New Jersey-2020-A3485-Introduced

An Act concerning efficiency and transparency in the recovery of Superstorm Sandy aid money, amending and supplementing P.L.2015, c.102, and making an appropriation.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 2 of P.L.2015, c.102 (C.52:15D-4) is amended to read as follows:

2. As used in P.L.2015, c.102 (C.52:15D-3 et seq.), as amended and supplemented:

"Agency" means the New Jersey Housing and Mortgage Finance Agency established pursuant to section 4 of P.L.1983, c.530 (C.55:14K-4).

"Applicant" means an individual or business that has applied for, is waiting for, or is receiving benefits under a recovery and rebuilding program, and shall include individuals who are awaiting the completion of a construction project using benefits received under a recovery and rebuilding program.

"Commissioner" means the Commissioner of Community Affairs.

"Department" means the Department of Community Affairs.

"Forbearance" means a period of time during which obligations for mortgage and interest payments are suspended.

"FRM" means the Fund for Restoration of Multifamily Housing.

"Qualified contractor pool" means a listing of contractors approved by the Department of Community Affairs participating in the RREM program.

"LMI" means Low-to-Moderate Income and the program for which policies and procedures have been adopted by the Department of Community Affairs.

"Mortgage" means a mortgage, trust deed, or other security in the nature of a residential mortgage.

"Notice of Over-Disbursement" means the notice provided to a Sandy-impacted homeowner pursuant to section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill).

"Over-disbursement" means any Community Development Block Grant-Disaster Recovery funds previously paid to a Sandy-impacted homeowner who is eligible for, and has not withdrawn from, the RREM or LMI program,which the department has calculated to exceed the initial determination of need, plus any demonstrated additional unmet need, but only to the extent that such assistance is a duplication of benefits received by the homeowner as prohibited pursuant to 42 U.S.C. s.5155.

"Recovery and rebuilding program" means the use of funding provided by the federal government for the RREM and LMI programs, which are intended to help individuals rebuild and recover from Superstorm Sandy, the TBRA program, which is intended to assist renters in returning to and residing in areas impacted by Superstorm Sandy, and the FRM program, which is intended to assist developers in repairing or replacing rental housing units damaged or destroyed by Superstorm Sandy.

"RREM" means Reconstruction, Rehabilitation, Elevation and Mitigation.

"Sandy-impacted homeowner" means a homeowner for whom one or both of the following are true:

(1) the homeowner received rental assistance from the Federal Emergency Management Agency as a result of damage to his or her primary residence due to Superstorm Sandy; or

(2) the homeowner has been approved for assistance through the RREM or LMI program.

"Superstorm Sandy" means the major storm that made landfall in New Jersey on October 29, 2012.

"TBRA" means Tenant-Based Rental Assistance.

(cf: P.L.2017, c.15, s.1)

2. (New Section) When the department determines that a Sandy-impacted homeowner has received an over-disbursement of RREM or LMI funds during the closeout process, the department shall provide the Sandy-impacted homeowner with a "Notice of Over-Disbursement." The notice shall be included in the Final Grant Reconciliation Document provided during closeout and detail the source, type, and amount of over-disbursement, including a line-item accounting of all Community Development Block Grant-Disaster Recovery funds disbursed to the Sandy-impacted homeowner, the program through which the funds were disbursed, and the purpose of each disbursement. The notice shall also contain an explanation of a Sandy-impacted homeowner's rights, including all rights established in P.L. , c. (C. ) (pending before the Legislature as this bill), information on how a Sandy-impacted homeowner may appeal the department's determination, information on options for the repayment of the debt, and information on any interest and penalties that may accrue if the debt is not paid within the period permitted pursuant to section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill). Within 60 days of receipt of the notice, a Sandy-impacted homeowner shall notify the department whether they will satisfy the debt in one lump sum or will request a compromise or payment plan. However, if a Sandy-impacted homeowner files an appeal of an over-disbursement determination within the time frame permitted under section 5 of P.L. , c. (C. ) (pending before the Legislature as this bill), that Sandy-impacted homeowner shall notify the department whether they will satisfy the debt in one lump sum, will request a payment plan or appeal the over-disbursement determination. The notice also shall include a debt repayment form and instructions regarding the payment of the debt. The department shall provide written notice to a Sandy-impacted homeowner that their payment has been received and has been applied to satisfy the debt.

3. (New Section) a. The department shall provide a payment plan allowing all Sandy-impacted homeowners to repay any over-disbursement debt either in lump-sum or in 60 months paying as much or as little as they choose per month over the course of the repayment period until the debt is satisfied. At the end of 60 months, any remaining debt will be transferred to the Division of Revenue and Enterprise Services in the Department of Treasury.

b. After the payment plan is determined, the department shall mail a payment plan agreement offer letter and promissory note to the Sandy-impacted homeowner. The Sandy-impacted homeowner shall return the signed and dated promissory note to the department within 30 days of receipt. If a Sandy-impacted homeowner fails to return the signed and dated promissory note, the department shall mail the Sandy-impacted homeowner a letter of intent notifying the Sandy-impacted homeowner that their case will be transferred to the Division of Revenue and Enterprise Services in the Department of the Treasury and notifying the Sandy-impacted homeowner of the consequences of a failure to pay the over-disbursement debt. The payment plan shall be offered to all Sandy-impacted homeowners who owe a debt of over-disbursement. No payment plan agreement shall require specified minimum payments.

c. The department shall post information on the payment plan on the Internet website established pursuant to section 5 of P.L.2015, c.102 (C.52:15D-7). Any information posted pursuant to this subsection shall include a link to the department's Language Access Plan for housing programs.

4. (New Section) a. If an over-disbursement is made to a Sandy-impacted low income or moderate income homeowner, as the equivalent terms are defined by the United States Department of Housing and Urban Development, and the homeowner does not have sufficient income, assets, or resources to make payments, the homeowner may request to have some or all of the over-disbursement debt compromised. When the department determines that a low-to-moderate income Sandy-impacted homeowner does not have sufficient income, assets, or resources to make payments, the over-disbursement debt, except for any portion of the debt the debtor can pay through disposable assets, shall be compromised in whole or in part. In making this determination, the department shall evaluate a low-to-moderate income Sandy-impacted homeowner's assets, income, and reasonable living expenses to determine whether the homeowner can pay the debt. Reasonable living expenses shall include, but not be limited to, average utility costs for the last twelve months, housing, food, clothing, and other expenses set forth by the Internal Revenue Service for transportation, food, clothing, and out-of-pocket care costs. The low-to-moderate income Sandy-impacted homeowner shall provide the department with a copy of his most recent federal income tax return and a summary of his monthly expenses. When determining the ability of a low-to-moderate income Sandy-impacted 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. All proposed compromises involving special factors other than age or disability shall be approved by the commissioner.

b. The department shall notify a low-to-moderate income Sandy-impacted homeowner, by mail, when the commissioner has approved a partial or full compromise of the over-disbursement debt. If a partial compromise is granted, the letter shall explain to the Sandy-impacted homeowner that a partial compromise has been approved because the Sandy-impacted homeowner has provided evidence of an inability to pay the debt in full. The department shall offer the low-to-moderate income Sandy-impacted homeowner a 60-month payment plan to repay the amount due.

c. The department shall post information on a low-to-moderate income Sandy-impacted homeowner's eligibility for a compromise of the debt, and make debt compromise applications available, on the Internet website established pursuant to section 5 of P.L.2015, c.102 (C.52:15D-7). Any information posted pursuant to this subsection shall include a link to the department's Language Access Plan for housing programs.

5. (New Section) a. 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.

b. The department shall not waive a debt under subsection a. of this section 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.

c. For the purposes of this section, "against equity and good conscience" means: (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 in accordance with section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill); and (4) any other personal circumstances exist that would make collection unconscionable.

6. (New Section) a. Any Sandy-impacted homeowner may appeal, in writing to the commissioner, the department's determination that a Sandy-impacted homeowner received an over-disbursement of RREM or LMI funds. A Sandy-impacted homeowner may also appeal, in writing to the commissioner, the department's determination that a Sandy-impacted homeowner is ineligible for a compromise or a waiver of the over-disbursement debt. Any Sandy-impacted homeowner who received an over-disbursement of RREM or LMI funds and for whom a Final Grant Reconciliation Document has been signed by the department or who has repaid an over-disbursement debt either in whole or in part, may appeal the department's determination. Appeals shall be filed with the commissioner in writing within 30 days of the receipt of notice of an over-disbursement. If the appeal has been decided in favor of the Sandy-impacted homeowner, the Sandy-impacted homeowner shall be entitled to a reimbursement of any over-disbursement payments in excess of the amount otherwise due pursuant to a payment plan agreement, compromise, or waiver of the debt pursuant to section 3 of P.L. , c. (C. ) (pending before the Legislature as this bill). Within 15 days of the filing of any appeal by a Sandy-impacted homeowner, the department, shall provide that homeowner with information about his or her appeal, including:

(1) the date on which a Sandy-impacted homeowner filed the appeal;

(2) a full explanation of the appeal process.

b. After filing an appeal of the department's determination, a Sandy-impacted homeowner shall be permitted to enter into a payment plan pursuant to section 4 of P.L. , c. (C. ) (pending before the Legislature as the bill).

c. The department shall post information on the appeals process on the Internet website established pursuant to section 5 of P.L.2015, c.102 (C.52:15D-7).

7. (New Section) Unless there is evidence of civil or criminal fraud, the department shall not initiate any new action to recover any over-disbursement more than three years after the completion of a Sandy-impacted homeowner's RREM or LMI program project.

8. There are appropriated from the General Fund to the Department of Community Affairs such amounts as the commissioner determines are necessary to pay for the reimbursement of excess over-disbursement payments pursuant to subsection a. of section 6 of P.L. , c. (C. ) (pending before the Legislature as this bill), subject to the approval of the Director of the Division of Budget and Accounting in the Department of the Treasury.

9. The commissioner shall have 180 days following enactment to promulgate rules and regulations pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), to effectuate the purposes of P.L. , c. (C. ) (pending before the Legislature as this bill).

10. This act shall take effect immediately, but shall remain inoperative until the adoption of the rules and regulations promulgated pursuant to section 9 of P.L. , c. (C. ) (pending before the Legislature as this bill).

STATEMENT

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 DCA to notify a Sandy-impacted homeowner when it determines that the homeowner has received an overpayment of RREM or LMI funds, which 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 DCA'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.

Under the bill, DCA would provide a payment plan to all Sandy-impacted homeowners to repay any over-disbursement debt either in lump-sum or in 60 months, paying as much or as little as they choose per month, over the course of the repayment period until the debt is satisfied. At the end of 60 months, any remaining debt would be transferred to the Division of Revenue and Enterprise Services in the Department of Treasury.

In cases when over-disbursement was made to a Sandy-impacted, low income or moderate income homeowner, as the equivalent terms are defined by the United States Department of Housing and Urban Development, and the homeowner does not have sufficient income, assets, or resources to make payments, the homeowner may request to have some or all of the over-disbursement debt compromised. In such a case, DCA would determine whether a low-to-moderate income Sandy-impacted homeowner does not have sufficient income, assets, or resources to make payments. If that determination is made, the over-disbursement debt, except for any portion of the debt the debtor can pay through disposable assets, would be compromised in whole or in part.

The bill provides that in making the determination, DCA would evaluate the homeowner's assets, income, and reasonable living expenses to determine whether the homeowner can pay the debt. Additionally, when determining the ability of a low-to-moderate income Sandy-impacted homeowner to repay the debt, DCA may consider the homeowner's age, health, financial hardship, and other extraordinary circumstances as determined by the Commissioner of Community Affairs.

The bill also specifies that any Sandy-impacted homeowner who received an over-disbursement of RREM or LMI funds, and for whom a Final Grant Reconciliation Document has been signed by DCA or who has repaid an over-disbursement debt either in whole or in part, may appeal the DCA's determination in writing. Finally, the bill requires that information about the appeals process be placed on DCA's Internet website.