2,900 words, 12-minute read
Read Policy Watch’s “Unnatural disaster,” our extensive coverage of the failures of the ReBuild program.
The legislative library does not archive video, but here are some snippets from the hearing, captured by Policy Watch. We will upload the audio, which is available on CD, as soon as possible.
Q&A between committee and NCORR Chief Program Delivery Officer Ivan Duncan
Col. J. R. Sanderson, who led South Carolina’s successful disaster relief program, now senior government advisor for a SBP, a disaster management consulting firm; Q&A between the committee and Sanderson
Rep. Brenden Jones (R- Columbus, Robeson)
Sen. Brent Jackson (R-Duplin, Johnston, Sampson)
Lavonne Merritt, homeowner/hurricane survivor
Laura Hogshead, director of the NC Office of Recovery and Resiliency
T hey arrived with folded papers pulled from their pockets. Some came carrying stacks of documents neatly arranged in binder clips. Others arrived empty-handed, but hoped to leave with answers.
With scores more watching in person and online, survivors of hurricanes Matthew and Florence spoke before a state government oversight committee Wednesday about the injustices they have endured – a direct result of the bungled disaster relief program run by the NC Office of Recovery and Resiliency, also known as ReBuild NC.
Although they brought prepared statements, the survivors eventually veered off script. Years of anger and confusion, frustration and sorrow could not be contained to a single 8 1/2-by-11 sheet of paper.
“I beg each of you to think about what you allowed to go on,” Lavonne Merritt, who lives in Wendell, said. Her father applied for a new house in 2019, but died of cancer before he could return home. As his heir, Merritt is now in the disaster relief program. Construction on the house hasn’t even started.
ReBuild blamed the town of Wendell for not issuing a permit. But Merritt’s own sleuthing revealed Wendell had never been contacted by ReBuild.
“I promised my daddy I’d go back home. Are you waiting for me to die?” Merritt, who has lung cancer, said. “If I die today, I’ll die fighting.”
State House and Senate leadership convened the hurricane response and recovery subcommittee in July, after Policy Watch, and then other media outlets, investigated ReBuild NC’s chronic mismanagement of its homeowner recovery disaster relief program.
ReBuild NC has received nearly $800 million in federal funds to repair or reconstruct homes damaged by two historic storms: Hurricane Matthew in 2016 and Hurricane Florence in 2018. Yet of the 4,100 households enrolled in the program, only 789 homes have been built.
Bureaucratic snafus, arbitrary decision-making, inconsistent protocols – and even arrogance in ReBuild NC’s top leadership – have inflicted dire consequences on thousands of people. For as long as three years, survivors have been dislodged from their homes, shuffled to motels, RVs, or with family or friends, while their belongings rot in rat-infested mobile storage units. At least 10 people have died waiting to return home.
“These are families who haven’t had a meal in their own kitchen since the storm,” Sen. Brent Jackson, a Republican who represents three southeastern counties, and is a subcommittee co-chair, said. “Children who can’t remember the joy of opening Christmas presents in their home. People who lived out their final days waiting and wanting a chance to simply go home, a chance that never came.”
After five and half hours of testimony – by ReBuild NC officials, the Office of State Budget and Management, hurricane survivors, and the former head of South Carolina’s successful disaster relief program – plus voluminous public comments submitted online, most of the committee settled on one conclusion.
“ReBuild isn’t just broken,” Republican Rep. Brenden Jones, who represents Columbus and Robeson counties, which were devastated by both storms. “It’s shattered.”
N ot only was the substance of the testimony key, but also the order in which it unrolled. The subcommittee bookended the day with success stories, and to underscore ReBuild NC’s deficiencies, amassed the fiascos in between.
Richard Trumper is the director of the Office of State Budget and Management’s disaster relief program. Since August 2018, the OSBM program has been funded by $186 million in state money to serve hurricane survivors who don’t qualify for FEMA or other federal assistance through ReBuild NC.
Trumper, a former general contractor who joined OSBM in January 2019, acknowledged that even his office experienced some minor delays. Bankruptcies, title issues, property surveys, the firing of two contractors, and especially the pandemic “increased timelines for all projects,” he said.
Nonetheless, of the 1,034 households that applied, 927 were approved. And of those, 903 – 97% of families – have returned home, he said.
ReBuild NC often cites the pandemic as a reason for its delays. However, Trumper told the committee that his office avoided significant setbacks because they pre-ordered materials, ranging from mobile homes, which they stored, to sewer pipe.
“We worked with our vendors and asked what we should get in front of,” Trumper said. “We knew we couldn’t wait a long time.”
OSBM streamlined paperwork. The office added contractors, ensured they could handle the workload, and paid them no less than twice a month. OSBM enlisted volunteers, and sent paid staff to live in motels and temporary trailers to help people.
OSBM accomplished this with just 13 employees – although they all worked long hours and accumulated overtime – compared with the 300 staff at ReBuild NC.
“In our office hang the pictures of 25 of the 900 people we helped,” Trumper said.
His voice cracked as he began listing a few.
“Clara, Terry …”
He knew their names.
