The Latest on Sandy Recovery: Almost 4 1/2 Years Later

neighbors’ collapsed homes at Bay Point NJ across the cove from me

 

Superstorm Sandy hit us in October 2012 – almost 4 1/2 years ago. My world has never been the same. On the day before the storm I was a ‘normal’ small business person with decent cash flow, bills paid, a little money in the bank, adequate business capital, and good credit. All of that changed for the worse. Little else has changed over these past years. We all recognize now that it was not the storm itself that had lasting impact but the man-made “disaster after the disaster” that caused the most damage. I am still fighting every day to recover. Here is where we are now:

  1. Homeowners insurance was allowed to exclude wind damage and therefore my entire claim was denied. I am gradually making repairs as cash flow permits. I still have major repairs that are not yet started.
  2. FEMA admitted fraud in the flood insurance claim settlement process when they denied almost all of my claim. Actually only a small portion of my damage was due to flood. I hired a lawyer in 2015 who reopened the claim. We reached an agreement in 2016. It still hasn’t been paid. After paying the lawyer the settlement won’t be much.
  3. Government aid programs were denied to my entire rural county on the Delaware Bay. Only the nine richer counties on the ocean side were eligible for government aid for Sandy rebuilding. I spent literally hundreds of hours over these past our years preparing applications and paying for supplemental reports with no result. At one point I even contracted with an assistant to help prepare the massive amount of documentation that the government required. I hold Governor Christie personally responsible for this indefensible position that was apparently based only on political reasoning, i.e. we do not have enough voters here.
  4. Home values have fallen rapidly. My home that was worth about $160,000 before Sandy is worth about $20,000 today.
  5. Telephone lines ware not reinstalled on my street. We switched to cellular even though the signal if not very strong here. We still have no cable or wired internet. Verizon recently made application with the state to remove the remaining telephone lines in the rest of our community.
  6. Many neighbors sold their houses to the state. I couldn’t afford to do so; the buyout offer was less than the amount I owe on the mortgage. Besides, I wouldn’t be able to find another home elsewhere for anywhere close to the amount offered for this home.
  7. One neighbor says he received a notice that the electric company will soon discontinue service. We are all working toward self-sustaining energy systems but I am nowhere close to ready for cutting off ties with the electric company.
  8. I completed a dune building project to protect my house from future storms. It took a while to get the right combination of landscape materials and grasses but I feel that we are ready for the future.
  9. The local government completed work on a seawall that protects my home from future floods. The risk of future home damage due to storms is now reduced.
  10. Flood insurance rates increased. More increases are threatened after a risk survey is completed for our area.
  11. Property taxes increased sharply. As the state buys more houses in the township, there are fewer taxpaying homeowners remaining to cover ever-increasing government costs. Sharp tax increases are expected.
  12. I am required to upgrade my septic holding tank. The engineering plan and permit application was submitted in 2013 but I am still waiting for approval by the state. I expect a decision this spring. The cost is expected to be in the range of $25,000. I do not yet have a plan to pay for the repair.
  13. The lender who provided money for emergency repairs in 2013 has sued for collection. I did my best to negotiate an extension on the repayment but ultimately cannot deter them from taking legal action at this point.
  14. My business income is significantly lower than before Sandy. There are many contributing factors but the many hours I spend dealing with government clearly cut into my income earning capacity.
  15. My legal expenses for all of these actions continue to grow.
  16. This week the news reported that the next federal budget proposed by the Trump administration includes a surcharge on flood insurance premium to pay for the Mexican wall. Our NJ politicians are outraged but they have not been effective in upholding NJ citizens’ rights against the Trump regime so far and I fear this won’t turn out any better.
  17. Government threatens to resume its building code prosecution if I do not complete Sandy repairs. It is not clear to me which branch of government will handle the prosecution. The threat letters come from the state DEP but contain listing of personnel from both state and county offices. In January 2016 the local township prosecuted me for a $500 per day violation of their Certificate of Occupancy rule. I can’t get a Certificate of Occupancy because repairs are not complete so this is a ‘Catch 22″. At one point the township solicitor even mentioned possible jail time if I continued to assertively defend against the charge. I had to hire a lawyer at additional expense. In the end we settled the case and they dropped the charge. I continue to receive letters from the state and county  threatening prosecution. I worry that I won’t be so lucky with higher-powered prosecutors.

Sandy had a previously unimaginable long-term impact on my health, business and personal relationships. I regret that I am more cynical and less trusting of individuals who say “I’m from the government. I’m here to help”.  Since Sandy I’ve lived almost 60 miles away in a family home in Pennsylvania. I hope to return someday. I will keep working, trying to resolve these obstacles and rebuild a decent place to live. I think that we will be successful if I simply do not give up. Yet the cost and financial consequences of Sandy will likely have multi-generational impact. Not only on my own financial security in retirement bit also the standards and expectations of our children.


