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Botched Process Denied Thousands of NJ Residents Millions in Sandy Relief

Report shows vast majority of homeowners won appeals after state corrected flawed damage estimates

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Three-quarters of all those who appealed denial of federal Sandy aid from two popular housing assistance programs administered by the state of New Jersey wound up winning their appeals, raising new questions about the distribution of the funds.

As a result, the Cherry Hill-based Fair Share Housing Center, which yesterday released new data it received from the state Department of Community Affairs as the result of an Open Public Records Act request, charged that the contractor hired -- and subsequently fired -- by the Christie administration “botched” the entire process of providing aid.

The center called for an independent audit of the $600 million Reconstruction, Rehabilitation, Elevation and Mitigation program and the $180 million Resettlement program.

“When I see this scale of dysfunction, I can’t believe in the state doing the audit at this point,” said Adam Gordon, a Fair Share staff attorney. “It has to be someone who has independence.”

But Lisa Ryan, a DCA spokeswoman on Sandy recovery, said many of the initial denials resulted because the state had been using damage assessments from the Federal Emergency Management Agency that it found to be inaccurate. It sought and received approval from the U.S. Department of Housing and Urban Development to use applicants’ damage estimates from insurance companies or the U.S. Small Business Administration for their appeals and the result was the high success rate.

“DCA has ensured that anyone initially rejected received a thorough review of their application, resulting in reinstatement of eligibility and the award of recovery funds in every single eligible case,” she said.

According to Ryan, “several thousand” homeowners out of 40,000 who applied to the RREM and Resettlement programs were rejected because they did not meet eligibility requirements, one of which was that their residence had sustained at least $8,000 in damage due to Sandy. All of those deemed ineligible received a letter outlining the reason and stating they could appeal within 30 days, she continued.

“Noting the high number of ineligibility determinations, we investigated and learned FEMA provided the state with inaccurate damage assessment data,” said Ryan. “As a result, we obtained HUD approval to allow applicants to demonstrate damage through third-party sources other than FEMA data.”

FEMA officials could not be reached for comment.

According to an analysis of the Fair Share data, 789 of 1,069 people, or 73.8 percent, who appealed an RREM determination with either Hammerman and Gainer Inc., the firm the state had hired to manage the programs, or DCA, and 1,124 of 1,464 who appealed a Resettlement rejection – 76.8 percent – won their appeals and are now considered eligible for a grant. The Resettlement grants are $10,000 per home owner, while the RREM grants range up to $150,000.

Gordon called Ryan’s assertions about inaccurate FEMA data “new and interesting” but said they raised more questions.

“Why is that only coming to light now?” Gordon asked. “Did they hide it for the last seven months? Why didn’t (DCA Commissioner Richard) Constable even mention it as recently as a month ago in legislative testimony?”

The claim further bolsters Fair Share’s assertion that DCA should review all rejected applications, including those of people who did not file an appeal, Gordon said.

That call was echoed by the Housing and Community Development Network of New Jersey, a group of organizations and individuals that supports creation of housing and economic opportunities for low- and moderate-income residents.

“There’s too much at stake not to go through with that review,” said Nina Arce, a network spokeswoman. “Things have to be fixed. We know that and the governor knows that.”

According to the data, nearly 1,800 people deemed ineligible for Resettlement grants and almost 2,200 rejected for RREM money did not file any appeal. Fair Share said it’s “impossible to know from the data provided how many of those applicants” may have been eligible. It contends the appeals process was not clear and noted that, for several months, no information about appeals appeared on the Spanish-language version of the state’s Sandy recovery website.

"The Christie Administration's widespread rejection of large numbers of families actually eligible for Sandy aid shows that the Sandy recovery process has been flawed from start to finish," Gordon said. "Who knows how many thousands more have been denied aid because the Christie Administration botched the process. Is this why HGI was fired? The public, especially those still out of their homes, deserve an answer. And people who were denied unfairly should not be barred from getting help with their homes because of the Christie Administration's and HGI's mistakes."

The Christie administration quietly terminated its three-year, $67.7 million deal with HGI last December, just seven months after signing the contract. State officials have not explained why they terminated the contract or who is running the programs now.

U.S. Rep. Bill Pascrell Jr. (D-9th District), also urged Gov. Chris Christie to reopen the RREM application process, which closed last Aug. 1, “so folks can get access to the help they need.” And he concurred with Gordon’s call for HUD to conduct independent monitoring in New Jersey, akin to audits done in the wake of Hurricane Katrina that found hundreds of millions of dollars in aid unaccounted for.

"Today's revelations shed some light on just how grossly mishandled the largest Sandy housing program really was,” Pascrell said. “I've been saying from the start that the numbers just don't add up.

“Furthermore, the excuses and lack of transparency need to end,” Pascrell said. “We need a full accounting of the HGI contract, and I urge HUD to require the appointment of an independent monitor before the next round of funding goes out to ensure there isn't further mismanagement. The people of New Jersey deserve some answers.”

"What is Governor Christie hiding on HGI?" Gordon said. "Why hasn't he come clean before with the fact that they apparently couldn't perform the most basic task of their $68 million contract - determining whether people are eligible for Sandy aid? It's good that HGI is now gone. But we need a full explanation of why HGI was fired. And then the administration and HUD have to clean up HGI's mistakes."

He added that Christie also should explain why it gave HGI a more than $10 million "settlement" of litigation that may or may not have existed.

It’s especially important to get answers as the Christie administration moves forward with plans to use the next $1.4 billion in federal funds, as announced on Monday. Fair Share wants that action plan modified so that those “unfairly left out” of the current funding can get a chance to get compensation in the next round.

Arce criticized the new action plan as “pretty much a business-as-usual model that makes no fixes to the problems we have seen.”

Fair Share also called for investigation into questions about the distribution of Sandy recovery funds that were not designated for individuals but for communities.

Questions recently have been raised about the alleged distribution of Sandy aid for political purposes. For instance, $6 million was designated for a senior citizens center in Belleville, which suffered comparatively little damage. And Hoboken, several blocks of which were underwater due to the storm, received far less in aid from the Hazard Mitigation Grant Program Energy Allocation Initiative than communities that were relatively unscathed. That city’s mayor has charged that Lt. Gov. Kim Guadagno threatened to withhold Sandy aid unless she pushed through a high-rise development represented by a Christie ally, a charge Guadagno denies.

RREM and Resettlement Program Statistics:

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