As the one-year anniversary of superstorm Sandy nears, New York State and City have spent only a small fraction of the billions of dollars in federal grant funds Congress authorized for them early in 2013 to help local residents, businesses and communities rebuild.

The state and city each received about $1.7 billion this summer, to be administered by the U.S. Department of Housing and Urban Development through its Community Development Block Grant (CDBG) program.

But neither the state nor the city have distributed CDBG money to rebuilding-aid applicants yet, because extensive review policies designed to prevent fraud are slowing the process, city and state officials said. And city officials report the federal government shutdown has now stalled an already slow process.

The state has spent a portion of its federal grant on “things like getting the intake centers up and running and stocked with supplies and equipment,” state Housing Trust Fund treasurer Frank Markowski reported in mid-September to state housing commissioner Darryl Towns, who chairs the body responsible for distributing the funds and asked at a meeting how much aid had been paid out so far.

Continued Markowski, “However, at this date there has not been an extensive amount of funding disbursed yet.”

Just $130 million of the more than $5 billion in block grant funds designated for New York City, New York State and New Jersey have been spent, according to the most recent figures available from the federal Hurricane Sandy Rebuilding Task Force.

The federal block grants are supposed to pick up where $4 billion in Federal Emergency Management Agency (FEMA) aid released immediately in the wake of the storm left off. That aid included $1 billion in assistance to individuals whose property was uninsured, and $2 billion to local and state governments for repair work, said Seth Diamond, New York State’s director of storm recovery.

‘It’s a nightmare’

But Congress’s delay in voting on the $50.5 billion disaster aid bill, which wasn’t approved until January, has meant a late start on the many bureaucratic procedures required to get the grant money to those who need it, said Barbara Brancaccio, a spokeswoman for New York Rising, the state program managing New York’s relief efforts.

New York City’s situation is similar. The city has spent roughly $4.6 billion in emergency aid money, largely through FEMA, but has so far distributed a very small amount of the $1.77 billion it has received in Community Development Block Grants, said Peter Spencer, spokesman for the city’s Build-It-Back program, all of it on vouchers to help the displaced pay rent.

Before the city can spend the grant money, every project, including individual home repairs, must go through a series of federally required environmental, procurement and policy compliance reviews to ensure the funds are being spent properly. That review process has come to a screeching halt, because federal agency workers responsible for conducting some of the reviews are on furlough during the government shutdown, a spokesman for the mayor’s office said.

“It’s a nightmare,” said Spencer of the bureaucratic tangles involved in spending the aid.

“If you’re a person who’s been shell-shocked by this and you’ve gotten your house destroyed, first thing you have to do is try to figure out how to get yourself sane, and you’re also trying to figure out how to repair your home. You apply here, you apply to FEMA, you fill out all these forms, apply to your insurance company, you fight with them, you start filling out the same forms again and again. Everything seems the same, it’s all the same bunch of bureaucracy you’re dealing with,” he said.

“People are obviously frustrated and angry and we’re frustrated too because its a tough process,” added Spencer.

The state says it is also ready to distribute funds from its $1.7 billion federal Community Development Block Grant, $1 billion of which will go toward measures to reduce the impact of future storms and the rest to homeowners who were ineligible for FEMA aid, who will receive money to elevate their homes or repair them to meet new storm standards. But before homeowners can receive money they must file extensive records to prove the legitimacy of their expenses. For New Yorkers still traumatized by the storm, filing the paperwork required to receive aid is a complex and daunting process, Diamond acknowledged.

The slow pace of state disaster relief for affected homeowners, many of whom remain locked in disputes over flood insurance, leaves them facing difficult decisions. Still-displaced New Yorkers are unsure whether or not to spend their own money on much-needed repairs, because they say the city and state programs haven’t provided them with definitive answers on reimbursements or a timeline on repairs.

‘I’ll probably be in debt for the rest of my life’

Beth Henry completed the pre-registration process in February for state assistance to rebuild her family’s Massapequa home on the southern shore of Long Island, which — save for her daughter’s bedroom — was destroyed during the storm. Henry, 40, received $51,000 from flood insurance, and was therefore ineligible for FEMA disaster assistance. A contractor began repairing her first floor at the home, based on an $85,000 estimate, only in the past few weeks. Henry said her family debated taking out a pension loan, but instead borrowed from relatives to cover the difference.

“Now that we’re actually rebuilding, it’s the most stressful that it’s been,” Henry said. “After the initial two weeks after the storm, this is probably the worst time. We have to pay people and we don’t know where we are getting the money to pay people.”

Henry applied for New York Rising assistance in April, when the state first announced its plans for using the Community Development Block Grant. She had to wait until August to receive a case manager assigned by the state to help her with rebuilding, and a damage assessment inspector just visited her home in September, she said. She has not yet received word about whether she will get aid, or how much.

“The pace on this was ridiculously slow,” Henry said.

