1 disaster recovery division texas department of housing and community affairs

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Disaster Recovery Division

Texas Department of Housing and Community Affairs

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SESSION 5: IMPLEMENTING

OUR PLAN – TDHCA CHALLENGES TO

GETTING FUNDS OUT QUICKLY

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Program Challenges

Staffing and building an unprecedented program

Duplication of Benefits

Integrating floodplain requirements (not required under annual block grant program)

Responding to intense interest in program activities

CDBG Disaster Program Challenges

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Program Challenges – Staffing

State legislated caps on staff and budget Round I originally designed to be integrated

into existing TDHCA staffing structure Round II necessitated creation of new

Disaster Recovery Division Anticipated that all housing under Round I

will be done by Labor Day Approx. 550 homes

All $503 million under Round I & II will be fully used within the next 2 ½ years


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Program Challenges – Duplication of Benefits

Round I & II assistance amounts are lesser of the maximum program limits or the amount needed to repair/replace the house

Assistance amount is reduced by the DOB amount If damage remains to be addressed after repairs

have been made, the assistance equals the amount necessary to ensure livability standards are met

Damage and normal wear and tear are addressed


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HUD clarified that a “duplication of benefits” does not occur if a household used all funds from FEMA to make a home temporarily livable and CDBG funds will be used to reconstruct that housing unit

In such instances, assistance to the household is not reduced to cover the DOB Project is eligible for the full amount necessary to

repair/reconstruct that unit


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Program Challenges – Duplication of Benefits Deductions: Sources of funding that duplicates

benefits are deducted from the assistance amount including the following primary sources: FEMA SBA Insurance

Homeowner is required to disclose all sources and CDBG Administrators verify information provided Referrals have been made to HUD OIG when

appropriate


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Credits: Verified expenditures are credited back to homeowner if consistent with intended use of funds: FEMA

Repair Replacement Permanent Housing Construction

Eligible uses identified by SBA and Insurance


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Calculation Examples Example 1: Maximum assistance is $65,000. The

household received $10,000 from other funding sources. Determination made that $10,000 worth of repairs have been completed, but the house must be replaced. A replacement unit will cost $50,000. The household’s eligible assistance amount is $50,000.

Calculation: Lesser of Max. Assist. or Damage: $50,000 Deductions: – $ 0 Assistance Level $50,000


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Calculation Examples Example 2: Maximum assistance is $65,000. The

household received $10,000 from other sources. Households has $50,000 in damage but cannot prove that any of the $10,000 was used to fix the home. The household’s eligible assistance amount is $40,000.

Calculation: Lesser of Lesser of Max. Assist. or Damage:

$50,000 Additional Deductions: – $10,000 Assistance Level $40,000

Gap Funding Needed: $10,000


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Calculation Examples Example 3: Maximum assistance is $40,000 for rehab

and $75,000 for reconstruction. The household received $5,2000 from FEMA for housing repair and replaced their roof for $3,200 ($2,000 DOB). The cost to address remaining damage is $60,000, exceeding the $40,000 rehab limit. The household is eligible to receive replacement housing that will actually cost $75,000, but must cover the $2,000 DOB amount.

Calculation: Amount Needed: $75,000 Additional Deductions: – $ 2,000 Maximum Assistance $73,000

Gap Funding Needed: $2,000


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Calculation Examples Example 5: The preliminary assistance calculation

for a household resulted in approval of reconstruction assistance totaling $70,000. The household has been approved for an SBA loan totaling $25,000 but closed the loan before drawing any funds.

Calculation: Amount Needed : $70,000 Additional Deductions: – $ 0 Assistance Level $70,000


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Housing Trust Fund (HTF) Disaster Recovery Gap Financing Program

The CDBG Disaster Recovery Program can provide CDBG funding necessary to rehabilitate or reconstruct a home unless the funding represents a duplication of benefits, which is prohibited.

Gap financing has been a major barrier to moving the program forward

Most households only received FEMA funding, and they used it to live on after the storm

Because Texas is administering a construction Because Texas is administering a construction program, the household has to make up the difference program, the household has to make up the difference between the amount needed to repair/replace the between the amount needed to repair/replace the home and the DOB amounthome and the DOB amount


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HTF Disaster Recovery Gap Financing Program

TDHCA Governing Board set aside $1 million in HTF dollars in September 2007 for Round I

Unrestricted State of Texas General Revenue Maximum per household award is $10,000

Average need per household is $3,200

Necessary for households to complete their recovery by covering the gap representing a duplication of benefits

Approximately 72% of households under Round I have accessed the program since it became available


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HTF Disaster Recovery Gap Financing Program

DOB gap-financing for homes being repaired, replaced, or reconstructed under Round I

Allows families to take advantage of CDBG funding by ensuring full coverage of home repair, replacement, or reconstruction cost

0% loans and grants


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Gap financing is a major barrier to moving the Round II HAP/SPRP program forward

Looking into HTF, private loans, and other sources

If same as Round I, there will be over 3,000 households affected in Round II


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RECOMMENDATION TO HUD: Rather than dollar-for-dollar reduction from SBA loans,

clarify for all states that DOB equals the amount of interest savings from SBA’s below market interest rates.

Allow proof of expenditures for any eligible FEMA assistance category to “credit” against DOB. For example, if a household is provided $5,200 for home repairs, and can prove that they spent $8,000 on other eligible FEMA cost categories (such as personal property, medical, dental, etc.), no duplication of benefit.

Federal database of previous and current disaster funding for DOB checks.


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Program Challenges – Floodplain TDHCA originally planned to provide grants only 42 U.S.C. 5154a requires the maintenance of flood

insurance on assisted properties, regardless of property transfer For loans, evidence of coverage must be continued

for the term of the loan For grants, evidence coverage must be continued

for the life of the property Grantees are required to maintain a complete, up-to-

date listing evidencing coverage TDHCA opted to loan funds when assistance will be in

the floodplain 3-year, zero percent interest, deferred forgivable

loan


1 disaster recovery division texas department of housing and community affairs

Documents

maximum program limits

cdbg funds

plan tdhca challenges

maximum assistance

annual block grant program

house assistance

duplicates benefits

cdbg administrators