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Congressman Garret Graves

Representing the 6th District of Louisiana

Louisiana Congressmen Graves, Richmond target SBA loan headache for flood victims with new bill

November 17, 2017
In The News

WASHINGTON — Thousands of Louisiana homeowners hit hard by the 2016 floods have been tearing their hair out for more than a year over a federal rule blocking them from tens of thousands of dollars in recovery money.

People like Charles Thibodeaux, an 83-year-old retired plant worker who lives in Central, applied for Small Business Administration loans to help rebuild their flooded homes at the urging of federal disaster officials.

Thibodeaux ended up turning down the $31,700 loan he was offered. But a federal rule against so-called "duplication of benefits" means state officials running the federally funded Restore Louisiana grant program have still been forced to subtract the approved loan amount from any potential rebuilding grant Thibodeaux could receive.

Reps. Garret Graves, R-Baton Rouge, and Cedric Richmond, D-New Orleans, filed legislation this week to allow state governments to waive that rule — something Louisiana Gov. John Bel Edwards has long indicated he'd like to do.

"Survivors are constantly urged by FEMA and SBA officials to apply for loans immediately after the event — maybe the most stressful moments in their lives — without any expectation of possible grants," Graves said. "Then when grants are available, these survivors are denied. It is inappropriate to bait and switch like this."

The Governor's Office, which is running the roughly $1.3 billion Restore Louisiana homeowner assistance program, said about 10,000 Louisiana flood victims are affected by the SBA loan issue. 

The Stafford Act, the law controlling much of federal disaster-response policy, prohibits disaster victims from receiving duplicate government assistance for the damages. In recent years, federal agencies have interpreted that regulation to mean those approved for government loans — even if they didn't take out a cent — already received a benefit that can't be duplicated by a disaster grant.

Louisiana politicians at the state and federal level have spent more than a year trying to find ways around the issue. Edwards, Graves, Richmond and others have lobbied the Trump administration to reinterpret the provision.

Louisiana's congressional delegation and governor lobbied the U.S. Department of Housing and Urban Development and its secretary, Dr. Ben Carson, for months on the issue with no success.

For Louisianans like Thibodeaux, who finished repairs on his home just three weeks ago after seeing it swamped in more than three feet of water, it's been a maddening and unexpected roadblock.

Thibodeaux said he was approved for a Restore Louisiana grant but ended up not getting any money from the program because the SBA loan he was approved for was counted against any potential award.

"I put in for an SBA loan but I didn't take it — I said no because I knew there was going to be some government bulls*** about it," Thibodeaux said by phone Friday while helping his son do repairs on his own flood-damaged home. "Well, I found out they held it against you just like if you got that money. I didn't think that was fair at all."

Fixing his home and replacing ruined appliances cost Thibodeaux roughly $54,000 total, an undertaking partly covered by a FEMA individual assistance grant, but which also wiped out most of his savings.

"I've been telling everybody, 'Don't count on getting no money,'" Thibodeaux said of the Restore Louisiana program. "I'm fed up with it to be honest with you. I'm just fed up with our federal government, period. I think a lot of people are."

The bill introduced by Graves and Richmond on Thursday was co-sponsored by Rep. Clay Higgins, R-Port Barre, and seven other members of Congress from Texas and Florida, states hit hard this year by devastating hurricanes.

The delegates from the U.S. Caribbean territories of Puerto Rico and the Virgin Islands — both of which are also still reeling from destructive hurricanes — also signed onto the bill.

A spokesman for House Majority Whip Steve Scalise, R-Jefferson, said the House's third-ranking Republican is also backing any legislation to address the issue.

"It doesn’t make sense that folks are penalized for doing the right thing immediately following the floods," said Chris Bond, the spokesman. "Congressman Scalise has worked with the delegation on this issue and will continue fighting to get this problem fixed"

Richmond and Graves' bill would also loosen federal rules that restrict what kinds of flood-prevention and mitigation projects states can build using congressional disaster-recovery funds.

Current regulations place major obstacles in how states can use FEMA hazard-mitigation grants and Community Development Block Grant money — generally the two largest pots of disaster-recovery money available to states — on certain types of projects, such as those authorized by the U.S. Army Corps of Engineers.

The restrictions are among several challenges facing the long-planned but largely unbuilt Comite River Diversion Project, which is designed to help alleviate flooding in the area hardest hit by last August's flood.

Another pot of federal money for flood-protection projects could be available in the coming months as well. The White House sent a letter Friday outlining its request from Congress for a $44 billion disaster-recovery package.

Much of the request focuses on recovery money for areas hit by Hurricanes Harvey and Irma. White House budget director Mick Mulvaney wrote that federal officials are still compiling damage estimates from Hurricane Maria, which ravaged Puerto Rico — and plans to ask for additional money in the coming months.

But the White House letter also proposed a $12 billion competitive grant fund for projects in states or territories hit "by more than one flood-related major disaster declaration in the last four years" — a criteria Louisiana meets.

"We've been asking for some money on resiliency and mitigation projects from day one — that would be a huge help to the state," said Richard Carbo, the governor's deputy chief of staff. "There's about $600 million in unmet needs for infrastructure that we've identified."