September 7, 2017

Senate Includes Long-Term Recovery Funds in Harvey Aid Package

Share Posted By:

As Texans and Louisianans begin to assess the destruction caused by Hurricane Harvey and countless people in Hurricane Irma's expected path prepare for worst, Washington has offered a real bright spot. Without waiting to be asked by the White House, the Senate today passed a $15.25 billion relief and recovery package for Harvey survivors that, thanks to an amendment from Majority Leader Mitch McConnell, includes $7.4 billion for HUD's Community Development Block Grant Disaster Recovery (CDBG-DR) program for major declared disasters occurring in 2017 (note: not just Harvey), on top of the FEMA and Small Business Administration funds approved by the House. As I type this, the legislation is moving back to the House, which is expected to approve the package and send it to the President before the end of the week.

Hurricane Harvey and potentially Hurricane Irma will occupy a place in the record books alongside storms like 2005’s Hurricane Katrina and 2012’s Hurricane Sandy, where people in the areas hit hardest ultimately measure their recovery in years, not weeks or months.  After Hurricane Sandy, Congress took three months to pass a recovery package with CDBG-DR, during which time communities could make no plans for rebuilding because they had no certainty about the long-term funding that might be available.  Senator McConnell’s break from the precedent of waiting for an Administration request is to be commended; instead of getting caught up in the politics of an Administration asking to fund a program that the President’s budget request eliminated, Senator McConnell put communities first.  This is an excellent step forward, and bodes well for efforts to stabilize the region.

As Terri Ludwig said in her blog yesterday, CDBG-DR offers communities the most flexibility for rebuilding after disasters.  CDBG-DR flows from HUD to states, counties, and/or cities (at the Secretary’s discretion), to be used for repair and rebuilding of public housing, private homes (rental and owner-occupied), small businesses, public facilities, and other infrastructure, as well as other activities like temporary rental assistance and economic development such as working capital loans.  While replenishing FEMA’s emergency assistance coffers, preventing the FEMA-run National Flood Insurance Program from expiring, and making loan authority available to the Small Business Administration are all important, critical steps to enabling recovery that must occur in the coming weeks, the provision of CDBG-DR is key because it will make the biggest difference in getting people back into suitable, permanent housing. 

CDBG-DR is a program that is built on the chassis of the annual CDBG program, but unlike the annual program, HUD does not have standing authority to make CBDG-DR grants; the CDBG-DR program only exists once Congress affirmatively acts after a disaster or series of disasters to make funding available.  Senator McConnell’s CDBG-DR proposal tracks recent CDBG-DR allocations, with one notable exception: whereas some past laws have lowered the percentage of CDBG-DR dollars that must be used to primarily benefit low-to-moderate-income (LMI) households down to least 50%, if passed, the current proposal would hold the line at 70%, the same level as annual CDBG grants.  This amendment would give Secretary Carson broad authority to waive statutes that he administers, including the LMI benefit requirement.  While past CDBG-DR laws have dropped the LMI benefit standard to 50%, they also included a higher standard for the HUD Secretary when considering whether to grant a waiver: compelling need.  In Sen. McConnell’s amendment, if the Secretary Carson were to waive the standard, it would only need to be upon a finding of good cause. There is no simple conclusion to draw about whether this approach will better serve residents most in need by setting a higher LMI standard, or rather will make it easier for them to be left behind when jurisdictions face countervailing pressures to serve higher-income homeowners and repair infrastructure.

CDBG-DR grants can go even further in helping communities rebuild if they can leverage private capital investment through proven public-private partnerships. After Hurricane Katrina, Congress included funding for both grants and tax credits as part of the long-term recovery assistance in disaster areas to great success with the Gulf Opportunity Zone Act. Congress should include two proven tools—the Low-Income Housing Tax Credit and New Markets Tax Credit—in any recovery package.

I spent more than 15 years in federal government service and found disaster recovery questions to be some of the most difficult to sort out.  Communities only receive these dollars when they have been traumatized, and feel a strong pull to put back what was lost rather than to see the influx of dollars as a real opportunity to fix longstanding community problems.  When I was working on the yearlong task force convened by President Obama and led by then-HUD Secretary Shaun Donovan to coordinate federal, state, and local recovery policy after Hurricane Sandy, Shaun Donovan brought the staff together and told us that we needed to bring our best ideas to the work because “there is never a time when most people will need the federal government more than after their homes, work places, communities, roads, and transit systems have been destroyed.”  Collectively we developed innovative policy strategies like repaying homeowners for work they already had performed on their own before repair programs were rolled out by the states - since often homeowners without flood insurance had emptied their savings accounts, maxed out credit cards, and looted their retirement accounts to remove moldy carpet and drywall and fix pressing structural problems - and incentivizing natural flood control measures that allow residents of public housing and other low-income communities in New York City to access the waterfront for recreation instead of cutting them off from it.  However, despite our efforts, we were not able to conquer the largest obstacle: the amount of time it takes to complete rebuilding.  That challenge looms large as Congress, HUD, and affected states and localities begin to prepare for the years ahead. 

Stay tuned for additional blogs with discrete policy recommendations for making the rebuilding quicker, more efficient, and more inclusive for all affected.