Aid to flood victims hangs in the balance during Minnesota legislature's special session

• Disaster aid

John Palkie of Duluth tells his tale of frustration in trying to get an affordable loan to Gloria Moen, education and lending coordinator with One Roof Community Housing, at a flood assistance clinic at the Duluth Entertainment Convention Center on Thursday. Palkie described his home on Water Street in Duluth’s Fond du Lac neighborhood as “Ground Zero” during the June flood. His basement flooded and he lost many of his possessions. (Bob King / rking@duluthnews.com)

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At stake today in the special legislative session is a program that would offer forgivable, no-interest loans to flood victims willing to stay in their homes for 10 years.

But to qualify for it, homeowners first have to sign up for a Small Business Administration loan. That’s what Gayle Blatnik was doing Thursday with her mother, Marjorie Sullivan, at the Duluth Entertainment Convention Center.

When Blatnik opened the basement walkout door of her 90-year-old mother’s home the morning of June 20, water rushed out into the yard.

Flooding had destroyed Sullivan’s furnace and several other things in her Seventh Avenue East Duluth home, so Blatnik and Sullivan were at the DECC to learn what kind of loan assistance was available.

“It’s all new to me; we’ve never flooded,” Blatnik said. “We’re hoping this process works. I’ve taken time off work. We have no clue. That’s why we have these wonderful people helping us.”

Gov. Mark Dayton secured an SBA disaster declaration for Carlton, Pine and St. Louis counties and the Fond du Lac Band of Lake Superior Chippewa following June’s flood after the Federal Emergency Management Agency denied the state’s appeal for individual assistance. The loans are available to surrounding counties in Minnesota and Wisconsin affected by the same storm.

Lawmakers today could approve money for a Minnesota Housing Finance Agency loan called the Quick Start, whose principal is forgiven unless the borrower sells the house or no longer uses it as a primary residence within the 10-year loan period. The maximum amount is $30,000 per household.

“It’s just imperative, it’s critical for folks impacted by the disaster to apply for the Small Business Administration loan,” said Julie Anderson with the Minnesota Department of Public Safety. “If they get turned down, they may be eligible for state assistance.”

A third recourse is getting help through the local Long-term Recovery Committee. That could include grants from private and nonprofit funds such as one administered by the United Way of Greater Duluth.

On Thursday, flood victims met first with SBA workers, then with those who explained the Quick Start Disaster Recovery Program, and finally with Long-term Recovery volunteers.

The center at the DECC is open until Wednesday. The SBA loan deadline in Minnesota is Oct. 15. In Wisconsin, the deadline is Sept. 25.

The SBA already has made $1.46 million in loans to homeowners, renters and businesses in St. Louis, Pine and Carlton counties as a result of the June flooding, said Jack Camp, public affairs specialist for the Small Business Administration Office of Disaster Assistance.

“It’s important that people come down to see us,” he said, noting that help also can be sought on the phone or online.

The entire contents of John Palkie’s basement in the Fond du Lac neighborhood were destroyed in the June flood. The Water Street homeowner already had applied for an SBA loan but wasn’t pleased with the offer, saying he couldn’t afford the payments. Because the SBA has approved a loan, he’s not eligible for a Quick Start loan. Palkie came to the DECC on Thursday to explore his options.

“We’re falling between the cracks,” he said. “I’m not hopeful about it. But a lot of people down there lost a lot more than we did. They’ve got no first floors. It looks like a refugee camp down that whole road.”

He planned to talk to the Long-term Recovery volunteers.

It’s important for property owners to apply for an SBA loan to become eligible for a Quick Start loan, said Drew Digby, long-term recovery coordinator for Carlton County and United Way of Greater Duluth.

With the Quick Start loans, “they are trying to stabilize communities,” Digby said. “They don’t want people to pick up and leave after a disaster because that could decimate a community.”

Tags: news, flood, money, duluth, legislature, minnesota