Rescue Construction Solutions blew past construction deadlines and amassed hundreds of homeowner complaints; some people died before they could move back into their houses.
This is the first story in a series on the state’s hurricane disaster relief programs.
Sam Cockrell removed from the front of his house in Lucama a plank of plywood that had been spray-painted in orange with the word: “Keep.”
He dismantled a second board. It read “Out.”
“I want to keep the front door,” Cockrell said, unlocking it, “as a memory.”
He opened the door into darkness. An invisible mist of mildew escaped as if the house had been holding its breath and then exhaled.
Since Hurricane Matthew devastated eastern North Carolina in October 2016, the state has received $236 million in federal disaster relief money to rebuild or renovate single-family homes that sustained major or severe damage, such as Cockrell’s. At least 1,780 houses belonged to low- and moderate-income households.
Yet five years after the state received its funding, only 717 houses have been finished and another 169 are in progress. Meanwhile, Cockrell and thousands of North Carolinians have been stranded in motels or with relatives, in dilapidated houses or in travel trailers for months, even years. Some people died before they could move back into their houses, state records show.
A Policy Watch investigation has found that over the past four years, the NC Office of Recovery and Resiliency (NCORR), which runs the state’s housing disaster relief program, has changed its own rules that rewarded one company – Rescue Construction Solutions of Raleigh – with contracts worth $80 million.
Hundreds of pages of state records show that even while Rescue blew past construction deadlines and amassed hundreds of homeowner complaints, NCORR gave the company more money, more responsibility — to the detriment of displaced Hurricane Matthew survivors.
NCORR’s RebuildNC program is funded by taxpayer dollars through the U.S. Department of Housing and Urban Development. Ivan Duncan, NCORR’s chief program delivery officer, is responsible for overseeing all construction within RebuildNC.
Hundreds of pages of documents and interviews with more than 20 people show how Rescue received preferential treatment:
The company was awarded additional contracts, even as it got further behind schedule. Of the 529 homes Rescue won in the bidding process, only 134 are listed as complete, according to state records.
This year, NCORR retroactively altered 85 of Rescue’s original bids to allocate an additional $3.1 million to the company. Until 2021, NCORR’s own policy forbade retroactively changing bids despite rising construction costs.
Also in 2021, before NCORR awarded Rescue a $52 million contract to install modular homes, it changed performance requirements in a way that ended up favoring the company. Had NCORR not amended those requirements, Rescue would have been ineligible to bid, according to the office’s own policy.
Rescue won a bid to be the contractor for Sam Cockrell’s new house, at an estimated cost of $188,000. The home has been in limbo for nearly a year. Cockrell has been living in a Comfort Suites in Wilson County since last June, returning home each day to feed his dogs. (Until the state moved him to the motel, he lived in his damaged house.)
Between Rescue’s backlog and his ongoing dispute with NCORR – he asked that his new 1,000-square foot home be built 30 feet south, on higher ground, instead of elevating it – not so much as a shovel of dirt has been upturned.
“They keep doing the same thing over and over, and not getting anything done,” Cockrell said. “I was hoping to get in this year, but I wouldn’t bet no doggone money on it.”
Despite repeated failures, contractor benefited from altered rules, lax oversight
Barbara Pinion and her husband, who live in Bladen County, survived two catastrophic hurricanes, in 2016 and 2018. “It was horrific,” Pinion said. “First Matthew, and then Florence flooded us out again. We’ve been in hell.”
Rescue won a bid last September to tear down the Pinions’ home and build a new one. The couple signed the paperwork in December. Only last week was NCORR finally moving the Pinions, both in their mid-70s, out of their home. “Four years we have been living in a damaged house,” Pinion said. “There’s mold, mildew. We were doing the best we could.”
The Pinions are now looking for a rental with the $275 monthly stipend from the state. Their new home isn’t scheduled for completion until November.
HUD disaster relief funding targets low- to moderate-income households, like the Pinions, whose insurance doesn’t cover the repairs or who are too poor to hire contractors to rebuild or renovate their homes.
Initially, the state fumbled the disbursement of HUD money related to Hurricane Matthew. Neither the Commerce Department nor the Division of Emergency Management (DEM) – which ran the program for the first two years – had experience navigating federal relief bureaucracy. North Carolina soon ran afoul of HUD over improper contracting and slow spending of federal funds, according to a 2019 Program Evaluation Division report submitted to the legislature.
The legislature created NCORR in late 2018. Gov. Roy Cooper, with the support of then-DEM Director Mike Sprayberry, appointed Laura Hogshead as NCORR’s chief operating officer to get the state on track. Hogshead had worked as the chief operating officer at HUD.
She earns $139,996 a year, according to a state salary database.
Hogshead quickly hired Ivan Duncan. He had worked at the New York Governor’s Office of Storm Recovery overseeing buyouts and acquisitions related to Hurricane Sandy; he then switched to a position within program delivery – similar to the job he now holds at NCORR. He earns $134,611 annually.
“We recruited him to come and bring all of his [disaster relief] knowledge to North Carolina,” Hogshead told Policy Watch, “because the whole reason that the legislature had to set us – NCORR – up is that the state didn’t know how to spend this money.”
When Duncan arrived, Rescue and 11 other contractors had already been pre-qualified for the program by the Commerce Department and DEM the previous summer.
However, Rescue’s pre-qualification application, which Policy Watch reviewed, was incomplete. The application required potential contractors to list all civil litigation in which they were a defendant within the past three years. Company president Sheila Brewington signed the document June 22, 2018, but omitted the fact that at the time the company was embroiled in a civil lawsuit in Wake County Superior Court related to a residential roofing job. The litigation was later settled in mediation.
The application also asks whether the company had been involved in “any judgments, claims, arbitration, mediation or lawsuits within the last five years, whether resolved or still pending resolution.” Brewington responded “no.”
Brewington did not respond to written questions from Policy Watch. Michelle Rash, vice president of RLF Communications, which has expertise in crisis communications, responded on behalf of Rescue, but did not answer questions, either. Instead, Rash issued a statement: “Rescue Construction Solutions is proud of the work we have done to help many families impacted by Hurricane Matthew return to their homes. We have strived to comply with all government rules and regulations and believe all of our contracts were awarded consistent with bidding requirements and applicable law.”
The state reserved the right to conduct background checks on applicants, according to pre-qualification documents. It’s unclear whether that happened, and if so, what it revealed. NCORR referred questions to the agencies in charge at the time; Policy Watch has requested documents related to the background checks.
In the fall of 2019, state documents show Rescue won its first substantial NCORR bid, worth $4.6 million to rebuild 27 houses. In 2020, Rescue won two additional bids worth $5.3 million to rebuild or renovate 64 houses, according to state documents. The same year, Rescue was fired by a general contractor, Premier Design Build, over an alleged botched roofing job at Fort Bragg, interviews and court records show. (Premier withheld $100,000 in payment; Rescue sued, and the contractor was forced to pay.)
North Carolina law requires that contracts be awarded to the “lowest responsive, responsible” bidder. But Rescue routinely lowballed its bids to win, one company which also won contracts with the state, told Policy Watch.
“We didn’t see how Rescue could do the jobs for that price,” the contractor said.
In many cases, Rescue couldn’t. State records show Duncan, with Hogshead’s approval, retroactively increased the company’s bid prices on 85 projects. As a result of these adjustments Rescue received an additional $3.1 million.
Hogshead acknowledged in an interview with Policy Watch that the pricing changes were made “fairly recently,” and attributed them to spikes in materials costs because of supply chain issues during the pandemic. “What we’re finding now is that even on the projects we bid out per federal procurement rules and awarded, the general contractors are not able to do the work with the price that we agreed to.”
Hogshead said three other contractors also received retroactive increases in March to cover the escalating cost of materials. Policy Watch has requested those bid documents.
In a followup email, Hogshead told Policy Watch that a price increase is “not meant to, nor does it benefit only some general contractors. The program institutes price increases when research justifies it.” Those adjustments must be approved by HUD.
Yet several contractors told Policy Watch that they had asked Duncan for price increases to account for materials costs, as recently as last year.
“He flat out told us no,” one contractor said. “We don’t expect to get rich, but we do expect to be paid fairly.”
“He told us we just had to figure it out,” another contractor said, adding his company had lost upward of $50,000 on the program. The company has completed all of its projects except for one.
Policy Watch obtained contractor notes that were taken contemporaneously at weekly meetings. (There are no recordings because Duncan required contractors to turn off their phones and place them in a bucket. Hogshead confirmed this occurred because, she said, Duncan was concerned proprietary information could be discussed. Hogshead said she spoke with Duncan and that the practice won’t reoccur when in-person meetings resume.)
Last June, Duncan reportedly said “any changes that NCORR is looking to change will always be moving forward and not retroactive.”
The notes also corroborate other contractors’ claims that Duncan denied them retroactive increases. One company stated it “could not do it for the price they bid and wanted to give back the project since it had been on hold for so long.”
Duncan and NCORR general counsel Jonathan Doerr reportedly said pricing adjustments “could not be retroactive and could cause a bid protest or a finding/concern from HUD,” the notes read.
Hoghead acknowledged that NCORR had turned down these requests “for a long time.”
“For the first probably, year of the pandemic, we said, we have a contract and we need to execute it,” she said. “And the projects were not moving forward, because they literally could not afford the gas, the lumber or the windows, the doors. We held the line as long as we felt like we could, and now we just have to get these projects done. So we did a retroactive increase, but it did not just impact Rescue.”
Duncan has a connection at Rescue via Mike Carrington, a former project manager for DRG, a contractor in New York. DRG won millions of dollars in bids related to Hurricane Sandy from the Governor’s Storm Recovery Office. Some of those bids were awarded while Duncan was employed by that office.
Carrington now works for Rescue.
Hogshead told Policy Watch that when Carrington “wanted to relocate to North Carolina, he started working for Rescue. NCORR did not ask Rescue Construction to hire him and his employment with Rescue has no bearing on their contracting.”
NCORR could have rebid the projects to allow other contractors to do the work, but it did not.
“The other thing that we’re having a problem with is that those contractors aren’t bidding. So we have put out a number of bid packages that we’ve had to cancel because no one will bid on them,” Hogshead said. “Because, again, gas, supplies, traveling to the sites, a lot of our general contractors have just refused to bid.”
Costs aren’t the only reasons companies aren’t bidding, several contractors told Policy Watch. They said NCORR’s management of the program has driven them out of the state. Some lost between $500,000 and $750,000.
“We will never step foot in North Carolina again under the current circumstances,” one contractor said.
Rule changes help Rescue win $52 million contracts for modular home program
Sheri and Bill Zerby moved out of their modular home in Craven County on Dec. 7, 2020, anticipating Rescue would soon rehab and elevate it. Months of waiting have turned into nearly a year and a half – time spent living in a 250-square-foot travel trailer in the parking lot of Vanceboro Christian Church.
“It’s been awful,” Sheri Zerby told Policy Watch last month. She fired off a list of incidents: Staircase railings were not installed to code. Air vents fell out. The couple once checked on their house and found the doors unlocked.
“We have called Raleigh [NCORR] and got nowhere. We can’t get up with anybody and the house just sits for weeks.”
The Zerbys’ home was scheduled to be finished on April 29. Policy Watch visited the property on April 28. It still lacked siding and wasn’t close to being complete.
The Zerby family is not responsible for the long delay. Hogshead said the home wasn’t finished because of an increased scope of work, including elevating the home another two feet, per a county requirement, as well as a county inspection delay.
While Rescue was lagging behind its fellow contractors on completing houses, NCORR awarded the company another contract, worth $52 million, for a modular home program.
Since winning the contract last August, Rescue has finished just three of the 226 modular homes, documents show. Nine more are in progress. At this rate, it will take another seven years to complete all of the modular homes.
Hogshead said supply chain issues have slowed Rescue’s construction pace for the modular program. It is true that because of the pandemic, factories haven’t met the demand for modulars. However, NCORR launched its modular program – in the middle of the pandemic – so people could return to their homes more quickly.
Rescue would’ve been temporarily ineligible to bid on future contracts, performance reviews show, had NCORR not changed the rules.
NCORR’s general contractor instruction manual dated May 6, 2021, shows that to be considered a “responsible” bidder a company must score at least an 80, based on several performance benchmarks. These include the pace of construction, number of incomplete and complete projects, inspections, and complaints.
On July 13, 2021, Rescue scored a 71.2. The company lost points for its number of open projects; at that time 92 homes were still under construction, and Rescue had received non-compliance notices on 27 of them, records show. The company also received deductions for overdue progress inspections, as well as the average number of days from a work order to a completed project.
On Aug. 12, NCORR issued a revised instruction manual, the eighth such version. The document noted that on June 3, the scorecard had been revised to lower the eligibility threshold to 75 points.
On Aug. 13, Rescue scored a 77.15.
Hogshead said scorecards are used to examine contractors’ ability to bid, but not for requests for proposals and not for modular homes.
A contractor’s construction history with NCORR is not considered for requests for proposals, she said, “but rather their ability to bring on subcontractors such as modular manufacturing facilities.” Three days later, bids for the modular home project closed.
Rescue soon won the entire 226-home package on Aug. 16, 2021.
Hogshead said the previous threshold was even higher — 85 — but NCORR lowered it to enable more contractors to competitively bid. “Scorecards are done in the best interest of the State,” Hogshead said.
Yet NCORR changed another aspect of the scorecard that would help Rescue in the future. The “capacity” section no longer evaluated a contractor for its number of projects, which could gauge whether the company is overcommitted.
Instead, contractors would only be penalized based on the projects that had not been started after a “Notice to Proceed,” or NTP, for short.
Once NCORR issues a Notice to Proceed, a contractor has 60 days to begin the job and 90 to 135, depending on project complexity – to finish it. A person with direct knowledge of the scoring system told Policy Watch that contractors can ask NCORR to delay the Notice to Proceed, essentially stopping the clock on a project. When the monthly scoring happens, it can appear that projects are on time, when they’re not.
Of the 226 modular projects awarded to Rescue, just 11 have an NTP.
On a recent spring day, James Cade visited his modest ranch home outside of Lumberton to cut the grass and to feed the feral cats that hang out on the patio. His wife, Gloria, would arrive that afternoon to plant flowers.
The Cades have owned their home for 37 years, but for the past 11 months they have lived in a Fairfield Inn in Robeson County.When Hurricane Matthew hit, a closet flooded, James Cade said, “but there wasn’t that much water.” However, inspectors came and found mold in the home, and told the Cades they would be eligible for the HUD rehabilitation program.
For two years, the Cades lived in their moldy house before they were approved for the program.
Rescue received a Notice to Proceed on March 23, 2021. With nearly all of their belongings in five PODS that had been set on the driveway, the Cades moved out on May 6 of that year, making way for work to begin.
But the company did not start until Oct. 22, state records show. Construction is scheduled to be completed on June 3. The house remains gutted, without walls or ceilings. The home must be rewired as well.
“They haven’t been back in three months,” Cade said. “I talked to a contractor friend of mine who said he could have done this in 45 days.”
There are several factors behind construction delays, both within and beyond Rescue’s – or any contractor’s – control. Sometimes liens or back taxes delay a project, or a homeowner can’t move out because of medical reasons. A wall might be demolished to reveal a termite infestation, prompting a change order. A new floor plan can enlarge the house, which might not fit on the lot.
In some cases, though, the delays are inexplicable.
After 13 months in an Extended Stay Hotel, Denisa Raye of Fayetteville is close – so close to moving into her home.
Fed by floodwaters from Hurricane Matthew, an underground spring beneath Raye’s house damaged its foundation. “My house split in the middle,” Raye said. “My bathroom wasn’t connected to my house.”
Nonetheless, FEMA determined her house didn’t lie within a flood zone. Raye’s homeowners’ insurance denied her claim. That’s when she turned to HUD and the state of North Carolina for help.
Meanwhile, Raye and her family remained in their dilapidated house for another three and half years. The baseboard heat no longer worked, so one winter’s night when the temperature dipped to 10 degrees, Raye said, “I was filling up pots of water and heating them on the stove to heat my house.”
They covered holes in the floor with plywood and dodged the sheetrock falling from the ceiling. “Our house was falling in around us,” she said.
Finally, Rescue received a Notice to Proceed on May 28, 2021. Her home was nearly finished by October.
“All I need is a ramp,” said Raye, who uses a walker to get around.
To build the ramp, Rescue has to install a single piece of sheet metal for the front porch, which the company has yet to obtain. “They knew I needed a ramp from the get-go. It’s frustrating. I’m not asking for a lot.”
Raye said she asked the state if she could hire someone to build the ramp, but was told no. The workmanship on the house comes with a 10-year warranty, which could be invalidated if the construction is done by someone outside the program.
