Matt Rusinski, a Toms River resident, has crossed more rebuilding thresholds than others displaced by Sandy a decade after it made landfall in New Jersey. He’s back in his house, the repairs finished after he meticulously tracked adjuster evaluations, architect estimates, and receipts from local and federal financial aid. He followed all of the instructions in order to receive the assistance, only to be faced with the prospect of having to sell his home to pay for the recoupment of overpaid funds and duplication of benefits that the government has told him he owes.
Because of Sandy’s widespread impact, he is not the only New Jersey resident still attempting to resolve the storm’s significant financial impact ten years later.
According to the National Hurricane Center, the superstorm, as it became known after a last-minute downgrade from a Category 1 hurricane to a post-tropical storm before making landfall, sent New Jersey and neighboring states reeling as it slammed into the coastline near Atlantic City with hurricane-force sustained winds of 80 mph on Oct. 29, 2012. (NHC). However, it was Sandy’s storm surge that caused the superstorm to be one of the most expensive tropical cyclones to make landfall in the United States.
“Water kills many more people in storms than wind, and this scale captures the impacts of the water (storm surge and freshwater flooding) along with wind and the overall economic impact of the storm to give people a comprehensive picture of how life-threatening and destructive a storm is expected to be,” AccuWeather Chief Meteorologist Jonathan Porter said.
Superstorm Sandy, while not classified as a hurricane by the NHC at the time of landfall, was a 5 on the AccuWeather RealImpact™ Scale.
When all was said and done, Superstorm Sandy ended up becoming the fourth costliest tropical cyclone on record for the U.S. at $81.9 billion in today’s dollars, according to NOAA’s National Centers for Environmental Information (NCEI) and the NHC.
However, AccuWeather estimates that the Economic Impact was as much as $210 billion, when adjusted for inflation, when accounting for long-lasting impacts to the mid-Atlantic and New England. This includes taking beach erosion and environmental impacts into account, the impact to tourism in the region and acknowledging uninsured and unreported losses were easily in the billions, according to AccuWeather Founder and CEO Dr. Joel N. Myers.
Rusinski was barred from reentering his neighborhood for roughly a week due to the flooding. When the floodwater finally receded, it left a waterline just under his front door’s doorknob — one of the first signs of the damage he would find inside.
After his flood insurance payout was only a fraction of what he had originally been quoted for repairs, Rusinski took out personal loans as well as one with the Small Business Administration to fund the rebuilding of his first floor. Then the Homeowner Reconstruction, Rehabilitation, Elevation and Mitigation (RREM) Program, a program funded with federal block grants distributed by the Department of Housing and Urban Development, started taking applications to aid in rebuilding and flood mitigation.
Rusinski applied and qualified for the maximum award of $150,000 the program offered per person — if he demolished the first floor that he had just rebuilt using the previous funds and instead build on top of the second floor in the case of another flood event.
“I did exactly what I was showing them [the RREM Program] I was going to do, which they approved to begin with. I showed them blueprints from the architecture I was doing. They wouldn’t disperse money until I showed them contractor receipts for everything I was doing, and they okayed all that,” Rusinski said.
Once all was finished, Rusinski was told an inspector with the RREM Program would return within a few months to look over the house to evaluate and verify the work done. If the home passed the inspection, the program would release the lien on Rusinski’s property. When the time came, however, he received a surprising bit of news.
“Couple months later, I get a notice from the state of New Jersey saying I owe them $60,000 and I have x-number of years to return that money,” Rusinski said.
The program claimed that there had been an over-disbursement of funds due to a duplication of benefits with the SBA grant he had received prior.
Navigating clawbacks after Sandy
Financial relief programs typically don’t allow the duplication of benefits — or the disbursement of money from two different programs for the same purpose. While Rusinski had disclosed in the program’s application he had received — and completely used — the funds from the SBA loan to rebuild the first floor that the RREM Program required him to tear down, the RREM Program still quoted duplication of benefits to the tune of $19,000. In addition, it cited the over-disbursement of funds, claiming Rusinski should have only received $90,000 from the program.
“I think they had some kind of repayment plan that was a three-year plan. I have no way to return $60,000 in three years, not even in five years,” Rusinski said. After seeking out support, he is now a member of the New Jersey Organizing Project (NJOP), a grassroots organization that advocates for clawback forgiveness following the storm.
Rusinski is far from the only Sandy victim facing clawbacks, or the called return of funds that have already been disbursed. More than 1,800 households in New Jersey still owe $73 million to various federal programs and loans, according to Representative Frank Pallone Jr. (D-NJ). A spending bill passed by the House of Representatives this July included a provision that could permanently alleviate people of these costs. The provision in bill HR 8294, pushed by Pallone and U.S. Representatives Bonnie Watson Coleman (D-NJ) and Andy Kim (D-NJ), could waive the requirements for some Sandy victims to repay federal disaster relief aid if passed in the Senate.
Of the impacted homeowners, 882 households would be eligible for full forgiveness — wiping out over $28 million of the debt, subject to Secretary approval, according to the press release.
“Superstorm Sandy decimated New Jersey families and towns, and they are still on the hook for millions of dollars through no fault of their own,” Pallone said. “During this time of economic uncertainty, it’s simply unfair for federal agencies to ask for repayment on tens of millions of dollars in loans and grants from Sa
Recoupment efforts aren’t just from programs that were funded through HUD, however. FEMA, which operates under the Department of Homeland Security, offers the Individuals and Households Program, which is often one of the first programs to provide financial aid and direct services to people impacted by disasters with the purpose of meeting basic needs and supplementing disaster recovery efforts. This might look like providing funds for temporary housing, home repair, uninsured or under-insured disaster-caused expenses and hazard mitigation assistance like elevating a water heater or repairing a roof to better withstand strong winds.