My earlier blog posts on Sandy recovery:

Sandy flood insurance claim review won’t be an easy process

fema meeting

US Senators from New York and New Jersey have been working for many months to get FEMA to admit that its contractors ripped-off Sandy victims by low-balling flood insurance claims. Finally FEMA agreed to review all flood claims of people who felt they were short-changed by the assessors. I was among those affected.

In short, the contractor I hired to do a damage assessment said that my small elevated home was “totaled” due to shifting and sinking pilings caused by flood waters. The county board of health then later said that my above-ground septic tank below the house that worked fine before Sandy was now not repairable. Yet the flood insurance assessor concluded that damage was minimal and settled my claim for only $1,200.

Today I spoke with the claim reviewer and realized that the review process may not be an easy solution. Now that 32 months have passed much of the evidence is gone. My memory is foggy about the details in the chaos that existed in those early days after the storm. I lacked the capacity to prove my claim then; I’m in an even weaker position today. I read this passage in recent coverage of the issue “George Kasimos, founder of the Sandy watchdog group Stop FEMA Now, believes that Sandy victims are better off hiring a lawyer to represent them. “I am of the firm belief that you should not go this alone,” Kasimos said. “People who just pick up the phone and do this themselves, I don’t think they will get the maximum they are entitled to.”” I agree. I should not try to do it alone again.

Their is no doubt that my modest house is in such bad shape that it needs to be replaced with another mobile or modular unit. The only question remaining is how to pay the $55,000 (or higher) cost now that my finances have been beat up so badly by the after-effects of Sandy. Only three years ago I could have written that check from my line of credit but no longer – Sandy repairs to the business have already chewed up all of the money that I’ve been able to gather.

One thing is certain: Sandy changed my life dramatically for the worse and the effects of its impact are not over yet.

For more see:

http://tonynovak.com/cpa/sandy-3-year-anniversary-where-am-i-now/

http://www.app.com/story/news/local/ocean-county/sandy-recovery/2015/06/05/sandy-insurance-lawyer/28550575/  (My underlying belief is “fooled me once, shame on you, fool me twice, shame on me”. I think it would be unwise for me to attempt to handle this alone again).

http://www.nj.com/news/index.ssf/2015/06/fema_re-opens_claims_but_some_sandy_victims_say_no.html (interesting to note that other homeowners have the same reaction to stress that I’ve already reported to my claim reviewer)

https://www.linkedin.com/pulse/disaster-assistance-tony-novak  (my latest rant on the topic)

Rolling back the clock to reconsider a financial mistake: the Sandy recovery saga of Money Island Marina

This past weekend we rolled back our clocks by an hour.  The concept triggered me to wish I that I could roll back my own clock by two years.

On this weekend, two years ago, the residents of New Jersey’s Delaware Bay shores faced substantial damage to our homes and businesses from Sandy storm that had just left its mark as the largest natural disaster the state had ever seen. The immediate needs were all-consuming: restore utilities, clear roadways, empty the building remaining and plug the roof leaks. About half of the residents including a few of the key business owners in our small community left prior to the storm and never returned. The few who did return were determined to rebuild. The anthem phrase “Stronger than the storm” had not yet been coined by the state’s PR firm, but that was the attitude that all of us shared from the beginning of the cleanup.

I hadn’t even considered whether we might be able to reopen the Money Island Marina and its affiliated businesses in time for the next season. Yet even at that early stage I felt that the natural impulse to rebuild was also the correct business decision.  A small crew of about six residents worked 14 hours a day, 7 days a week, for month after month. We rebuild our cabins, the Money Island Marina facilities and the structures of the small businesses that utilized our small commercial seaport. Now looking back, I wonder if I exercised prudence in supporting the rebuilding of our community. Should I have known that verbal assurances were insufficient when it comes to financial commitment? If I had to do it over again, what should I have done differently?

It is clear now that my attitude and actions were influenced by a stream of statements made on television by Governor Chris Christie and other government officials over the days, weeks and months following the storm. I was engulfed in the stronger than the storm” mindset and I felt like we had government’s support. Our commercial insurance companies were initially cooperative. Claim adjusters from the various agencies spent days analyzing the damage. As the accountant and controller of the business, one of the first things I did was to authorized the use of a $40,000 cash reserve held for property taxes to be used for immediate emergency repairs. It seemed like an obvious choice at the time when we had no basic utilities and still had water coming in through broken roofs. Taxes seemed to be a secondary concern at that moment. At that time, I saw little risk in the strategy. In 30+ years of business, I have always had access to lines of credit well in excess of $40,000. It seemed highly probable that we would eventually be able to replace the tax funds from some other source. That decision turned out to be a big mistake.

