Flood victims who rebuilt their Minot homes are finding it hard to qualify for money offered under a new CDBG program.
The program was set up when Minot qualified for a second round of Community Development Block Grant money in the fall.
It would use five million dollars from the 40-million the city was awarded for flood recovery.
Jim Olson reports on how and why so many flood victims are being left out of the program.
The CDBG assistance plan offered up to ten thousand dollars in direct payments to homeowners who had spent money rebuilding their homes within one year of the Mouse River flood of 2011.
And more than one thousand people applied by the deadline last week.
But, Minot City Finance Director Cindy Hemphill says many did not meet requirements for signing up...
(Cindy Hemphill, Minot Finance Director) "We have 1,051 applications that we received. We have determined already that 180 of them are ineligible and a good majority of those is because one: they are not within the legal jurisdiction of the city of Minot. And-or two: they are in the flood control footprint."
That leaves 871 applications still in the running to receive the funds.
But Hemphill says a spot-check of those remaining applications shows a troubling trend - most of them do not meet the federal requirements to be eligible to receive the CDBG funds.
(Cindy Hemphill, Minot Finance Director) "They're not showing an unmet need because they have their SBA loans and they have their FEMA money so they had their expenses covered and that will render them ineligible for the $10,000 reimbursement."
Here's an example of how a homeowner who rebuilt quickly is left out in the CDBG reimbursement plan. Say a home had $100,000 in damage from the flood and the homeowner received $30,000 from FEMA in the early days of the cleanup. As that homeowner took on the job of rebuilding, he had to come up with $70,000 on his own, or could turn to the Small Business Administration to receive a $70,000 mortgage at an interest rate of about 2-and-a-half percent. Under federal regulations, that homeowner would be ineligible to receive any further assistance because he had received $100,000 in "federal assistance" to repair his $100,000 in damages. Of course, $70,000 of that must be repaid to the SBA because it's a loan. Still, the feds consider that loan a "benefit" that can't be duplicated through a CDBG payment.
Another problem facing the city in securing the five million dollars for the direct payments to flood victims is the percentage of applicants who are considered low to moderate income, or "LMI." The federal government requires a 50-50 split between LMI and others, known as those with urgent need.
(Cindy Hemphill, Minot Finance Director) "Right now it's trending that 72 percent are urgent need and only 28 (percent) are LMI so we're not at that 50 mark anyway."
Hemphill says the city has already asked for a waiver of the one-year limitation on expenses that can be reimbursed, because many people were delayed in their rebuilding process after the flood. There's been no answer from the feds. And she says there will have to be another waiver request to be allowed to ignore the requirement that 50% of the applications come from low to moderate income applicants. Without those waivers, it appears that a vast majority of the five million dollars set aside to help homeowners who rebuilt, will have to be redirected to other programs the city identifies for flood recovery.
Finally, some editorial comments.
The first time I heard about this program, I knew the enthusiasm of the city officials telling me about it was unfounded - simply because I knew that nearly all of the people who got to work quickly to rebuild after the flood did so in large part with a loan from the SBA...and if the feds were going to consider a loan to be a disqualifying factor in receiving the CDBG funds, very few people would qualify for the help they so dearly need. It's just another slap in the face of people who have done what was asked of them - rebuild right away and help restore the city's neighborhoods. Another case is the state rebuilders loan program that has been hijacked by the federal government. State legislators who designed the program intended it to be easy loan money - at low interest - for people trying to get back on their feet. But I now know of multiple cases where the federal government has demanded to receive the entire state rebuilders loan amount from borrowers to pay down their SBA loan. I guess it's the price we pay for being willing to accept help from the federal government in the first place - it comes with a lot of strings attached. And it brings into focus just how valuable local and volunteer assistance has been for our region. Hope Village, RAFT, the Mennonites and so many more - and family, friends, and even strangers pitching in - it's all added up to get us to the level of recovery we've achieved so far. And it appears it's that kind of help that will continue to play a key role as our recovery continues. Jim Olson, KX News.