N.J. Sandy contractor fired following public complaints

Posted: February 26, 2014

TRENTON The Christie administration official overseeing distribution of $3 billion in federal Sandy aid testified Monday that "lawyers are engaged" to sort out the firing of a $68 million contractor, which he said occurred after the state tried to resolve complaints from Sandy victims.

But Richard E. Constable, commissioner of the Department of Community Affairs, insisted that hiring Hammerman & Gainer Inc. (HGI), the Louisiana-based firm that ran housing recovery centers to distribute $700 million in rebuilding money, was "the right thing to do."

"We obviously became aware of concerns that many members of the public had," said Constable, during two hours of testimony before the Senate Legislative Oversight Committee. He defended the state's distribution of Sandy recovery aid, saying it outpaced New York City and state. He said New Jersey's program reached a point where the state could assume the job previously being done by HGI.

Constable said the problems were discussed, and "ultimately it was deemed more appropriate by both parties to sever the relationship."

"This is difficult stuff," he said. "All of the governments are having a tough time trying to navigate the system."

Constable said $10.5 million paid to HGI as part of a "settlement agreement" executed in December was not a severance fee, as it has been characterized, but rather payment for services.

"They did work," he said. "They have invoices."

Constable did not give a total figure paid to HGI and said legal issues limited what he could say about the termination.

State Sen. Jennifer Beck (R., Monmouth), however, had no hesitations: "I think I know why they were fired. Because they performed poorly and that's being kind."

Constable said the state had assumed the supervisory functions of the housing recovery centers and retained some of the 600 employees hired by HGI, while also using state employees.

"Are you confident you have enough people to do the job?" asked State Sen. Loretta Weinberg (D., Bergen), vice chair of the committee.

"I'm not," Constable replied. "That's why every day, every hour, we assess to see where we are. Right now, we think it's appropriate."

About 300 employees are now dedicated to distributing the $700 million in housing money through the state's Rehabilitation, Reconstruction, Elevation, and Mitigation (RREM) program, he said.

Deputy Commissioner Chuck Richman said after the hearing that the attorney general and lawyers for HGI are "trying to reconcile the bills" with HGI.

The state's programs have come under increasing fire from frustrated victims and advocates, who contend that the money has been slow to be distributed and the process riddled with confusion and error.

Constable told the committee that their frustration was "palpable." He said the need was far greater than the $3.2 billion awarded the state, which he noted was $4 billion less than New York received. New York was able to offer grants of up to $350,000; New Jersey's caps are at $150,000.

"That $4 billion difference would go a long way here in New Jersey," he said.

Eric Williams, a New York City Sandy recovery official, acknowledged in testimony that only 178 grants have been finalized in New York's equivalent program. New Jersey has finalized grants with 1,300 people out of 5,000 approved so far, totaling $160 million in aid.

About 7,000 remain on the waiting list, half of whom are expected to be approved for grants during a second round of funding. The rest will not receive federal aid despite being eligible.

Paradoxically, Constable said, New York has been able to reimburse more rebuilding work than New Jersey because that state opened applications for grant money later than New Jersey, leaving a longer window for additional rebuilding. HUD requires rebuilding to cease during the grant application period or not be eligible for reimbursement, a policy that has left many victims in limbo.

He said that the state is trying to streamline the process and that federal housing officials have refused to waive requirements that rebuilding stop while grants are being reviewed.

The state has been able to persuade the U.S. Department of Housing and Urban Development to exempt certain properties from "painstakingly slow" architectural and historical reviews, he said.

And the state has reduced the paperwork needed for income verification and sped up its reimbursement approvals.

"Clearly we're not where we want to be," Constable said. "We're making improvements."

He defended affordable housing projects funded with Sandy aid money that were not inside the most impacted towns but were still in the nine most impacted counties, as HUD requires.

He said the developments, including a controversial senior citizen project in Belleville, Essex County, would have a three-month period in which Sandy-impacted victims would get priority in applying for housing.

Regarding HGI, he said the state could not have set up the program on its own, and the company's record in Louisiana, where it also was fired, was considered. HGI was the lower of two bidders.

"There's no company that does disaster relief that does not have problems with local government," he said.

State Sen. Robert Gordon (D., Bergen), chair of the committee, said he had a new concern: the performance of insurance companies compensating victims for their damage. Many victims have complained of getting vastly inadequate payments.

Gov. Christie said at a town-hall meeting last week that the federal government, which runs the national Flood Insurance Program, has refused to participate in a state mediation program. Private insurers generally refused flood damage under homeowners' insurance policies.

Constable said the state would hold open houses at its nine recovery centers on March 15 for anyone seeking help.




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