City can reimburse homeowners

If your home was damaged during the 2015 floods and you spent your own money to fix it up, dig out your receipts.

At Tuesday night’s San Marcos City Council meeting, the council heard — for the first time — that Community Development Block Grant-Disaster Relief (CDBG-DR) funds the city received to help with flood recovery could be used to reimburse qualifying residents for expenditures related to rebuilding or repairing homes. By the end of the meeting, City Manager Bert Lumbreras had proposed the creation of a reimbursement program and asked the council for time to “come up with an approach to come up with some funding” for the program.

The discussion emerged during a public hearing on a substantial amendment to the allocation of some of the nearly $34 million in CDBG-DR funds. The proposed reallocation would move funds between infrastructure projects. City staff said that the projects to help mitigate future flooding come at an estimated cost of almost $42 million — almost twice the estimated costs when the projects were still in the feasibility stage. The projects altogether are expected to run $19 million over budget. 

During the public hearing, several residents brought up the idea of reimbursements for residents who spent their own money to repair their homes.

“They call it flood recovery for a reason — for the victims to recover,” Lisa Marie Coppoletta said. … “Some of those people still don’t have countertops,” she said. “Most of those people don’t have an HVAC system.”

Coppoletta said that the residents of Blanco Gardens were victims of flooding caused by The Woods apartment complex, which she said was the fault of city staff.

“I still believe that you owe these victims — because they are victims — reparations, not road projects.”

Gloria Salazar said she was on the Housing Board in 2015 when the floods occurred.

“Even today, I think all of us can remember what it felt like to drive out to that area and see the destruction, and see those families suffering,” she said.

Salazar asked if the city did everything it could to help the people, when there were early rumblings of using the disaster recovery funding for infrastructure projects instead. Although the projects are necessary, she said, “is it right for the money to come from the money that was given to help our city residents? The money to help them to rebuild their home? To try to get back to their life?”

‘I was always told no’

Mayor Jane Hughson asked Housing and Community Development Manager Stacy Brown, who had given the presentation on the CDBG-DR reallocation, to address concerns that were brought up during public comments.

“It hurts me, too, that we’re not able to help more people,” Hughson said, noting that the federal funds came with federal strings.

Council member Melissa Derrick also asked Brown to address reimbursements and how much the city had begged for them, to no avail.

“We would have loved nothing better,” Derrick said.

Funds were made available for qualifying residents to use to fix up their homes, Brown said. Residents had to be in the low- to moderate income range, have owned the property during the flood and have lived there during the flood. However, city staff had said that homeowners who used their own money could not be reimbursed through the CDBG-DR funds

Brown said that there is a reimbursement program through the General Land Office— geared toward victims of Hurricane Harvey — that the city will participate in. San Marcos is set to receive $24 million in funding from the GLO.

“They have an application and criteria that we will be using,” she said.

Mayor Pro Tem Lisa Prewitt said that this was the first reimbursement program the city had heard about. Brown said that the GLO is providing reimbursements up to $50,000 for low- to moderate income residents who have their receipts and meet other criteria. 

Council member Saul Gonzales asked Brown if the council could reallocate some of the CDBG-DR funds that were set to be shifted among infrastructure projects to reimbursement efforts.

“Let’s say that we decided to allocate some of this money to those people,” Gonzales said. “... We’ve been asking for the longest time.”

Gonzales said he repeatedly asked city staff to try to find a way to reimburse residents who used their own money to fix up their homes and, “I was always told no, no, no.”

Hughson asked for clarification about which money could be used to reimburse residents and whether the CDBG-DR money the city already received could be used for that purpose.

“If we knew about it,” Brown said. “We did not know about it until recently.”

Lumbreras asked, for clarification, if council could dedicate some of the CDBG-DR funds for reimbursement instead of infrastructure, and Brown said yes.

“We just found out about this reimbursement,” Derrick said. “I’m not understanding how that happened but I don’t guess I need to. What I do need to understand is whether all of the DR funding we have received thus far, we have just found out, could have been used for reimbursement, or is it just the $24 million?”

Brown said that the city could reallocate all of the CDBG-DR funds received to reimbursement, but there would be a catch.

“All of the money we’ve currently spent on the other projects, we would have to reimburse HUD, because we haven’t finished them,” she said.

Brown explained that HUD will only pay the city for projects that have beneficiaries, such as the Blanco Gardens flood mitigation plan. All of the planned infrastructure projects are still in the design phase.

“They have not helped anybody yet,” Brown said. “Until they are completed, we are still on the hook for that money. … If we decide to reallocate all this money, then we are going to be paying back millions of dollars we have already spent on our infrastructure projects.”

Brown said that city staff did not know until last fall that funds could be used for reimbursement. The issue arose when the Housing Authority asked for reimbursement for repairs to CM Allen Homes.

“Excuse me, but I asked that question,” Gonzales said. “Since CM Allen Homes is going to get reimbursed, can our residents get reimbursed as well, and you told me no.”

“This is the first I’ve heard this,” Hughson said of the possibility of reimbursements.

Council member Ed Mihalkanin stated that council had been told that federal rules prohibited reimbursement for construction that residents paid for themselves.

“What we were told is there is no longer an unmet need because that house has been renovated,” he said, “therefore we can’t allocate this money to reimburse those people.”

City staff said that last fall, they were told they could reimburse those residents.

“Did anyone on council know that?” Hughson asked; the answers were all “no.”

An ‘important issue’

Council agreed to go into recess to give city staff a chance to go over the numbers regarding reallocation and the establishment of a reimbursement program.

“I’m going to need to see a whole other set of numbers as to what we could possibly use,” Hughson told Lumbreras. “... I don’t feel like I can make any kind of decision on this.”

More than 15 minutes later, staff was still working through possibilities, so the council voted to table the CDBG-DR item until later in the meeting. When city staff re-emerged, Lumbreras said he would like to present council with a plan.

“I can understand this is an important issue for the council,” he said, adding that he had a suggestion “to help you get to where you want to go.”

First, he clarified the CDBG-DR numbers, noting the projected $19 million deficit from the planned infrastructure projects. The suggested reallocations of $6.9 million would go toward relieving that deficit, leaving a little more than $12 million. Lumbreras said that the city could receive a Texas Water Development Board grant of about $12 million to help with those projects.

“In effect, we could make all of these projects whole,” he said.

Lumbreras noted that the use of CDBG-DR funds for a reimbursement program would require renotification and public input, and though the process would take time, it is feasible.

“What I would recommend to council is just let us do that again,” he said. “I will be happy to come back again with some options for how council could fund a reimbursement program.”

Lumbreras recommended that council take no action on the CDBG-DR reallocations Tuesday night but go back for renotification and find a way to fund reimbursements.

The CDBG-DR reallocation issue will come back to council for a vote for the second meeting in May, slated for May 21. 

Derrick expressed optimism about the possibility of reimbursing residents.

“This is some of the best news we’ve ever heard about DR funding,” she said.