Ours is simply a poor rural community. In fact Downe Township is listed as the most rural and one of the poorest areas in the state of New Jersey. Fishing, oystering, crabbing and boat repair are primary occupations of the majority of working residents of Money Island. Many of the workers here don’t have health insurance, 401(k)s, credit cards and retirement plans. One of the waterman in a nearby community recently died without ever having been issued a social security number. They basically run their businesses until they can’t do it anymore and die shortly thereafter. So when it came to funding the Sandy rebuild, financing the project fell largely on my own shoulders. I borrowed money from my retirement account, life insurance and credit cards. Altogether my personal debt totaled $160,000 to rebuild two of the cabins, the docks and the business properties. Everyone was pleased with the results and we get many compliments on the appearance of Money Island Marina today. I wound up with $140,000 personal debt remaining two years after the storm, mostly at 18% interest.

Over the next 18 months I watched every available avenue of funding close its doors on us. The commercial homeowners and flood insurance claims were denied. FEMA did a damage assessment and then advised us that Cumberland County homes and businesses were not eligible for the millions of recovery funds that were directed to the nine wealthier counties Atlantic coast counties. Some NJ government agencies gave verbal assurances that we were approved for recovery funding, but this never materialized. The U.S. Small Business Administration declined our loan request, as it did for 98% of the applicants who applied. The New Jersey Economic Development Authority denied our applications because I was not able to provide the various business owners’ financial records prior to the storm. NJ Sea Grant reversed its preliminary approval of funding for a sanitary pump out station because we now lack commercial liability insurance.

Then we were clobbered by a second wave of even larger problems that took us by complete surprise. Government turned hostile. The DEP Office of Land Use very quickly issued liens on our property in the spring of 2013 for issues that had nothing to do with Sandy issues or the recovery effort. The lien was apparently based on errant information, but that didn’t seem to matter to the state. The state and the township then blocked us from getting any building permits and then fined us $2,000 for repairs made without permits. A state inspector objected to the plans drawn by our professional civil engineer. Then a local official noticed a zoning defect that had apparently existed for decades – having nothing to do with Sandy recovery – and insisted that we address the defect though a lengthy and expensive process before we could receive any building permits. The Cumberland County Department of Health followed this antagonistic pattern a month later by evicting some key watermen who were forced to use garden hoses to supply water to their cabins on an emergency basis while water well was repaired.  The DEP then issued a false report on water quality (implying that the cause of summertime bacteria was local septic systems) and the local township solicitor followed by issuing notifications that the township now plans to foreclosure on tax liens not paid since Sandy.

The only good news is that today the Money Island Marina is stronger and looks better than ever before. Our rebuilt facilities are stronger and more resistant to extreme climate conditions. Business is slowly rebounding. It was a pretty good year for fishing and the oyster industry continues to rebound. (Crabbing was terrible, but that has nothing to do with Sandy; good and bad years are to be expected in commercial crabbing).

Now the dark clouds of financial pressure grow more threatening for the marina community each month. Despite a good track record and excellent credit history of the individual members, I have been unable to find any source of permanent funding for any of the businesses. Potential investors want to be involved but they are scared away by the hostile actions of government. I conclude that unless the marina finds a permanent source of funding soon, we will soon lose all of the properties to a tax lien foreclosure settlement. The marina would then be purchased for use as a private residence and the community would lose public access to the waterway. The commercial fisheries and oyster boats that rely on this port would lose critical docks.

In retrospect, I know that I should not have trusted the verbal assurances of government and the private insurance companies. But should have I considered the possibility that every avenue of funding would be permanently closed? Should I have factored into consideration that business funding is tougher to find than ever before in our country’s recent history? The questions weigh heavily on me and I feel responsible for the welfare of the individuals who relied on my judgment through this difficult period. We continue to work with public and private sources to seek a solution to sustain our community of Money Island as we’ve known and loved it.

Proposed Sandy tax relief for individuals and businesses

These measures are proposed June 2013 and appear to have a strong chance of passage. (My source is NJSCPA.org).

 

Individuals:

  • Waiver of Adjusted Gross Income limitation for theft/loss deduction, so individuals can deduct the cost of uninsured losses. 
     
  • Increased Charitable Contribution Limits: The legislation increases charitable deduction limits of taxpayers with respect to cash contributions to certain tax exempt organizations made for the purpose of relief efforts related to Hurricane Sandy. 
     
  • Look-back Provision for Child Tax Credit and Earned Income Tax Credit, to allow a family in the affected region to opt to use their previous year’s earnings to calculate their Child Tax Credit and Earned Income Tax Credit.
     
  • Allow taxpayers whose principal place of residence is in the Hurricane Sandy Disaster Area and who suffered a loss from Hurricane Sandy, to take distributions from retirement savings accounts with no tax penalty, provided such amount is repaid within three years.

Businesses:

  • Allowing businesses to expense the cost of disaster recovery.
     
  • Allowing businesses to use Net Operating Loss to recover past tax payments or reduce future tax payments, if they are operating with no tax liability during the prescribed period.
     
  • Increase in new markets tax credit for investments in community development entities serving Hurricane Sandy disaster areas.
     
  • Allowing public utilities to reduce their tax liability when rebuilding or replacing assets damaged in the storm.
     
  • Work Opportunity Tax Credits for displaced workers.