Rescue or its subcontractors also dismantled gates at the entrance to Raye’s driveway and another behind her home, then threw them away. “They don’t want to put the gates back,” she said.
(It’s unclear who took down the gates, but the state requires general contractors to be responsible for the workmanship and conduct of its subcontractors.)
The backyard gate separates her home from a railroad track and a creek. Raye’s granddaughter loves animals, often chasing them through the back yard. “I’ve got to have those gates,” Raye said. “When she goes outside to play she has to have boundaries.
Raye said she has no idea when she’ll move back home. “If I had it to do all over again, I’d rather have taken out a mortgage,” she said.
NCORR is responsible for overseeing the Hurricane Matthew disaster relief program, but other entities are accountable as well. The Joint Legislative Commission on Governmental Operations established a subcommittee on Hurricane Matthew recovery, but it has not addressed homeowner issues. There are no meeting minutes for the commission on the legislature’s website.
Republican lawmakers, who hold the majority, disbanded the nonpartisan Program Evaluation Division, the legislative watchdog that had issued a 2019 report critical of delays and unnecessary spending related to the storm. (The Department of Commerce and the Division of Emergency Management were responsible for these missteps.)
Last month, State Auditor Beth Wood issued a report critical of the state’s oversight of Hurricane Florence funds. Wood’s office has not issued a similar report for Hurricane Matthew. However, last December she likened the response to the pandemic to that of recent hurricanes, where there is a rush to get money out the door, but questions arise soon thereafter as to how the money was spent.
“It’s been the history of North Carolina, we have a hurricane, we get the money out the door so people can get into a home, get a hotel, have food, whatever, whatever and that’s critical,” she told the Government Operations Commission. “But when we stand that up, we need to stand up beside it, some form of accountability, and watching over and setting metrics as quickly possible.”
Herman Jones is waiting for that accountability. The renovations on his home in Craven County remain unfinished for more than a year. He and his wife are living with their son.
Hogshead attributed the delays on Jones’s home to county officials, wait times for permits and inspections, as well as multiple renditions of foundation drawings.
“They’re giving me the runaround,” Jones told Policy Watch.
His wife uses a wheelchair, so the home needed an outside ramp because the home is also elevated. Jones said a crew built a ramp, only to tear it down because it turned out to be too steep. Inside, the backdoor sticks. The kitchen floors tilt. Wall paint has bled onto the ceiling.
Jones said he entered the home one day to find a man painting the walls, illuminated only by a headlamp. Otherwise, the room was dark.
Outside, air vents have been installed upside down in the foundation, and the siding appears to have been applied unevenly.
And then there’s the central air conditioning unit. Jones bought it two years ago; it sits in the backyard, out of the way of construction. “I told them not to touch it, that it was new,” Jones said. “I came to check on the house and the unit was on a trailer and they were getting ready to haul it away.”
Jones, 77, has lived in the house, which was built by his father, for 45 years. “A guy told me last year I’d have Christmas in this house,” Jones said. “I don’t know if I’ll live long enough to move back.”
This story has been corrected to show the date of the last Joint Legislative Emergency Management meeting about hurricane recovery was March 2021. The original story said it was January 2017. The story has also been clarified to underscore that the modular program does not require a scorecard.
How we got the story
This investigation is based on public documents: bidding and financial spreadsheets, construction progress filings, contractor performance scorecards, complaint files, court records. We consulted reports and policy manuals issued by the NC Office of Recovery and Resiliency and the US Department of Housing and Urban Development, as well as legislative documents.
Policy Watch requested an interview with Ivan Duncan, chief program delivery officer at NCORR; the office made Laura Hogshead, chief operating officer of NCORR and Duncan’s boss, available instead.
We interviewed multiple contractors and people who work in the construction industry, including several former employees of Rescue Construction Solutions. Construction professionals and former Rescue employees asked not to be named in this story for fear they would be blacklisted from future state contracts.
Rescue Construction Solutions recently retained RLF Communications, a public relations firm with expertise in crisis communications, to respond to this story.
Policy Watch interviewed eight homeowners and visited dozens of homes, some complete, others in progress, and still others that have not been started.
I was driving around rural Wilson County searching for a specific house, whose owner — a survivor of Hurricane Matthew — I had matched to property records. “No trespassing” read one sign. “Private property” read another. But a man was fixing his truck in the driveway, so I stopped, got out of the car, and ensuring that I stayed on the public road, asked if I could speak with him.
Sam Cockrell couldn’t have been nicer. He spent more than hour showing me around his property, his damaged home where his father once lived, his belongings crammed into two PODS. I learned he’s a fan of the Washington Football Team, likes motorcycles, and loves to fish.
He’s been living in a Comfort Inn for going on a year. He’s tired of it. He wants to be back in the shade of his pine trees. He wants to move into his new home, a 1,000-square foot Carson floor plan with a both a front and back porch that will keep him cool and dry.
In Craven County Herman Jones was tinkering in his workshop where he restores old radios. “Would you like to talk about your experience with Hurricane Matthew and your home?” I asked.
“Boy, would I,” Jones replied. And for the next 60 minutes he told me of his myriad frustrations with the contractor, Rescue Construction Solutions, and their subcontractors. He gave me a tour of his home, with its sticky back door and uneven kitchen floor. The ruined pile of concrete that had work crews had left open in the rain. The air vents that had been installed upside down.
These are real people, not just figures on a spreadsheet, not just “applicants.” They have been traumatized by Hurricane Matthew — and in some cases, Florence. And they’re still living motels, with relatives, in damage houses, in travel trailers, for months, even years.
How could this happen? All these people, likely thousands considering the number of households still displaced, without a permanent home five and a half years after Hurricane Matthew.
I needed to answer the questions: Who’s accountable? How is the system broken? Who has the power to fix it? What’s at stake? Who’s winning? Who’s losing?
The NC Office of Recovery and Resiliency is in charge of the homeowner recovery program for Hurricane Matthew disaster relief. And through sources and documents, I learned about a contractor, Rescue Construction Solutions.
It’s not the only contractor in the program, but it has the lion’s share of projects.
A month after trips to courthouses, database and property records searches, dozens and dozens of phone calls and emails, plus logging 1,000 miles on my Prius, I finally could write the first story, published yesterday. Simply put, it’s about how NCORR’s lack of oversight, its management of the disaster relief program and the plodding pace of Rescue Construction Solutions in particular, is holding up progress.
At stake are the happiness and peace of people like Sam and Herman and Sheri and Bill and Denisa and Judy and James and Gloria and Patricia, and all those people — not just “applicants” — who just want to go home.
Here are the public records requests. I filed the first one on April 12, and told NCORR I could accept the documents on a rolling basis. That means they could send the records as soon as they got them, rather than wait for all the documents to come in.
I have received very few documents from NCORR not even from requests filed nearly a month ago. I filed another request on May 9 with the Division of Emergency Management and the Department of Commerce asking for documents related to background checks for contractors; these two agencies were in charge of the program in 2018 when contractors were prequalified.
On Tuesday, May 2, I interviewed NCORR Chief Operating Officer Laura Hogshead on Zoom. With her permission, the interview was recorded. [soundcloud soundcloudurl=”https://soundcloud.com/lisa-sorg/ncorr-may-3-audio?utm_source=clipboard&utm_medium=text&utm_campaign=social_sharing” ] interview was recorded[/soundcloud] Policy Watch immediately shared the audio and video with NCORR. On Thursday, May 4, NCORR requested a followup interview, which occurred on Monday, May 9. Again, the interview was recorded.
Hogshead also corresponded with me several times by email over the weekend of May 7-8.
I emailed Sheila Brewington, president of Rescue Construction Solutions, twice. She didn’t reply, but a crisis communications firm representing Rescue called me, then issued a statement — again not answering the questions.
A Wake County civil court case against Rescue that started in 2017, and should have been disclosed by the company when it applied to be prequalified, and again when it bid on projects
A federal court case involving work at Fort Bragg. In that litigation, Rescue sued the bonding company for the general contractor over a pay dispute. The general contractor had fired Rescue for allegedly botching a roofing job, and didn’t want to pay. The court did force the contractor to pay Rescue. However, on page 4 of the document, there is a reference to Rescue’s “unworkmanlike and untimely performance.”
The changes in scorecard measurements in the summer of 2021
Rescue’s pre-qualification application, dated June 2018
NCORR’s invitation to bid on the modular project dated July 16, 2021
Here are spreadsheets. All personal information has been removed.
All 1,486 complaints lodged against all contractors, not just Rescue. Rescue had 585 complaints, although that could be expected since the company had so many projects. Other companies with more than 100 complaints: Excel Contractors, 297; Persons Service 222 and Thompson Construction 172.
In some ways, there’s nothing new or terribly surprising when large bureaucracies – be they government agencies or big corporations – are revealed to be plagued by waste and malfeasance. Humans and their institutions being as they are, flawed and prone to foibles like incompetence, greed, sloth, overpromising, and favoritism; such revelations have been a constant in the American experience since prior to the country’s founding.
All that said, the maddening familiarity of such phenomena cannot serve as an excuse or diminish our commitment to rooting them out and making things right.
And so it is that the state of North Carolina has a new incident of bureaucratic waste and abuse on its hands to which state leaders must give immediate and sustained attention.
As veteran NC Policy Watch investigative reporter Lisa Sorg detailed this week as part of a lengthy and deeply researched special investigation, the North Carolina Office of Recovery and Resiliency (NCORR) – a state government office established by the General Assembly in 2018 to coordinate the disbursement of federal hurricane rescue funds – has made several highly questionable moves in recent years that have helped assure that hundreds of homes damaged or destroyed by Hurricane Matthew in 2016 remain in a state of disrepair and their owners displaced.
And, by all indications, topping the list of questionable moves was the repeated decision to bestow preferential treatment (and thereby award millions of dollars in contracts) to the Raleigh-based contractor Rescue Construction Solutions.
Distilled to its essence, the story is this:
North Carolina received hundreds of millions in federal recovery dollars from the Department of Housing and Urban Development (HUD) to distribute to help lower income families rebuild after Matthew.
Over a period of time, NCORR awarded contracts for a huge chunk of that money, around $80 million, to Rescue even though it almost certainly should have realized that the company was: a) in over its head, and/or b) irresponsibly and misleadingly lowballing contract bids.
What’s more, by all indications, the awards to Rescue were the result of preferential treatment not accorded to other contractors.
As Sorg reported:
The company was awarded additional contracts, even as it got further behind schedule. Of the 529 homes Rescue won in the bidding process, only 134 are listed as complete, according to state records.
This year, NCORR retroactively altered 85 of Rescue’s original bids to allocate an additional $3.1 million to the company. Until 2021, NCORR’s own policy forbade retroactively changing bids despite rising construction costs.
Also in 2021, before NCORR awarded Rescue a $52 million contract to install modular homes, it changed performance requirements in a way that ended up favoring the company. Had NCORR not amended those requirements, Rescue would have been ineligible to bid, according to the office’s own policy.
Rescue also failed to disclose key information in its pre-qualification application that could have excluded it from the HUD program.
And while all of this would be disturbing enough if Rescue had somehow managed to deliver on the promised work or, at least, had been getting its act together of late, the record shows that it has failed miserably. At the rate it’s been proceeding with a $52 million contract it received to construct 226 modular homes, for instance, the work won’t been completed until 2029.
Of course, there’s no doubt that the pandemic has had a large and adverse impact on the construction business generally. In an interview with Sorg, NCORR chief operating officer Laura Hogshead pointed to spikes in material costs and supply chain issues as a partial explanation for Rescue’s poor performance and her office’s decision to allow Rescue to retroactively revise some of its bids.
But that explanation only goes so far. As Sorg also reported, many other contractors managed to generate significantly better results even as some were denied the opportunity to revise their bids.
Meanwhile, some expressed deep suspicion and frustration with respect to Rescue’s success.
“We didn’t see how Rescue could do the jobs for that price,” one contractor said.
Another stated “We will never step foot in North Carolina again under the current circumstances.”
Hogshead’s explanation also doesn’t explain the strange and eyebrow-raising decision of the official who oversaw day-to-day details of the program, Ivan Duncan, to require contractors to deposit their cellphones in a bucket during weekly meetings so that the meetings could not be recorded.
The bottom line: The process of disbursing hundreds of millions of federal dollars to numerous private firms in dozens of dispersed communities across a large and, in many places, struggling region in order to help hundreds of lower income homeowners would be a tough job under the best of circumstances. During a pandemic, it was sure to be even tougher.
But ultimately, the public has a right to expect that the officials assigned such a task will do an honest and effective job and come forward publicly to ask for help when circumstances make it impossible.
Gov. Roy Cooper should launch an immediate investigation to get to the bottom of this deeply troubling story right away.
[Note: This commentary has been updated as it originally misidentified the Office of Recovery and Resiliency.]
The NC Office of Recovery and Resiliency is disputing a previous Policy Watch story that Rescue Construction Solutions received preferential treatment in the bidding and scoring processes. We are publishing their rebuttals and our responses in full, unedited. NCORR sent these rebuttals via email, which are public under state open records law.
First NCORR rebuttal and Policy Watch responses, May 11, 2022:
We have reviewed your email and have included our responses to each item below. Let me also say that we certainly appreciate many of the difficulties your agency has encountered over the years in fulfilling its mission (most of which were referenced in our reporting).
As you will see, however, it remains our firm conviction that, except perhaps with respect to a small handful of very minor matters that do not impact its overall thrust, the story is completely accurate.
North Carolina received hundreds of millions in federal recovery dollars to distribute to help lower income families rebuild after Hurricane Matthew.
Five and a half years after the storm, hundreds of families remain homeless and their abodes uninhabitable.
Over a period of time, NCORR awarded contracts for around $80 million to Rescue Construction Solutions even though it almost certainly should have realized that the company and was in over its head, provided false information in its prequalification application, and has consistently delivered poor performance.
Rescue was the beneficiary of NCORR contracting decisions not accorded to other contractors.
As has always been the case, however, we stand ready and anxious to receive additional information – e.g., requested documents and other records — that would shed more light on the matter. In particular, we would very much like to conduct interviews with Ivan Duncan and Sheila Brewington – both of whom have thus far not made themselves available to discuss this important matter with which both were so intimately involved.
Our responses to each of the 20 points you raise appear below.
NC Policy Watch
Lisa and Rob –
NCORR requires the following corrections to sections of the May 9 story that are misleading and, in some instances, false. In addition, to ensure an accurate portrayal of the agency and program, the accompanying opinion piece should be amended to reflect the corrected information as well. Should Policy Watch decline to make any of the corrections, please provide an explanation and supporting documentation which demonstrates why inaccurate information should remain in the story. Specific corrections are shown below with direct quotes from the story in italics.
“At least 1,780 houses belonged to low-and moderate-income households.” – As we discussed yesterday morning during our interview, if this is a FEMA number, it has no bearing on the number of homeowners we will be able to help. FEMA does not measure eligibility for CDBG-DR. It is misleading to use a number from another federal agency that is not associated with CDBG-DR eligibility to set a false expectation.
Response: We do not believe it is at all misleading to report FEMA’s count of the total number of homes damaged by Matthew. We find it somewhat surprising that you would need to ask us if this is a FEMA number.
2. “Yet five years after the state received its funding”; “Over the past 4 years” – NCORR has only been in existence for 3 years. I understand that for people seeking assistance, the specific entity within the state providing assistance is secondary, but if this article is supposed to be about NCORR, reference the correct timeframe.
Response: The story accurately reports when and why NCORR was created. It reads “The legislature created NCORR in late 2018. Gov. Roy Cooper, with the support of then-DEM Director Mike Sprayberry, appointed Laura Hogshead NCORR’s chief operating officer to get the state on track.”
3. “Rescue received preferential treatment” – All procurement actions were done in accordance with state procurement policy, Rescue did not receive preferential treatment.
Response: Our reporting, including conversations with numerous experts and impacted individuals led us to this conclusion regarding Rescue’s treatment. The story also reports your response.
4. “…that rewarded one company” – The changes we have made in accordance with state procurement policies have benefitted more than one company, as stated in our email sent to you on May 8, 2022. Suggesting that only one company benefited is false and misleading.
Response: As with #3, our reporting led us to this conclusion. We also reported your response. If you could provide documentation as to the other contractors who benefited in the same way, we would be very happy to receive it.
5. Rescue Construction has completed 135 construction projects. Of the 529 projects cited, 226 are in the pilot modular program and not on the same schedule as other rehabilitation or construction projects.
Response: We say 134 projects have been completed based on the documents we’ve received. We would be happy to update this number if another home has been completed since we received that report. And obviously, the hard fact remains that – whatever the schedule to which homes are assigned — the overall shortfall in performance remains enormous.
