ReBuild NC defends Rescue Construction, while fining company for delays in hurricane recovery
State lawmakers express frustration, lack of confidence in agency’s assurances
Flood waters isolate homes in the aftermath of Hurricane Florence Sept. 19, 2018 in Robeson County. (Photo by Joe Raedle/Getty Images)
For the third time, hurricane survivors arrived at the state legislature – some sick, others frail, and all of them tired of living in motels.
For the third time, lawmakers on a government oversight committee interrogated ReBuild NC Director Laura Hogshead, responsible for mismanaging the disaster recovery program.
And for the third time, little substantive came of the hearing, at least publicly.
Behind the scenes, though, it appears that legislative and media scrutiny has forced someone’s hand. On Feb. 1, Richard Trumper, who led a successful state-funded disaster relief program, was hired as a senior advisor for disaster recovery at the Department of Public Safety, which is over ReBuild NC. (However, Gov. Cooper’s administration has been careful to note Hogshead does not report to Trumper.)
Since then, there has been progress: Fifty-six general contractors are now qualified to work in the program, up from just 23 in December. The additional workforce has translated to an average of 48 houses completed in January and February. In comparison, in 2022 the monthly average was just five.
Yet despite the advances, for thousands of homeowners the misery continues, unabated.
Of the 4,446 households in the program, 866 are in the final construction phase or back home under ReBuild NC. Another 201 homes were built and finished in 2018 and 2019 by Robeson County’s local program, which received federal funds.
That leaves 3,399 households in limbo. All Hurricane Matthew projects must be finished by mid-2025, according to federal rules, or a portion of the $236 million that North Carolina received must be returned.
For Hurricane Florence, the deadline is mid-2026. The state received more than $500 million in disaster relief funds from the federal government.
“We still have families displaced far too long,” said Republican Sen. Brent Jackson, who co-chairs the committee. “Modulars still aren’t being built. Contractors aren’t being held accountable. These problems should have been solved a long time ago.”
At the first committee hearing last September, Hogshead predicted the 115 families who had been living in motels for more than a year would be home by Christmas.
Instead, just 41 are back in their houses.
And the total number of families who have been displaced for more than a year has increased, to 141, according to Hogshead’s testimony.
“We’re doing everything we can,” she told the committee last week. “It’s my top priority.”
Hogshead spent a significant portion of her testimony defending Rescue Construction Solutions. Despite being the target of lawmaker and media inquiries about its poor performance, “this contractor didn’t walk away,” Hogshead said.
But if Rescue had withdrawn from the program, it would have lost $80 million in ReBuild NC contracts. Of that total, $52 million was for the modular home program, which by any metric, has itself been a disaster.
Because there was a shortage of mobile homes, in 2021 ReBuild NC launched a “pilot” modular program in hopes of getting people into new houses more quickly. Of the 226 modulars that Rescue won in its bid, it had built just 20 as of this past February, state records show.
Last August, when ReBuild NC renewed Rescue’s modular contract for another year, the company had built fewer than 10.
Most of the remaining modular homes are now being converted to traditional stick-built houses. Rescue has either ceded – or ReBuild NC has taken away – many of those projects, which means they must be rebid, adding to the delays.
Sen. Danny Britt, a Republican from Robeson County, was skeptical of how the modular contract was handled. Rescue was one of two bidders; the other, Hogshead said, “was not responsive.” That means the company couldn’t conform with the bid requirements, such as posting a bond.
(NC Newsline previously reported on the preferential treatment Rescue received from ReBuild NC Chief Program Delivery Officer Ivan Duncan. He resigned suddenly in November and has returned to New York, where he works in real estate. Rescue has repeatedly denied any wrongdoing.)
Britt mentioned text messages obtained by the committee showing that ReBuild NC quickly accepted Rescue’s bid, even though the company had no business relationships with modular home builders.
Hogshead quickly defended the contract, saying the pilot program didn’t require a contractor to have modular builders lined up. “HUD, the HUD Inspector General and the state auditor” had found no issues with the bid or contracting process, Hogshead said.
NC Newsline contacted the state auditor’s office, who said there was no record of it reviewing the modular contract. The auditor’s previous report, in April 2022, criticized DPS’s lack of oversight of state appropriations for Hurricane Florence recovery. That report did not examine federally funded programs, such as the modular project.
ReBuild NC did not respond to repeated requests from NC Newsline seeking information to substantiate Hogshead’s testimony.
“The attention on one particular contractor is unfair,” Hogshead told the committee. “Any contractor would have run into challenges. The manufacturing process was slow. Candidly, the level of scrutiny has not been productive in getting work done.”
In February, ReBuild began financially penalizing contractors who fall behind schedule and when there are no extenuating circumstances, such as weather, to cause the delays.
Four projects have been assessed $3,900 so far, Hogshead testified. The full penalties won’t be calculated until the projects are finished.
Hogshead did not name the contractor during the hearing. In response to a question from NC Newsline, a ReBuild NC spokesperson later said the company responsible for all four late projects was Rescue Construction Solutions.
More delays: ReBuild NC realizes too late that new homes won’t fit on lots
Nearly 900 days ago, Lavonne Merritt’s family house in Wendell was bulldozed. Her father had died while waiting for a new home, leaving Merritt to inherit the property – and the headaches of the ReBuild NC program.
But the new home would not fit on the property. ReBuild NC did not realize that until after the original house was razed.
“She’s in a motel,” Britt said of Merritt, who also has lung cancer. “And now you can’t rebuild the house.”
The home had to be rebid, albeit with a different floor plan.
Merritt’s situation is common – and indicative of the problems that continue to plague the program.
State data obtained last year by NC Newsline shows that at least 18 homes were on hold in more than a half dozen counties because they did not meet local lot size or septic requirements.
“There are no current house plans with the program that will fit on the lot,” read the notes for a Robeson County property.
In Wayne County, “property line issues discovered after the survey was completed … Potential new floorplan may need to be selected and the award recalculated …”
“(Columbus County) will not issue a septic permit for the home, and soil will not accommodate a larger septic for a 4-bedroom home.”
And in Cumberland County, the first floor plan failed to meet local requirements, as did a second.
Hogshead told lawmakers that homeowners receive their award package – the type of home that will be built – before a general contractor and surveyors get to work. She attributed part of the problem to overwhelmed county staffs and miscommunications between local and state officials.
Republican Sen. Steve Jarvis said committee staff contacted several counties about the permitting issues. In one instance, the contractor had not paid the fees. Another county told investigators there were no records of permits ever being applied for at that address.
“I can’t count the number of septic tanks hold ups because ReBuild didn’t do their due diligence,” Jarvis said. “I want to be clear with you and everyone in this room: You do not have a permitting issue, you have a project management issue.”
As the meeting wound down, Sen. Jackson asked Hogshead, “How will we have assurance that the most vulnerable people will be taken care of?”
Hogshead replied, “You have my word on that.”
“Based on prior history your word is not worth a whole lot,” Jackson said.
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