‘You should resign.’ Lawmakers denounce lack of accountability in NC hurricane recovery

Thousands of Eastern North Carolinians affected by Hurricane Matthew in 2016 and Hurricane Florence in 2018 have yet to receive the help they need.

State lawmakers, during a hurricane response and recovery subcommittee meeting Wednesday, expressed dissatisfaction with the progress made in getting people into homes, or doing necessary repairs, and a deep concern for the lack of accountability and transparency with companies contracted for repairs and rebuilds.

“The lack of accountability for employees or programs, the lack of measurement, the lack of follow-through. Something is not right about this,” said Sen. Jim Perry, a Kinston Republican. “It feels untoward to me that this is being left in place and nothing is being done about it.”

“I’m beginning to wonder if there’s more to the story about why you haven’t taken any more action than you have,” Perry said.

The agency tasked with managing the hurricane response is the North Carolina Office of Recovery and Resiliency or Rebuild NC. This agency, created by Gov. Roy Cooper, manages $778 million ($236.5 million for Hurricane Matthew and $542.6 million for Hurricane Florence) in federal recovery funds awarded by the U.S Department of Housing and Urban Development (HUD).

These funds must be spent to repair and replace homes by 2025, for Matthew, and 2026, for Florence, as previously reported by The News & Observer.

Update on number of homes completed

The subcommittee, made up of 12 legislators, was created in July by Republican Senate leader Phil Berger and House Speaker Tim Moore to look into why federal disaster recovery funds for Matthew and Florence had yet to be used to help thousands of affected people in Eastern North Carolina.

Laura Hogshead, chief operating officer of the Office of Recovery and Resiliency, had presented data at a previous meeting of the committee showing that as of Sept. 14, work on just 789 out of 4,197 homes has been completed.

Today, she presented updated numbers showing that work on 889 out of 4,313 homes has been completed. This means that since the last meeting, 74 construction projects were completed, while 26 families chose a reimbursement option, Hogshead said.

“That is sustainable progress, but it’s not enough. It’s where we can build from,” Hogshead said.

During this and the last meeting, Hogshead acknowledged her agency’s and her own failings. At this meeting, N.C. Department of Public Safety Secretary Eddie Buffaloe Jr., who oversees NCORR, also took accountability for failures and said the progress made was not enough.

“I don’t believe that we’re on pace to serve our North Carolinians, to get them back into their homes. And so the pace we’re at is not acceptable,” said Buffaloe, who also said he is meeting with Hogshead every other week to work through issues.

The majority, 1,173 people, are still bottlenecked in the contracting and bidding process. Of those, 970 have been awarded to contractors and need to go through permitting and more before construction, according to Hogshead.

There are eight steps in the application process, running from intake, eligibility and personal information review, through inspections, award determination, contracting, construction and completion.

According to Hogshead, changes since the last meeting include that the agency has improved its constituent services through state case management teams. Previously, the firm Horne LLP did the case management, she said. Additionally, where before there were five general contractors, now ReBuild NC has 12, she said.

During their last meeting, lawmakers urged ReBuild to focus on recruiting more general contractors and paying them faster. According to Hogshead, since the last meeting, ReBuild no longer has to abide by a state policy that stipulates a state agency that gets an invoice can’t pay it for 30 days (which is important for small general contractors that can’t wait for payment), has reassigned more finance staff to processing ReBuild invoices and has a check-writing vendor under contract so that ReBuild can start making direct payments to contractors in January.

Lack of accountability

Multiple lawmakers expressed concern and dissatisfaction with transparency in contracts and the lack of accountability for companies that failed to meet goals.

Republican Sen. Danny Britt of Robeson County grilled Hogshead on a contract awarded to Rescue Construction Solutions of Raleigh.

Britt said about 500 families are waiting for modular homes with only Rescue assigned to those kinds of homes. The contractor won the $38.9 million modular home contract in August 2021, with little to no competition. It was the sole “responsive” bidder in the process, Hogshead said.

Seven months after this award, the contractor requested and received an 18% increase, or an additional $7 million in pay, totaling a $45.9 million payout, despite the contractor completing only 11 modular homes since August 2021, Brett said.

Britt said there were “numerous calls as to getting more access to the records and documents related to these contracts,” and questioned Hogshead whether NCORR representatives had requested the subcontracts between the modular-home general contractor and its subcontractors.

According to Hogshead, ReBuild requested those documents but those requests were not granted as the contractors are not required to provide the documents.

“We’re required to hold them (contracted companies) accountable. They are required to hold their sub-recipients accountable for subcontracts,” she said.

Britt also asked Hogshead if there was any way to seek penalties known as liquidated damages against Rescue Construction Solutions for not complying with the contract terms. Hogshead replied she was “familiar with the liquidated damages clauses in our normal contracts. This is a pilot program so I am less immediately familiar with the liquidated damages of that contract.”

“This pilot project has been in effect for over a year,” Britt said. “And you’re looking at the paperwork. And you believe you should be ultimately responsible for these folks not being in their home on Christmas Day in a few weeks.”

“The job that NCORR has done has been unacceptable,” Britt said. “You should resign from your position. But if you were in the private sector you would’ve been fired a long time ago.”

Sen. Brent Jackson, a Sampson County Republican and committee co-chair, echoed that warning, saying: “There has got to be some improvement in this program immediately, or I’m going to use what power I have to redirect the funds to someone who can get the job done.”

Sen. Steve Jarvis asked when liquidated damages could be assessed. Hogshead said they had a rigorous process to determine when a case warranted damages as opposed to there being a reasonable request for an extension, but that “now that the major impacts of COVID have eased and if there are no more extraneous excuses we are going to start assessing liquidated damages.”

To date, NCORR has not recouped any damages from general contractors, Hogshead said.

Buffaloe said that no discussion had been brought to him by Hogshead about liquidated damages but “if she brings it to me, we will have a candid conversation with our general counsel and everybody else involved.”

Regarding accountability with Rescue, Buffaloe said following questioning that, “I think we go back and take a deeper dive, sir. I’m certainly not, not willing to do that. I am willing to do that.”

“Our goal was to get families returned back into their home and not leave a stone unturned,” he said.

An area of concern for lawmakers is the 100 or so families who have been living outside of their homes, some for years, in hotels or motels via temporary relocation assistance following the loss of their homes.

Of those families, 18 have been moved home, 11 will likely go home this month and six are possible this month, Hogshead said.

Last meeting, Perry said, “we sort of closed discussion talking about over 100 families that have been out of their home for so long and we talked about getting them home by Christmas, as a goal… I was throwing a softball at that time. Those people have been out so long, I thought we’d get them home, so I’m extremely disappointed.”

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