6. It is misleading to state that we changed our stance on retroactive increases. The increases we have implemented have not been for contracts already executed, but for future work. Increases were only given for projects without NTPs and for change orders which had not yet been submitted. Our contracts allow for price increases. The only reference to price changes in the NCORR Procurement Manual is on page 25 and allows for changing prices. The statement in the article is false.We have a document in our possession which lists a home for which a contract was let in 2019, the NTP issued in 2021, and the price increases approved in 2022.
7. “Also in 2021, before NCORR awarded Rescue a $52 million contract to install modular homes, it changed performance requirements in a way that ended up favoring the company. Had NCORR not amended those requirements, Rescue would have been ineligible to bid.” – This statement is flatly FALSE. As explained in an email yesterday morning, the scorecards have no bearing on the IFB process.
Response: Among other things, there appears to be some confusion here about acronyms. In your interviews and previous emails to us you do not use the term “IFB.” It’s also clear from the record that NCORR failed to take account of Rescue’s inaccurate pre-qualification application.
8. Sam Cockrell is in the process of relocating his home to his desired location, but he denied his original award, which prolonged the process. There is no doubt that this process can be cumbersome, but it’s important to include context on why delays can occur.
Response: We reported this.
9. The Pinions signed an award agreement in December. Until they were qualified and signed the award, it is inaccurate to place the blame for their living situation on NCORR. NCORR cannot use HUD funds until the family is determined eligible. Again, a lack of context is misleading.
Response: We reported the December date. It has now been six months without activity for this family.
10. The contractors that were “driven out of the state” were never in the state to begin with. They were out-of-state contractors, who typically follow CDBG-DR money from state to state and try to profit from it. We have not been informed that any contractor lost between $500k and $750k – they may have a reduced profit, but none of them have reported that they lost money on our projects. Is there evidence to back this claim up?
Response: A contractor need not be a North Carolina resident to be “driven out of the state.” We stand by our reporting here.
11. “At this rate, it will take another 7 years to complete all of the modular homes” is misleading. The pilot is designed to bring more and more factories on board, which will speed up production. Manufacturing has certainly slowed due the COVID-19 pandemic, as factories are experiencing the same workforce and materials challenges that the rest of the construction industry is facing.
Response: The number is accurate. If there is additional information available indicating that a production speed-up will be forthcoming, please provide it to us or indicate where we can access it.
12. “Rescue would’ve been temporarily ineligible to bid on future contracts, performance reviews show, had NCORR not changed the rules” and the resulting section is flatly FALSE. As described to you in writing yesterday morning, the scorecard has NO BEARING on the Modular IFB.
Response: Again, it appears that we may have a conflict here with respect to the acronyms referenced in your interviews and emails – “RFP” and “IFB.” If you provide documentation here, we’d be happy to update the story.
13. “However, the modular invitation clearly states it is for bids” is misleading, at best. The method used for inviting bids is “Invitation for Bids,” but is clearly separate from the process used with our pre-qualified GCs to bid on construction projects. Conflating the language is misleading to readers who are not in the industry. Response: See responses to Numbers 7 and 12 above.
14. We did not drop the “capacity” section in the scorecard. This is flatly FALSE. Please provide sourcing on this claim, it is incorrect.
Response: The story does not say it was “dropped.” Our reporting here is based on the interpretation provided by expert sources.
15. “Of the 226 modular projects awarded to Rescue, just 11 have an NTP.” This is misleading. Projects receive an NTP as the factory is ready to build the modular home.
Response: We do not think it at all misleading to report that so few homes are moving forward. If it’s your position that this matter is all the fault of modular factories, we’d be happy to receive documentation.
16. “For two years, the Cades lived in their moldy house before they were approved for the program.” This is misleading. Until they qualify for the program, we cannot move them out of their home.
Response: This is an accurate description of the situation the Cades find themselves in.
17. The Cade family has experienced a required abatement process and 5 change orders, increasing the scope significantly and leading to delays in obtaining materials.
Response: We do report the fact that other factors have contributed to the Cades’ situation. These facts do not explain or excuse the fact, however that, as of the date of our interview with Mr. Cade, months have passed since he had seen any activity on their home.
18. Denisa Raye’s home was changed from a rehab project to a reconstruction project because of significant structural issues. We are currently waiting on the county to issue a building permit.
Response: Our reporting indicates that it’s been seven months that Ms. Raye has been waiting for a simple ramp. Is it your contention that this is exclusively the fault of Cumberland County?
19. The Joint Legislative Emergency Management Oversight Committee held a meeting on March 17, 2021 at which Director Hogshead testified.
Response: We regret the omission and have updated the story.
20. Laura Hogshead is the Director of NCORR, not Chief Operating Officer as stated in the story.
Response: The NCORR website lists you as “Director” and the “Chief Operating Officer.”
Second NCORR rebuttal received on May 13, 2022, plus Policy Watch response:
May 16, 2022
Please find below our responses to your email of Friday afternoon May 13. Once again, I hope this demonstrates to you that:
our reporting in this matter is based on hours upon hours of research and analysis, numerous interviews with knowledgeable individuals and directly impacted parties, and scores of documents;
the situation highlighted therein constitutes a genuine human tragedy for numerous displaced families; and
there is a desperate need for NCORR to review and improve its efforts and those of the companies it has hired to do this vitally important work.
As I noted last week, we certainly appreciate many of the difficulties your agency has encountered over the years in fulfilling its challenging mission. This is hard work at a tough time. But you must agree that, at this point – nearly six years after the hurricane – it’s simply unacceptable (or should be) for a such a vital mission to have gone so long without coming close to being completed.
As I also mentioned last week, we would also renew our request to conduct an interview with Ivan Duncan, who is at the center of this matter.
Finally, in keeping with our ongoing effort to be as transparent as possible with all concerned, I would alert you to the fact that we will be publishing the content of both of the email communications you sent to us in which you questioned the story, along with our responses – including those that appear below.
NC Policy Watch
Hello Rob –
I certainly hope you are feeling better and can return your attention to the inaccuracies in this story. There are number of factual errors that appear to be the result of incomplete or inaccurate documentation on your part.
You are incorrect in your assertion that “the office should have realized that the company was in over its head, omitted important information in its prequalification application, and has consistently delivered poor performance.” And you are wrong that “Rescue was the beneficiary of NCORR contracting decision not accorded to other contractors.”
As the Director of NCORR, it is my responsibility to answer for my office and I have been willing to do so and to provide documented evidence showing how our processes work.
I am attaching documents (and sending a SharePoint link) that would have mitigated the need for you to work during your COVID convalescence.
1. Rescue Construction did not receive preferential treatment. The documents that prove this are numerous. First, for the May 28, 2021 increase, there are Change Orders that include a 43.7% increase as a line item for several GCs. The files are too large to attach here, so we have created a SharePoint site for you to access so you can see those Change Orders. We will send you the link to access that SharePoint in a separate email (that email will come from Jeremy Burnette). We have included a sample of Change Orders that show that the following GCs benefitted from the May 28, 2021 price increase: CRSC, Persons Construction, RHD Construction, Fuller Center Disaster Recovery and Excel Construction. Each Change Order is lengthy, but you can see the line item for the increase.
In addition, the March 22, 2022 price increase benefitted G&N Construction and Remodeling, Famlock Construction, and Fuller Center Disaster Recovery. I disclosed these names in an email on Sunday to Lisa. It is completely confounding to me for your outlet to believe unnamed sources instead of the person running the program and the records of NCORR, but we are providing the evidence that her sources are wrong. Proof that those GCs received the increase is also in the SharePoint site.
PW Response: We reported that contractors received price increases for change orders. However, change orders are not the same as retroactive alterations to a competitive bid.
2. It is false to state that we changed our stance on retroactive increases. The increases we have implemented have not been for work already performed, but for future work. Increases were only given for projects without a Notice to Proceed (NTP) and for change orders that had not yet been submitted. Our contracts allow for price increases. The only reference to price changes in the NCORR Procurement Manual is on page 25 and allows for changing prices. We provided that information to Lisa last Sunday.
You provided an Excel spreadsheet this morning that purports to show a project that received a price increase after receiving an NTP. It is unfortunate that your sources provided wrong or intentionally misleading documents. AECOM erroneously included that project (APP-03083) on the list to receive an increase, our staff caught the mistake, corrected it and executed the attached contract with Rescue at the lower, original price (not the increased price). When reporting, it is important to have the final document. If Lisa had shared that document with me in the course of the nearly two-week span in which I gave two interviews, I would have corrected her mistake before it was published. (Attachment – “Response #2”)
PW Response: We have posed the question again to our sources and asked them for documentation. They provided documents for seven homes that had executed work orders/Notices to Proceed prior to the competitive bid changes.
3. I will fully admit that I use the terms “IFB” and “RFP” interchangeably, as they are very similar in the contracting world and I should be more clear. But the fact remains that the scorecards that we use to assess GC performance had no bearing on the Modular IFB. You say that you are updating the story, but this was a major part of your insinuation that NCORR was steering contracts to Rescue and is worth much more than an “update.” That needs a full retraction.
PW Response: We reported and updated the story to underscore NCORR’s position.
And your response this morning changes the question – instead of now focusing on the scorecard, which you now admit has no bearing on the IFB process, you are asking about litigation. I’m happy to answer that and would have been happier to do it before the article was published. The Terms and Conditions attached to the Modular IFB make clear that it is the State’s option to perform a background check, but it is not required. IF the State requires a background check, THEN the vendor is obligated to disclose any civil litigation. For the Modular IFB, she did not hide information and we procured that contract according to our state policies. Criticism of a state policy is one thing, but falsely stating that required steps were broken is unacceptable. (Attachment – “Response 3” shows the Terms and Conditions attached to every DOA procurement. These T&Cs are widely available.)
PW response: We asked about civil litigation during the pre-qualification process in the first interview. Your response was “That’s a good question and I will look into it.” The modular invitation to bid has similar language asking about civil litigation as in the pre-qualification form.
4. The assertion that it will take until 2029 to accomplish the modular builds is ridiculous. We are working with factories to increase production but, to be frank, they are reluctant to work with Federal funds after having projects canceled by FEMA in the last few years. This is another instance where Lisa would have been well served to look for the context.
PW response: We reported that “at this rate” it would take seven years to complete the modulars, meaning at the current rate of three homes in nine months.
5. On the issue of whether or not “Rescue would’ve been temporarily ineligible to bid on future contracts, performance reviews show, had NCORR not changed the rules,” that is not accurate . As I provided to Lisa on Monday morning, May 9:
You brought up the issue of the Scorecards and the fact that the scoring was changed from 80 to 75 in July of 2021. You’re right – that scoring was changed (actually on June 3, 2021), and I’d like to better explain why we changed that scoring. First, it’s not the first time that we have changed the scoring threshold. Previously, the threshold was 85, but only Rescue Construction and CRSC were able to meet that threshold, so we lowered it to 80. Scorecards are done in the best interest of the State. It was determined that having more GCs eligible to bid creates more competition, which is a benefit for the program.
Let me illuminate a little more clearly when we made changes and the resulting bids that we received.
On June 3, 2021, as stated above, we changed the threshold from 80 to 75.
On June 22, 2021, we put out two Reconstruction RFB packages. Rescue did not bid. Only CRSC bid, but we could not award because they bid $180/sqft, which was over the stated $146 cap.
On July 12, 2021, we put out 6 MHU RFB packages. Not one single GC on our list bid on those projects. Again, we could not award.
On Aug 13, 2021 we put out 2 Reconstruction packages. Timberline was the only bidder and it was $248 per sqft. Again, that was over the cap and could not be awarded.
Rescue did not bid on anything for 2 months after the threshold was lowered.
To make it clear, we lowered the threshold to increase competition, and for the next 10 RFBs, we received no bids that could be awarded per state procurement rules.
I can only conclude that Lisa did not read the information provided to her by me, the Director of the program, in response to an interview, and decided instead to publish the story she had already written. This is inaccurate and disappointing.
PW Response: We did read the information and included a summary. As for the story being already written, we actually held the piece because the state requested a second interview.
6. We’ve been very transparent with your organization and will continue to be. Unfortunately, you have not been transparent with us about the primary sources for this article, upon whose word you are printing baseless and damaging accusations. These “experts” have provided you incorrect, incomplete, and misleading information – information that we could have helped you to understand if you would have shared it with us. If you’d like to base your reporting on actual experts on contracting and procurement, backed up by documentation, instead of blind sources, we are able and available to walk through contracting decisions and to continue to provide relevant documentation.
PW Response: Our sources are confidential, but not anonymous. Based on further documentation and NCORR’s responses to us, we believe their fear of retaliation is justified.
We have asked for relevant documentation from NCORR, dating back to public records requests filed as early as April 12 and 13. The only records we have received are an organizational chart and lists of pre-qualified contractors.
7. For clarity, I was hired as “Chief Operating Officer” of NCORR in October of 2019 and became “Director” in August of 2021.
PW Response: We used the title that was in your bio on the website. It is also on your LinkedIn page.
One last thing – I do not mind having my interviews posted. I do find it to be in incredibly bad faith, however, for Lisa to have posted them after stating during each interview that she was “only recording for accuracy.” Shame on you all. I should also note that, as people who protect our applicants from having their identities exposed, you may want to be careful about how much Personally Identifiable Information is in the material that your “sources” are sending to you. Your sources certainly do not care about protecting people’s information.
PW Response: We posted the interviews only after receiving a text from State Senator Mike Woodard stating that someone at NCORR had forwarded the interview to the Governor’s communications director, Ford Porter. Since the first interview was circulating at the highest levels of state government, it was/is our belief that the public has a right to know what it contained.
We posted the second interview in order to show any follow-up questions and answers.
In response to a Policy Watch investigation published last week, the North Carolina Office of Recovery and Resiliency (NCORR) denied that Rescue Construction Solutions (Rescue) received favorable treatment over other general contractors in bidding and scoring related to Hurricane Matthew disaster recovery work.
Hundreds of households — equivalent to thousands of people — remain displaced from Hurricane Matthew, which occurred in October 2016. These North Carolinians are still living in motels, travel trailers, with relatives, or even in their original damaged homes.
However, notes taken by someone who attended weekly meetings about NCORR’s RebuildNC program show that Ivan Duncan, NCORR chief program delivery officer, did give Rescue leeway not afforded to other contractors. The person provided the notes to Policy Watch on the condition they would not be named, because they were afraid of retaliation by the state. Excerpts appear below; Policy Watch deleted some entries because they were very technical and weren’t relevant to the issue.
Among the revelations:
Duncan reportedly told inspectors in May 2021, not to visit homes Rescue had built. This allowed Rescue to sidestep oversight.
Duncan also allegedly allowed Rescue to delay starting some of its construction projects, according to notes taken in May 2020. That’s important because contractors’ performance and eligibility to bid on future contracts is based in part on their completion rate.
Other examples of alleged preferential treatment include Duncan’s edict to pay Rescue to move a household for the second time; other general contractors were not given the same consideration, the notes say.
Last year, the notes indicate Duncan also looked favorably upon RHD, another contractor. However, the notes show that RHD hesitated to accept Duncan’s offers.
The meetings were not recorded because Duncan required attendees to turn off their phones and place them in a bucket. In a previous Policy Watch story, NCORR Director and Chief Operating Officer Laura Hogshead said that practice no longer occurs. The notes indicate that Duncan reportedly said he “works in gray areas,” and asked contractors not to put anything in writing or emails. Such correspondence would be public under state open records law.
Rescue has not responded to written questions about its performance. Instead, the company hired a crisis communications firm, which issued a statement last week saying the company had bid properly, but it did not address the questions.
Policy Watch shared these notes with NCORR. A spokesperson for the agency released the following statement Tuesday morning:
NCORR remains committed to helping hurricane survivors rebuild their homes and communities as evidenced by the more than 700 houses already repaired or replaced in eastern North Carolina. We take the Policy Watch allegations very seriously and will thoroughly investigate to determine their validity and whether corrective action is needed. Many of the allegations thus far have been based on unconfirmed or inaccurate documentation, misinterpretation of program policy, or hearsay from unknown sources. For example, it is misleading to say that only certain general contractors had projects inspected. In fact, all projects had recurring inspections by county inspectors, while the lead contractor in charge of construction oversight, AECOM, was also tracking every project. Whether or not every contractors’ projects had an unannounced visit by state officials, they were all were inspected multiple times by qualified experts. This is just one example of how NCORR has been misrepresented in recent coverage. We look forward to sharing factual information to demonstrate that NCORR is not only committed to helping storm survivors recover, but also to full compliance with the law.
Names of individual contractors have been redacted and replaced with company names. Policy Watch added the annotations and highlighting to explain the significance of those passages.
