The day after an inquiry from his office, Courtney received a letter from HUD on Aug. 18. It explains that funds from the Small Cities Community Development Block Grant Program as well as the Home Investment Partnerships Program could be used to assist homeowners with failing foundations.
The programs, both administered by the state Department of Housing, received a total of nearly $19 million last year — $12.2 million in Small Cities CDBG funds and $6.5 million in HOME funds not otherwise allocated to larger cities.
The funds are typically used for a variety of housing and development projects throughout the state, with the distribution determined by the state Department of Housing and the Office of Policy and Management in consultation with the General Assembly.
In June some local leaders brainstormed ideas for financial relief, which HUD officials said in the August letter could be assisted by CDBG and HOME funds.
“I am committed to investigating every possible source of federal assistance that could be available to homeowners in northeastern Connecticut with crumbling foundations,” Courtney said. “As more and more residents are discovering that their homes may be impacted by this problem, we are going to need an all-hands-on-deck response in order to make these homeowners whole again.”
Kristine Foye, HUD’s deputy regional administrator, cautioned that while it is possible to use the funds for foundation replacements, there are many limits on how the funds can be used.
“The HUD-funded Small Cities CDBG Program may be used to repair an individual resident’s foundation; however, there are several limitations and requirements on these funds,” she said. “The HOME program may also be used to repair an individual’s foundation; but, this program has even more stringent terms.”
The funds are generally awarded to smaller communities throughout the state, Foye said, and the Department of Housing determines the priorities.
In order to use funds from either program, a municipality would need to operate a housing rehabilitation program, Foye said, noting that in its current consolidated plan, the Housing Department does not make HOME funds available for housing rehabilitation programs.
She added that HOME funds could assist only low- and moderate-income property owners.
The Small Cities program, Foye said, awards funds to towns for housing rehabilitation programs, but municipalities must apply for these funds through an annual competition, which the Housing Department typically conducts each spring.
“In order for individual residents to receive CDBG Small Cities funding, the appropriate municipalities would have to apply to DOH for funds to operate a housing rehabilitation program targeted at repairing these deficient foundations,” Foye said.
Likewise, Small Cities funds may be used only to assist low- and moderate-income households, address an urgent need, or address conditions of slum and blight. However, Foye noted that the “urgent need” qualifier could be used to help higher income homeowners.
According to the HUD Exchange website, each state has the opportunity to administer CDBG funds for “non-entitlement areas,” which are categorized as cities with populations of less than 50,000 and counties with populations of less than 200,000.
The potential for using federal grant funds is Courtney’s latest effort to provide financial assistance to property owners.
In August, he was joined by U.S. Sens. Richard Blumenthal and Christopher S. Murphy and U.S. Rep. John B. Larson, D-1st District, in pressuring the state’s insurance companies to participate in a relief program that could provide $52 million in assistance.
As of today, the Department of Consumer Protection has received 330 formal complaints of crumbling foundations from residents in 23 towns, according to DCP spokeswoman Leslie O’Brien.
However, some estimates show that there could be thousands of victims, many of whom have said they are hesitant to come forward because of fear of further financial implications, including higher insurance premiums and lower property values.
Gov. Dannel P. Malloy continues to urge those affected, or potentially affected, to file a formal complaint with DCP. That would provide the state with the scope of the problem and could lead to new opportunities for financial relief, he said.