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How Did New York Get So Much Sandy Money?

Thursday, June 19, 2014

NJ Spotlight

On April 29 of last year, six months to the day after Sandy made landfall, New Jersey Gov. Chris Christie stood with U.S. Housing and Urban Development Secretary Shaun Donovan in a seafood restaurant in Highlands, NJ. Surrounded by cameras, Donovan announced the delivery of the first $1.8 billion of recovery funding to the state, and Christie was glad to accept.

“I want to thank the secretary for his partnership,” the governor said. “He understands our region, being married to a Jersey girl. He understands and feels the pressure of making sure that even though he is a New Yorker . . . ”

He digressed.

“We always get a little paranoid about that, right? 'Cause when we’re in anything with New York — the Port Authority of New York and New Jersey, the Superbowl with New York — there’s always a little paranoia that we’re going to get screwed. We know that, right?”

The crowd laughed. Joking aside, Christie said there was no reason to worry.

“I can tell you that it is just as important to him to make sure that New Jersey is rebuilt stronger and better than it was on October 28, 2012, as it is to him to have New York rebuilt in exactly the same way,” he said.

But a year later, New Jersey has gotten less than half as much Sandy aid from HUD as New York State and City combined, even though the states’ original damage estimates suggested that New York was only slightly harder hit.

There are a number of theories why things have turned out this way.

Some officials still believe that Donovan — New York City’s former housing commissioner — showed favoritism toward his native state.

Jeff Tittel, director of the Sierra Club of New Jersey, thinks the state is being punished with less funding because it’s not giving enough consideration to climate change and sea-level rise in its storm recovery.

Yet others have speculated that damaged parts of New York State may have gotten more aid because their electric company— the Long Island Power Authority (LIPA)— is publicly-run, while electric utilities in New Jersey are privatized.

None of these explanations appear to be the case.

Rather than there being any one, single reason for the funding disparity, an NJ Spotlight/WNYC investigation has found a variety of factors that pretty much guaranteed from day one that New Jersey would get less support.

What’s more, state officials and lawmakers aren’t just disappointed by how things have turned out. Many of them, like State Assemblyman Declan O’Scanlon (R-Red Bank), still don’t even understand why.

“My problem is when we have people who can essentially see each other over a border. And the people on one side of the border are getting twice as much money or have different standards for qualifying for the money than the people on the Jersey side of that border. That’s a problem,” he said, explaining that it’s unfair to heap criticism on Gov. Christie’s handling of the recovery when his administration’s hands are essentially tied. “That should bother everyone — Democrats and Republicans alike.”

State Sen. Jennifer Beck (R-Red Bank) agrees.

“To me, there’s just an issue of basic fairness here,” she said. “I have really not gotten a good answer.”

Figuring  out why New Jersey is getting less aid than New York means going back to the late fall of 2012, when the federal aid bill was written to cover damages from not just Sandy, but a wide range of disasters from around that time. Including that expansion provision bought votes from states like North Dakota, which had suffered river flooding.

But ironically, New York appears to be the biggest beneficiary. Hurricane Irene and Tropical Storm Lee — both 2011 storms — caused much more damage in upstate New York than they did in New Jersey, and consequently steered hundreds of millions of dollars of funding from the so-called Sandy aid bill to Albany instead of to Trenton.

After the bill passed, the Department of Housing and Urban Development came up with a formula to distribute aid based on damage to housing, businesses, and infrastructure. That formula permitted New York State to receive nearly $2 billion to help repair its transportation network, especially the city’s subway system, which the state owns.

While New York was looking to fix its trains, Gov. Christie was concerned with repairing one of his state’s most damaged and important assets: its coastline.

A portion of the HUD funding the state received would be used to match Army Corps of Engineers grants to build new beach protection projects. But a federal law capped the amount of HUD funding New Jersey could use for that match at about $2 million. That’s one-one-thousandth (0.001) of the amount New York State got for transit.

In addition, the formula gave New Jersey less money because the federal government estimated construction costs are about seven percent lower than in New York. It also turned out that much of New Jersey’s residential damage was to vacation homes along the Jersey Shore, which weren’t eligible for most federal aid.

Given these factors, the federal government estimates that New Jersey's unmet repair and resiliency needs for homes, businesses, and infrastructure total $4.9 billion -- less than half the combined needs of New York State and New York City, which add up to more than $11 billion.

HUD says it was this formula – not favoritism — that led to the difference in funding.

But New Jersey officials remain confused.