Abbreviations and definitions GC: General contractor
CRCS, Persons, Rescue, Duckey, RHD, Excel: Company names of general contractors
AECOM: Construction management company that is the liaison between NCORR and the contractors
Sprayberry: Former Director of Emergency Management Mike Sprayberry
Trace: Trace Allard, NCORR director of program delivery
Open procurement: Competitive bidding process
Ryan: Ryan Flynn, former NCORR chief of staff
O&P: Overhead and profit
ECR: Estimated cost of repairs
MHUs: Mobile home units
Jonathan Doerr: NCORR attorney
NTP: Notice to Proceed; when an NTP is issued, the clock starts on construction, which is required to be finished within a certain amount of time, depending on the complexity of the project, usually 90-135 days. Contractors can request time extensions.
CO: Change orders, adjustments to the construction costs when unforeseen issues arise, such as mold, termites, asbestos
As most voters have shown they understand, Roy Cooper has been one of the best governors in modern North Carolina history. He’s a skilled lawyer, pragmatic politician, and a caring and committed progressive who believes in human rights and building a fairer and more equitable and sustainable society.
He’s no saint – no one would ever expect such a thing – but in comparison to many of the cynical and on-the-make charlatans and hatemongers who have infected 21st-century American politics, Cooper stands out as an unusually decent, dedicated, competent and uncorrupt public servant. North Carolina is a significantly better, healthier, and more prosperous place because of his able and dedicated leadership, and that of many of the talented people he’s hired and appointed.
But like all chief executives who find themselves overseeing large bureaucracies comprised of thousands of imperfect human beings performing countless important tasks, Cooper can’t and doesn’t hit a home run every time he comes up to bat. He’s had his share of errors and omissions over the past five-plus years, and one such very important area that is in desperate need of an urgent and dramatic overhaul is this: hurricane recovery.
As NC Policy Watch investigative reporter Lisa Sorg has documented (and continues to document) in an ongoing series of powerful reports, Cooper appointees are failing miserably in delivering recovery services to scores of families who suffered grievous damage to their homes during a hurricane – Matthew – that dates back to the month before Cooper was even first elected in 2016.
The stories Sorg has uncovered – and that she must now seek to wade her way through given that scores of people have been coming out of the woodwork to contact her ever since her first report was published – are outrageous and heartbreaking.
In many parts of eastern North Carolina, people have been living in dangerous and unrepaired homes, motels, travel trailers and automobiles for years. Almost all are people of extremely modest means who are just trying to survive.
Meanwhile, the state agency created to respond to this crisis and aid these people in need, the North Carolina Office of Recovery and Resiliency (NCORR), has – there’s no other way to put this – failed miserably. Not only has NCORR presided over and allowed this shameful situation to persist and fester, it has made things worse by repeatedly handing large contracts for millions of tax dollars to a firm that is clearly not up to the hugely important job it was assigned, and that has repeatedly failed to deliver the work for which it was paid.
But wait, it gets worse.
Multiple credible reports from reliable witnesses indicate the company in question received unwarranted favorable treatment from NCORR and that the official in charge of day-to-day oversight engaged in several inappropriate actions – right down to forcing contractors to place their cellphones in a bucket prior to meetings so they wouldn’t record his inappropriate statements.
And that’s not all.
When Policy Watch brought these findings to the attention of agency and company in question, the response was denial, excuse making and stonewalling.
Rather than taking immediate action to get to the bottom of the enormous and disturbing mess Sorg’s reporting revealed, much less moving to address it, the agency devoted its time to quibbling with Policy Watch over minutiae in our reporting and denying that anything of importance was or is wrong. NCORR also still refuses to make the public official responsible for the inappropriate statements to contractors available to answer questions.
Meanwhile, the company in question, moved to immediately hire a crisis communications firm and has refused to speak to Sorg or answer any of her questions.
Of course, none of this is to say or imply that overseeing the massive job of hurricane recovery is an easy one. And clearly, the onset of the pandemic has made things much more difficult.
But doggone it, people have been living in motels for years. At least one family was actually threatened with eviction because, they were informed, the state had temporarily stopped paying their motel bill. Work on building them a new home has yet to commence.
This is beyond outrageous and simply unacceptable.
If the agency didn’t have the tools, resources or capacity to get the job it was assigned done, both it and the Governor’s office should have been (and should still be) raising holy heck with the General Assembly, Congress, and the White House – anyone with the capacity to help.
The bottom line: It is plausible that Gov. Cooper hasn’t fully appreciated the scope of this disaster. Large public bureaucracies of all kinds – public and private – have a long and rich tradition of masking their foul-ups and ineptitude and telling their higher ups the news that makes them look good. With a little skillful P.R., even the most inept agency can manufacture some happy photos and ribbon-cutting events.
Let’s hope this was the case.
But now, for better or worse, the truth is out and it demands immediate action from the governor. Hundreds of suffering North Carolinians await his action.
[Editor’s note: Readers can follow Sorg’s ongoing series this Wednesday as she profiles Roverta, Franklin and Ashley who are desperate to return to their Wayne County home.]
Roverta and Franklin, photographed inside their mobile home, which has been declared uninhabitable. The couple, their daughter Ashley, and a granddaughter have lived in an extended stay motel, at taxpayers’ expense, since March 2021. They frequently check in on their property to ensure it’s secure. (Photo: Lisa Sorg)
[Editor’s note: This is the first of several profiles of homeowners who remain displaced from Hurricane Matthew, which devastated parts of North Carolina in October 2016. These personal stories are part of Policy Watch’s ongoing investigation into the NC Office of Recovery and Resiliency, which has mishandled the RebuildNC program. Five and half years after the storm hit, hundreds of households, equivalent to thousands of people, still do not have permanent homes; they are living in motels, travel trailers, with relatives, or even in their damaged houses. For each profile, Policy Watch has given residents the option of using their full names, partial names or no name at all, depending on their comfort level.]
For 28 years, Roverta and Franklin have owned a spacious mobile home and a lot in Dudley, in Wayne County. Here, they raised a family. They planted a flower garden. They barbecued in the backyard. Roverta ran a day care, as the couple’s own children grew into adults.
“Thanksgiving is our major holiday,” Roverta said. “Kids, grandkids, friends, anybody who wanted to come. It was home to everybody.”
The couple who opened their doors to so many people now has no permanent home of their own.
Since enrolling in the ReBuild NC program three years ago, they’ve been through two contractors — Duckey and Excel — five construction liaisons and six case managers. Yet their mobile home has yet to be demolished and replaced.
Roverta and Franklin’s story is similar to those of dozens of homeowners in the ReBuild program interviewed by Policy Watch: Poor or nonexistent communication by the state; construction delays for months, even years; a constant churn of case managers; conflicting information; and the state’s lack of empathy for people who have survived a traumatic, life-or-death natural disaster.
For the past 15 months, Roverta, Franklin, their daughter Ashley, and a granddaughter have lived in an extended stay motel in Goldsboro, at taxpayers’ expense, because construction overseen by the NC Office of Recovery and Resiliency, which operates RebuildNC, is so far behind.
State records show the family’s new house is in limbo, with no start date scheduled, and no estimate of when they will return home.
When Hurricane Matthew hit on Oct. 8, 2016, fierce winds stripped shingles off the roof of their home, allowing rain to pour through. “Every room was damaged,” Franklin said.
Several environmental managers told the couple it was safe to stay in their home, even as a brown stain blossomed across the ceiling. Even though Roverta has sarcoidosis, an inflammatory disease that can damage the lungs. Even as Franklin, a non-smoker, began to develop breathing problems from the mold. He’s since been diagnosed with COPD, chronic obstructive pulmonary disease.
In June 2019, Roverta and Franklin were accepted into the ReBuildNC program. In September of that year, they signed a contract. Their four-bedroom mobile home would be demolished and replaced with one the same size.
“[ReBuild] told us we should be in our new home by January 2020,” Roverta said.
It’s May 2022 and there is no new house. Roverta and Franklin recently visited their dilapidated mobile home, which has been declared uninhabitable. Nonetheless they check in on their property from time to time, picking up the mail, ensuring no one has broken in. The lawn is tidy. A vibrant red rosebush that Franklin planted in memory of his mother is in full bloom.
Inside lie the remnants of a life that can’t fit in PODS, and some of it that is likely too full of mold and mildew to salvage: Toys and decorations, curtains, a couch. A washer and dryer.
“Somebody’s stolen the mailbox twice and tried to get inside the PODS,” Roverta said. “That’s my concern, our stuff is sitting here but we’re not here.”
They should be here, but the original promised move-in date, January 2020, came and went. Meanwhile, the family — Roverta, Franklin, Ashley, and a granddaughter — remained in the home. They began repairing the bathroom and kitchen floors, which were unsafe.
However, the program doesn’t allow homeowners to make temporary fixes without state approval.
“We got a letter saying stop repairing or leave the program,” Ashley said.
The Year 2020 passed. Another environmental manager visited their home and declared it uninhabitable. “We kept calling the state because we didn’t know what to do,” Roverta said. She eventually reached someone in the governor’s office, she said.
Shortly afterward, in January 2021, Ivan Duncan, chief program delivery officer with NCORR, called her. “He offered us a FEMA trailer,” Roverta said, “and I told him I didn’t sign up for that. He was rude.”
Finally, in March 2021, ReBuildNC moved the family of four into the motel. The contract that Roverta and Franklin signed specified a four-bedroom modular home. But the contractors had been awarded a bid from NCORR that allowed for only three bedrooms.
“I had to go to the tax office and get proof that my original home was four bedrooms,” Roverta said. “Four bedrooms was in the contract.”
In August 2021, when the family should have been in a new house, Ashley’s daughter, who is in second grade, contracted COVID at school. This was not the first time a family member had contracted the virus, but the living conditions were different.
The previous year, when the family was still in their mobile home, Ashley had come down with COVID and stayed in her bedroom, sparing anyone else from catching the virus. Now that the family was crammed into a motel, there was nowhere to adequately quarantine. Ashley caught COVID a second time. Then Roverta because ill. She was hospitalized for two weeks.
“Just before getting COVID, she was breathing freely,” Ashley said. “Now she’s on five liters of oxygen at night. She got COVID because we weren’t able to quarantine.”
The stress of motel living continued. Five months ago, in the middle of the winter, Roverta said motel management knocked on the door of their suite.
“They said we had to leave because the state hadn’t paid the bill,” Roverta said. “There were 20 families living there. We didn’t have anywhere to go.”
The state quickly negotiated with motel management, which allowed the residents to stay.
Asked about the incident, NCORR issued a statement to Policy Watch saying “on Jan. 12, 2022, our office became aware that the contractor responsible for managing hotel accounts had been slow to issue payment in some instances. NCORR resolved the issue within nine days, ensuring all hotel accounts were brought up to date. This example underscores NCORR’s recent decision to bring all recovery program activities in-house where state employees will have full oversight rather than relying on contractors.”
A state progress report from last month shows the status of Roverta and Franklin’s case. There is no timetable, no indication of when the old mobile home will be demolished and replaced with a sturdier modular house.
Instead, the report only shows that the home will be reassigned to yet another new contractor. Roverta and Franklin’s relocation status reads: “Pending the general contractor’s construction schedule.”
Man’s advocate says NCORR ignored requests for emergency repairs
[Editor’s note: This is among several Policy Watch profiles of homeowners who remain displaced from Hurricane Matthew, which devastated parts of North Carolina in October 2016. These personal stories are part of Policy Watch’s ongoing investigation into the NC Office of Recovery and Resiliency, which has mishandled the RebuildNC program. Five and half years after the storm hit, hundreds of households, equivalent to thousands of people, still do not have permanent homes; they are living in motels, travel trailers, with relatives, or even in their damaged houses. For each profile, Policy Watch has given residents the option of using their full names, partial names or no name at all, depending on their comfort level.]
The grumbling of outboard motors announced that help had arrived.
In October 2016, Hurricane Matthew engulfed the city of Goldsboro in 15 inches of rain, lifting the Neuse River to a record 29.7 feet — 11 feet above flood stage.
About a mile from the Neuse, the man had lived in a little white house with a majestic magnolia tree in the front yard for 30 years. “It was a family house,” said the man, now 65, who asked not to be named. “My daddy bought it, and I inherited it.”
The flood waters rose, and the man was stranded. “I got out by motorboat,” he said.
Torrential rains had strafed his roof, but FEMA determined that the damage was not severe and gave the man money to repair it. HUD — the U.S. Department of Housing and Urban Development — though, has a different standard. By the time HUD factored in aspects of the house that weren’t up to code, including the presence of asbestos in the walls and floors, the agency declared it uninhabitable. The family home needed to be torn down and rebuilt.
So began a five-year morass, in which the poorest and most vulnerable people, like the Goldsboro man, are at the mercy of an inefficient and at times, indifferent state bureaucracy. The NC Office of Recovery and Resiliency oversees the Hurricane Matthew disaster recovery homeowner program. NCORR, as it’s known, received $236 million in federal funds to help people secure new or renovated housing, but poor case management has left thousands of people displaced more than five years after the storm.
“Every person’s story has things in common,” said Charles Wright, a designee and advocate selected by the Goldsboro man to help him negotiate the program. “The bureaucracy, people being strung along, people whose houses are condemned but have nowhere to go.”
After the flood, the man was homeless, so he stayed with friends, an elderly couple. Then the husband died, as did the wife.
Homeless again, the man scraped together enough money to buy a 14-year-old Kia sedan. He parked it in his yard and slept in it for three months. “On the coldest nights I paid to stay in a motel,” the man said.
Finally, in April 2018 the man could afford to move into a low-end motel. He’s been there ever since, paying $650 a month, about 70% of his income from his job as a custodian.
NCORR pays for temporary housing for eligible displaced people when their projects reach a certain stage in the process. But until then, in most cases people are on their own.
“Most of his money goes just to survive,” Wright said, adding the state should reimburse the man for four years’ of motel bills, roughly $32,000. “He should be made whole.”
After two years of motel living, on Aug. 28, 2020, the man, aided by Wright, sent an NCORR case manager an email, requesting money for emergency repairs. Wright included photos.
“My home has deteriorated to the point it is no longer safe to enter my home,” the letter, which the man had signed, reads. In addition to the extensive roof damage, the ceilings had collapsed in five rooms.
Neither Wright nor the man received a response. Two weeks later, on Sept. 10, Wright sent another email, asking about the status of the man’s application.
On Sept. 18, the case manager responded: “Thank you for the information. It has been uploaded to his file.”
Neither Wright nor the man ever heard from NCORR about emergency repairs again. Had the man received the funds for temporary fixes, he likely could have lived in his home until it was time for a contractor to demolish it and rebuild.
Finally, in August 2021, the man’s house was one of 30 in a package that NCORR opened for bids. Rescue Construction Solutions, which, as Policy Watch previously reported, is far behind schedule on its projects, won the contract. Of the 30 homes, all are scheduled to begin construction this year, state records show, although five are already delayed. One homeowner died last December; an heir is now eligible for the program.
The asbestos from the man’s home was removed in February. A mobile storage unit arrived in April, which should have triggered the next step in the process: relocation at the state’s expense. Yet NCORR hasn’t moved the man into a better-quality motel.
State records show construction on the man’s house isn’t scheduled to begin until July 8, although given other homeowners’ histories, that date will likely be postponed. Even if construction begins on time, and proceeds without delays, the man’s new home isn’t scheduled to be finished until Jan. 26, 2023.
“You do what you got to do. I got to survive,” the man said. “All I got is me.”
Over past month, more problems, no improvements at NCORR
Since Policy Watch published its first story on May 9, dozens of homeowners have come forward with stories about problems with NCORR, contractors and workmanship on their homes. Several people told with Policy Watch they had contacted the governor’s office as recently as last year about issues with the program. They said they didn’t receive a response.
Policy Watch has requested an interview with the governor’s office.
A spokesperson for the state attorney general’s office told Policy Watch it had received two complaints, but forwarded them to NCORR.
At least a dozen people, contractors and homeowners alike, have told Policy Watch that NCORR Chief Program Delivery Officer Ivan Duncan was verbally abusive to them. Policy Watch previously requested an interview with Duncan, but NCORR provided Chief Operating Officer and Director Laura Hogshead instead.
Hogshead previously told Policy Watch it had become difficult to attract and retain contractors for the disaster relief program. That and supply chain issues, she said, have slowed the pace of construction.
One North Carolina contractor with an extensive track record of disaster recovery, said it had rebuilt 120 homes damaged by Hurricane Florence — outside of NCORR’s RebuildNC program. The contractor recently notified NCORR and Duncan that the company could withdraw from the disaster relief recovery program, citing “a lack of focus on the homeowners” and “a lack of effective communication.”
