March 29, 2023

“Things can be bad, and getting better,” wrote Hans Rosling. The Swedish physician became a TED Talks staple with his vivid presentations of how the world is not as bad as we think, even if it is not as good as we would like.

Something of that came through in the March 29 hearing of the Joint Legislative Commission on Governmental Operations Subcommittee on Hurricane Response and Recovery. Laura Hogshead, who manages the Rebuild NC program as director of the North Carolina Office of Recovery and Resiliency (NCORR), testified. She was followed by Richard Trumper, newly appointed senior advisor for disaster recovery at the Department of Public Safety. The subcommittee was established in 2022 to oversee assistance to homeowners affected by Hurricane Matthew in 2016 and Hurricane Florence in 2018.

Hogshead echoed Rosling in her testimony. “We have made progress, but we are not satisfied with that progress,” she said. “We will continue to improve wherever we can.”

Bad

Although the agency has completed 278 projects since the subcommittee’s first hearing in September 2022, just about everyone involved has been frustrated with the inefficiencies, complicated rules, and communication breakdowns that have marked the Rebuild NC effort. Although NCORR and counties have completed projects for 1,067 families, the program still had 3,399 homes in in process, with many more families likely to enroll before the program stops taking applications April 21. The pace of completions has accelerated, but it would take five years to complete the remaining projects at the rate of 57 homes per month; at 40 per month, it would take another eight years to complete all the projects.

NCORR received nearly $1 billion for hurricane recovery, including $250 million set aside for other programs. The agency has spent or obligated $430 million to repair and replace homes, including $20 million on temporary relocation assistance, and $285 million on other programs. It has until August 2026 to complete its work or forfeit the remainder of the Community Development Block Grant for Disaster Recovery (CDBG-DR) and Community Development Block Grant for Mitigation (CDBG-MIT) it received.

Hogshead has cited permitting issues with local governments and weather delays. Legislators challenged Hogshead’s assertions based on their site visits and communication with local officials.

Sen. Steve Jarvis (R-Davidson, Davie) told Hogshead, “It’s disingenuous to blame counties for delays in permits when other contractors in the private sector have it figured out, and they can navigate the system.”

“Part of the problem and the reason we’re here today is government bureaucracy.”

Rep. John Bell

Hogshead acknowledged that contractors have been unprepared at times and that NCORR had not offered them much guidance. She said that NCORR’s hands-off approach was recommended by SBP’s J.R. Sanderson to let contractors deal with contractor problems and that it is the contractor’s responsibility to know how to perform the roles that they were contracted to do. Hogshead added that NCORR has advised contractors to hire employees dedicated solely to handling permits. Some counties and cities do not know which projects are Rebuild NC homes, receive incomplete applications, and find sites unprepared for inspections. What has come through most clearly is an incomplete flow of information.

But better

During the December 2022 hearing, Hogshead noted that DPS’s 30-day wait time to pay vendors (which she said was a broader state policy) led contractors to withdraw from the program because they could not pay employees or meet expenses with the delay. DPS leadership then allowed NCORR to pay bills in as little as two weeks. Contractors appreciate the faster payment schedule and NCORR will soon be able to pay with bank transfers instead of checks.

Hogshead expressed thanks for House Bill 119, currently in the Senate, which would allow NCORR to assign projects up to $250,000 to contractors, consistent with a recommendation from disaster recovery consultants at SBP. She also highlighted changes in case management and volunteer organization assistance.

NCORR has begun to impose “liquidated damage” penalties for contractor delays and reworked its contractor scorecard so that strong performers receive more work. In December, Hogshead said her office had been constrained in its ability to enforce contracts.

Hogshead also reiterated that the regulations, requirements, and risks that come with federal funding create obstacles to meet the needs of program applicants.

“We are working on implementing a process where we make sure that the folks that need the help the most are getting it, without violating HUD fair housing laws,” she said.

Organizational change

Trumper’s role seemed to be a response to the lack of communication mentioned in the December hearing. He brought one person with him from OSBM-DR and is building out a staff of five rather than utilizing existing NCORR employees. Rep. John Bell (R-Wayne) questioned the wisdom of building another office when “part of the problem and the reason we’re here today is government bureaucracy.” Both he and Hogshead emphasized their good working relationship, with his knowledge of construction and her expertise on HUD. He has spent more time in the field building ties to local governments, checking on projects, and recruiting contractors.

Next steps

While progress has been made, processes have improved, communication among leadership and applicants has improved, and the rate at which homes are completed has increased, still more must be done.

Representative Mark Pless (R-Haywood, Madison) suggested a starting point. “I think it would be worthwhile to bring NCORR, local governments, the Department of Insurance, and contractors together to make sure everybody can be ‘level set’ for the next 3,000 homes.”

The subcommittee will continue to track progress until its next meeting, which is not yet scheduled.