[Second Reprint]

ASSEMBLY, No. 4784


with committee amendments






      The Senate Budget and Appropriations Committee reports favorably Assembly Bill No. 4784 (2R), with committee amendments.

      As amended, this bill establishes specific procedures to be used by the Department of Community Affairs (DCA) to recover overpayments of Community Disaster Block Grant-Disaster Recovery (CDBG-DR) funds awarded through the Reconstruction, Rehabilitation, Elevation and Mitigation Program (RREM) and the Low-to-Moderate Income Homeowner Rebuilding Program (LMI).

      The bill requires the DCA to notify a Sandy-impacted homeowner when it determines that the homeowner has received an overpayment of RREM or LMI funds that must be repaid to the State.  The notice must provide information about the type of debt owed, an accounting of all funds disbursed to the homeowner, an explanation of the homeowner’s rights; information on how the homeowner may appeal the department’s determination; information on options for the repayment of debt; and information on any interest and penalties that may accrue if the debt is not paid within the period permitted by the bill.

      The homeowner is permitted to pay the debt in full in one lump sum. If there are insufficient assets to do so, the homeowner may apply for a repayment plan.  Eligibility for a repayment plan is based on a DCA review of the homeowner’s assets, income, and reasonable living expenses to determine whether the homeowner can pay a portion of the debt with an initial payment and the remainder thereof in regular installments.  The bill requires the DCA to establish two payment plans that allow for payment over a period of 36 months to 60 months, depending on the homeowner’s net disposable income.  The maximum payment under a payment plan cannot be greater than one-half of one percent of the homeowner’s monthly income, or six percent of the homeowner’s annual income, whichever is less.

      If the homeowner does not have sufficient income, assets, or resources to make payments, the debt, except for any portion that the homeowner can pay through disposable assets, will be compromised and considered paid in full.  When determining the ability of the homeowner to repay the debt, the department may consider the homeowner’s age, health, financial hardship, and other extraordinary circumstances as determined by the commissioner.

      Additionally, the bill, as amended, provides that the department is authorized to waive the debt if: (1) the RREM or LMI funds were distributed based on an error made by the department; (2) there was no fault on the part of the debtor; and (3) the collection of the debt would be against equity and good conscience.

      The bill defines “against equity and good conscience” to mean: (1) collection of the debt would cause serious financial hardship; (2) the debtor has spent the over-disbursement for the reason it was provided or other disaster related needs and has no present ability to reclaim the funds; (3) more than 36 months elapsed between the time assistance was awarded and the date “Notice of Over-Disbursement” was provided by the department; and (4) any other personal circumstances exist that would make collection unconscionable.

      Under the provisions of the amended bill, the department is not authorized to wave a debt if the debt involves fraud, the presentation of a false claim, or misrepresentation by the debtor or any party having an interest in the claim.

      The bill permits the homeowner to appeal, in writing, to the commissioner, a DCA determination that the homeowner received an over-disbursement of RREM or LMI funds.  The homeowner may also appeal a DCA determination that the homeowner is ineligible for either a payment plan or a compromise of the debt.  Appeals are to be filed with the commissioner within 30 days of the receipt of notice of an over-disbursement or the denial of a payment plan or compromise.  All appeals are to be decided within 30 days of their submission to the commissioner’s office.  The bill requires the State to refund any over-disbursement payments made by the homeowner that are in excess of the amount due under a payment plan agreement and appropriates General Fund monies to the DCA for that purpose.

      As amended and reported, this bill is identical to Senate Bill No. 3149 (1R), as also amended and reported by the committee.



      The amendments provide that such amounts as are determined by the Commissioner of Community Affairs will be appropriated from the General Fund to DCA to pay for the reimbursement of excess over-disbursement payments.  Additionally, the amendments revise the title of the bill to reflect that the bill makes an appropriation.



      This bill will have an indeterminate impact on State finances.  To the extent that the DCA has to refund over-disbursement payments in excess of the amount owed by a Sandy-impacted homeowner, the State will incur additional costs.  The State may incur additional administrative costs associated with implementation of the bill.  The full amount of federal disaster assistance that must be repaid will not be known until all RREM and LMI Program participants have completed the program closeout phase.  As of July 2017, the State has requested repayments totaling $7.3 million, of that amount, $2.3 million has been repaid and $4.9 million remains outstanding.

      During testimony before the Assembly Budget Committee in April 26, 2017, the Commissioner of Community Affairs noted that where possible, the DCA is working with homeowners to review bills for expenses incurred during the home rebuilding process to determine if those charges can be reclassified in order to avoid an over-disbursement of federal disaster assistance (technically known as a “duplication of benefits”).  The commissioner stated that the department had identified $1 million in charges that could be reclassified and not repaid to the federal government.