State Probe Confirms Sandy Energy Grant Program Fraught With Errors

Scott Gurian | April 16, 2014 | Sandy
Officials revamp scoring system in response to NJ Spotlight analysis of how funds were allocated

The National Guard helped Hoboken residents during the flooding and power outages in the days following Sandy.
The head of a state committee responsible for doling out $25 million in Sandy energy grants has told the legal team hired by the Christie administration for the internal review of the Bridgegate scandal that his group’s original decisions were seriously flawed due to “data entry errors.”

The revelation backs up the findings of an NJ Spotlight investigation but also indicates that problems may have been even deeper and wide-ranging than was originally reported.

The disclosure comes in new documents released by Gibson, Dunn & Crutcher, the law firm conducting an investigation into the actions of the governor’s office in the Bridgegate scandal. As part of the investigation, the legal team reviewed claims that Hoboken had been shortchanged Sandy aid for political reasons. Lawyers were told that the contractor the state hired to help sort through grant applications had mishandled the process and that many of the awards previously announced will have to be modified as a result.

The Hazard Mitigation Grant Program’s Energy Allocation Initiative was created to provide funding for generators and other backup energy solutions in municipalities affected by Sandy and previous severe storms.

It came under scrutiny in January, after Hoboken Mayor Dawn Zimmer went public with concerns that her city should have gotten more through the program than the $142,080 it was awarded. She charged that Lt. Governor Kim Guadagno and several other administration officials had threatened withholding aid if she didn’t support a real estate redevelopment project favored by an ally of the governor.

While not finding clear evidence that threats were issued, an NJ Spotlight investigation last month did discover numerous errors in the state’s handling of the grant program.

A detailed analysis found that Hoboken was shortchanged about $700,000 and that places like Belmar and Atlantic City – which experienced severe flooding in some neighborhoods – applied for grant money but didn’t receive any funding at all.

Meanwhile, dozens of small towns that had comparatively little flooding history received much more than they should have, according to the state’s own ranking criteria.

The findings were based largely on a review of the administration’s internal scoring spreadsheet, which was obtained by the New Jersey chapter of Public Employees for Environmental Responsibility (PEER) and shared with NJ Spotlight reporting partner WNYC/NJ Public Radio. Points were assigned based on a variety of factors, including the population of the municipality, its disaster history and whether it had conducted an energy audit.

The newly-released memo summarizing an interview with Steven Gutkin – who served as “de facto chair” of the cross-agency committee that determined the grant awards – suggests that those dozens of errors NJ Spotlight found in its investigation were merely the tip of the iceberg.

Speaking with attorneys from the law firm of Gibson, Dunn & Crutcher, Gutkin said the Governor’s Office of Recovery and Rebuilding had asked his group to conduct a thorough review of the Energy Allocation Initiative in response to “media coverage about potential errors in the program,” which NJ Spotlight first reported in early February.

State officials had previously announced changes to some two dozen award allocations in December of last year in response to problems resulting from an “Excel formula issue,” but NJ Spotlight’s analysis found that some of those updates not only failed to fix the problems but actually made them worse.

“Gutkin’s staff did not realize the extent of the errors that had been made prior to the media coverage,” the memo says, and an initial review raised concerns that Witt O’Brien – the NJ Office of Emergency Management’s contractor for the program – had failed to fully capture all of the energy-related requests from grant applicants and properly enter them into MB3, a computer program the state was using. Upon further examination, officials discovered that “because of data entry errors, approximately 550 projects were not entered appropriately into the MB3 system, and so they were not considered and scored by the cross-agency committee or awarded allocations.”

As a result, state officials abandoned the computer program and re-started the scoring process from scratch, handwriting new tracking numbers on each paper grant application, along with detailed explanations of their scoring methodology. They also put their initials next to each score, indicating their approval.

The final scores and award allocations have yet to be released, and none of the money has been handed out yet. Gutkin indicated, however, that while more projects like Hoboken’s are now likely to be funded, the overall amount each project will receive will probably be less, since state officials will need to conduct a grading curve of sorts to remain within the grant program’s $25 million budget.

Officials say the large number of scoring mistakes shows that Hoboken wasn’t being singled-out for political reasons.

Whatever the source of the errors, NJ Spotlight’s analysis appears to show that correcting all the problems will require substantially reducing and even withdrawing awards previously announced for many municipalities – in some cases by up to hundreds of thousands of dollars. And it’s hard to see how the administration will be able to do that without making a lot of people angry.

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