Still waiting: Sandy loans stuck in red tape

A state program designed to help small businesses rebuild after superstorm Sandy is gridlocked, leaving some Jersey Shore businesses with an uncertain future.

The Stronger NJ Business Loan program has made major strides since the Asbury Park Press reported in December that not a dime of construction loan money had been released, even though 12 loans had been approved.

Now, just eight businesses remain in the program, including 29 Beach Road LLC, a building in downtown Monmouth Beach that was flooded with 4 feet of water from the Shrewsbury River.

Owner David Ciccozzi said a week later he was acting as general contractor in a massive rebuild of the 9,100-square-foot commercial building. He can't understand why it's taking more than a year to cut him a check, and the delay is causing Ciccozzi, who has two children in college, a great deal of stress.

"I desperately need this loan," Ciccozzi said. "I'm robbing Paul to pay Peter."

Only about 40 percent of the $7.7 million awarded to small businesses looking to rebuild after Sandy has been put to work through Stronger NJ business construction loans. The remainder is locked away, the state says, until applicants can satisfy the program's burdensome federal requirements.

Three of those loans, including Ciccozzi's, haven't even closed yet.

His 11 tenants, including a cafe, a dry cleaner, a nail salon, accountants and attorneys, were able to return by April 1, just six months after the storm. Ciccozzi said this was possible because he scraped together about $250,000 by borrowing against his Toms River home and his savings and then tapping friends and family for the rest. His $500,000 flood-insurance policy paid out only $222,000, he says.

The first floor of the building had to be demolished to the concrete walls. All new plumbing, wiring, heating and air conditioning were installed.

The terms of a Stronger NJ loan are much more favorable than what one would find in the private sector: no interest for the first two years, up to 30 years to pay back the principal, and the potential for part of the loan to turn into a grant.

Ciccozzi's plan was to use his own financial wherewithal as a bridge to get his tenants back in the property, back in business and back paying rent until the state's loans came through. He received initial approval in June 2014.

A commitment letter for Ciccozzi's $163,547 construction loan should be drafted "very soon," according to the New Jersey Economic Development Authority, which runs the Stronger NJ program. Ciccozzi said he's been told that for months.

The bar to release the proceeds of a construction loan is set much higher than for working-capital loans, the other kind of Stronger NJ business loan, according to EDA spokeswoman Virginia Pellerin. Ciccozzi has received almost all of the $90,000 working-capital loan that he was approved for in August 2014.

More than $43 million in loans has been directed to small businesses through the Stronger NJ program. Nearly all of that — 93 percent — comes from working-capital loans, as the state has steered all but eight applicants away from the onerous construction loan process.

Environmental reviews, a "cost-reasonableness" review and signing off on construction plans are all steps on that path."Any change to plans can result in significant delays," she noted.

Restaurateur TIm McLoone says it took some time for all parties to get in sync, but it has been a pretty smooth process since.

His restaurant, The Rum Runner, was approved for a $4.1 million construction loan, and as of the start of the summer, the state had released about $1.25 million for McLoone to rebuild his flagship restaurant, according to state records.

He says the restaurant, which will occupy the same lot next to the Shrewsbury River, is on track to open sometime in January.

"There's a lot of oversight, and as taxpayers, we agree that's a good thing," McLoone told the Asbury Park Press last week. "From our perspective, it slows things down every once in a while, but it's 100 percent understandable.”

"Everybody was working toward the same goal," he said. "You never got the sense of anybody trying to stop you or anything like that."

Gigi Liaguno-Dorr, however, is no closer to rebuilding her restaurant, Jakeabob's in Union Beach, than she was in December. Liaguno-Dorr said she had to circle back to the state DEP to revise their designs, but now their budget needs to be reworked.

It's a critical time for Jakeabob's future — if it is to have one at all. Will the restaurant be back by Memorial Day 2016, or will it miss a fourth summer at the Bayshore?

“I'm not sure about that. That’s definitely uncertain. At this rate, absolutely not,” she said. "For so many years now, I've been hopeful. Now I'm being realistic.”

Russ Zimmer: 732-557-5748, razimmer@app.com