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Sandy aid: Home buyouts? Competitions for cash? Officials think bold.

New York and New Jersey leaders are making proposals on how to use the first installment of the $51 billion aid package that Congress approved for regions affected by superstorm Sandy.

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A beachfront house damaged from superstorm Sandy is shown in the Far Rockaways, last week, in the Queens borough of New York. New York and New Jersey leaders are making proposals on how to use the first installment of the nearly $51 billion Sandy aid package that Congress approved last month.

Mark Lennihan/AP

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Federal dollars are beginning to flow to regions affected by superstorm Sandy, and proposals for spending that taxpayer-funded dough have ranged from the creative to the controversial.

Besides the necessary but dull mold remediation, roof repairs, and dredging of waterways, New York and New Jersey leaders are proposing “Race to the Top”-style competitions, aggressive tourism marketing campaigns, and contentious home buyouts, totaling in the hundreds of millions of dollars.

In play is $5.4 billion, the first installment of the nearly $51 billion Sandy aid package that Congress approved last month. Of that, New York City will receive $1.77 billion, New Jersey $1.82 billion, and New York State $1.71 billion, with the remaining funds split between Connecticut, Maryland, and Rhode Island.

The funds will be granted as Community Development Block Grants, the government’s version of a virtual blank check. Managed by the US Department of Housing and Urban Development, these grants are among the most direct ways for government to award aid money and provide local officials immense freedom and flexibility in spending funds. All plans require federal approval, with the first aid checks to arrive in late spring.

“It is up to them to decide what the most important needs are,” HUD Secretary Shaun Donovan said in a press conference Wednesday announcing the Sandy aid.

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