CHRISTMAS LETTER TELLS MAN TO RETURN $2,196 FLOOD GRANT

JACKSON -- Phillip Halter of Chaffee was looking forward to a happy holiday season, but two days before Christmas he received a disturbing letter from the State Emergency Management Agency.

A former Dutchtown resident, Halter was a victim of the 1993 flood. It destroyed his mobile home and everything in it. He sought shelter at his parents' home in Jackson for a few months, then bought a used mobile home. A $2,196 grant from SEMA furnished it.

Now SEMA says it wants the grant money back.

"I didn't even know I was going to get that grant," Halter said. "If I knew things were going to end up like this, they could have kept the money."

He vacated his old mobile home July 12, 1993. The home ended up with three feet of water inside, and the Federal Emergency Management Agency declared it a total loss. Halter filled out the emergency management paperwork to qualify for disaster loans and grants, but didn't know if he would receive any.

In November 1993, Halter received a letter from the Small Business Administration offering him a $5,000 loan. A condition of the loan was that he had to take out flood insurance. Because Halter didn't have anything to insure, and he didn't like the terms, he called the SBA and said he didn't want the loan.

A man at the SBA office told Halter a verbal rejection wasn't enough, and he would have to sign a document and mail it back. Halter did the same month he received the application.

In December 1993, he cashed some bonds to buy a used mobile home from Ferrell Mobile Homes. He put the mobile home back in Dutchtown, but when floodwaters got close the following spring, he moved his home to Chaffee.

There was no money to furnish the mobile home, so Halter said he was ecstatic to receive a grant check for $2,196 in January. It came with a letter from Gov. Mel Carnahan saying he was sorry about Halter's losses and hoped the check would help compensate for them.

Halter spent the money on bedroom furniture, two end tables and a dining room table and chairs.

It seemed everything turned out well until Halter received the Dec. 21 letter from SEMA saying he had to repay the grant money because he turned down the SBA loan Jan. 26, and accepting the loan was a condition of receiving the grant money. The letter, written by SEMA grant coordinator Ron Harrison, threatened legal action if Halter didn't respond by Tuesday.

Halter said the letter was inaccurate because he rejected the loan two months before he received the grant check.

"I can prove all this," he said. "I know how the government works, so I kept all the paperwork they sent me."

But Harrison said Tuesday Halter was missing one vital piece of paperwork -- the letter he sent to SBA in November 1993 rejecting the loan.

"It is human nature to prefer free money over money you have to pay back," Harrison said. "A lot of flood victims got a grant and then backed out of their loans."

SEMA is dealing with 17,000 disaster victims in Missouri right now due to four floods between spring 1993 and spring 1994. Most, Harrison said, understood the conditions of their SBA loans and SEMA grants and played by the rules. Others tried to get more than their share.

For example, one couple applied for and received two grants by changing the spelling in their last name. The computer missed it. Others received an extra $148 in their grants to buy flood insurance but spent the money on personal items and never purchased insurance.

Now, 1 1/2 years after the major flood of 1993, SEMA is beginning to look at the cases and is finding discrepancies. Harrison said he wants to be sure Halter isn't one of them.

"It could be that he is absolutely right," Harrison said. "He probably won't have to send the money back, but we just have to check things out with the SBA."

About 200 flood victims received letters like Halter's. If they don't respond, they will receive another registered letter requesting a response. If none is made, the case will be turned over to the state attorney general's office for prosecution.

"The whole idea is for people to call us and explain their side," Harrison said.