Congress's recently passed $9.7-billion aid package for flood insurance claims is a good start but is only a prelude to the $51-billion package that lawmakers need to pass in coming weeks to help Superstorm Sandy victims, say local industry and elected officials. While there is no guarantee that the larger bill will be voted on and passed soon, it is vital to recovery efforts, they add. A House vote on the $51-billion measure is expected on Jan. 15, with a Senate vote the week of Jan. 21.
The $9.7 billion temporarily increases the borrowing authority of the Federal Emergency Management Agency (FEMA) to carry out the National Flood Insurance Program (NFIP). The NFIP program is reaching its $20.7-billion borrowing cap, but the extension allows flood insurance funds to continue to be dispersed to those devastated by the storm, Michael Grimm (R) said in a statement. Grimm represents Staten Island and part of South Brooklyn. He calls the $9.7 billion a "down payment on a much larger aid bill."
Industry groups agree."It's a good first step, but we need the remainder of the aid to be passed. We've got major national contractors, large-scale contractors and smaller contractors who are performing all this work in the Rapid Repairs program and they need to be paid," says Lou Coletti, president and CEO of the Building Trades Employers' Association (BTEA). He says that if there is a delay in funding, or insufficient funding, "either the city will be unable to recapture 100% of its cost, which means they'll go to the contractor and say 'we'll give you 50 cents on the dollar for work you performed,' or the contractor won't get paid at all."
BTEA worked with New York officials to help launch the NYC Rapid Repairs program late last year. The city, in partnership with FEMA, designed the free program to help make emergency repairs on residences, some of which are abandoned due to severe damage.
Industry officials are concerned, Coletti says, that the many local contractors involved in recovery efforts through Rapid Repairs and/or other programs may not get paid in a reasonable timeframe if the larger aid package is not approved. "The city is supposed to front the money [in the Rapid Repairs program] and then be reimbursed by FEMA," he says.
"When we were first called by the city to get involved in this, there were several business-related issues and one of them was payment, because there were significant cash-flow problems in the September 11 recovery effort" and contractors feared that the city might face the same problems with Sandy recovery efforts, he says.
After performing September 11 recovery work, many small subcontractors, in particular, teetered on the brink of bankruptcy due to the problem, Coletti says. "To have Congress be the impediment now—I think we need to have a national discussion on the business elements of disaster recovery." Contractors must have reasonable assurances that they are going to be paid and paid within a reasonable amount of time, he adds.
The Rapid Repairs program is reimbursable under FEMA's Public Assistance Program, "which means we have to do the work first anyway and then submit the bill to FEMA," says Peter Spencer, a spokesman with the Mayor's Office of Recovery. "This should not be affected by the supplemental bill."