The Small Sandy Grants To Hoboken Aren't As Suspicious As They Look

The latest scandal surrounding Gov. Chris Christie (R-N.J.) relates to Hurricane Sandy relief grants in Hoboken.

Hoboken Mayor Dawn Zimmer (D) claims Christie’s administration withheld hurricane relief grants as punishment because she didn’t back a zoning change for a landowner with ties to one of Christie’s top appointees at the Port Authority of New York and New Jersey.

Zimmer alleged, in a Saturday report from MSNBC, that in May 2013 Lieutenant Gov. Kim Guadagno (R-N.J.) told her Sandy relief grants would be held up unless Zimmer backed a zoning change sought by the Rockefeller Group — a real estate development firm that owns a 4-acre development site in Hoboken, a city of 50,000 across the Hudson river from New York City. Rockefeller is represented by David Samson, whom Christie appointed to serve as Chairman of the Port Authority.

Zimmer did not support the designation, and Hoboken’s city council did not adopt it. And when Hoboken applied for over $US100 million under the state-federal Hazard Mitigation Grant Program (HMGP) to protect the city against future flooding, it received just $US142,000.

The Christie Administration has pushed back aggressively against Zimmer’s claims. On Monday morning, Guadagno called them “offensive” and “false.” She said Zimmer “mischaracterized” their May conversation. She said “I deny any suggestion made by Mayor Zimmer that there was ever any condition on the release of Sandy funds by me.” But she hasn’t said exactly what they did discuss. Christie spokesman Colin Reed also declined, on Saturday, to provide Business Insider with more detail on what Guadagno recalls having discussed with Zimmer.

On Saturday, Reed sent around a statement with three lines of response to the accusations: (1) Zimmer made favourable public statements about Christie in August 2013, well after she alleges this threat was delivered in May 2013; (2) MSNBC has it out for Christie; and (3) Hoboken has actually done quite well, grant-wise, having “received approval for nearly $US70 million dollars worth of funding” since Hurricane Sandy.

I’ll let other people consider points (1) and (2), though I should note in the interest of disclosure that I’m a paid contributor to MSNBC. But I think I can shed some light on point (3). On one hand, the $US70 million figure is a red herring, which involves the Christie administration taking credit for a lot of funds it doesn’t control. On the other hand, Hoboken’s small grant award is a lot less strange than it sounds after you dig into the applications.

I don’t know what Guadagno said to Zimmer about the Rockefeller Site. But it does look plausible to me that Hoboken would have gotten very little of what it wanted out of HMGP even if Guadagno and Christie were not trying to retaliate against Zimmer.

(1) The grants.

Hoboken has received $US142,000 in Hazard Mitigation Grant Program (HMGP) funds, out of nearly $US300 million available to the state to distribute, or about 0.05% of program funds. It has received another $US200,000 in Community Development Block Grant-Disaster Recovery (CDBG-DR) funds for Sandy recovery, out of a pool of $US1.8 billion, or about 0.01% of program funds.

These awards look out of scale to Hoboken’s situation at first glance; the city contains about 0.6% of New Jersey’s population and is a low-lying area on the Hudson River that suffered severe flooding due to Hurricane Sandy.

But in both programs, the vast majority of grant funds were not available to city and town governments at all. The State of New Jersey provides a good overview of what sort of entities these grants were made available to; most were for homeowners and businesses.

Of the $US1.8 billion in CDBG-DR funds, about $US200 million was available for grants to governments. Only some of that $US200 million has been awarded to date. Hoboken’s $US200,000 grant (paid out of a $US5 million statewide pool for planning expenses related to hazards) came in response to the only CDBG-DR application it has filed.

“We weren’t eligible for anything else,” said Juan Melli, spokesman for Mayor Zimmer, in an email to Business Insider. Melli did complain that the Christie administration changed the rules midway for another grant pool, $US75 million for Neighbourhood and Community Revitalization, in a way that caused Hoboken to miss an opportunity to apply. Reed did not immediately respond to a request for comment about that accusation.

While Hoboken made only the one CDBG-DR application (which it received) it filed seven letters under HMGP that sought over $US100 million in funding, a large request compared to the $US300 million pool of funds — especially since only $US25 million of that pool was for direct awards to cities and towns.

$200 million under HMGP was reserved for grants to homeowners, either to buy out their low-lying homes or elevate them to reduce flood risk. Another $US53 million was allocated directly to county governments, which would have discretion to fund city-level resiliency projects and develop county-level hazard plans. $US7 million was set aside for gas stations.

That left a $US25 million pool for which cities and towns could apply (along with other local governments, including counties and water/sewer authorities) specifically for expenses related to energy resilience. From that pool Hoboken got a $US142,000 grant for backup generators. This is a lot less than the $US1.3 million Hoboken sought for this purpose, but it’s typical of the grants awarded to other municipalities. The largest grant was $US735,000 to Newark, the largest city in the state.

Hoboken’s other applications for HMGP funds included about $US30 million for pumps and sea barriers and $US60 million to buy low-lying vacant land and convert it into parkland containing flood control facilities. It’s hard to see how these would have been funded through HMGP, given the limited funds for cities and towns and the fact that the city-and-town funds were specifically earmarked for energy projects. The Christie administration emphasises that it is working to pursue additional federal funds for flood control in Hoboken through a separate pilot program.

Arguably, the structure of HMGP cuts against Hoboken’s interests. Buying out homeowners or raising their houses, purposes for which 2/3 of the HMGP funds were allocated, are strategies not very well suited to an urban jurisdiction like Hoboken. Hoboken’s grant applications note repeatedly the cost-ineffectiveness of buying out low-lying residential units in the city, due to their high value. But whether or not that was a good policy choice, it’s hard to see how it could have been a strategy for political retribution aimed specifically at Hoboken.

All of which is a long way of saying: the small grant amounts are not necessarily themselves suspicious.

(2) The “$70 million” claim.

All that said, it’s weird that the Christie administration is trying to hang its hat on “$70 million dollars worth of funding” approved for Hoboken. A majority of this amount, $US43 million, consists of National Flood Insurance Program claims that have been paid out to flood insurance policyholders in Hoboken. Flood insurance is, well, insurance; it’s supposed to pay out when you get flooded.

It’s also not responsive to Zimmer’s accusation, which is that the Christie Administration withheld funds under its control as punishment for Zimmer not pushing their favoured real estate project. NFIP funds are not under Christie’s control. Christie’s administration can help claimants who are having difficulties getting paid by NFIP (and has often discussed its efforts to do so over the past 15 months) but it can’t shut off NFIP funds.

The $US70 million figure also includes $US8.5 million in Small Business Administration loans, $US6.3 million in FEMA Individual Assistance payments, and $US2 million in Federal Transit Administration funding. Again, these are federal funding sources where he might be able to put in a good word for a favoured city, but he’d have little ability to withhold funds punitively.

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