Why New Jersey Got Billions Less Than New York in FEMA Disaster Aid After Sandy

Scott Gurian | July 9, 2015 | Sandy
Critics say New Jersey could have been more proactive, fighting harder for more money

An audio version of this story is available online at WNYC Public Radio, a content partner of NJ Spotlight.

In the two-and-a-half years since Superstorm Sandy, while the Garden State has struggled to recover, many people have puzzled over the question of why New Jersey has received substantially less federal aid than New York, even though both states suffered roughly the same amount of damage — close to $37 billion.

Much of the focus has been on Community Development Block Grants, where New Jersey got about half as much as New York state and New York City combined. But another metric in which the difference between the two states is most glaring is FEMA Public Assistance grants, which are used to help the state and local municipalities conduct both emergency and long-term infrastructure repairs after a disaster. To date, New Jersey has received just $1.7 billion in FEMA public assistance, compared with $7.7 billion for its neighbor across the Hudson.

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Why such a big gap? The state office of Recovery and Rebuilding referred inquiries to the governor’s press office, who didn’t respond to a list of detailed questions. After speaking to a number of other officials in both New Jersey and New York, however, NJ Spotlight has been able to piece together a series of explanations.

To a certain extent, the disparity between the two states appears to be justified; both suffered enormous losses, but their damages were unique and called for different types of federal help. New York faced a multitude of expensive infrastructure repairs, while New Jersey’s damage had a greater impact on individual homeowners, who wouldn’t have been eligible for public assistance. Still, some critics speculate that New Jersey probably could have gotten more than it did from FEMA if it had handled the recovery differently, putting greater numbers of qualified and experienced people in charge of the process and being more proactive in its efforts.

“New York is very astute,” one source interviewed for this story said. “They’ve got it down. I’m not so sure that our friends in New Jersey have.”

In order to receive FEMA public assistance dollars, a recipient would normally be required to spend a quarter of the total project cost upfront, in return for a 75 percent match from the federal government, but lawmakers successfully lobbied FEMA after Sandy so New Jersey, New York and other applicants only had to contribute one-tenth of the cost out of their own pockets for eligible projects.

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Still, in the midst of a budget crisis, Trenton didn’t exactly have much spare cash lying around, so to come up with the money, it did what other states have done and earmarked a portion of the $4.2 billion it received in Sandy Community Development Block Grants to cover its local-match obligations. Although CDBG funds originate from another federal source — the U.S. Department of Housing and Urban Development — states realized after Hurricane Katrina that they could employ creative bookkeeping to count a portion of HUD money as their “local” contribution for the purposes of FEMA and other federal agencies, and they’ve been doing it ever since.

New Jersey initially allocated $275 million for this purpose, but as the recovery went on, the needs of displaced homeowners and renters continued to grow, with more than 40,000 primary homes and 16,000 rental units having sustained “severe” or “major” damage. Thus, the fund was raided several times to provide more money for the RREM grant program, as well as a new program for low- and moderate-income homeowners.

“Given the sheer breadth of housing damage and the number of homes that are required to be elevated, the state recognized that the costs of repairing owners’ primary residences and rental units would be massive,” said Department of Community Affairs spokeswoman Lisa Ryan. “Also, the state observed in the months after Sandy that many households displaced by the storm were seeking intermediate or long-term rental housing at a time when rental-housing stock was significantly depleted because of storm damage. Understanding that this confluence of events threatened to drive up rental prices for Sandy-impacted families, including those of limited financial means and those with special needs, the state decided to direct most CDBG Disaster Recovery funding to housing, since shelter is one of the basic human needs.”

That meant that when all was said and done, just $225 million was left to meet the state’s local match obligations with FEMA, as well as cost shares for water and wastewater system assistance through the EPA and transportation assistance through the Federal Highway Administration.

By comparison, New York State allocated $508 million out of the $4.4 billion it received, and New York City — which got $4.2 billion in HUD funding — chose to earmark over $1 billion, a quarter of its total amount, to cover its local-match obligations. With less demand for its housing program, however, the city had the liberty to do that, explained Amy Spitalnick, a spokeswoman for the Mayor’s Office of Management and Budget.

“I also think the higher local match in New York City is a logical result of the very significant storm damage to our urban infrastructure, such as schools, public hospitals, roads and bridges, and wastewater treatment plants. While our population [in the affected areas] might be slightly lower than New Jersey’s, it’s much more concentrated, which means more of our infrastructure felt the full brunt of the storm,” she said, adding that repairs to flooded tunnels and subway lines are more costly.

“New Jersey primarily had beaches and old towns with little value,” agreed another official. “I know they’re iconic towns, but the infrastructure is old. So you lose a couple of piers, you lose some beach … For what it cost to fix NYU [Langone Medical Center], you probably could have rebuilt half the coastline of New Jersey,” he said.

While New Jersey, New York City, and upstate New York (including Long Island) each received separate batches of CDBG funding and made their own choices about how much of that money to spend on local matches, FEMA’s decision to obligate $7.7 billion in public assistance for New York was based on the damages incurred and local matches paid by the city and the rest of the state combined. So infrastructure damage to the city alone could have easily had a significant impact on the amount of overall funding the state received, even if other areas weren’t hit as badly. In addition, New York officials note that damage from two other disasters that impacted their state — Hurricanes Irene and Lee — were also incorporated into FEMA’s funding equation.

It’s worth noting as well that New York City and New York State’s combined CDBG funding totaled more than twice what New Jersey received. So it was much easier for them to cover their housing needs and still have a sizable chunk of money left over to spend on local matches to access the FEMA funding to begin with.

