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Elusive 'Substantial Damage' Letter a Stumbling Block for Some Sandy Survivors

Two years after the storm, some homeowners still face consequences of problems from early in the recovery

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Toms River resident Frank Azack's home is still gutted and unlivable, more than 2 years after Sandy.

Frank Azack doesn’t bother to lock his door anymore.

“There’s nothing to take,” he chuckled. “The house is totally empty!”

Standing in the echoey, gutted remains of the tiny structure in Toms River that he and his wife used to call home, it’s easy to see what he means. The walls are gone, leaving exposed pipes and wiring; the floor is warped, and there’s still evidence of mold in some places. For Azack, it’s a depressing sight.

“The insurance company told me that I should have the floors ripped out, put new beams in, replace the plywood, clean out the crawlspace, and repair any cracks with epoxy adhesive,” he said. “Like putting a Band-Aid on it, you know? It’s not going to work.”

“Not going to work” because there’s a crack in the foundation, and the house is slowly sinking into the ground. Essentially, it’s a total loss. Azack’s insurance company finally acknowledged as much, cutting him a check in mid-2013 for $74,000 dollars, 82 percent of the structure’s value. But town officials initially said his losses were much less. It took Azack another year to get a letter from Toms River, declaring his home “substantially damaged.”

“Every time I called downtown, I’d get put to a different department, I got hung up on. ‘Call Engineering. Call Planning. Call Zoning.’ I kept getting put all over the place,” Azack recalled. “Nobody would give me a solid answer. And I just needed a letter stating how much damage I have. ‘We don’t have those letters.’ That’s what I was told.”

The reason this matters is because after Sandy, the state of New Jersey gave priority to grant applicants who submitted substantial-damage letters from their towns, showing their homes had lost more than 50 percent of their value. While Azack was calling around, trying to get that document, the grant deadline passed, so he lost out on up to $150,000 he desperately needed to rebuild his home.

For all the homeowners who’ve successfully navigated the complicated recovery process, sorting through mountains of paperwork, making countless trips backs and forth to meet with their housing advisors, and spending hours on the phone with government bureaucrats, all to earn a spot in line for aid, it’s hard to know just how many people are in situations like Azack.

Of the nearly 9,000 New Jersey residents who’ve received preliminary approval so far through the state’s largest grant program, fewer than 300 have gotten funding and completed construction on their homes. Among the multitude of reasons why Sandy aid has taken so long, for some storm victims, obtaining this elusive document from their towns was part of the problem. Looking back, critics say there’s plenty of blame to spread around, from municipal officials uncertain of their duties to the state for not clarifying grant requirements from the outset to the feds for failing to mandate training for the local floodplain managers responsible for issuing these letters. In some cases, it appears that attempts by bureaucrats to control the process and manage the flow of applications actually made things more confusing and left homeowners twisting in the wind.

The Department of Community Affairs has resolved to eventually provide funding for all grant applicants, including those who were unable to obtain substantial-damage letters, but the added delays have been difficult and stressful, and many residents will likely still fall through the cracks. Whatever lessons can be drawn from this experience, for some unfortunate homeowners, those lessons come too late to help.

New Jersey gave priority to grant applicants who submitted substantial-damage letters from their towns, showing that their homes had lost more than 50 percent of their value.

What Frank Azack didn’t realize at the time was that he had other options. The original damage assessment he got from the town in September of 2013 -- which was based on the findings of inspectors who he said never notified him to gain access to the inside of his home -- put his losses at just $38,000, below the 50 percent threshold to be considered “substantially damaged.” If he disagreed with that conclusion, town officials say he should have been aware that he could easily appeal by presenting to them the documentation from his insurance company that he had received several months earlier, noting that his losses were actually much higher.

“With all the people that came in here, it’s hard for someone to tell me they didn’t know,” said Robert Chankalian, the Toms River Engineer and Flood Plain Manager who eventually issued Azack his substantial-damage letter this past July, after Azack was able to reach someone who explained to him the process.

Chankalian thinks the town did a good job communicating to residents the various ways they could obtain substantial-damage letters or file appeals if they so desired. Besides presenting insurance documents, they also had the option of hiring their own, independent adjuster or presenting estimates from two licensed contractors (or receipts if they had already conducted the work).

“I can tell you that between our website, between newspapers, council meetings … The mayor was on the radio quite a bit. I mean, we reached out as much as we could,” he said. “And I know the message went out because thousands of people followed the process.”

From Chankalian’s standpoint, the appeals process in Azack’s case worked exactly as it should.

“If this person had done it sooner, they would have gotten [the substantial-damage letter] sooner,” he said. “I don’t think it’s fair to blame the town that it didn’t come quick enough when he didn’t ask until two years later. That’s a little disingenuous.”

