FILE - 2016 Louisiana floods

Cleaning up after the flooding of 2016 in Baton Rouge.

The Restore Louisiana Homeowner Assistance Program on Monday began issuing the first round of checks to homeowners who were caught in the “duplication of benefits” trap, program officials announced.

After the devastating 2016 floods, the federal government advised victims to apply for a Small Business Administration loan to help pay for home repairs. Applicants who were approved for the loan were denied access to Restore Louisiana money, whether they accepted the loan or not.

Federal legislation approved last fall cleared the way for affected homeowners to get Restore dollars. But the U.S. Department of Housing and Urban Development didn’t issue necessary guidance about how the change would be applied until June.

This first disbursement of grant funds will go to about 230 homeowners who were approved for an SBA loan but declined or canceled the loan and have already executed their grant agreement with the Restore program, officials say. About 800 homeowners who declined or canceled their approved SBA loan in its entirety and received a grant determination, but have not executed their grant agreement, will receive notice of their increased award, adjusted to remove the entire SBA loan amount from their benefits calculation.

Pat Forbes, executive director of the Louisiana Office of Community Development, said program officials are doing “everything we can” to work with federal officials and speed up the release of more funds.

“Since the guidance was published a few weeks ago, we have been working with HUD to ensure the quickest possible delivery of funds to those homeowners who have been waiting so long for this assistance,” Forbes said in a prepared statement. “While I am proud of our work to expedite delivery of these critical recovery dollars to the flood-impacted homeowners who should have never been further victimized by this federal penalty in the first place, we understand that this process can never move fast enough.”

HUD’s guidance stipulates Louisiana must submit an Action Plan Amendment to HUD for approval before Restore Louisiana can begin providing money to repay SBA loans disbursed to homeowners. The Office of Community Development is writing the amendment and plans to publish it within a week.

HUD says the program must ensure at least 55 percent of all grant funds go to the benefit of low- to moderate-income households. Once the APA is approved, which officials say could take up to three months, the program expects to be able to provide funds for repayment of the drawn down amounts of SBA loans for all households at or below 120 percent of their area’s median income.

HUD’s guidance requires higher-income households, which may receive only partial reimbursement, to demonstrate a financial “hardship” to be eligible. In the coming weeks, Restore Louisiana officials plan to send a survey to homeowners that will assist OCD in developing a “broad and inclusive set of criteria” for hardship exceptions. The criteria for exceptions must be part of the APA approved by HUD, which also will approve homeowners’ individual hardship justifications on a case-by-case basis.

Staff Writer

David Jacobs is a Baton Rouge-based award-winning journalist who has written about government, politics, business and culture in Louisiana for almost 15 years. He joined The Center Square in 2018.