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Feds Note Progress on Distribution of NJ’s Sandy Aid, But Also Cite Concerns

Audit faults state for sloppy paperwork in handling of applications and inadequate outreach to low-income and minority victims

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New Jersey has made "significant progress" in handing out its first $1.8 billion in Community Development Block Grant funding to homeowners and renters, according to a report released yesterday by the U.S. Department of Housing and Urban Development (HUD).

In its first review of how New Jersey has managed the distribution of aid money, the report praised the state for its "active and robust oversight," even though the state has thus far failed to publicly disclose the findings of that oversight.

The report didn’t reveal any instances of noncompliance, but federal officials did cite several areas of concern, ranging from messy record-keeping to insufficient outreach to low-income and minority Sandy survivors. The feds noted that one-quarter of all applicant case files they reviewed had missing or misfiled documents or incomplete information.

Many of the problems, the report said, stemmed from mismanagement of the Reconstruction, Rehabilitation, Elevation and Mitigation (RREM) grant program by HGI, the state’s former contractor that was fired back in January. (HGI has since released a statement defending its actions).

Of the 83 files they examined, federal officials found numerous instances of missing documentation from applicants who filed appeals, files that were updated months behind schedule and computer records that lacked important information such as dates when grantees were referred to housing advisors and when they started construction. The state says it began an effort in February to clean up the documentation to ensure that every record is complete and accurate in its database.

The audit also said that HGI had relied on volunteer college students to perform outreach, and while those efforts were strong in the counties most affected by the storm, they were lacking in areas where the storm did less damage.

The Department of Community Affairs “initially did not carefully manage the contractor’s outreach efforts, apparently resulting in gaps in its outreach to households least likely to apply for these programs, particularly (low and moderate income) households,” the report added. In fact, it said the state didn’t appear to have a clear plan in place to target low-income storm victims and didn’t do enough to reach out to non-English speakers over a wide geographic area.

While they “observed no evidence of prohibited discriminatory practices in application processing,” federal officials also raised concerns about disparities in application rates between white and minority households in the most impacted counties, worrying that the gap could result in future violationz. And they warned that the state wasn’t providing enough options for low- and moderate-income households that suffered damage but didn’t apply for RREM grants to get the aid they needed.

“This is recognition that there have been very serious and systemic problems in the RREM problem,” said Adam Gordon, a staff attorney at Fair Share Housing, which has been a frequent critic of the Christie administration’s handling of the Sandy recovery efforts. He said he was stunned that HGI had sought out volunteers to do its outreach rather than hiring paid professionals, even though it had been awarded a $67 million contract to do the work.

He was also surprised by the revelation that the state has had “integrity monitors” in place since last June to provide oversight of the grant program, but has not released quarterly reports to the public, as it’s required to do under state law. It appears that state officials considered those reports to be drafts, and thus felt they were under no obligation to publish them.

The audit recommended that state officials release that information on the state’s Sandy recovery website.

“HUD believes that proactive transparency and openness regarding the state’s ongoing process of seeking out and correcting program management issues will be beneficial,” it said.

Gordon agreed. “When you’re in this kind of disaster recovery process, it’s very damaging to people to not have real information about what’s going on,” he said. “There’s a lot that we still don’t know.”

For their part, state officials say they've taken action to identify and correct all the concerns raised in the report. They note that the audit didn’t find any civil rights violations or major regulatory deficiencies worthy of sanctions. And they say they’re fully cooperating with federal officials and are taking action to address any issues that arise in the future.

Editor's note: This article has been updated and revised since it was first published.

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