‘This makes my brain hurt’: Connecticut used disaster aid to rebuild million-dollar homes

Many of the owners work at investment firms and hold job titles such as chief executive officer, senior vice president and director of sales, according to their LinkedIn profiles.

William and Rebecca Lowry received $73,000 in HUD money after repairing their five-bedroom, 5,580-square-foot home in Greenwich. The house is in a private waterfront community established in the 1930s for “people of taste and refinement,” in a neighborhood where the average household income is $356,000.

The reimbursement came after two other federal agencies had already helped the Lowrys. The Small Business Administration provided a $421,300 low-interest disaster loan, and the Federal Emergency Management Agency gave them $90,000 to elevate their home above flood level, records show.

The Lowrys’ total federal aid was $584,000. The house is now valued at $3.4 million.

Attempts to reach the Lowrys by phone and mail was unsuccessful. Their lawyer, Edward Lerner, declined to comment.

“That’s disgusting,” said Yolanda Stinson, lead organizer of the Connecticut Coalition for Economic and Environmental Justice, when E&E News told her about the disaster aid. “That sounds — God. This makes my brain hurt right now.”

Twenty miles up the coast, a different story unfolded after Sandy.

In Bridgeport, a public-housing complex with 406 units was torn down after being flooded by the storm. Connecticut officials said $105 million was needed to replace the homes but spent only $10 million to rebuild one 93-unit complex in another location. The old site remains vacant — 13 acres of dirt, weeds and construction debris surrounded by a chain-link fence.

Bridgeport has the fourth-highest poverty rate in Connecticut.

“They could have used that money more constructively here than helping those rich people in Darien or Westport or Greenwich,” said Stinson, who lives in Bridgeport. “If they own that house in Darien, they didn’t need that kind of money.”

E&E News searched hundreds of property records and other documents in dozens of Connecticut towns to identify 335 homeowners who had received HUD disaster aid. The records provided unprecedented detail about the recipients, after state officials declined to provide their names and addresses to E&E News.

Among the findings from the data:

— Thirty-one of the 62 homeowners borrowed against the equity in their homes after the storm. The additional principal could be applied to repairs and paid off in monthly increments.

— Eighteen of the homeowners got low-interest disaster loans from the SBA to pay for repairs. Their average loan was $200,500, records show.

— Twenty-one sold their houses after using HUD money for repairs. The average sale price was $1.77 million.

HUD requires people who sell their homes within five years of getting disaster aid to repay the money, which is provided as a forgivable loan. The requirement aims to prevent homeowners from turning a quick profit off federal aid.

For Julianna and Matthew Spain, the five-year period on their $150,000 reimbursement expired in April 2021.

Six months later, they sold their 4,000-square-foot home in Darien for $2.575 million. They had bought the home in 2004 for $1.7 million.

The Spains declined to comment.

Jill Dell’Abate and Charles Mangold tapped multiple financial resources to repair their $1.5 million home in Old Greenwich.

They borrowed $87,300 from the SBA and refinanced their mortgage to generate $100,000 for repairs, records show. In addition, Dell’Abate said in an interview, they got $30,000 in disaster aid from FEMA, about $190,000 from flood insurance and a loan from her brother, who also used his airline miles to get the couple and their two children hotel rooms at the Stamford Marriott and the Hyatt Regency Greenwich immediately after Sandy.

Town inspectors approved the repair work in November 2013 — just over a year after Sandy hit.

Nearly two years later, in August 2015, Dell’Abate and Mangold received $92,000 from HUD.

“I was shocked — totally shocked,” Dell’Abate said.

Even with the HUD money, Dell’Abate said, she and her husband spent about $150,000 of their own money. But that spending paid off.

“The truth is, because I had to have a brand-new kitchen, the kitchen became a much nicer kitchen,” she said. “I probably made it up by increasing the house value because a lot of things were dated in the house.”

Quietly weakening regulations

The process that led to owners of pricey homes getting HUD money began with a wording change.

Buried inside a 21-page notice the department published in early 2013 explaining how Sandy aid could be spent were two crucial paragraphs. Together, they weakened regulations that had for years steered HUD disaster aid to people with financial needs or limited income.

In the roster of federal disaster programs, HUD aid is called the last line of defense.

It distributes money based on each state’s “unmet recovery need” — the cost of repairs that haven’t been done due to a lack of money from other disaster programs or insurance policies.

Although states have wide latitude in how they spend HUD aid, the projects must “primarily benefit low- and moderate-income people and areas,” Marion Mollegen McFadden, the department’s principal deputy assistant secretary for community planning and development, wrote in a recent letter to the Government Accountability Office.

She emphasized that point by underlining a word: HUD aid is “the only source of federal disaster recovery funds with this specific purpose.”

That has made HUD a lifeline for people who don’t have savings, insurance or the good credit score needed to get an SBA disaster loan. The aid is distributed through HUD’s Community Development Block Grant Program, an anti-poverty program created in 1974 to target urban decay.

“This is the only ballgame in town for households with low incomes if they’re looking to recover long-term from a disaster,” said Noah Patton, a housing policy analyst for the National Low Income Housing Coalition. “To send that money to higher income households is not what that money is for.”

HUD disaster aid has become more vital as climate change intensifies storms, floods and wildfires — and as officials recognize that other federal programs favor higher-income people and communities.

Congress has given HUD a total of $95 billion to distribute to states since the program was created in 1992, following the fury of Hurricane Andrew’s landfall in South Florida. Two-thirds of all HUD aid — $63 billion — has been approved in the past decade, including $15 billion in Sandy’s aftermath.

But as HUD disaster aid has grown, pressure has mounted to ease restrictions on how it can be spent. That pressure was acute after Sandy.

The storm’s catastrophic effects occurred in some of the nation’s wealthiest areas, including Nassau County, N.Y., Monmouth County, N.J., and Fairfield County, Conn. As a result, state officials faced pressure to extend HUD funds to wealthy communities. And many homeowners used their own money to repair their homes quickly, without waiting for federal payments.