For many, this is the program that keeps them afloat until insurance payouts are processed and other disaster relief efforts are passed.
According to data that AccuWeather obtained from FEMA over the summer, more than 1,300 people in New Jersey alone who had received financial aid from the IHP due to Sandy were notified they were required to return a portion of or the entirety of the funds they had received from the program.
The agency requested recoupment to the tune of $9.4 million, less than half of which has been paid back as of 2022, according to the data. While that amount is small compared to the hundreds of millions FEMA distributed in the state following Sandy, many don’t have the thousands they may have been requested to return on hand, having spent it on repairs or recovery.
The most common reason for the clawbacks was the home was not the owner’s primary residence, followed by overpayment by the housing assistance section of the IHP and then the duplication of benefits.
Residents in Ocean County face the highest cost of recoupment from the IHP at over $5 million, followed by $1 million in Monmouth County and over $900,000 in Atlantic County where Sandy made landfall. Ocean and Monmouth counties sit just north of Atlantic County.
“When you’re processing tens of thousands of claims, you’re doing it as quickly as possible to try and get money to those folks,” Mark Neveau, a former federal coordinating officer with FEMA, told AccuWeather.
Neveau explained that following a disaster, much of the process involves self-identifying through an interview process and producing documentation that proves residency — which is sometimes difficult to obtain following a disaster. There’s then an auditing process while closing out the cases, which is where overpayments come to light unless the receiver of the grant appeals and can provide documentation to justify the award.
“When I started this, it took a lot longer to get people aid than it is today, which is wonderful with technology, with banking, with electronic transmittals where before that there was apprehension,” Neveau said. So when the process is sped up, he added, steps are taken to make sure the default rate of fraud isn’t also accelerated.
The Office of Budget and Management along with the Inspector General’s office out of FEMA work hand in hand to analyze the default rate, success rate and adequate paper documentation. Processing centers are one of the solutions that have been utilized to centralize the effort to avoid the duplication of benefits and unauthorized payments.
Grants from FEMA’s Individuals and Households Program are capped, so the best use of the funding is not necessarily for rebuilding, Neveau said, but for help with housing assistance.
Depending on the disaster, Neveau said that aid can help people from months to years, although he added that qualifications for the reauthorization of this benefit included actively looking to find permanent housing.
“But this program, above all, is the one that helps most of the people in their time of need because it puts a roof over their head,” he added.
A long road home
Displacement was a major issue following Sandy, with many unable to return home for years as obstacles arose with rebuilding, one of which included battles with flood insurance.
It took seven years for Douglas Quinn to return home following Sandy after disputing his insurance payout. Citing pre-existing damage in the form of the movement of the supporting soil ahead of the storm, his flood insurance originally offered to pay him 37 cents on the dollar, Quinn told AccuWeather.
“It really ruined our lives,” he said. “It was a very, very brutal period of time in our lives.”
Quinn added that through the process of challenging claims, 144,000 similar insurance claims were reopened, resulting in $350 million paid to the insurance holders. Quinn is now the executive director of a nonprofit called The American Policyholder Association.
A completely different situation unraveled for those without homeowners or flood insurance.
“Many of the people were seniors. They had paid their mortgage, but they didn’t have homeowners insurance, and that impacted them because they were not able to have the ability to rehabilitate their house or they didn’t have savings,” Kaleem Shabazz, Vice President of the Atlantic City Council and President of the Atlantic City branch of the NAACP, told AccuWeather.
The Atlantic City branch of the NAACP was just one group of a coalition of volunteers put together by Rev. Collins A. Days to work with residents who didn’t have the resources to recover from the storm.
“We also raised the issue that is still pertinent that communities of color suffered in a disproportionate amount when we have forces in nature when we have storms no one can control,” Shabazz said. “But when you have communities that have more resources, that have insurance, that have people who have disposable income, they are more able to deal with and respond to it than people who are not in that condition, so that’s a disparity and that’s something that we are still working on.”
Outside of the threat of hurricanes and superstorms, an analysis from the U.S. Environmental Protection Agency from 2021 found that the most severe hazards from climate change disproportionately impact communities of color. The analysis looked at six categories of the highest impacts of climate change: air quality and health, extreme temperature and health, extreme temperature and labor, coastal flooding and traffic, coastal flooding and property and inland flooding and property. Black and African American individuals were projected to face higher impacts in all six categories compared to all other demographics.
Sandy placed an “exclamation mark” on climate change impacts
In 2021, a study co-funded by NOAA’s Climate Program Office was published in the journal Nature Communications. Researchers involved in the study confirmed that the flooding from Hurricane Sandy was exacerbated due to anthropogenic, or human-caused, sea level rise.
An estimated $8.1 billion of the damage was attributed to climate-mediated anthropogenic sea level rise, and an additional 71,000 people were affected by the flooding as a result of higher sea levels.
“You don’t have to be someone who can see into the future to see what’s happening, and we’re on the same path if we’re not able to try and prepare people. When I say prepare people, I mean financially, and with some safety nets when something like this happens,” Shabazz said. “As Bob Dylan said in his song [Subterranean Homesick Blues], ‘You don’t have to be a weatherman to know which way the wind is blowing.'”
While climate scientists and activists have long stressed the need to address the impacts of climate change, Sandy placed an exclamation mark, he added.
“I think we can see that we are looking at some very serious times, weather-wise, and I just hope that all of us are looking at solutions.”