House Passes Disaster Recovery Legislation That Would Divert Recovery Funds from Lowest-Income Households

The “Expediting Disaster Recovery Act” was passed by the U.S. House of Representatives on September 14 by a vote of 405-20. The bill will now move to the Senate. Several of the bill’s provisions would augment FEMA’s ability to assist disaster survivors and quickly provide state and local governments the funding necessary to increase capacity to administer recovery programs in the aftermath of a disaster. However, NLIHC opposed the passage of the legislation based on the inclusion of an amendment that would permit scarce recovery funds to be immediately used to pay off Small Business Administration (SBA) disaster recovery loans to disaster survivors without taking into account household income.

As a result of the amendment, the bill would:

  • Divert scarce resources away from the lowest-income disaster survivors, for whom Community Development Block Grant-Disaster Recovery (CDBG-DR) funding is one of the only recovery tools available. There are never enough CDBG-DR funds to fully address the needs of disaster survivors, and using scarce resources to pay back federal disaster loans would result in even fewer resources for the most marginalized households, who have the greatest recovery needs.
  • Eliminate HUD’s flexibility in determining the best ways to maximize the reach of CDBG-DR funds. The bill would allow any household, regardless of income level, to use CDBG-DR funds to pay off SBA loans, even when many households may not need such assistance.
  • Use federal resources inefficiently. Rather than require HUD’s federal grant program to pay off SBA federal disaster loans, Congress should reform the SBA loan program to better serve disaster survivors. SBA should consider additional measures – such as loan forgiveness and more favorable terms – to ensure greater affordability, rather than divert limited resources targeted to survivors with the lowest incomes.

Read the text of the bill at: