Paterson’s bungling of flood buyout results in $2.8 million loss in federal disaster recovery funds | Paterson Times

Paterson’s bungling of flood buyout results in $2.8 million loss in federal disaster recovery funds


After years of bungling the purchase of flood damaged properties along the Passaic River in the aftermath of hurricane Irene, the city lost $2.85 million in federal disaster recovery funds, according to public documents.

Municipal officials listed the loss in a routine measure for a vote before the City Council at a late June meeting without any explanation. It was incorrectly listed as a “Blue Acres” grant, when, in fact, it was the $4.32 million given to the city in 2012 through the Federal Emergency Management Agency (FEMA) Hazard Mitigation Grant Program for acquisition and demolition of flood-damaged properties in the Riverview section of the 1st Ward.

The grant had a $1.44 million local match, bringing the total for the flood buyouts to $5.76 million.

8 of 9 council members did not ask any questions. Councilman Flavio Rivera asked for an explanation after the measure was approved. Mayor Andre Sayegh’s administration officials could not provide an adequate explanation to Rivera for the loss.

Rivera hasn’t received an explanation as of late last week, he said.

“We have so much need in this city. We can’t lose money,” said Rivera.

Finance director Marge Cherone said the grant expired in Dec. 2017.

The city had until Mar. 2015 to spend the funds, said Michael Moriarty, federal insurance and mitigation director at FEMA Region II. However, municipal officials were granted three separate extensions, extending the deadline to Dec. 2017, he said.

Initially, the city submitted a list of 33 residential properties to acquire. 19 of 33 withdrew from the program. Many homeowners, whose mortgages were underwater, saw the prices offered as too low.

Homeowners were offered pre-flood market prices for their properties.

“They were running into problems executing all 33,” said Moriarty. “So many people dropped out of the program that they did not have enough houses to use up the funding.”

Using the extensions, municipal officials added 49 more properties to the program. 17 properties were acquired and demolished, said Moriarty.

It’s “rare” for a community to lose more than half of the total grant amount, said Moriarty. He said some communities lose 5-10-percent of their grant amount.

The grant funds were at risk from the start. Former mayor Jeffery Jones’ administration bungled the buyouts from the beginning. It received criticism for the way it selected various properties for purchase.

Jones tasked a woman, whose competence was questioned by the City Council, to run the buyout program.

“It underscores what happens when folks don’t do their jobs,” said councilman William McKoy.

Voters sent Jones and his team packing in 2014 for their failures.

After three years of little progress on the buyouts, former mayor Jose “Joey” Torres hired a consulting firm to carry out the buyouts. He also moved the program from the Community Development Department to the Economic Development Department.

“Not everybody was willing to sell,” said former economic development director Ruben Gomez.

Gomez said the program presented challenges. For example, he couldn’t purchase commercial properties that were affected by the flood. He said the city also had difficulty in getting in touch with the property owners in the area.

Letters sent out were returned. At one point, Gomez sent people out to knock on doors, he said.

“I probably did the most in 18 months,” said Gomez. Acquisition and demolition of a single property took months, he said. Controlled demolition, which involves removing hazardous materials like asbestos from the structures, took at minimum three months, he said.

Gomez said by the time the city had a handle on the program time ran out. He also pointed out there were two buyout programs.

The second one was funded using $2.1 million in Community Development Block Grant Disaster Recovery (CDBG-DR) grant the city received via the Passaic County government. He said that program had better success.

In 2017, municipal officials said 22 properties were acquired through the CDBG-DR program. The city lost $70,577 in CDBG-DR funding, according to municipal records.

Are there any chances of regaining the lost dollars?

“The grant is closed,” said Moriarty. Whatever funds were left has been returned to the federal government treasury, he said. “But there’s always available funding. We have different programs.”

Moriarty mentioned two programs that award millions every year. The Pre-Disaster Mitigation (PDM) and the Flood Mitigation Assistance (FMA) grant programs.

Neighboring Wayne, which has a long-term strategy to address flooding in its Hoffman Grove neighborhood, gets $8-9 million per year in grant funding, he said.

“They could submit grants every year,” said Moriarty. But it requires long-term focus and a strategy to mitigate flooding. He pointed out the Passaic River presents a great risk for Paterson. “They have to have the vision and ability to carry it out.”

Sayegh, his chief of staff Kathleen Long, and his economic development director Michael Powell did not respond to requests for comments for this story.

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  • Dominick Perez

    How much was lost to fraud? I'll bet the thieving morons who run that craphole made a killing.