But Azack is far from the only homeowner who had trouble with the process. Up and down the coast, other Jersey Shore residents say they experienced similar problems. In some cases, they encountered local floodplain managers who had never even heard of a substantial-damage letter or didn’t realize that issuing them was part of their expected duties. In other cases, officials were reluctant to assess people’s damage out of fear of incurring liability for their municipality. Even the New Jersey Department of Environmental Protection acknowledges there were issues.

“Each floodplain manager should know his or her responsibilities,” said spokesman Larry Hajna. “However we did see in communities that had not had a significant flooding event in years that the community floodplain manager often served other roles and was not up to speed on his or her responsibilities.”

Fair Share Housing Center Staff Attorney Adam Gordon says tales of homeowners getting the runaround or being sent on wild goose chases were all too common.

“We heard stories of people who were being sent around from office to office,” he said. “They were given, in some cases, a nonexistent phone number to go and find this piece of paper that wasn’t necessary under federal rules.”

To be clear, local officials always have to inspect homes and issue damage determinations after major storms as a requirement of their community’s participation in National Flood Insurance Program. But Gordon says New Jersey’s unique decision to also use the results of those inspections to prioritize funding for the state’s largest, post-Sandy grant program made the process needlessly complicated and confusing for many residents, especially compared to New York State and New York City, which didn’t make this a requirement. So when it came to distributing Sandy aid, asking homeowners to obtain these substantial-damage letters became a bureaucratic bottleneck that caused months of delays.

With the RREM application deadline coming to a close in late summer 2013, the pressure was building.

For many towns, the prospect of conducting thousands of assessments in a short amount of time proved to be unwieldy, given the scale of the disaster. Even Toms River, the second-largest municipality in Ocean County, found itself overwhelmed, with just five staffers in the engineering department to inspect some 14,000 homes that had flooded in the storm.

“Quite frankly, we just did not have the manpower,” said Chankalian, noting that he and his colleagues also had to inspect damaged municipal infrastructure like roads, bulkheads, dunes, water pipes, and the boardwalk. Everyone was working long hours, and on top of that, many township employees including Chankalian were dealing with flooding in their own homes.

Recognizing that towns were in over their heads, FEMA hired an outside contractor called Dewberry in late December, 2012 to assist. Over the next nine months, the firm would help conduct inspections in a dozen municipalities -- including Toms River -- and hand the results to local officials, who would then review them and issue the determinations (whether residents were substantially damaged or not). The following summer, the New Jersey Department of Community Affairs would also ask the three contractors managing RREM -- the state’s largest post-Sandy grant program -- to assist with over 1,000 inspections in some 90 communities.

It still took a long time for many homeowners to receive their determination letters, though, and with the RREM application deadline coming to a close in late summer 2013, the pressure was building.

“People found it impossible to get a floodplain letter,” said Fair Share attorney David Rammler. “But they still had to move into the system and apply for RREM. Once you apply for RREM, certain clocks start ticking. You get to a point where the RREM people tell you it’s ‘fish or cut bait’ on your floodplain letter, and you don’t have it.”

Meanwhile, some individuals on the inside of the process were also trying to help.

“The one piece of blue-chip evidence that an applicant could have in the dossier was a letter from their floodplain manager,” recalled “David,” an employee who worked at one of the state’s nine intake centers where storm victims could apply for long-term rebuilding aid. He’s afraid that going public could hurt his chances for future employment, so we’ve agreed not to disclose his real name or other identifying details.

“While it wasn't stressed in training, the floodplain manager letter was described in training materials as the single most efficacious, irrefutable piece of the puzzle for qualifying for the RREM grant,” he said, adding that over half of the applicants who showed up at his center complained of being unable to get a response from officials in their town.

Dave’s bosses at the recovery center were furious when he started giving out contact information for floodplain managers. He was fired not long after that.

David considered himself a problem solver. When he saw something that wasn’t working, it seemed natural to him to try to fix it. So he tracked down a list with the contacts of every floodplain manager in the state, and started giving out the phone numbers to whoever needed them. Storm victims were grateful, but his bosses at the recovery center were furious.

“I was told by management that under no circumstances was I to distribute that information,” he recalled. His bosses said they were under orders from the governor’s office not to besiege state employees with calls from residents. David tried explaining that floodplain managers work for the towns -- not the state -- and that it’s considered part of their job to issue these letters to storm victims, but he was met with deaf ears. Shortly thereafter, he was told that his services were no longer needed.

A Department of Community Affairs spokeswoman said she wouldn’t respond to accusations by former employees, “but in general,” she wrote in an email, “we work every day to improve customer service and employee training.”

A few weeks after David was let go, operators at the state’s Sandy call centers were instructed in their training materials to direct applicants who had trouble obtaining substantial-damage letters to floods.org, the website of the Association of State Floodplain Managers, a group that could help put them in touch with their local officials. They were still not allowed, however, to put callers directly in touch with the floodplain managers in their municipalities, even though the Department of Environmental Protection had access to a list of who all the floodplain managers were.