Testifying in February before state lawmakers, New Jersey’s top official for housing — Community Affairs Commissioner Richard Constable — said that HUD had allocated “significantly less than warranted” to New Jersey. While he was grateful for the aid the state had received, he said it was clear that there are more needs than resources to go around. “That $4 billion difference would go a long way here in New Jersey,” he said.

Part of the problem, HUD says, is that everyone is using different math. The feds are focused on funding repairs and limited-resiliency upgrades to properties that were directly affected by Sandy. New Jersey is essentially including everything but the kitchen sink in its wish list. That includes additional mitigation measures, such as the cost to harden infrastructure that may not have even been affected by the storm.

That’s way more than the federal government is willing or able to pay, and by some accounts more than New York City and New York State are counting in their damage estimates.

That’s the crux of the problem. A senior Christie administration official told NJ Spotlight and WNYC that New Jersey has never fully understood the federal formula. Although the state expected it would receive less than New York, officials are still trying to figure out why the gap is as large as it is.

That leads to questions about who’s running New Jersey’s recovery operation and how well he or she interact with Washington.

Across the Hudson, the upper echelons of New York government were in a better position to grasp the details. For example, Gov. Andrew Cuomo led HUD as secretary in the 1990s.

New Jersey Gov. Chris Christie was a former federal prosecutor, without comparable experience.

A few months after Sandy, Cuomo hired Jamie Rubin to be in charge of New York’s recovery efforts. Rubin had been a top advisor and assistant to Shaun Donovan at HUD.

Christie appointed Marc Ferzan to be his “storm czar.” He didn’t have any experience at HUD. Ferzan used to work in the New Jersey Attorney General’s office and as a federal prosecutor.

Constable is another lawyer and former prosecutor who worked under Christie in the U.S. attorney’s office.

Many of New Jersey’s elected officials— including members of its Congressional delegation — are also confused. Early last month, several of them held a meeting with the HUD secretary.

“We’ve seen the disparity in funding, and it’s a concern I’ve raised directly with Secretary Donovan,” said Congressman Chris Smith, who represents sections of Monmouth and Ocean counties that were hit hard by Sandy. He added that he was still awaiting clarification of the formula used to determine the allocation amounts. “It’s a big gap to explain,” he said.

Federal housing department officials did not respond to questions about whether they had done an adequate job explaining their behind-the-scenes process to lawmakers and officials in New Jersey. Press Secretary Patrick Rodenbush did issue a statement, however, defending the awards.

“HUD allocates Community Development Block Grant Disaster Recovery (CDBG-DR) funds based on a formula designed to meet unmet housing, business, and infrastructure needs,” he wrote. “This formula is based off damage assessments from FEMA, the Small Business Administration, the Department of Transportation, and the Army Corps of Engineers. HUD has worked very closely with New York City, New Jersey, and New York (State)  to ensure that our funding meets all of their critical needs.” Rodenbush added that the funding being handed out will enable New Jersey to reach all Sandy survivors on its current housing waiting lists.

In the end, the upside of this allocation has been an embarrassment of riches for New York State. Albany is sending hundreds of millions to New York City, not just to repair the subways, but also to do things like buy out properties on Staten Island and for organizing community-planning efforts in Sheepshead Bay, Brooklyn — even though the city received its own Sandy allocation.

Meanwhile, a year-and-a-half after the storm and over a billion dollars short of the funding they expected they’d receive, New Jersey officials are still scratching their heads. By their calculations, even after all the HUD money is spent, they’ll still need another $17 billion to fix all their damage and prepare for future storms.

Scott Gurian is the Sandy Recovery Reporter for NJ Spotlight and WNYC /New Jersey Public Radio.

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Comments [2]

Kathleen Mary from NJ Shore

Drive around the shore....there are just as many people giving up as there are building new homes. The process is daunting and wrought with time delays if awaiting RREM funding. Frustration now and desperation tomorrow. Help the people now and take the politics out of this process!

PS....I learned a lot about the RREM program from this blogger...maybe it will help someone else.... http://blog.dreamhomesltd.com

Jul. 08 2014 02:17 PM
Washed out of my house from New Yorker

I have had to deal with HUD, NY state gov and other entities. It's awful. One of the first events was Gov Cuomo standing with the president of Sears giving away appliances and then the next day some other retail chain. Well, that's all great but the appliances don't help when you have salt water which corroded your electrical outlets. Even worse was the staff who they hired to help administrate the paperwork. Then you call the local economic development office and around and around you go. I would like to see an investigation of New York State's Economic Development agency who is working on these loan funds. #nothelpful Then I contacted Dept. of State where I have written numerous letters to their commissioner - no response. Around and around you go navigating the state gov. to assist you and the staff is not response, not educated to assist residents.

Jun. 19 2014 12:25 PM

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