A Reagan-era law designed to protect the environment from development is tripping up small business owners hoping to get their hands on federal loans so that they can rebuild.
The Coastal Barrier Resources Act, passed in 1982 and amended in 1990, prohibits federal money from being used to encourage building on coastal land that is environmentally sensitive. It appears to exempt land that is already been developed, but the Shore's lawmakers could not provide a definitive answer.
"I encourage New Jersey businesses and residents who experienced storm damage to apply for support from the Small Business Administration and receive a formal determination of their eligibility," said Sen. Frank Lautenberg, D-N.J. "We will continue working with federal agencies and exploring options to make sure New Jersey businesses and residents receive the federal assistance they need."
The issue has been magnified since Sandy tore through the region, forcing thousands of small business owners to apply for low-interest loans from the U.S Small Business Administration to help them rebuild and make up for their economic losses.
They have come across a not-so-fine-print letter as part of their application, advising those who are in a Coastal Barrier Resource Area that they are ineligible for federal assistance.
The letter was enough to put a scare into Manny Iosue, the owner of The Oven and Lavallette Pizza, two restaurants on a barrier island that were destroyed.
Iosue did not have flood insurance, leaving him to turn to the SBA's disaster loan program, in which the agency will lend business owners up to $2 million at an interest rate as low as 4 percent to help rebuild or to use as working capital.
When he received the application in the mail, he was nearly derailed by a page entitled "Notice To All Applicants."
"Applicants whose property has been determined by the Federal Management Agency's Flood Insurance Rate Maps (FIRM's) to be in a Coastal Barrier Resource Area (COBRA), are ineligible for SBA loan assistance due to public law," it began.
Iosue's pizzerias are among the hundreds of business that set up shop on what they call a barrier island that stretches from Bay Head to Seaside Park. The land is wedged between the Barnegat Bay and the Atlantic Ocean and suffered some of Sandy's worst devastation.
"If we can't go the the SBA, the Shore will not be rebuilt," Iosue said.
The law can be traced to the Coastal Barrier Resource Act. Championed by former U.S. Sen. John Chafee, R-R.I., it was designed to discourage development in coastal barriers along the Atlantic Ocean and Gulf Coast.
The U.S. Fish and Wildlife Service has said the law saved taxpayers $1.3 billion from 2002 to 2010 -- money it did not need to spend to rebuild in high-risk areas.
The map, however, is not clear-cut. The Federal Emergency Management Agency lists at least a portion of 33 New Jersey towns as part of the Coastal Barrier Resource System. (Lavallette, where Iosue's restaurants are, is not one of them).
But a map of the John H. Chafee Coastal Barrier Resources System provided by the Fish and Wildlife Service shows it only affects 44 miles of the New Jersey shoreline, including mostly undeveloped areas, such as the Metedeconk River Watershed, Island Beach State Park, Sandy Hook and conserved land where the Shrewsbury and Navesink rivers meet.
Small business owners for now should simply ignore the warning from the SBA, apply, and let their elected officials clarify the map, said Jackeline Mejias Fuertes, director of the New Jersey Small Business Development Council at Brookdale Community College in Middletown.
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