The window to apply for RREM funding ended on August first, yet many applications were still lacking accompanying substantial-damage determinations, so in late September, Department of Community Affairs Commissioner Richard Constable made personal calls to mayors of 18 municipalities with large numbers of outstanding letters to urge them to move the process along. That was followed up with additional correspondence, which included lists of specific residents who still needed the documents. After all this, applicants who were still unable to secure substantial-damage letters were placed at the back of the line for RREM funding, behind other applicants who did submit the documents.

The Christie administration announced this week that it plans to earmark an additional $225 million for the RREM program out of the third batch of federal Sandy aid that’s expected to arrive in the coming months. With that money, they expect to be able to fund all the remaining applicants on the RREM waiting list, including those who did not have substantial damage. So if everyone who applied will get the funding they need in the end, why does all this matter?

According to one advocate, ‘People ensnared in this mess did not know whether they would be able to move back home, and in some cases are still on the wait-list today when they should have qualified from day one.’

“It was by no means clear that everyone on the wait list would be funded back in 2013 and early 2014 -- in fact, the sense most people were getting was that if they were put on the bottom of the pile they wouldn’t get funded,” said Fair Share’s Adam Gordon. “The first suggestions that the State would clear the wait list did not come until April or May 2014. We’re glad to see that happening. But one of the reasons it is happening is that many people gave up on the process because it was so complicated and unclear, including some people confused by the substantial-damage requirement. It is far from clear that if the process had actually fairly reached everyone that was qualified, there would have been enough money.”

“More broadly, the combination of delay and stress -- not to mention many people simply leaving the process because of hurdles and confusion like the ones around the substantial-damage requirement -- is a big deal when you are talking about people’s homes and lives,” he added. “People ensnared in this mess did not know whether they would be able to move back home, and in some cases are still on the wait list today when they should have qualified from day one. Two years of temporary living situations and uncertainty about your family’s future is a big deal.”

One of the lessons he draws from this whole experience is that we should consider reducing bureaucracy by streamlining the inspection process.

“We waste a whole lot of time and money on doing the same thing over and over again. I wonder what the average number of inspections each person's home gets,” he said, referencing the various assessments carried out by local floodplain managers conducting substantial-damage determinations, FEMA officials calculating individual assistance, and private insurance companies. “There should be one inspection, right after the storm, of what is needed for all programs, for every home and we'd save a lot of money and time.”

That’s easier said than done, however, since each inspector is looking for a different thing. Plus, FEMA officials worry that combining inspections could slow down their ability to quickly get emergency aid into the hands of homeowners.

For John Miller, Legislative Committee Chair with the New Jersey Association for Floodplain Management, the biggest takeaway is the confusion among floodplain managers who were unclear about their responsibilities and duties.

One homeowner who found out after the deadline that he had been eligible all along said, ‘No matter how many times I tried, I kept getting a different story every time. It’s beyond frustrating!’

“When you have the magnitude of Sandy, it exposes these weaknesses, and it certainly has exposed the lack of knowledge,” he said.

Aside from earning homeowners priority access for RREM funding in this case, the larger importance of deeming a home substantially damaged is that it’s then required to be elevated to protect it from future flooding. “As the building stock is newly built, you’re getting higher standards built in,” Miller said. “But with the older building stock, the only way you’re going to capture those, and the only way you’re really going to mitigate those is by having a robust substantial-damage operation.”

He worries that if local officials don’t make these determinations everywhere they should, the state might not be much safer from the next big storm.

“If a building is substantially damaged and not mitigated to bring it up to current standards and to reduce its future vulnerability, it’s likely to be damaged again,” he added. “Probability-wise, you’re resetting the bowling pins.”

The solution, he said, is to mandate training for all floodplain managers at the state or even the federal level.

“This is a building-safety issue. This is a public-safety issue,” he said. “We require certifications and licenses for a lot of professions that oversee public safety issues. Why don’t we require it for this one?”

For Frank Azack, the Toms River homeowner, the sad twist in this story is that it turns out that under the state’s rules, having a substantial-damage letter would have given him priority for RREM funding, but it wasn’t actually a requirement like he says he was told it was in. He found out after the deadline that he still could have applied and earned a spot on the waiting list, but now he’s not eligible at all.

“I was misinformed,” he said. “And no matter how many times I tried, I kept getting a different story every time. It’s beyond frustrating!”

Critics say the state was partially at fault here for not issuing official guidelines for the RREM program -- clearly spelling out all the rules -- until October 2013, more than two months after the application deadline had already ended.

“You have all that RREM grant money,” Azack added, “and people like me who have 82 percent damage should qualify for that, but for some reason, I didn’t because somebody made a mistake somewhere. And I have to pay for that.”

He’s on disability from work, so he’s making half what he used to make, and between paying for repairs out of his own pocket plus his mortgage and insurance payments for the house he can’t even live in, he’s drained his savings account. He’s also suffered health problems caused by the stress.

It’s been 26 months since the storm, and he says that’s unacceptable.

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