T he half-dozen top ReBuild NC officials in the front row represented roughly $750,000 in annual salaries. Behind them sat low-income homeowners and hurricane survivors for whom the program was the option of last resort.
Their stories, and those submitted online as public comment, were as unique as their family situations, but a common thread ran through them all. Inconsistent or nonexistent communication from case managers and construction liaisons for months at a time. Changing floor plans without explanation. Survey and construction errors. Reimbursement nightmares. Lies. The runaround.
Time, as Willie Williams explained, “we’ll never get back.”
The Williams family of Ayden, whom Policy Watch profiled in July, has been living in a one-room motel since 2019. They sent letters to 10 state agencies, including the governor and the attorney general, but said they received no response.
Rescue Construction was supposed to remodel their home, and installed the flooring and windows. Then inspectors decided it was too damaged, and needed to be torn down and rebuilt. Other than the dismantling of the facade, their home, which was livable, has lay fallow for almost three years.
“I’ve asked my wife to speak because it’s emotional for me,” Williams said.
“We’ve never felt empathy until today,” Geraldine Williams said. She self-administers kidney dialysis 10 hours each day in the motel room, a less-than-sterile environment. She caught COVID while living in the motel. “It’s all about us not being heard.”
A construction liaison hired by ReBuild NC has given Lavonne Merritt four different start dates for her home, which was to be built by Rescue Construction Solutions. Each time, “no one ever showed up,” she said. Rescue has withdrawn from her project. Merritt is waiting for a new contractor.
Merritt also was forced to choose a new floor plan because the original one wouldn’t fit on her lot. Now she’s getting a two-story house — even though she expects to need a wheelchair because of her cancer. And the blueprint showed the home has only one door. “If the house catches on fire, you better hope you can get out the front,” she said.
Marie Edwards of Kinston has also been displaced since 2019. A contractor left a hole in the roof. Rain ruined the house, which had to be gutted. Inspectors found termites. Contractors incorrectly installed the rebar for the foundation, which had to be re-poured.
ReBuild NC moved her to a Red Carpet Inn, but she and other hurricane survivors were temporarily evicted because the state didn’t pay the bill.
“It was my mama’s house,” Edwards said. “All I wanted to do is improve it. They couldn’t do me right. I want the home that I lost.”
NC Office of Recovery and Resiliency Director Laura Hogshead, who earns $145,000 a year, acknowledged she was responsible for the program’s failures – while attributing some of them to the pandemic and onerous HUD requirements.
“This recovery is not going as you or I or the families want it to go,” she said. “That’s on me. These are my staffing decisions and other decisions.”
Hogshead hired Ivan Duncan as chief program delivery officer in April 2019 to run the construction side of the homeowner recovery program. He came from New York State, where he held a similar position, and where, he told the committee, he was “very successful.”
Multiple contractors and homeowners have complained that Duncan, who earns more than $137,000 annually, is rude, dismissive and abusive – allegations borne out in notes taken at weekly contractor meetings and provided to Policy Watch.
Opacity and secrecy are rife within the agency, according to homeowners and contractors. Duncan used to force contractors to place their cell phones in a bucket during weekly meetings, apparently to avoid being recorded. The ReBuild NC website lists information only for media and communications contacts, but no one in a decision-making position.
Contractors were forbidden from speaking with hurricane survivors about their own homes. “We didn’t want them to have communications without state staff present,” Hogshead told the committee. “We couldn’t be sure what was said.”
Federally funded programs are notoriously bureaucratic. But unnecessary layers of bureaucracy have not only strangled ReBuild NC, they’ve also insulated it from thorough oversight.
Nor is ReBuild NC open to suggestions or outside help, contractors say. HORNE, a national firm that contracted with the state for case management, said in its written public comments that it “made numerous attempts to recommend best practices” to ReBuild NC, but those suggestions “were not well-received.”
“Recommendations that were not adopted are too numerous to list,” the document reads. Those included forbidding case managers to provide homeowners with meaningful, detailed updates. Nor could HORNE speak with construction managers or other state agencies.
The lack of transparency, HORNE wrote, resulted in homeowners being “placed on hold for months.” ReBuild NC has since brought case management in-house. Hogshead said she has hired a “chief of constituent services” to oversee that part of the program.
Often when a state agency or program needs money, especially related to disaster relief, it lobbies the legislature.
ReBuild NC never asked lawmakers for funding to help cover non-federal temporary relocation expenses, such as food for those living in motels without a kitchen, transportation and laundry. Such a request would have likely exposed the program to legislative scrutiny.
“You could come to the legislature and ask,” Sen. Kirk DeViere, a Cumberland County Democrat, said. “It’s about a sense of urgency. We have to take care of people. That’s the most important thing at the end of the day.”
Hogshead said within the past six months – coincidentally since the program has received media attention– she has streamlined parts of the program to get people back home more quickly. Taking a cue from OSBM, the program is now buying mobile and modular homes off the lots instead of ordering them from the manufacturer.
Homeowners will have the same case manager throughout the process. ReBuild NC is paying contractors faster. The 800 or so homeowners who owe the state money for “duplication of benefits” – insurance payouts, FEMA grants – can sign a promissory note instead of having to pay thousands of dollars upfront. Texas, which has sustained many natural disasters, already does this.