But with just $225 million to spend, New Jersey was more constrained in the number and size of FEMA projects that it could request.

[related]The state’s unwillingness — or inability — to chip in more money for this purpose made the news in April of last year, when NJ.com reported on internal emails from the federal Environmental Protection Agency regarding Morris County’s Fenimore landfill, which was allegedly contaminated with Sandy-related waste. Senior EPA officials had determined that the site couldn’t be treated or monitored under the Superfund, but they suggested that the potential Sandy connection meant the state could apply for FEMA aid, and they offered to support Trenton if it took that path. When the state declined, EPA staffers were incredulous.

“What is up with NJ?” wrote one official. “I would love to know why they made this decision.”

“The state just needs to make the request,” another wrote. “Once again they have been reluctant to do so because of the cost-share issue.”

Beyond not chipping in enough of its own money to tap into federal funds, critics say New Jersey wasn’t proactive enough in its efforts to secure FEMA dollars, and they point to New York’s approach as a stark contrast.

“What New York has done a very good job with — and I can’t speak for other states — is we have been actively, and very aggressively, working to try to make sure that we account for every dollar that we are eligible for under the FEMA public assistance program,” said Kris van Orsdel, the director of Infrastructure and local government programs in the New York Governor’s Office of Storm Recovery. To do that, he said, the state hired a firm called Adjusters International, which deployed hundreds of field representatives to help local municipalities make sure FEMA was taking note of all their damages when preparing public-assistance funding requests.

He explained a hypothetical example of a flooded school.

“Our Homeland Security agency working with A.I. would make sure that we’re not leaving out, for instance, the chalkboard. We would say, ‘Well, the chalkboard’s damaged. You don’t have “chalkboard” written into that project worksheet.’ The first inspector may not have written that down. We would actually go to FEMA on behalf of the school board and working with them say, ‘Add the chalkboard in.’ That adds more money.”

“One of the things that we always tell people is there’s nothing wrong with asking and having somebody say no,” he said. “If you don’t ask for the funds, then you leave it on the table; it’s better to get a ‘no’ than to not ask.”

New Jersey hired a similar firm called Witt O’Brien’s to assist local governments in preparing their applications, and some people like Atlantic County’s Deputy Director of Emergency Management Ed Conover were happy with how things turned out.

“The experience may vary county to county, but we had some really good people working here from Witt O’Brien’s,” he said. “Looking at some of our projects, they were able to argue for us for things we submitted to FEMA that were deemed ineligible costs. They were able to help us argue with the proper documentation that these were actually eligible costs. All in all, it was a positive experience.”
But others speculated that with Witt providing just a few dozen boots on the ground compared with the hundreds of employees Adjusters International deployed in New York, the company didn’t have the manpower to do as thorough of a job as it otherwise could have done.

The New Jersey Office of Emergency Management sent a statement saying they’re confident that Witt provided the appropriate level of staffing “to address the evolving needs the State experienced during the response phase of the disaster as well as the recovery phase we continue to work in.” While staff have been restructured and reduced over time, they said, the state has done all it could to get the FEMA funding to which it’s entitled.

Not everyone agrees, though.

“Is it realistic to think they could have gotten billions more from FEMA? I would say the answer is ‘no.’ There’s just not that much damage. But tens of millions? Absolutely. That’s a no-brainer to me,” said one insider with knowledge of how both states have dealt with the process (he spoke on the condition of anonymity due to his ongoing involvement with the recovery).

When it comes down to it, he explained, the two states had very different mindsets.

“New York State definitely takes an advocacy position. They fought for everything and put FEMA against the wall,” he said. “I’m not saying that the Christie administration didn’t do that, ‘cause they genuinely seem to want to go to bat for the people.” But he said he worried at times that they were in over their heads.

By the time Sandy hit, New York was already well-versed in dealing with recent disasters such as Hurricanes Irene and Lee, while New Jersey had largely been spared.

“The instances of major damage to New Jersey have been few,” he said, adding that while he doesn’t necessarily blame state officials for having less experience, he did feel they could have done more to consult outside experts and even more importantly, recognize their own limitations.

For example, he said it makes little sense for the Office of Emergency Management to operate under the auspices of the Homeland Security Branch of the New Jersey State Police.

“There’s an awful lot of pride in the New Jersey State Police and their ability to handle these types of situations. There’s no one better than the police to respond to disaster. That’s what they do best!” he explained. “But their job is more about law enforcement than it is understanding public-assistance policy and a long-term financial recovery.”
He said a better model would be for the state to follow the lead of New York and create a Public Assistance Liaison Program, hiring retired engineers and other state employees familiar with public-works projects to provide technical expertise to help with the disaster recovery.

In response, an agency spokeswoman sent a statement saying that NJOEM has a long history of responding to disasters as well as participating in the long-term recovery phase.

“The State Office of Emergency Management is staffed by experienced full-time civilian and enlisted emergency management professionals who have trained and exercised in all phases of the disaster cycle,” she said, adding that New York and New Jersey are two different states with different needs, so it’s not fair to compare them.

It’s been nearly three years since Sandy, and while most of the major infrastructure damage has now been repaired, our source said he’s still concerned that the state is too eager to wrap things up when it should instead be continuing to fight for more funding.

“New Jersey is hell-bent on closing out the disaster,” he said. “‘Get out there, close out those grants so we get our money and off we go.’ The game’s over with. We’re on to the next disaster if it should come.”