The contractor also shared with Policy Watch an email it had sent on April 29 to the governor’s office. It reads in part:
At this point, due to arrogant responses from a specific person in NCORR, I’m ready to go to local government officials and the press to voice my concerns of incompetence with leadership in ReBuild NC. … Feel free to call me if you are interested in hearing the issues. I’ll assume if I don’t hear back that the Governor is not interested in improving ReBuildNC to get things done for citizens in North Carolina.”
The “specific person” referred to in the email was Duncan.
The contractor told Policy Watch the governor’s office did not respond.
Meanwhile, NCORR has not renewed its construction management contract with the firm AECOM. (This change had been planned before Policy Watch’s series launched.) Instead, NCORR will move those duties in-house, which will be cheaper, according to Hogshead.
As part of that shift, NCORR has hired a former Rescue Constructions Solutions employee, Kevin Lara, to be an estimator. In a written response to Policy Watch questions, NCORR said Lara will be “reviewing scopes of work and change orders from all general contractors … and that the correct grade of materials is being used. Because NCORR uses third-party pricing and standard grade material, there is no subjectivity to the approval of change orders. He will review and recommend, but he is not the final decision on any change order.”
The job was publicly posted on the state’s website, NCORR said.
This is the second instance of a Rescue employee being linked to NCORR and Duncan.
Mike Carrington worked for DRG Construction in New York State. That firm won millions of dollars’ in contracts from that state’s storm recovery office while Duncan was employed there as a program delivery officer. Carrington now works for Rescue.
Policy Watch recently published notes taken contemporaneously during weekly contractor meetings showing that Duncan gave Rescue, and to a lesser extent, RHD, leeway not afforded to other contractors. NCORR has denied showing favoritism to any contractor.
Gov. Cooper orders NCORR to expedite Hurricane Matthew recovery, but homeowners’ woes continue ( Originally published 6/24/2022)
Thad Artis, Jr. is living alone in limbo.
Artis is entering his second summer in a Goldsboro motel, waiting to move into his new modular home in Pikeville. But his contractor, Rescue Construction, has made no progress on the home. “A motel is not a home,” Artis said. “It’s just a place to go when you’re on vacation.”
Artis is among thousands of homeowners enrolled in the NC Office of Recovery and Resiliency’s Hurricane Matthew disaster recovery program. He is also among hundreds and hundreds still displaced after the historic 2016 storm.
Worse yet, his wife suffered a stroke and is paralyzed on one side of her body. “She can’t walk. She can’t see,”Artis said.
He asked motel management to allow a hospital bed and a lift to be placed in their room so the couple could stay together and she could receive therapy with him by her side.
The management denied his request.
Artis lives in the motel, but had to place his wife in a long-term care facility. “And they’re calling me about a bill,” Artis said.
It’s wrong,” Artis said of the delays. “We’re suffering.”
“At home you’re relaxed,” he went on. “I’m not relaxed. A home is a place of love and compassion. You can rest better. You’re sure. You feel good. You can sleep.”
As a result of Policy Watch’s earlier reporting, Gov. Roy Cooper “has ordered the NC Office of Recovery and Resilience and the Department of Public Safety to undergo a thorough review of all areas where the process can be streamlined and customer service improved,” said Jordan Monaghan, the governor’s press secretary, in an email. “They have identified a robust plan of action to get people back into their homes faster. The governor expects that NCORR will focus on delivering results faster while staying in close touch with those being assisted.”
(Scroll down for the list of program changes.)
However, for most displaced homeowners these directives have yet to get them back into their houses. Here are the stories of several more homeowners.
Theresa Hamilton turned 90 years old on June 5, living in a motel. Her son, who works in construction, also spoke about the extensive wait.
Joy and Terrance Dillahunt did get back into their Goldsboro home in 2020 after couch surfing for six months. They described the shoddy quality of work that was done on their home. Their contractor was Persons Service Company. It had received 222 complaints about workmanship, according to state records.
Ms. Smith has been displaced for more than a year and still lives in a motel.
NCORR’s changes to the Hurricane Matthew disaster recovery housing program
1. Adopting the Decent, Safe, and Sanitary building standard: “NCORR has been renovating homes to the Housing Quality Standard, which means projects take longer because contractors must repair any and all problems discovered in the home, including those that are not storm-related. NCORR will adopt the Decent Safe and Sanitary standard, ensuring that storm damage is repaired and up to code, but will not focus on non-storm damage.”
Why this is important: This applies only to homes that are being repaired, not new construction.
Homeowners who already have a grant agreement with NCORR will still have their repairs done to the U.S. Department of Housing and Urban Development’s Housing Quality Standard, according to an NCORR spokesperson. New enrollees, though, will be asked to sign an agreement without a specification of which standard will be applied.
This new criteria could speed up home repairs, but several contractors cautioned that the Decent, Safe, and Sanitary standard is not as rigorous as the Housing Quality Standard. For example, drywall could be replaced — but not painted.
A checklist provided by NCORR contains 18 criteria for the Decent, Safe, and Sanitary Standard. The Housing Quality Standard checklist has some overlap, but is much more extensive.
2. Customer service brought in-house: Instead of continuing to use contractors for case management, NCORR is now bringing that function within state government. “This will reduce turnover, enhance information sharing, and improve the ability for survivors to get timely answers to questions,” an NCORR spokesperson said via email.
Why this is important: Dozens of homeowners have told Policy Watch that they had several case managers in just a few months. There was enormous turnover and little continuity, the homeowners said. Case managers requested nothing be sent via email, but that communications should be by phone. Without a paper trail, homeowners often had to repeat steps in the process. In many cases, homeowners said, they couldn’t even reach their case managers.
While these communication failures occurred with contractors, an NCORR employee was in originally in charge of applicant services: CJ Jordan, who has since transferred to the NC Department of Environmental Quality, where he oversees more than a billion dollars in federal infrastructure funding related to water, sewer and storm water.
3. Streamlining program requirements: “Several changes to documentation have already been put into place and applicants should be able to move through the process more quickly as a result of these changes,” according to NCORR.
Why this is important: Many homeowners have complained about the extensive and redundant paperwork required to enter the program. In some cases, applicants said they were given papers to sign that were missing key information; some declined to sign because they didn’t know what they were agreeing to.
4. Recruiting and working with smaller contractors: NCORR said it “has worked mostly with large general contractors that are equipped to undertake a high number of construction projects at the same time. The program will now focus on working with smaller, more regionally based contractors who will be able to complete fewer projects but on a shorter timeline.”
Why this is important: There are several small contractors already work in the program, including Rescue Construction Solutions, Fam-Lock and RHD. Several multi-state contractors told Policy Watch that the bid packages — the number of homes — were too large and cumbersome, even for major companies. Unless the number of homes per contractor decreases, it will be difficult to quickly complete the work.
At least a half dozen contractors also said that Ivan Duncan, NCORR’s chief program delivery officer, was verbally abusive and made arbitrary policy decisions, effectively driving them out of the program.
Contractors and homeowners also said there were glitches in “change orders.” These changes occur when a contractor discovers previously known issues in a home, such as asbestos, lead or structural problems. These change orders must be approved by NCORR before the work can be done. Some homeowners have waited for months for these orders to be okayed or denied — ultimately the responsibility of Ivan Duncan.
5. Expanding the pool of general contractors: “NCORR will begin posting all construction projects to the state’s Interactive Procurement System website, rather than posting to the smaller pre-qualified contractor list that was previously used. This will open up bidding to a much larger pool of potential contractors,” according to a spokesperson.
Why this is important: The smaller pre-qualified contractor list contained roughly a dozen companies that had to fill out paperwork and prove they were financially capable of completing the jobs. However, a Department of Public Safety spokesman told Policy Watch that no background checks were conducted to verify the information potential contractors provided was accurate.
Rescue Construction Solutions, for example, claimed it had not been the subject of civil litigation within three years. That was not true.
Expanding the pool of general contractors could help alleviate the shortage, but without adequate oversight, the program could be vulnerable to abuse.
6. Purchasing new mobile homes from lots, as well as manufacturers: “NCORR will change its current method of procuring mobile homes for applicants to expedite delivery. Previously, manufacturers were building mobile homes based on specific plans to ensure that all units purchased were the same in terms of features and amenities. Going forward, purchasing pre-built mobile homes from lots and manufacturers will mean faster delivery, while still meeting HUD standards.”
Why this is important: Under the previous arrangement, NCORR did not purchase mobile homes or modulars from dealer lots. Instead, homeowners could choose from dozens of floor plans; the homes then had to be built from scratch based on those specifications, creating a backlog of hundreds of homes.
7. Hiring/contracting inspectors to ensure accurate scopes of work: “Project scopes of work were often done immediately after a storm and no longer reflect the state of a damaged home at this point. More inspectors will provide accurate scopes of work before bidding the contract out, which will reduce project change orders and construction delays,” according to NCORR.
Why this is important: Mold, mildew, broken windows, leaky roofs. Because so many homes have been left unfinished — and for so long, upward of two years, in some cases — they have further degraded because of the weather. Construction delays have not only broadened the scope of repairs, but have increased the cost of repairs.
This story is part of a continuing series on NCORR’s mismanagement of its Hurricane Matthew disaster relief homeowner program
Displaced homeowners also finding their belongings damaged in mobile storage units; state paid for them but says it’s not responsible
The NC Office of Recovery and Resiliency, also known as ReBuild NC, could not produce records to Policy Watch of how much money it has spent in the last five years on motels and storage units for people displaced by Hurricane Matthew, according to a spokesperson’s email.
However, based on figures for just six families, the amount likely runs into the millions of dollars.
After the historic storm devastated eastern North Carolina in October 2016, the state received $236 million in federal disaster relief money to rebuild or renovate single-family homes that sustained major or severe damage. ReBuild NC pays for motels and storage units for low-income homeowners while they are displaced. This is called Temporary Relocation Assistance.
Yet since NCORR was created by the legislature in late 2018, construction delays and program mismanagement have prevented thousands of people from returning to their homes on time. These hurricane survivors have been living in motels, with relatives or even in their dilapidated houses for months, even years.
Meanwhile, the homeowners’ belongings have been stored in mobile storage units outdoors, some for longer than two years. In some cases, those belongings have been ruined because the units have leaked or been infested with rodents and insects.
Policy Watch filed a public records request on April 13 requesting documents related to motel and storage unit expenditures. Policy Watch offered to accept invoices because state law does not require agencies to create a record for a requester.
The text of the request:
This request is in reference to Hurricane Matthew recovery. As for Nos. 3 and 4, if those totals are not available, I can accept all invoices related to those requests and calculate the days myself.
1) Yearly total expenditures on motel bills for displaced residents who are awaiting new or renovated housing due to Hurricane Matthew damage
2) Yearly total expenditures on motel bills broken out by county
3) Yearly total number of days spent in motels by all displaced residents
4) Yearly total number of days spent in motels, per county
5) Yearly total expenditures on storage facilities, including PODS or similar structures, for displaced residents
6) Yearly total expenditures on storage facilities, including PODS or similar mobile structures, for displaced residents, by county”
After receiving the request and multiple follow-ups, an ReBuild NC spokesperson responded:
We have been notified that no records exist as described in your records request, so staff is working to compile information that will answer your questions.”
Without state records it’s difficult to estimate how much ReBuild NC has spent, a key figure in determining the costs of this aspect of the program. And depending on the extent of work required on a home, it’s feasible that the motel and storage unit costs could approach the cost of those repairs.
Even at a discounted state rate, with county and state tax exemptions, the motel expenses are mounting. The totals for just six households exceeds $310,000 — and according to state records, hundreds more households remain displaced.
ReBuild NC’s total expenditures would not include reduced stipends it pays to displaced people who are living with relatives. Nor do these totals include the cost of the mobile storage units.
James Cade of Lumberton has lived with his wife in a mid-range hotel for 14 months. Based on that rate, the state has paid about $33,000 for their stay, equivalent to about $2,357 per month. Five PODS are sitting in the family’s yard. Fair market rent in Robeson County for a two-bedroom apartment is $671 a month.
Sam Cockrell of Lucama has been displaced for more than a year; his motel bill would be similar to the Cades’.
A single homeowner told Policy Watch they have been displaced for two and a half years, and lived in a motel the entire time. Receipts from the first motel show the state paid nearly $50,000 for the first 640 days. Since then, the person has transferred to another motel, for which receipts aren’t available. However, at the $80-a-night-rate, ReBuild NC could have paid roughly another $17,000, bringing the entire cost of the motel stay to at least $67,000. Those expenses do not include the two PODS sitting in the driveway.
One family told Policy Watch they have been living in two rooms at a motel for 19 months, totaling at least $91,000, not including the cost of the mobile storage units. The family asked not to be named because they are afraid they will be retaliated against and construction on their home will be delayed.
A fourth homeowner reported to Policy Watch that receipts show ReBuild NC paid $21,000 for a six-month stay.
The rate at a Home2 Suites in Goldsboro, where some people are still living, is $100 a night, according to a person who answered the phone. The state is behind on paying motel bills there, she said. She declined to provide additional details, only to say that the state pays the bills “little by little.”
In a previous email with Policy Watch, ReBuild NC attributed late payments to an outside contractor. However, ReBuild NC also said it was bringing those duties in-house.
Willie and Geraldine Williams have been living in a Kinston motel room for 844 days. Based on mid-range rates of $77 to $80 nightly, the state has incurred at least $68,000 in motel bills for the Williamses. The family has two PODS, at state expense. This breaks down to roughly $2,400 a month for the state to house them. By comparison, monthly rents for a two-bedroom apartment in Kinston range from $650 to $800 a month, not including utilities. However, if the Williamses lived in an apartment, it’s unlikely they would need PODs.
The Williams family’s situation illustrates the inefficiencies in the program. They moved out of their home in Ayden on March 19, 2020. Initially ReBuild NC and a contractor determined that the house needed only repairs. After installing new flooring, windows and air conditioning, inspectors said the home was structurally unsound and needed to be torn down and rebuilt.
Not until 2021 did contractors arrive to raze the house. However, they only removed the brick facade and the porch, leaving the ruins in piles on the property. The rest of the house still stands, and no work has been done on it for a year. The front yard is now a small marsh with cattails growing in it.
Geraldine Williams receives calls from the case manager about every two weeks, but that person can’t answer any of her questions. “They can’t tell me anything, not even the name of the contractor,” she said. (State records show that as of April 2022, it was Rescue Construction.) “They ask me if I have any questions,” said Geraldine Williams, as she sat in her motel room surrounded by clothes and kidney dialysis equipment. “I have only one question and it’s the same as last time: When am I going to get back in my home?”
Belongings ruined in storage units; ReBuild NC says it’s not responsible
For most displaced families, most everything they own is now sitting in mobile storage units, sometimes for more than a year.
Many homeowners told Policy Watch that they had received a letter from ReBuild NC requiring them to agree in writing that the state is not responsible for any damage to the contents of their mobile storage units. Instead, the letter directs homeowners who believe their belongings were damaged while in storage to contact the storage unit company for a claim.
The state pays for the storage units, but an ReBuild NC spokeswoman told Policy Watch via email that the agreement is between the storage unit company and the homeowner.
Many homeowners told Policy Watch they never signed such an agreement when they entered the program. What they do remember, is being told by ReBuild NC they would be out of their homes for no more than six months.
While it’s common for storage unit companies to require these agreements, said A.D. Skaff, supervising attorney for disaster relief at Legal Aid of North Carolina, homeowners were not aware their belongings would be in storage for so long — in some cases, years. These structures are not intended for long-term use outdoors. For that purpose, the storage units are moved inside and depending on the contents, even in a climate-controlled building.
Skaff told Policy Watch that in a review of her clients’ agreement documents with ReBuild NC, she could find none that specifically absolved the state of liability.
That’s because the document was not included in the homeowners’ original package for Temporary Location Assistance. It was created last August and sent to homeowners whose belongings were in the units. ReBuild NC said it sent the letter, “to homeowners that were confused about who to contact regarding concerns with potential damage to items stored in the units. Unfortunately, in some instances, items may have been damaged prior to being placed in storage due to flooding or other storm-related issues, which could trigger mold and mildew in the unit.”
Only now is the agreement a routine part of the application. “From that point forward, the form has been provided to applicants as they enter Temporary Relocation Assistance,” an ReBuild NC spokesperson wrote in an email to Policy Watch.
Charles Wright, who advocates for several displaced homeowners in Wayne County, said requiring applicants to sign an agreement “this late in the process is very problematic. I think it’s a new form for a new problem.”
Carolyn McFarlin thought she would be back home within three months, according to ReBuild NC estimates. ReBuild NC moved her out of her home last November so renovations could begin, such as rewiring the home, replacing a stove, and repairing the soft spots in the floors and a moldy ceiling.
None of that work has begun. McFarlin has been living with her sister. “It’s stressful,” McFarlin said. “Even though it’s family, the house is still not yours.”
