Where Boards Can Finds Funds for Rebuilding After a Catastrophe

Assuming, first of all, that your building has no flood insurance (in which case you'd deal initially with your insurance carrier), a board can turn to free, FEMA-backed repair and reconstruction programs administered by New York City and New York State. You can turn to the Small Business Administration for low-cost loans. And you can do assessments equal to a portion of the FEMA grant money given to your individual homeowners.

Your Tax Dollars at Work

Let's take the first way. In the aftermath of  Sandy, and likely with future such disasters, FEMA contributed funds to affected New York City condo and co-op boards through the now-closed New York City Rapid Repairs, a free program to help make emergency repairs such as "restoration of heat, power and hot water, and other limited repairs to protect a home from further significant damage," according to the city website. As FEMA spokesperson Ed Conley explains, "We're not administering or managing the program — in terms of eligibility, that's being defined by the city and you would not apply directly to FEMA. But indirectly, in terms of covering costs, we're involved."

Long Island, similarly, had FEMA's Sheltering and Temporary Essential Power (STEP) pilot program.

"I applied to everything I could," says Dr. Janie Simmons, an anthropologist and AIDS researcher who serves as board president of Shore View Condominiums at Rockaway Beach in Queens. "The Rapid Repairs program, as soon as phones opened to apply, I applied." She was rewarded with teams of electricians, plumbers, etc., who were, she notes, "highly professional and really terrific. First they came in to assess what had to be done, and made it clear what they could do, which is dismantle old water heaters and boilers, take them out, and put in new ones. The cost [to the city and FEMA] is going to be about a quarter of a million dollars to help us."

A Loan Again, Naturally

Boards also can apply for low-cost Small Business Administration (SBA) loans "for up to $2 million for funds to repair damage to common areas," says Michael Peacock, an SBA spokesman. Indeed, even apartment owners can borrow up to $200,000 individually to repair or replace their damaged units. "Most [co-op and condo] associations are set up as private nonprofits, so the rates for them generally are three percent," Peacock says. "For the unit-owners, the rates are generally as low as 1.688 percent for as long as 30 years."

Not only that, but they can tide you over for the weeks or months it may take before any insurance claims get settled. "Quite often," he says, "we're able to approve an applicant for the full amount of the damage prior to their settlement with their insurance company, and then we'll accept an assignment of the insurance proceeds."

Assessing the Situation 

Finally, boards can help raise money to repair common areas through the tried-and-true method of a special assessment — though special care must be taken, since most homeowners will have been whomped with a big financial hit themselves.

"All the board can do is have an emergency special assessment, a relatively small one of $3,000 or at most $4,000," Simmons says. Mitigating this somewhat is that co-op shareholders and condo unit-owners can, in turn, apply for a low-rate SBA loan to cover the cost of the assessment, says Peacock.

And while business-interruption insurance may not exist for co-op and condo associations, the SBA does have "what we call an economic-injury disaster loan," he says, "basically for [a board] to continue to pay the normal monthly operating expenses. There are two basic loans: one is for physical damage and one is for economic injury." The $2 million cap remains the same, however, whether you take out one loan or both.

Shareholders and unit-owners can also file with their homeowners' insurance to recoup the cost of an assessment.

Ultimately, says Simmons, "The association is required to rebuild. And morally we feel we have an obligation to rebuild. And in practical terms we have to rebuild because we don't want homeowners to walk away."

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