Still displaced, Henry and her family have split their time between her parents’ home in Massapequa and a rental in Copiague, where she shares a bedroom with her two daughters and her husband has to sleep in the den. In early September, a volunteer agency helped begin construction to rebuild her three-bedroom house, repairing walls and installing windows and doors for which her family paid out-of-pocket, before her contractor took over.

“The time from April until now, they’ll tell you that they’re doing a lot and everyone has had meetings with their case managers, and it was a waste,” she said.

Henry said she found case-manager meetings so far had been a dog-and-pony show. “They just wanted people to think it’s moving,” Henry said of the New York Rising program. “‘Oh, we’re having a meeting. It’s moving.’ But it’s not moving. I don’t know when people are going to see any money.”

Henry’s sister, 34-year-old Wantagh resident Christa Higbee, fled her home the night before the storm and returned to find four feet of water in her Cape-style house. The water destroyed everything in her first floor. She also splits time between her parents’ home and an apartment with her husband, daughters and infant son.

Her family plans to spend about $70,000 from its savings to lift her home, not including the additional $85,000 she expects in costs to repair her gutted out interior. She received about $65,000 from her insurance company, less than half of her total repair costs.

“It just throws a wrench in everything,” Higbee said. “If you don’t know whether you’re getting the money, how can you plan? I don’t have an extra $80,000 laying around. I can’t not make a decision because I’m waiting on that.”

Higbee added: “I know I’ll probably be in debt for the rest of my life.”

Federal shutdown shuts off aid

Ben Rajotte, a professor at the Touro Law Center who runs the school’s disaster relief clinic in Central Islip, N.Y., said the majority of Sandy survivors seeking assistance have been underpaid by their insurance providers and are looking for ways to fight their claims. Rajotte said most clients received less than half of what it cost to rebuild or replace their homes. If left unresolved, the underpayments make aid from grant-funded programs like New York Rising and Build it Back all the more urgent, he said.

“It’s not uncommon to see people that have a policy for $250,000 or $300,000 and their house has been destroyed and they need to completely rebuild,” Rajotte said. “They’ve received less than 50 percent of coverage of what they paid for.” Rajotte said the majority of the clinic’s cases come from senior citizens.

Complaints about the pace of aid have filtered up to the U.S. Senate, where before the government shutdown Democratic Sens. Charles Schumer and Bob Menendez called HUD Secretary Shaun Donovan to testify before the Senate Banking Committee about why money from his agency was moving slowly.

“We passed a bill back in January,” Schumer said. “But now, here we are nearly a year after superstorm Sandy, and the most constant question I get from my constituents is why they haven’t been able to get funding or reimbursement.”

The answer, in short, was a set of bureaucratic procedures intended to thwart fraud and overpayments, such as tracking homeowners’ and renters’ sources of private and government disaster relief. Donovan testified that money was “beginning to flow.”

However, federal agencies face a significant challenge in preventing waste and “duplication of benefits” — claims already covered by insurance or other forms of government relief, Donovan said.

“When you make the statement that money is beginning to flow,” Menendez said. “When people are looking at nearly a year after the storm and money is beginning to flow, it speaks to why we need to find a process, one, that is safe and secure in terms of making sure there is not fraud, but at the same token an expedited process.”

The New York City–run Build it Back program, which provides individual assistance to homeowners, is also still getting its footing. It secured $306 million of CDBG funding for homeowner aid, including support for rebuilding, buyouts and elevating structures at risk of flooding.

Build it Back spokesman Spencer says that the federal government shutdown has delayed a second installment of federal funds that will be needed to ensure that everyone who’s eligible for help under the city program will get it.

“We know exactly how far the money is going to go. We have 23,000-plus registrants now…we know we’re going to need a lot more money and we’ve asked for it and the federal government knows we’ve asked for it and we were supposed to hear back in August,” he said. “Now we can’t even hear back from them.”

Meanwhile applicants for the city’s HUD-funded aid program, like their state counterparts, continue to wait. Cheri Puma, 55, still sleeps on her sister’s couch in Staten Island. The morning after the storm, she and her son were rescued along with a neighbor’s family in a police boat. She said she applied for New York City’s Build it Back program in early August but has not yet received a caseworker. The condition of her home gets worse each day. The city’s buildings department initially “red-tagged” her home, slating it for demolition, before upgrading its condition, she said.

Puma received insurance money, but declined to disclose the amount. It wasn’t enough to rebuild her home or repair her foundation. She’s still waiting for approval from the city building department to begin rebuilding.

“It’s all about time,” Puma said of the promise of federally funded aid. “Some of us are in this horrible place. You have to pay your mortgage on a house you can’t live in and everyday you go by there and look, and the roof is leaky now and the floors are all moldy. Things are worse than ever before, and they don’t realize.”

Update, Nov. 7, 2013:

A progress report from New York State to the U.S. Department of Housing and Urban Development shows that through September 30, 2013, New York State had spent $451,000 in block grant funds: $340,938.25 on the buyout of a single property in Staten Island, $100,000 to aid a marine-equipment company in Hampton Bays, and about $10,000 for administration.