McFarlin’s belongings are stored in three PODS on her property in Tarboro. She opened them last week to find mold growing on a bed headboard.
Had the contractor started renovations shortly ReBuild NC moved McFarlin out of her house, she and her belongings — without the mold — would likely be back home now.
“I don’t understand why they moved me out of my house if they weren’t going to start the work,” she said.
Almost all of Geraldine and Willie Williams’ belongings — anything that can’t fit in a small motel room — are packed in two PODS and a barn. Willie Williams opened one unit last weekend. Boxes and clothing was rife with rodent feces and urine. Other items had been chewed on, presumably by rats or mice.
Now they will have to buy new clothes, dishes and other household items. “There’s nothing in that POD that I want to bring back in my house,” Geraldine Williams said.
A 12-member legislative subcommittee will investigate the NC Office of Recovery and Resiliency’s handling of a Hurricane Matthew disaster relief program that has left thousands of people displaced, living in motels, with relatives, or in dilapidated houses for years. NCORR is familiarly known as ReBuild NC.
This week House Speaker Tim Moore and Senate Pro Tempore Phil Berger established the Subcommittee on Hurricane Response and Recovery. Its co-chairs are Rep. John Bell, a Republican representing Wayne, Johnston and Greene counties; and fellow Republican Sen. Brent Jackson, whose district includes Duplin, Johnston and Sampson counties.
ReBuild NC received $236 million from the U.S. Department of Housing and Urban Development for Hurricane Matthew homeowner recovery. Initially, the Division of Emergency Management ran the program under then-director Mike Sprayberry. However, HUD criticized the division for the slow rollout of funding.
In response, in late 2018 the legislature created the NC Office of Recovery and Resiliency, which is under the Department of Public Safety. Gov. Roy Cooper appointed Laura Hogshead as chief operating officer to get the program on track. She hired Ivan Duncan as chief program delivery officer, who held a similar position in New York State after Hurricane Sandy.
However, under Hogshead’s and Duncan’s leadership, ReBuild NC has continued to founder. Since May, Policy Watch has published a series of investigative stories and homeowner interviews uncovering the extent of ReBuild NC’s mismanagement: arbitrary and preferential treatment to some construction companies, an atmosphere of secrecy, high turnover of case managers, lack of communication with displaced homeowners, as well as exorbitant expenditures on motel rooms and mobile storage units for those households.
As a result of Policy Watch’s reporting, Gov. Roy Cooper in late June ordered ReBuild NC and the Department of Public Safety “to undergo a thorough review of all areas where the process can be streamlined and customer service improved. They have identified a robust plan of action to get people back into their homes faster. The governor expects that NCORR will focus on delivering results faster while staying in close touch with those being assisted.”
Nonetheless, in the past month, Policy Watch has continued to hear from displaced homeowners who are desperate for help. All of them have told Policy Watch they get no answers from ReBuild NC about the progress on their homes. Several contractors have also left the program, further delaying construction.
The homeowners also said their case managers instruct them to communicate only by phone, not via email. Not only does this practice leave no paper trail for accountability purposes, it also prevents case managers from having a comprehensive history of a homeowner’s issues. In many instances, homeowners said they had to rehash their entire history with the program — even providing redundant documentation — to new case managers.
In response to the announcement of the subcommittee, NCORR issued a statement:
“Since beginning its work in early 2019, NCORR’s top priority has been to get hurricane survivors back into their homes as quickly as possible, while supporting the overall recovery of storm-impacted communities. NCORR has been working closely with General Assembly members and staff to increase understanding of its progress and operations. We look forward to sharing additional information about program changes underway that are improving and expediting the recovery process for the people we serve.”
In addition to the co-chairs, many of the subcommittee’s members represent constituents in eastern North Carolina, which was devastated by the historic hurricane in October 2016. The first meeting has not yet been announced.
Danny Britt (R-Columbus, Robeson) Brenden Jones (R-Columbus, Robeson)
Jim Perry (R-Lenoir, Wayne) Mark Pless (R-Haywood, Madison, Yancey)
Steve Jarvis (R-Davidson, Montgomery) Sarah Stevens (R-Alleghany, Surry, Wilkes)
Kirk deViere (D-Cumberland) Charles Graham (D-Robeson)
Joyce Waddell (D-Mecklenburg) Shelly Willingham (D-Edgecombe, Martin)
A house in Wayne County whose homeowner has been displaced by Hurricane Matthew since the storm hit in 2016. (Photo: Lisa Sorg)
ReBuild NC has spent $10.64 million on motels, moving and storage unit expenses in just two and a half years for displaced Hurricane Matthew survivors, as construction and administrative delays have kept people from returning to their homes.
The figures were included in Temporary Relocation Assistance (TRA) data provided by ReBuild NC, also known as the NC Office of Recovery and Resiliency. The data also includes expenses for apartment leases and stipends for friends and family of Hurricane Matthew survivors who privately house them.
As part of an ongoing investigative series, Policy Watch reported earlier this month that ReBuild NC had been unable to provide detailed expenditure documents as requested under public records law. The agency then agreed to send totals, but without supporting documentation.
In providing the new information, a ReBuild NC spokesperson noted that TRA funds come from the U.S. Department of Housing and Urban Development, although this type of assistance is not a HUD requirement. “It is an additional benefit that NCORR decided to provide to make the recovery process easier, especially for those applicants who have no other housing options during the construction process. Without this benefit, many of our applicants would not be able to participate in the program,” the spokesperson wrote in an email.
Under the TRA program, once construction begins on a home, ReBuild NC pays to move and house low-income hurricane survivors, as well as covering the cost of renting mobile storage units.
ReBuild NC incurred its first TRA expenses in January 2020. Since then, ReBuild NC has paid $6.5 million in motel bills, $1.7 million to PODS Enterprises, and $70,000 to 1-800-PACK-RAT for mobile storage units, as well as other expenses.
The relocation is supposed to be temporary — usually up to six months — but because of ReBuild NC’s mismanagement of the program, some hurricane survivors have lived in motels for more than two years. This includes the Williams family, who have been stuck in one room without a kitchen for 862 days.
Another homeowner, who asked not to be named for fear that work on their home would be delayed, told Policy Watch they have been in a motel since early 2020. However, the motel does not have a kitchen and the person receives food stamps, which don’t cover restaurant meals. As a result, it has been difficult for them to afford food, they said.
Construction delays have long plagued the program. Although some lag time can be attributed to the pandemic and supply chain issues, that does not explain all of the inefficiencies. In other instances, homeowners have been moved from livable, if damaged houses with the expectation construction would begin immediately. Instead, months, even years pass.
Several contractors have told Policy Watch that they have completed the work but have not been paid by ReBuild NC. Multiple contractors told Policy Watch that it can take months to get approval for change orders; these occur when contractors uncover additional work that needs done and that was beyond the estimate cost of repairs, such as lead paint or asbestos abatement.
According to state data that had been sent by ReBuild NC to the governor’s office and obtained by Policy Watch, 740 homes are listed as complete as of July 11. In early May that figure was 717.
The average cost per house — including new construction and rehabs — is $136,882, according to state cost estimate and invoicing data obtained by Policy Watch. Depending on the type of home, the cost of a motel stay could exceed that of new construction or repairs.
The recent TRA figures don’t capture the full extent of displaced homeowners. Hurricane survivors whose income is too high must pay for their own relocation expenses. However, several homeowners, such as the Dillahunt family, have told Policy Watch their income was miscalculated and they were in effect, homeless. The Zerby family didn’t qualify for TRA and lived in a travel trailer in a church parking lot for more than a year.
ReBuild NC operates its homeowner disaster recovery program using an eight-step process. In the first five steps, the process is primarily administrative: determining an applicant’s eligibility and benefit amounts, as well as inspecting the home.
In Step 6, ReBuild NC puts a project out for bid, and an eligible household can then move using TRA assistance. (If repairs are minor, a homeowner can remain in the house.) There are 819 households in Step 6, according to an eight-step status report dated July 11.
Construction begins in Step 7, the current status for 173 households. Another 740 are in Step 8.
Hurricane Matthew devastated eastern North Carolina in October 2016. HUD subsequently allotted North Carolina a $236 million grant for a disaster relief homeowner recovery program related to the storm. However, the recovery program, initially run by the state Department of Public Safety and the Department of Commerce was slow to launch, and cited by HUD as a “slow spender,” jeopardizing the grant.
The state legislature created the NC Office of Recovery and Resiliency in late 2018; Gov. Roy Cooper appointed Laura Hogshead as ReBuild NC’s director; she has been in charge since early 2019. Ivan Duncan is the chief program delivery officer, responsible for dealing with contractors.
Last week, state House and Senate leadership announced the formation of a 12-member oversight committee to investigate the delays and problems with the program. the first meeting has not been scheduled.
From Ivan Duncan’s LinkedIn page: Duncan is the chief program delivery officer at ReBuild NC. He was commenting on a United Nations post to LinkedIn about disaster relief. Multiple contractors and homeowners have complained that he is responsible for many of ReBuild’s problems. The agency has declined to make Duncan available to Policy Watch for an interview.
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
They 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.”
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.”
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.
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.”
The actual number is significantly lower – just 588.
NCORR, also known as ReBuild NC, included in its tally 201 homes that were finished by Robeson County’s locally run program in 2018 and 2019.
Policy Watch asked ReBuild NC to explain the discrepancy. “A great deal of information and data was provided to the subcommittee in advance of the Sept. 14 hearing, so members are fully aware of what the numbers mean,” a ReBuild NC spokesperson said via email. “NCORR reported out to the subcommittee following guidelines provided by legislative officials.”
Sen. Jim Perry, a Lenoir County Republican, told Policy Watch that he knew ReBuild NC had absorbed the Robeson County program, but didn’t recall the number of homes that the county had completed before merging with the state.
“ReBuild NC’s construction results were already unacceptable at 789 homes. Now we have clarity that it is actually 25% worse than we thought?” Perry said in an email. “Director Hogshead clearly has the wrong person running the construction effort. The Construction and Temporary Relocation Assistance programs have failed these people.”
For most of 2018 the state disaster recovery program was co-administered by the Department of Commerce and the Division of Emergency Management. After HUD labeled North Carolina as a “slow spender” of disaster recovery funds, the legislature created ReBuild NC, which launched in early 2019.
A Rebuild NC spokesperson noted that “all projects included in the  total were funded by the CDBG-DR grants” – HUD disaster relief money — “for which NCORR is the grantee and responsible party.”
It is true that Robeson County received $9.3 million in HUD funding via ReBuild NC. However, ReBuild NC’s own documents, reported to HUD, list Robeson County as the “responsible organization” in 2018 and 2019.
Over those two years, several counties, including Cumberland, Nash, Wayne, Robeson and Edgecombe, ran their own programs as “subrecipients” of HUD funding. Most counties completed a few houses; only Robeson made significant headway in that regard.
ReBuild NC’s own reports to HUD further illustrate the division of responsibilities between the state- and county-run programs. For example, homeowners’ cases outside of Robeson County were processed by a contractor hired by the state Division of Emergency Management; Robeson had its own project management contractor, HORNE.
In 17 months, from Aug. 1, 2018 to Dec. 31, 2019, the Robeson County program completed 201 houses, state records show. Nine contractors participated in that local program.
In January 2020, ReBuild absorbed all county-run programs. Over the next 30 months, through July of this year, state records show that 129 homes have been completed in Robeson County. Twelve contractors worked on homes there.
Some of the delay can be attributed to COVID-19 and related supply-chain shortages. Yet the overall pace of construction is slower now than at the peak of the pandemic, Hogshead testified.
Since 2020, Rescue Construction Solutions has won bids on the bulk of ReBuild NC homes in Robeson County; of 125, it has completed 19 as of July, according to state records.
When accounting for all counties where Rescue operates, it had won bids on 724 homes. Of those, Rescue has completed just 147.
Policy Watch asked Rescue for an estimated number of homes it would finish by the end of the year.
Michelle Rash, vice president of RLF Communications, the crisis communications firm representing Rescue, did not provide figures. Instead, Rash wrote on behalf of Rescue president Sheila Brewington that the company “remains fully committed to our work with NCORR and to helping families impacted by Hurricane Matthew rebuild as quickly as possible, within the parameters and conditions under which we are required to operate.”
Policy Watch requested from ReBuild NC an estimated number of homes that would be completed by each contractor by month and by the end of the year. A spokesperson said ReBuild NC has not requested specific start or completion dates, but did not explain why, especially since the legislative subcommittee dressed down the agency for failing to hold its contractors accountable.
“We are always monitoring contractor production with a goal of speeding up processes whenever possible and getting people back in their homes faster,” the spokesperson said.
Good news in Wayne County
There has been progress in Wayne County, where more than 100 households have applied to ReBuild NC for assistance.
Theresa Hamilton, who turned 90 years old in a motel in June, is on schedule to move into her home on Oct. 22.
Policy Watch reported earlier this year about a Goldsboro man who had been rescued by boat during Hurricane Matthew. Unable to stay in his damaged home, the man, who is in his 60s, lived in his car for several months one winter.
He eventually paid $650 a month to live in a one-star motel – all he could afford on his wages as a custodian – for more than four years.
ReBuild NC recently moved the man into an extended stay motel as part of a Temporary Relocation Assistance program, funded by HUD.
Charles Wright, the man’s communication designee, told Policy Watch that the man had been “lost in the system.” Wright has submitted the man’s motel receipts totaling $32,000 to ReBuild NC and asked for him to be reimbursed.
Editor’s note: As of noon Friday, the woman and her son were relocated by ReBuildNC to a hotel in Lumberton. Policy Watch will continue to update this story as additional details become available.
2:33 p.m. The homeowner called Policy Watch and said the motel in Lumberton had no rooms until tomorrow at 3 p.m. Meanwhile, the homeowner is sleeping in her dilapidated home that she said is full of mold.
The homeowners’ names have been withheld by their request for privacy reasons.
On Thursday around 11:30 in the morning, several Hurricane Matthew survivors living at an Extended Stay America motel in Fayetteville, in Cumberland County received a knock on their door. They had until 4 p.m. to pack up and leave.
They had been living at the Extended Stay for months, some even longer than a year, as their damaged homes were repaired or rebuilt under ReBuild NC’s homeowner disaster recovery relief program. The state was paying for them to live in the motel. Now they were essentially homeless.
“They didn’t give me a reason,” one of the survivors who was being evicted, told Policy Watch by phone. The woman, who is in her late 50s, has been living in the motel with her son for 20 months. “I don’t have anywhere to go.”
At 9:22 a.m. Friday morning, the woman called Policy Watch to say the police were there to evict her.
A motel clerk told Policy Watch by phone Thursday that the residents were being “relocated” by ReBuild NC.
That’s not true, a ReBuild spokesperson told Policy Watch via email. “ReBuild NC is not requiring the relocation of program participants. We are aware of a few individuals being evicted from hotels at the direction of the hotel and ReBuild is working to find new lodging in those instances. We are also in the process of communicating with other program participants to address any confusion.”
Extended Stay management was actually evicting the three families over alleged “violations of motel policy,” according to several sources, including Leigh Lawrence, the legislative aide for State Rep. Billy Richardson, whose district includes Cumberland County. Lawrence coordinated with the motel and county officials to get the woman and her son a temporary reprieve; the other two families had already left the motel by 4 o’clock. It is unclear where they went.
It’s also unclear what the policies had been violated. An Extended Stay clerk who answered the phone Friday morning said the motel had no comment, but that the information that Policy Watch had been given “was false.” The clerk would not elaborate.
The woman and her son had been complaining about bedbugs in her suite as early as April of this year, when Policy Watch previously spoke with her. The woman told Policy Watch Friday morning that after she reported the bedbugs, motel management sprayed the room and relocated her and her son. “They’re trying to blame us for the bedbugs, but the bugs were already here,” she said. The motel has a two-star rating out of five, based on public reviews.
ReBuild NC has spent more than $13 million as part of its Temporary Relocation Assistance program to house survivors of Hurricane Matthew and Hurricane Florence, primarily in motels. Some survivors have lived in motels without kitchens or laundry facilities for nearly three years.
After state lawmakers grilled top ReBuild NC officials at a government oversight hearing, the program began offering more apartment options for motel residents.
Many hurricane survivors have also told Policy Watch over the past six months about unsafe conditions in some of the motels, including drug dealing. One man told Policy Watch that hotel management abruptly changed his agreement from a monthly basis to a weekly one, then temporarily locked him out of his room.
Lawrence of Rep. Richardson’s office told Policy Watch that the Cumberland County officials didn’t know hurricane survivors were living in motels there, but that the county manager was communicating with top ReBuild officials about relocating the evictees.
Ivan Duncan, whose tenure as chief program delivery officer with ReBuild NC has come under increased scrutiny, is resigning, sources told Policy Watch.
