Two new bills pending in Congress would provide direct relief to communities recovering from Superstorm Sandy and COVID-19.
Robert W. Allison, CPA, RMA, President of HFA with offices in Monmouth and Ocean Counties, has initiated the cancellation process of Community Disaster Loans (CDLs) related to Superstorm Sandy after facing the continued economic stressors of COVID-19. Allison was the first to contact the local offices of Congressman Andy Kim, Congressman Chris Smith and Congressman Frank Pallone, Jr. who represent Superstorm Sandy’s hardest hit towns.
Upon review of the information presented, Smith introduced HR6454, Equity for Disaster Victims Act on April 3, and, a few weeks later, Kim introduced the Security After Sandy Act. Both efforts have received the support from members of the New Jersey Delegation and Senator Bob Menendez is expected to introduce a companion bill in the Senate. Smith and Kim thanked Allison, a subject matter expert, who shared added information and advised on the local government impact of the CDL issue.
“In my dealings with the congressional offices that represent Monmouth and Ocean Counties, everyone was extremely responsive and understood the consequence of CDL repayment on the taxpayer,” said Allison. “If this legislation passes, it will avoid large tax increases to the affected residents of Monmouth and Ocean Counties. The efforts to mitigate the CDL is receiving outstanding bipartisan support.”
The Kim and Smith bills both require the federal government to forgive federal loans awarded to municipalities to help them rebuild after Superstorm Sandy. “We need to take immediate action in order to help the countless families and communities throughout the Garden State who have been affected by both Superstorm Sandy and the current COVID-19 pandemic,” said Allison. Either bill, if signed into law, would provide direct relief to communities by canceling the repayment for all uncollected amounts owed with respect to CDLs made by the federal government for all Sandy loans.
“The federal government should not be pressuring our communities and demanding difficult payments, especially as we face the health and economic challenges of the COVID-
19 pandemic,” said Smith, the Dean of the New Jersey congressional delegation. “The federal government has forgiven similar loans in the past and the payments on the remaining Sandy Community Disaster Loans should be fully waived and forgiven so our communities can focus on present day challenges.”
“New Jersey is recovering from two crises right now; the impact of COVID-19 on our state and the lingering effects of Superstorm Sandy,” said Kim. “It’s time we took action to help our local mayors and homeowners to give them a fighting chance to stay on their feet during these historically tough times.”
Throughout history, the CDL program has supported local governments with significant tax and other major revenue losses after major disasters. While the program did provide critical emergency support for communities after Sandy, some loan recipients are being asked to pay back those loans at a time when localities are projecting extraordinarily steep revenue declines due to constricted economic activity as a result of COVID-19.
“Our communities and residents faced extraordinary financial strain as a result of Superstorm Sandy’s devastation,” said Congressman Pallone. “The coronavirus pandemic has only exacerbated the economic outlook for many of our communities that are still working to recover from Sandy’s destruction.”
In addition to CDL forgiveness, Smith’s bill also includes a provision he has long championed to eliminate the so-called “duplication of benefit” penalty that blocked many NJ homeowners from receiving both Small Business Administration loans and Homeowner Reconstruction, Rehabilitation, Elevation and Mitigation (RREM) Grants even though they were advised to pursue both to help them rebuild after Sandy.
“The faulty ‘duplication of benefit’ policy was partially abolished in 2018,” Smith said. “My bill will make it clear that protections established in 2018 should also apply to disasters dating to 2011, including Superstorm Sandy.”
According to Congressman Kim’s office, his bill has additional provision that would help New Jersey homeowners forced to pay back aid that was disbursed in the aftermath of Sandy by stopping any further recoupment efforts for debt owed to the federal government in relation to Sandy and other major declared disasters. These recoupment efforts, known as “clawbacks”, have blindsided many because it was under the federal government’s own recommendation that many New Jersey residents applied for loans and benefits offered by various federal programs without clear guidance on repayment terms and contingencies.
Allison expects his governmental clients may need future CDLs as a result of the current pandemic. “Municipal utilities that rely on usage for revenue (water, sewer, etc.) will be vulnerable as social distancing measures continue and businesses are delayed in opening,” he said. “The provisions in these bills will usher needed tax relief to help municipalities as they provide essential services. Together, we need to have our voices heard so we can get this legislation passed and finally have the financial relief that our neighbors so desperately need.”
Congressman Jeff Van Drew who represents several shore towns in South Jersey is a cosponsor of HR 6454; Reps. Frank Pallone, Jr., Bonnie Watson Coleman, Bill Pascrell, Jr., Donald Norcross, Tom Malinowski, Donald M. Payne, Jr. and Albio Sires have cosponsored HR 6765.