Recovery Financial Assistance

Recovery Financial Assistance

This is intended to illustrate the differences between sufficient
financial assistance to complete a recovery and that which goes beyond those boundaries to improve or resolve pre-disaster conditions.

1) The purpose of
unmet needs  financial assistance is to assist people whose post disaster
condition does not provide for:

a) a minimal
living housing condition where it had existed as their primary residence prior
to the disaster. This may include assistance for repairs, first / last months
rent, security deposit and rebuild costs not covered by the individual’s
financial and disaster grant assistance programs. All assistance is governed by
the case work recovery plan that ensures the individual is capable of continuing
their recovery after the assistance is provided (i.e. the client will not
require further assistance to meet ongoing or continuous needs).

b) essential
needs (housing content – stove, refrigerator, bed, washer, dryer, clothing,
tables, lamps, etc.)

c) their personal
(primary income) professional tools lost in the disaster that are not part of a
company or business.

d) replacing a client’s primary residence that consisted of a travel trailer, mobile home, or
manufactured home with a stick built structure (consideration should always be
made for replacing like for like as to square footage and similar type of
structure).

2) This assistance is only provided if their personal income, assets, insurance, federal
aid, SBA aid and state assistance does not provide for their recovery needs as
mentioned above. Note: Insurance assistance, as applied to their recovery needs,
includes both the dwelling and content amounts.

These can be applied to their recovery interchangeably to affect the best advantage to the
clients (i.e. if the client wants to apply some of the content coverage to
improve or add items to their home, this is acceptable).

However, if the use of the financial asset for these applications causes them to not meet their
essential service items, donor assistance cannot be used to make up the
difference (i.e. you cannot use content reimbursement money to build upgrades or
build beyond standard housing needs and then request donated dollars to make up
the shortfall in content requirements).

Examples of the improper use of insurance or other financial resources that could affect
eligibility for donor recovery assistance are landscaping, upgrade improvements
to the materials or appliances used in the house beyond standard, leisure
equipment (i.e. Jacuzzis, gym equipment) or outbuildings.

3) The donor assistance is not a secondary or supplemental insurance program to supply
financial assistance to complete full recovery to their pre-disaster state,
rebuild homes equal to (if size of the home is greater than that needed for
living space for family size as defined in the stick home approved plans), build
larger than the original primary home or repair / rebuild secondary homes.

It is not intended to improve their financial standing (resolve pre-disaster debt,
mortgage loans, etc.) or improve their property for amenities not necessary for
living space (i.e. landscaping, Jacuzzis, fencing, etc.).

4) It can be used to cover building code upgrade requirements where there is a shortfall from
existing financial resources and where (after requesting and being denied) there
is no variance allowed by the jurisdictional authority.

The case work plan should contain the following details:

a) What is needed by the client, destroyed by the fire, to complete their recovery to a self
sufficient state. This is not necessarily what they want to be completely
recovered or replace all losses or pre-disaster debts. This includes a residence
for those having their primary homes destroyed in the fire, repairs to their
primary residence, furniture, basic appliances, bedding and utensils.

It also can include required code upgrades, individual professional tools of livelihood (not
business equipment losses). Basically, what will get them back into a safe and
sanitary living situation.

b) What resources do they have to apply to the needs described in their plan. Insurance (repair,
replacement, contents, etc.), federal grants, state grants, their own financial
resources, and income. If they have sufficient resources to meet the basic
recovery needs above, then they do not need additional recovery funds. They
still may need and should be provided referrals to other services and agencies
that can assist with their other recovery needs including mental health or
medical equipment replacement services.

c) Define the best economical method to meet their unmet recovery need if they have
insufficient resources. This may include many alternatives that are more cost
effective. The request for funding of the unmet needs must ensure it is
sustainable by the client. Putting a client into a living situation which they
cannot financially sustain is not an option. This may mean a reduction in size
of dwelling.

d) Write up the funding request with the appropriate information above.

Examples:

1) Family of 7 with severe medical / physical impairments (quadriplegic) lost primary home 1994
sq. ft. and no insurance. The cost to rebuild an ADA compliant equivalent home
was $209,853. They received grants (FEMA, State, SEMPRA, Unmet needs agencies)
totaling $96,392 leaving balance of $113,461. This case was able to qualify for
ARC financial assistance because:

a. Large family (7) that had been living together for many years prior to the disaster in order
to meet the medical support needs of their family.

b. They would require payment for care givers for the multiple medical situations, but do not
if they remain intact as a family in a single residence as before.

c. Although the cost is high, it was the result of ADA compliance requirements. Partnering
agencies contributed to the initial grant base indicating multiple concurrence
of eligibility.

d. With this assistance, they could sustain their recovery without further requests.

e. This was the most cost effective approach based on planning research for their condition and
no alternate course of recovery was available (no assets or property were
available to sell to offset the expense and other living sites posed even higher
recovery costs).

2) Family of 2, elderly, had 1921 sq. ft. primary home destroyed, $205,000 mortgage balance. Due
to insurance coverage, FEMA & State declined assistance. Replacement cost
$472,049 for 2462 sq. ft. home. Insurance settlement (dwelling and contents)
$494,515 plus 24 months ALE at $3000/month. Reasons for not qualifying for
assistance:

a. Only 2 family members rebuilding a 28% larger home foot print than originally destroyed. (28%
of $472,049 or $132,160 approximate excess rebuild costs).

b. Insurance coverage is large enough to cover full rebuild of the home and still leave
approximately $22,000 for contents (Note, the construction costs were not
supplied with the request for additional $46,981assistance. Therefore, it is not
known what was being supplied in the rebuild costs.).

c. Client declined SBA loan based on personal preferences (No cost
comparison/justification for such action was included in financial assessment.
Such action would have left them with an equivalent mortgage level upon
application of insurance funds but at SBA lower loan rate). No case work was
done to define which course of action would have been more cost effective for
their recovery plan.

d. Due to the insurance payout amount, ALE living expenses for 24 months (on top of their
income), the availability of SBA loan, and the larger rebuild footprint; the
clients had sufficient resources. This case is not underinsured but has the
resources to fully fund their recovery.

These cases are representative of the level of case work, evaluation and resource planning that
needs to occur to appropriately apply donor dollars to assist in recovery. While
our hearts want to completely assist people to replace / repair all damage and
losses, the program is intended to ensure people can get back to a sustainable
living state that allows them to move forward to affect their own recovery.

Some clients have sufficient resources and life situations that make recovery possible with no or
slight reduction in their pre-disaster living state to move forward. Many are in
circumstances far from normal before the disaster and need the greatest
assistance post incident. These donor funds are available to all, but the
conditions of need and to what extent financial assistance is necessary for the
affected families to move forward with their recovery is very different for each
case.

Therefore, we must accurately define need in order to provide the proper level of rendered
assistance.

by-

Dr. Richard J.
Hinrichs, PhD., CEM

Director – RP&A
Administrator

American Red
Cross