A ReBuild NC spokesperson confirmed to Policy Watch that “Mr. Duncan has given notice that he intends to pursue a new opportunity and will be leaving his position. NCORR relayed this information to legislative staff this morning.”
Duncan has been in charge of the embattled homeowner recovery programs for Hurricanes Matthew and Florence since April 2019, when he was hired by ReBuild NC Director Laura Hogshead. ReBuild NC is also known by its formal name, the NC Office of Recovery and Resiliency.
Duncan earns more than $139,000 annually.
However, over the past three and half years, the homeowner recovery program has largely failed, a Policy Watch investigation found; only 814 homes have been built of 4,275 eligible applications. Of those 814 homes, 201 were built by Robeson County in 2018 and 2019, when it ran its own program with HUD funds. That means the actual number of homes reconstructed or rehabbed under ReBuild NC is 613.
Some homeowners have been living in motels for as long as three years, waiting for their homes to be completed — or even for the work to start. ReBuild NC has spent more than $13 million to house displaced homeowners in motels, apartments or with friends/family, state records show.
On Sept. 14, members of a joint legislative oversight committee grilled Duncan and Hogshead over the program’s inadequacies. At that meeting, Duncan appeared defensive and at times, even dismissive, of homeowners’ concerns.
A separate HUD audit showed that the ReBuild NC had failed to adequately document $2.5 million in expenditures for Hurricane Matthew recovery.
As Policy Watch has reported as part of its ongoing investigation, Duncan’s tenure has been fraught with controversy. Several contractors have told Policy Watch that Duncan’s demeanor is “abusive.” During weekly in-person contractor meetings, he routinely required contractors to turn off their phones and place them in a bucket to avoid being recorded. He discontinued that policy only after Hogshead, herself under scrutiny, directed him to allow contractors to keep their phones.
Yet those meetings were still documented. According to notes taken by a contractor during weekly meetings, Duncan appeared to have given Rescue Construction preferential treatment in evaluating its performance. Based in Raleigh, Rescue has been awarded more than $80 million in contracts to rebuild or renovate hurricane-damaged homes, more than any other general contractor. Duncan also reportedly said he worked in “gray areas,” according to the notes.
Duncan reportedly told inspectors in May 2021 not to visit homes Rescue had built. This allowed Rescue to sidestep oversight.
Duncan also allegedly allowed Rescue to delay starting some of its construction projects, according to notes taken in May 2020. That’s important because contractors’ performance and eligibility to bid on future contracts is based in part on their completion rate.
Other examples of alleged preferential treatment include Duncan’s edict to pay Rescue to move a household for the second time; other general contractors were not given the same consideration, the notes say.
Last year, the notes indicate Duncan also looked favorably upon RHD, another contractor. However, the notes show that RHD hesitated to accept Duncan’s offers.
Four former Rescue employees told Policy Watch that Duncan often visited the company’s office; these employees referred to the program as the “Ivan and Sheila show,” referring to Sheila Brewington, the company’s president. Rescue has repeatedly denied any wrongdoing or that it received preferential treatment.
From February 2015 to April 2019, Duncan had worked at the New York Governor’s Office of Storm Recovery overseeing buyouts and acquisitions related to Hurricane Sandy; he then switched to a top position within program delivery – a job similar to the one he now holds at ReBuild NC.
“We recruited him to come and bring all of his [disaster relief] knowledge to North Carolina,” Hogshead told Policy Watch earlier this year.
However, a month before Duncan left New York a HUD Inspector General’s report dated March 2019 found deficiencies in how that program was run. The audit found the State of New York “disbursed more than $3.5 million for ineligible properties and incentives and more than $5.9 million for property that it could not show met applicable requirements. “HUD did not have assurance that Disaster Recovery funds were used for their intended purpose,” the report reads.
The Inspector General’s office concluded that New York State “did not have adequate controls over the acquisition component of its program and refiled on applicants and the work of other entities to justify awards to homeowners without verifying the information.”
The report did not mention Duncan by name, so it is unclear who was ultimately responsible for the failures. However, he did serve in that agency’s leadership and was directly over the buyout and acquisition program.
For privacy reasons, Policy Watch has identified the homeowners only by last name, or by their request, withheld their name altogether.
Ms. Johnson’s toilet has sat, unconnected to any plumbing, in the middle of her master bathroom for more than a year.
Mold is blooming in her master bedroom closet, caused by a leaking shower. The water pressure is low, and her floors are uneven.
Her contractor, Persons Services has not fixed the issues since 2021, Johnson said. And the NC Office of Recovery and Resiliency, also known as ReBuild NC, has failed to hold Persons accountable.
“They haven’t done anything,” Johnson, who survived both Hurricane Matthew and Hurricane Florence, said. “I’m just getting the runaround.”
Multiple hurricane survivors told Policy Watch that after they moved into their homes, the structures began to fail: cracked sheetrock on the walls, badly fitting doors and windows, poorly installed septic systems and air conditioning units, and plumbing problems.
As of May of this year, homeowners had filed more than 1,000 workmanship complaints to the ReBuild NC against their general contractors, state records show. Some of the complaints were determined to be unfounded or the result of homeowner negligence. But many required contractors to fix the issues.
The problems are not only the fault of one contractor, but several, including Thompson Construction and Rescue Construction Solutions, according to homeowners interviewed for this story, as well as state documents. Persons and Thompson did not return emails seeking comment. Rescue President Sheila Brewington issued a statement through a crisis communications firm:
“All houses built through the North Carolina Office of Recovery and Resiliency are under warranty. If a homeowner has an issue or concern regarding the construction of their house during the warranty period, they contact NCORR. NCCOR then decides if the issue falls under the scope of the warranty and notifies the contractor as needed. Rescue Construction Solutions adheres to the warranty standards set by the program and, when advised of warranty issues, we address them in a timely manner.”
Troubles with warranties, inadequate inspections and shoddy workmanship
ReBuild NC homes, whether renovated or built anew, come with warranties, depending on the type of construction:
All homes have one-year warranty on materials, equipment, completed systems, such as heating and air conditioning, guaranteeing that they are “free from defects due to faulty materials or workmanship,” a ReBuild NC spokesperson told Policy Watch in an email.
For new homes, the structural work is guaranteed for 10 years from the date of final inspection.
New homes and manufactured homes, such as modulars, also have two-year systems warranties.
However, if a problem was not within the original scope of work approved by the state and the homeowner, then those repairs are not covered by the warranty.
Each home has “quality control and milestone inspections” by ReBuild NC staff, a spokesperson for the agency said in an email. These checkpoints are designed to get storm survivors back into well-built, safe and resilient homes as quickly as possible.”
Yet several homeowners told Policy Watch that their ReBuild NC inspectors often performed only cursory examinations of their homes, at various phases of construction.
A Lenoir County homeowner said ReBuild NC inspectors ignored his request to inspect his attic, where most of the damage occurred. He’s been out of his home for three years. His initial contractor was Persons Services; now it’s Rescue Construction Solutions. Recently, the homeowner said, he arrived at his home to pick up the mail when two men who appeared to be teenagers arrived to work on the house as subcontractors without supervision.
A Pender County homeowner told Policy Watch the inspector spent less than five or 10 minutes at their damaged house and seemed not to listen to their concerns about a leaking roof and mold. The family, who survived Hurricane Florence, were recently moved by the state into a motel after living in their dilapidated modular home since the storm hit in 2018.
Mr. Jones of Robeson County said he tried to tell his inspector about his roof. “He’s got a notepad,” Jones said, who moved into his house in 2019. “He doesn’t open any of my electrical panels, never looks in the crawlspace or the attic. It took seven minutes.
“It was the only time anyone came out during the whole process,” Jones, who works in construction, said. “There were no quality control checks, zero contact from ReBuild until they were ready to close on the house.”
Thompson was the primary contractor for Jones’s home. He said he observed subcontractors making construction errors even before he moved into his renovated house.
Exterior paint was found to contain asbestos, and is legally required to be removed because exposure to the material can cause cancer. There are specialized asbestos abatement firms who do this type of work for ReBuild NC contractors.
“You cannot just hire some guys to do this,” Jones said. “But the same crew that did the demolition did the asbestos and they weren’t certified to do that scope of work.”
And the crew didn’t actually remediate the asbestos. “They didn’t remove it,” Jones said. “They painted over it.”
Jones said he told the ReBuild NC inspector about the asbestos, but was ignored.
The plumbing also leaked while the home was under construction. “I could hear it,” Jones said. “Water was pouring under the house all day, ruining the subfloor and insulation. I’m calling and pleading that people are breaking things with no intention of fixing them. I called ReBuild to no avail.”
Several homeowners said they contacted their case managers and ReBuild NC about shoddy workmanship, but their situations remain unresolved. In some situations, the homeowners said they received no response at all.
Mr. Godwin of Robeson County, whose contractor was Rescue Construction Solutions, said when he turns on his hot water the lights flicker until he shuts it off – an indication of an electrical problem.
“The doors don’t fit. The refrigerator never cuts off. The air conditioning is nailed to the side of the house, and when it kicks on, the whole house vibrates.”
Local inspectors are scheduled to revisit his house; ReBuild NC has been to his home twice, Godwin said. “The state guy said someone would fix it, but no one did.”
Homeowners also attend the final walk-through before receiving the keys to their house; county or city staff also inspect the houses to ensure they meet building code. One Sampson County homeowner told Policy Watch that her house failed a county inspection three times. The air conditioning system didn’t cool the home; the drip edge on the roof – important to keep water from infiltrating the foundation below – was missing.
Cumberland County officials said of the 15 properties they inspected in their jurisdiction – unincorporated areas – they “didn’t get a sense of poor workmanship.” In Fayetteville, however, where hundreds of houses are either being renovated or rebuilt, city inspectors have failed homes more often. One homeowner said her house failed its energy efficiency inspection three times, before finally passing after the contractor re-caulked the windows.
And some of the problems emerged after the county and ReBuild approved the inspections – but within the warranty period.
Ms. Murphy, who lives in Bladen County, moved into her home in 2020. Since then, her septic system has malfunctioned. Dirty water from the washing machine backs up into the dishwasher, she said. In the summer, sewage pools on the ground above the septic tank and flows toward her drinking water well.
She said she contacted the health department, who sent an inspector. “He said it wasn’t done right.” Murphy paid to cover her well to keep the sewage out.
Since the warranty has expired, she said, “they told me I would have to fix it. I’m retired. I’m on a fixed income.”
Scrambling to hire more inspectors as delays mount
In May, the state Department of Insurance entered into an agreement with ReBuild NC to conduct building code inspections formerly done by local officials. The change occurred for funding reasons, Jason Tyson, communications director for the Department of Insurance, said.
After Hurricane Florence, the state legislature mandated that there would be no costs for permits related to the repair of storm damage. “This effectively removed funding the local jurisdictions would have needed for additional staff to support the increased demand,” Tyson said.
State agencies requested funding from the legislature to pay for one inspector and two trainees in the 30 counties included in the disaster declaration; the state would match 25% of the cost, and federal funding would cover the rest.
State lawmakers did not appropriate the funding, but ReBuild NC used $5 million of its disaster recovery funds to pay for a scaled-back version: seven trainers and 14 trainees.
However, ReBuild NC’s chronic construction delays have also delayed the new inspection program.
“This was slow to start as the projects have been few and far between,” Tyson said, “but trainees are being trained.”
Trainees have addressed other issues in counties outside of the disaster area, at the Insurance Department’s expense, Tyson said, “while waiting on additional projects” from ReBuild NC.
After a year of what Jones described as a “constant battle,” he eventually stopped the construction crew from working on his home after they accidentally sprayed white paint on his new black tin roof. “Had they got up there that day the paint would have been easier to get off. But they didn’t. I nagged them, and the next day they’re on my roof, with rags and paint stripper. There were white swirls on the roof. I told them to leave.”
Jones said ReBuild NC then threatened to sue him to make him repay the cost of the repairs done to that point. Ultimately, the state backed down. “These were bullying tactics,” Jones said.
Over the next two to three months, he caulked the windows, repainted the drywall, fixed the plumbing and repaired other parts of his house. It cost him $5,000 plus time off work. He still needs to reinstall insulation.
The primary contractors are taking the subcontractors at their word, and there is little quality control by the state, Jones said. “They don’t know what’s really being done or not being done.”
What to expect next:
TheJoint Legislative Commission on Governmental Operations, Subcommittee on Hurricane Response and Recovery will meet Wednesday, December 14th to further scrutinize ReBuild NC
Location: Legislative Building Auditorium, 16 W. Jones Street, Raleigh. The hearing begins at 10:00 a.m.
Laura Hogshead did not lose her job as the head of ReBuild NC on Wednesday, as many hurricane survivors had hoped.
Instead, several state lawmakers on a government oversight committee used the hearing as another opportunity to publicly berate Hogshead for the many deficiencies of the hurricane recovery program.
An abysmal number of home completions and a lack of accountability. A pattern of deception and a culture of secrecy. Over the past seven months, a Policy Watch investigation has found these factors continue to hamper ReBuild NC, formally known as the NC Office of Recovery and Resiliency, at the expense of some of North Carolina’s most vulnerable people.
HUD allocated $800 million to ReBuild NC for disaster recovery related to Hurricane Matthew, which devastated eastern North Carolina in October 2016, and Florence, which wrecked many of the same areas in September 2018.
Nonetheless, for the past three years under Hogshead’s leadership, ReBuild NC has failed to return hundreds of families, equivalent to thousands of people, to their homes.
“I’m here this morning to show you the progress, understanding that it’s not enough,” Hogshead told lawmakers this week, under oath. “It’s not enough for anybody who’s sitting behind me” – the dozen or so hurricane survivors in attendance. “It’s not enough for anyone in eastern North Carolina.”
At least 115 families have been displaced for one to three years after seeking help from the state to rebuild after Hurricanes Matthew and Florence, according to figures cited by lawmakers. Still more people have been out of their homes for shorter periods of time. ReBuild NC has spent more than $15 million to house the survivors, primarily in one- and two-star motels, and to pay for storage of their belongings.
Despite the chronic construction delays, ReBuild NC has never financially penalized a contractor for poor performance, even though its own policies empower it to do so. Quite the opposite: The program allowed one contractor, Rescue Construction Solutions, to bid on several projects – worth a total of $80 million – despite being more than a year behind on some homes, Policy Watch previously reported. Although Rescue was the lowest bidder on the projects, ReBuild NC had the authority to award them to other companies, but did not.
“Something doesn’t add up,” Sen. Jim Perry (R-Lenoir, Wayne) said at the hearing. “Something smells.”
During the first oversight hearing in September, Hogshead and Ivan Duncan, then the chief program delivery officer, assured lawmakers they would get at least 54 families back home by the end of the year. Those hurricane survivors were scheduled to move into mobile homes, which have among the quickest turnaround times.
Hogshead told lawmakers she didn’t know how many of those 54 families had moved back home, but that a “number of them have.”
It’s certainly not all 54. Only 18 families who qualify for all housing types, including traditional “stick-built” homes and rehabs, have moved back home since September. Eleven are scheduled to return through the end of the month, Hogshead said.
“That’s terrible,” Perry said. “It’s hard to believe.”
Hogshead attributed the delays to county permitting and other factors beyond ReBuild NC’s control.
While the updates were grim, more telling was how Hogshead elided the data, what Perry called “shining the numbers,” to make ReBuild NC appear more productive than it has been. In a slide presentation to lawmakers, Hogshead noted that since September, 100 homes had entered in Step 8, which indicates they are complete.
That’s not entirely true. Of the 100, only 76 have actually been built, Hogshead acknowledged, when questioned by lawmakers. The remaining 24 are homeowners who accepted ReBuild NC’s offer to reimburse them up to $5,000 for future repairs. The homeowners would ostensibly hire their own contractors with the money.
Sen. Kirk DeViere (D-Cumberland), said he visited homes in his district “that would not pass an inspection if somebody was going to get a loan.” That includes improperly installed windows and wall sockets, as well as uneven floors.
“My concern is that some people feel like they don’t have any other options,” he went on. “They don’t have a voice. They’re stuck in a hotel … They’ve got to take the home, and it’s in whatever form is given to them.”
Even the total number of families listed in the final step of the program – 889 – is misleading. ReBuild NC is taking credit for 201 homes completed by Robeson County’s local program, which was funded by federal dollars, Policy Watch previously reported.
Subtract Robeson County, and only 688 families have proceeded to Step 8. Factor in the reimbursements, and only 664 families have returned home.
Hogshead noted that since September the average number of completed homes per month has increased by 242%, compared with the first eight months of the year. But the bar was low: From January through August, ReBuild NC had averaged just five completed homes per month. That number is now 17, still far off pace to finish the estimated 3,600 homes in the queue by the HUD deadlines of 2025 and 2026.