ReBuild has also opened bidding to a larger group of contractors. It now has 14 firms.
“Everything that’s going on is unacceptable,” Sen. Danny Britt of Robeson County, said. “COVID is not an excuse.”
“I wish I could have made changes sooner,” Hogshead replied.
O n the sixth page of his slide presentation, Col. J.R. Sanderson revealed a flow chart that both chilled and incensed many of those in the committee room.
“When a disaster recovery organization begins to lose public trust it’s a shaky place to be,” he said.
That’s where ReBuild NC finds itself today.
The erosion of trust leads to political pressure, like a the special government oversight hearing. And if uncorrected, the situation escalates, to HUD involvement and potentially a wholesale firing of disaster relief program staff.
Sanderson was summoned before the committee because he led South Carolina’s successful disaster relief program before becoming senior government advisor for SBP, a nonprofit that specializes in disaster management.
Disaster relief is a $70 billion industry nationwide. Seventy percent of grantees – disaster relief programs like ReBuild NC – fail, Sanderson said.
It’s his job to turn those programs around and get people back home.
Sanderson reviewed ReBuild’s Action Plan for Hurricane Matthew, and graded it as an “F.” “It doesn’t have defined outcomes” – expectations, he said. (Hogshead did not write the Action Plan, which was published in 2017 when Mike Sprayberry headed the Division of Emergency Management. ReBuild NC did not exist until late 2018. Hogshead, though, has amended the Action Plan six times, with approval from the U.S. Department of Housing and Urban Development.)
ReBuild NC has until mid-2025 to finish all the Hurricane Matthew homes and spend its $236 million in federal funding. For Hurricane Florence, which is worth $540 million, the deadline is mid-2026. At the current rate of homebuilding and repair, Sanderson said, “I don’t believe you’ll be able to close out the grant within the time period.”
That means North Carolina could owe HUD money. It could also hurt the state’s chances at more federal funds for the next natural disaster.
To get back on track, ReBuild NC needs to hire what’s known as a “prime contractor,” a company to take care of the many project details, Sanderson said.
ReBuild NC had a prime contractor, AECOM, but ended their agreement this year. Instead, ReBuild brought all of those duties in-house, layering on the bureaucracy and bloating the agency with additional staff — now at 300 people.
Take a hard line with contractors, Sanderson advised. Failing to do so means, “we pay billions to people for effort, not outcomes,” he said.
He said the program, not the contractor, should establish the construction timeline, including the date to begin, known as a Notice to Proceed. But at ReBuild NC, at least one contractor moved its NTP date to avoid penalties for being late.
Two construction professionals and three former employees of Rescue Construction Solutions, which has been awarded more than $80 million in contracts, told Policy Watch that the company often postponed its start dates. By stopping the clock, Rescue could artificially inflate its scorecard rating and thus be eligible to bid on more projects.
Rescue and ReBuild NC have denied any improprieties related to NTPs.
Once an NTP has been issued, a mobile or modular home should be finished in 37 days, Sanderson said. For repairs, it should take no more than 56 days, with 88 days for a complete reconstruction.
ReBuild NC has routinely blown past those deadlines by months, even years.
In South Carolina, Sanderson fined contractors $100 a day for being late, with a few exceptions for weather or homeowner-related delays. “Good contractors will stay and make more money,” Sanderson said. “Bad ones will self-select.”
In North Carolina, tardy contractors are subject to daily fines up to $250. Despite extensive delays, ReBuild NC has never fined a contractor, Hogshead testified.
A program should ensure five to seven houses are finished each week, Sanderson said. North Carolina has also fallen far short of those goals. Lately, ReBuild has logged only six houses per month, a steep decline from the 28 homes per month at the peak of the pandemic.
The greatest distinction between North Carolina and South Carolina is temporary housing. South Carolina did not have “Temporary Relocation Assistance.
This assistance has helped hurricane survivors in North Carolina, but because of extensive construction delays, it has been far from temporary.
Sanderson said if a home was uninhabitable, his program did find alternative housing for the residents. South Carolina spent about $600,000 on temporary housing, in part because the state built homes quickly. By comparison, ReBuild NC has spent $13 million on motels, apartments and other ostensibly temporary living arrangements, money that could have gone toward building homes.
And some people here still live in deplorable conditions. Policy Watch reported on one family whose modular is so damaged that the roof leaks, rats enter through the floor, sparks fire from the electrical sockets and mold blooms across the walls. And yet they remain in their home, with nowhere to go.
Three homeowners told Policy Watch that their contractor, Persons Construction, poorly rebuilt or repaired their houses, which have water leaks, shoddy drywall and tile.
“Based on what I’ve heard today,” ReBuild NC has “issues with waste,” Sanderson told the committee. “You’ve got nowhere to go but up.”
The subcommittee plans to reopen the public comment period to gather more information. It will also reconvene in 90 days, in late December.
“What do we tell these people about how many homes we might have available by Christmas?” Rep. Sarah Stevens, who represents three mountain counties, said.
“I know how many we want to have,” Hogshead replied. “It depends on how many the general contractors can complete.”