Hogshead said that with more contractors – 12, up from five – she expects the rate to significantly increase.
But more contractors doesn’t necessarily translate to more work. Sen. Brent Jackson (R-Duplin, Johnston, Sampson), said that oversight committee staff performed random site visits to more than 60 homes in roughly a dozen counties.
“Do you know how many times they encountered contractors actively working on the home?” Jackson asked Hogshead.
“I don’t know off the top of my head,” Hogshead replied.
“Once,” Jackson said.
“By any stretch of the imagination, this is unacceptable,” he went on. “And I’m infuriated if you can’t tell. … There has got to be some improvement made in this program immediately. Or I’ll use what power I have to redirect the program to someone that can get the job done.”
Rescue Construction Solutions: despite poor performance, a ReBuild NC favorite
State lawmakers didn’t publicly name Rescue Construction Solutions as the problematic contractor, but there were clues: The only contractor who won the bid to build modular homes, despite a spotty performance history. The contractor with houses sitting untouched or unfinished for months or years.
And after the hearing, lawmakers confirmed that they are scrutinizing the company.
As Policy Watch has reported, in 2018 on its prequalification form to the program — then operated by the Department of Commerce and NC Emergency Management — Rescue President Sheila Brewington omitted that the company had been a defendant in civil litigation. She answered the question “no,” despite the company having been recently sued in Wake County court.
Despite that inauspicious beginning, from 2019 through 2021, Rescue won multiple contracts, adding up to at least 725 homes – rehabs, reconstructions, and modular homes – worth $80 million, according to state records from July.
Policy Watch requested updated numbers on Tuesday, but had not received them by deadline Thursday evening.
In August 2021, Rescue won the modular contract as the lowest bidder; seven months later it requested and received an 18% increase to do the work, worth an additional $7 million, according to lawmakers. Had that increase been part of Rescue’s bid, it’s possible they might not have won the modular project.
“The contractor was able to show to us that she was not able to get the units at the dollar per square foot that we had signed for,” Hogshead told lawmakers. “So we went through procurement and legal and gave an increase to get the homes ordered.”
This was not an isolated incident. State records show that Duncan, with Hogshead’s approval, retroactively increased the company’s bid prices on 85 other projects. Meanwhile, other contractors said, Duncan denied their requests for increases to cover costs of materials. Three contractors, Hogshead told Policy Watch earlier this year, did eventually get increases.
As of August 2022, when ReBuild extended Rescue’s contract for another year, the company had built just six of the more than 520 modulars. Now that number is 11.
Hogshead attributed the delay to manufacturing and permitting.
But that doesn’t fully explain the interminable delays on the renovation and reconstruction projects. State records show multiple homes in Rescue’s portfolio have languished for years. State and county demolition permits have been granted on a half dozen homes, records show, some dating back to March. But Rescue has not torn down those houses. Work is at a standstill.
Lawmakers asked Hogshead why she had not terminated Rescue’s contract. She replied that the contractor “had completed 179 homes.” But that’s less than a quarter of their awarded projects.
A former Rescue employee who asked not to be named because they still work in the construction industry told Policy Watch that the company was “absolutely not qualified to do modular.”
“We had bid packages we couldn’t keep up with,” the former employee said. “But to stay in the program we had to bid.”
Like most contractors, Rescue relies on subcontractors to do some of the work. (Rescue is also a small company. It employed 22 people in 2020, according to federal PPP loan documents. Its $284,000 PPP loan was forgiven in September 2021.)
Yet ReBuild NC has also failed to require Rescue to provide certain documentation between the company and some of its subcontractors that build the modulars.
Hogshead testified that even though she personally asked Rescue for the paperwork, per the committee’s request, the company has refused to provide it. She told lawmakers that she does not have the right to demand it.
However, state law does require contractors to provide that information to state auditors, HUD, and investigators, such as the oversight committee.
“So basically, everything you know about the numbers is based simply on your trust that you’re putting in the vendor and their estimate on when these things are going to be done,” Britt said. “And no actual documentation provided by the vendor to show when it will be done.”
Brewington, the Rescue president, responded to Policy Watch questions about the documents through the company’s crisis communications firm:
“Rescue Construction Solutions has complied with all legally required disclosures. In addition, we have attempted to cooperate with the State to share information that will assist in the improvement and success of the program. For example, Sheila Brewington met for over an hour with Derrick Welch, the Senate Majority Staff Director for Governmental Operations, and Blake Belch, the Gov Ops Evaluation for the Joint Legislative Commission on Governmental Operations, just a few weeks ago to answer their questions regarding ReBuild NC and Rescue’s role in the program.”
During the same period in which Rescue was winning millions of dollars in contracts – and leaving many vulnerable hurricane survivors displaced because it had failed to complete work on their houses – Brewington and the company’s Senior Vice President Christopher Edwards made a significant investment.
In March 2021, they purchased a $718,000 home on the shores of Hyco Lake, according to Person County property records. The 1,754-square-foot log cabin sits on nearly two-and-a-half acres, accessible only by water or a long gravel driveway. It includes a boathouse. At 1,326 square feet, it is bigger than many motel rooms.
Through the crisis communications firm, Brewington said the joint purchase with Edwards was “unrelated to to Rescue Construction Solutions’ efforts to assist the State and homeowners in the NC Rebuild program. To indicate otherwise is irresponsible and, potentially, slanderous.”
No financial penalties, no accountability
Despite the extensive construction delays, ReBuild NC has never assessed Rescue, or any contractor, a financial penalty for failing to meet a deadline. Yet the program’s contractor manual clearly states that companies can be fined $250 per day in “liquidated damages” for failure to adhere to construction deadlines.
Those damages would be garnished from the final payment for the project.
In September Hogshead acknowledged the program was reluctant to fine contractors for fear of “scaring them off.” She reiterated that point this week, saying ReBuild NC had to confer with its legal staff, disaster recovery programs in other states, and HUD “so we won’t spend all of our time in litigation, so that we can do this cleanly.”
It’s unclear why the penalty provision was included in the contractor manual if the legal aspects have not been fully vetted.
Hogshead said she recently put contractors on notice that if they didn’t comply with deadlines they would be subject to financial penalties starting Feb. 1.
“This week, just before this meeting,” Hogshead replied.
Emails shared with Policy Watch show that Hogshead had notified Trace Allred, interim chief program delivery officer, and two other top-level ReBuild NC staff Tuesday at 9:44 p.m. of the intent to assess penalties. In turn, Allred emailed all contractors at 10:50 p.m. less than 12 hours before the oversight hearing started.
In lieu of financial penalties, ReBuild NC docks points from contractors’ respective scorecards. Falling below a certain point threshold would disqualify, at least temporarily, a contractor from bidding. “It’s one of the other ways that we hold them accountable,” Hogshead said.
However, those point thresholds and criteria varied, based on the whims of Ivan Duncan, Policy Watch reported earlier this year.
And ReBuild NC hasn’t even used scorecards since May, two contractors who would have been subject to scoring told Policy Watch. That means there has been virtually no accountability for most of the year.
Richard Trumper, the director of disaster recovery at the Office of State Budget and Management, is leaving that post for a job at ReBuild NC, which is under public and legislative scrutiny for mismanaging its program.
Policy Watch confirmed the change with OSBM. In a prepared statement an OSBM spokesperson said that Trumper “has notified” the office “that he will be leaving his role at our agency for a position at the NC Department of Public Safety.” DPS oversees ReBuild NC, also known as the NC Office of Recovery and Resiliency.
It’s unclear whether Trumper would supervise Laura Hogshead, currently the director of ReBuild NC, who is responsible for the program’s failures.
OSBM referred those questions to DPS. Spokespersons for DPS and ReBuild NC could not be immediately reached for comment.
An ongoing Policy Watch investigation has revealed systemic mismanagement within ReBuild NC’s disaster relief program. This includes preferential treatment given to one contractor, Rescue Construction Solutions, as documented in weekly contractor meeting notes; a lack of accountability and transparency, as well as a pattern of half-truths. Most important, though, is the harm to survivors of Hurricanes Matthew and Florence. Thousands of people have been living for as long as three years in one-star motels or in their dilapidated houses waiting for repairs or reconstruction. At least a dozen people have died waiting to return home, according to state records and homeowner reports. Meanwhile, ReBuild NC has spent exorbitant amounts, upward of $15 million, to temporarily house survivors in motels, with family or very occasionally, apartments.
OSBM’s disaster recovery program differs from ReBuild NC : OSBM uses state dollars and serves disaster survivors who don’t qualify for FEMA or other federal assistance through ReBuild NC. ReBuild NC receives federal money from the US Department of Housing and Urban Development, which has its own regulations on spending and management. HUD cited ReBuild NC in September for failing to account for $2.5 million in disaster relief spending.
Trumper, a former general contractor, joined OSBM in January 2019. He testified at a legislative government oversight hearing in September, explaining how OSBM managed to avoid significant pandemic-related construction delays in enabling hurricane survivors to return home. Since August 2018, the OSBM program has been funded by $186 million in state money. Of the 1,034 households who applied for relief through OSBM, 927 were approved. And of those, 903 – 97% of families – have returned home, Trumper testified.
By comparison, as of Jan. 11, just 927 of 4,301 applicants in the ReBuild NC program are in the final “Step 8,” according to weekly legislative reports that are mandated by state lawmakers. But even the 927 figure is misleading. At least 24 of those homeowners accepted ReBuild NC’s offer to reimburse them up to $5,000 for future repairs. The homeowners would ostensibly hire their own contractors with the money, according to legislative testimony in December. And another 201 homes were completed by Robeson County’s local program in 2018 and 2019. That leaves just 702 homes that have been either rebuilt or rehabbed since funding became available in 2018 and 2019.
Several people have left ReBuild NC in the last two months. Most notably, Ivan Duncan, the former chief program delivery officer, abruptly resigned in mid-November. Duncan was central to Policy Watch’s investigation, based on confirmed reports of his abusive behavior toward contractors and his favoritism toward Rescue Construction Solutions. Jaime Fuquay, head of external affairs, recently left for a “dream job,” according to her post on LinkedIn. And Kathy Estrada, who worked as a Quality Control Manager, left ReBuild NC, effective Jan. 4. Moneka Jani, who was ReBuild NC’s chief recovery officer until May, when she became an “advisor,” has also left the agency, according to sources familiar with personnel matters.
Richard Trumper, director of disaster recovery at the Office of State Budget and Management, will move to the NC Department of Public Safety as the senior advisor for disaster recovery, DPS announced today.
He was appointed to the newly created position by DPS Secretary Eddie Buffaloe, Jr.
His first day will be Feb. 1.
“In this new role, Trumper will support initiatives to build long-term and stable recovery for North Carolinians following natural disasters. As part of an expanded, comprehensive approach to recovery, Trumper will work with department leaders, the N.C. Office of Recovery and Resiliency” — also known as ReBuild NC — “N.C. Emergency Management and other partners to get disaster survivors back in their homes faster,” DPS wrote in a prepared statement.
Policy Watch first reported yesterday that Trumper was leaving OSBM for a position at DPS. The department is over ReBuild NC and the Division of Emergency Management, both of which have roles in disaster recovery.
An ongoing Policy Watch investigation has revealed systemic mismanagement within ReBuild NC’s disaster relief program, led by director Laura Hogshead. This includes preferential treatment given to one contractor, Rescue Construction Solutions, as documented in weekly contractor meeting notes; a lack of accountability and transparency, as well as a pattern of half-truths.
Most important, though, is the harm to survivors of Hurricanes Matthew and Florence, which devastated North Carolina in 2016 and 2018, respectively. Thousands of people have been living for as long as three years in one-star motels or in their dilapidated houses waiting for repairs or reconstruction. At least a dozen people have died waiting to return home, according to state records and homeowner reports. Meanwhile, ReBuild NC has spent exorbitant amounts, upward of $15 million, to temporarily house survivors in motels, with family or very occasionally, apartments.
As of Jan. 11, only 702 homes have been built or repaired under ReBuild NC’s disaster relief program. More than 4,100 North Carolinians have applied for help.
There has been no public indication that Hogshead is leaving the agency. However in his senior-level position, Trumper will likely have wide latitude to make changes and course correct as needed. DPS did not list his salary for the new job, but he currently earns roughly $100,000 at OSBM, according to state data. Hogshead’s annual salary is $144,000.
Trumper is a North Carolina licensed general contractor who joins the department with more than 22 years of experience, including program management, construction management, disaster recovery, reconstruction and restoration, mitigation and disaster damage assessment. In his current job, Trumper successfully developed and managed state-funded recovery, reconstruction and mitigation programs in 21 eastern North Carolina counties. Most recently, Trumper has led state recovery efforts in western counties impacted by the 2020 earthquake and Tropical Storm Fred.
“Our state has made substantial progress recovering from hurricanes Matthew and Florence, but we still have a long way to go,” Buffaloe said. “Richard Trumper brings a wide range of experience and expertise that will support a core mission of rebuilding homes and communities as fast as possible after a disaster, while also making them more resilient in the future.”
“I look forward to joining the Department of Public Safety and establishing new partnerships that will speed up the recovery process and help families return home more quickly,” added Trumper. “My goal will be to build on the good things we’re already doing.”
ReBuild NC’s highly touted modular home program, which state officials have claimed would be the fastest way to get hurricane survivors out of motels and into permanent housing, continues to falter, according to state data.
Numbers provided by ReBuild NC to Policy Watch this week show that Rescue Construction Solutions has built 20 modular homes since winning a $52 million contract in August 2021.
That is less than 10 percent of the 226 modulars in the bid package.
Rescue, based in Raleigh, has been paid $32 million so far, which includes the modulars and 177 new or renovated stick-built houses, state data shows.
However, the recent figures are an improvement over December, when ReBuild NC Director Laura Hogshead told state lawmakers that just 11 modulars had been built. She has attributed the low numbers to backlogs at the modular factories and county permitting issues.
Several homeowners have told Policy Watch, and posted on the ReBuild NC Applicant Facebook page, that they were no longer receiving modulars, ostensibly because of ongoing delays. Instead, their contracts were being converted to traditional “stick-built” homes.
There are 55 facilities that build modular homes in the Southeast, according to the Manufactured Housing Institute. Of those, five North Carolina factories built 4,496 homes in 2021, MHI data shows.
ReBuild NC, also known as the Office of Recovery and Resiliency, has been awarded $800 million in federal funding to help survivors of the 2016 disaster, Hurricane Matthew, and the historic 2018 storm, Hurricane Florence, return home. An estimated 4,100 households have applied for new or repaired homes under the ReBuild NC program.
Instead hundreds of households, equivalent to thousands of people, still live in motels or in their dilapidated houses, years after the funding became available.
ReBuild NC is under legislative and public scrutiny over mismanagement of its disaster recovery program. An investigative series by Policy Watch about the program’s failures spurred state lawmakers last fall to form a special oversight committee to monitor ReBuild NC’s performance. There have been several shakeups within the agency since then. Last November, Ivan Duncan, chief program delivery officer and a subject of Policy Watch’s investigation, abruptly resigned.
On Feb. 1, Richard Trumper, who had led a successful disaster relief program for the state Office of State Budget and Management, became a senior advisor to help fix ReBuild NC. The agency is under the Department of Public Safety; Trumper reports directly to DPS Secretary Eddie Buffaloe.
Other data provided by ReBuild NC shows some progress in homebuilding and repairs since December.
The figures below show the number of homes built under the ReBuild NC program since May 2022.*
Homes completed as of Feb. 20 — 735
As of Dec. 14 —688
Sept. 16 —588
May 9 — 516
*Robeson County built another 201 homes in 2018 and 2019 with federal funding. ReBuild NC absorbed that county-led program in early 2020, and often takes credit for those homes even though it was uninvolved in the contracting and construction.
Below is a table of ReBuild contractors, the amount paid so far, and the total number of homes built or renovated. Three firms, indicated by an asterisk, don’t build homes; they are responsible for removing asbestos and lead contamination.
[table id=85 /]
Meanwhile, the House Disaster Recovery and Homeland Security committee will discuss a bill specific to ReBuild NC’scontracting problems today at 1 p.m.
House Bill 119 would allow ReBuild NC, to use an informal bid process for projects costing up to $250,000. The previous figure was $30,000.
Lawmakers hope this will allow ReBuild NC to more quickly recruit contractors, and in turn more quickly build or repair hurricane-damaged homes. Late last year ReBuild NC had less than a half dozen contractors; it now has 27, including those that do asbestos and lead abatement, according to the most recent state data.
The informal bid process still requires that “all such contracts shall be awarded to the lowest responsible, responsive bidder, taking into consideration quality, performance, and the time specified in the bids for the performance of the contract.”
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