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Investigation Reveals Sandy Energy Grant Program Riddled With Errors

Further, while responding to Zimmer's claims that Hoboken had been shortchanged, state officials never once said that the award amounts were still being finalized. Nor did New Jersey’s Storm Czar Marc Ferzan when responding to Zimmer’s allegations late last month.

Given the assertion that award decisions are still being revised, NJ Spotlight asked Ragonese and other administration officials when the process would be complete. They were unable to provide details, saying only, “We are continuing internal reviews. The process is still ongoing.”

No Playing Politics

What Ferzan did say, on a follow-up call with reporters a few weeks later, was that politics has never played a role in the state’s distribution of Sandy aid money, and that any suggestion discrepancies like these were anything more than honest mistakes would be unwarranted.

“It’s unfathomable that the system could be gamed in any way,” he said. ““There is nothing that is more highly regulated than federal disaster grants programs. Everything must be documented. Everything is subject to review by federal agency auditors. Each federal agency has an Office of Inspector General. And as a result of that, there’s been a lot of process that’s built into disaster recovery.”

While it’s generally true that there’s a massive amount of oversight built into the distribution of federal Sandy aid, HMGP is different in key ways from some other sources of funding for rebuilding and recovery.

The Hazard Mitigation Grant Program is not intended to pay for repairs but rather to help recipients prepare for future events. FEMA gave New Jersey broad discretion about where to distribute this money. That potentially includes areas that may not have even been directly affected -- or badly affected -- by the disaster.

hoboken gas generator
A gas-powered generator provides electricity for a Hoboken residence in the aftermath of Sandy.

When it comes to HMGP spending, FEMA’s only rules are that approved projects meet a list of eligibility requirements and a cost–benefit ratio analysis, so any dollars spent today can be quantified with a return on investment over the long term.

The Christie administration was under no obligation to distribute funding from the HMGP Energy Allocation Initiative to municipalities in proportion to the damage they suffered from Sandy. In fact, damage from Sandy wasn’t even a factor that was explicitly considered in the ranking criteria (It would have been partially captured in the points assigned for FEMA Public Assistance History, but state officials say the working group relied on data supplied by FEMA last August, and many public assistance requests from Sandy were processed in the months following that).

Since there are few federal requirements over how the state distributes this mitigation money, there’s actually not a lot of oversight to ensure that scoring and ranking are conducted fairly.

“FEMA’s mantra is to ‘let the locals lead,’” said one official who’s been involved with the state’s grant process, but would only speak off the record. “They give broad guidelines, but it’s up to the locals to implement, and they don’t generally second guess the local officials,” he said. “If the state were to say, ‘We want to give money to municipalities that have a trout stream but not to municipalities with dunes,’ FEMA probably wouldn’t step in to micro-manage that decision,” he continued.

That analysis was echoed by a statement from FEMA officials themselves. “The state administers the HMGP and the funds available to them,” they said. “FEMA does not determine who gets money or how much money a subapplicant [municipality] receives from the HMGP. It is a state responsibility. Every state determines how they spend, or not spend their HMGP funds.”

Illogical and Unfair?

Even if all the scoring were done properly, it would seem illogical and unfair to many people that a densely populated city like Hoboken -- which suffered over $100 million in damage from Sandy and has a long history of flooding -- would receive no more funding through this program to prepare for future storms than a place like Mount Arlington, a tiny borough with just 5,000 residents that has received less than $200,000 in past FEMA disaster assistance. Or that a place like Belmar -- which suffered heavy damage in Sandy and previous storms -- wouldn’t receive any funding at all.

So while the administration might not have actually broken any FEMA rules with its scoring, the appearance of improprieties is there.

A spokesman for the city of Hoboken released a statement in response to NJ Spotlight’s findings. “This investigation adds to the growing body of evidence that the Christie Administration’s process of distributing Sandy funds has been flawed, politicized, and subject to abuse,” it said.

Briefed on the investigation’s findings, state Senator Ray Lesniak -- a frequent critic of the administration -- called for an independent audit of the state’s distribution of Sandy aid money. “We’re going to have to just add that to our lengthening list of investigations,” he said.

hoboken  flood
Flooding in Hoboken during superstorm Sandy.

For their part, state officials -- who previously seemed ready to wrap up this grant program and move on to other things -- now appear to be backpedaling.

“As part of the State’s ongoing quality control and assurance process,” they wrote in a letter to grant applicants a few days after NJ Spotlight first confronted them with the scoring improprieties, “the cross-agency working group continues to review each data point, confirm accuracy, make any needed adjustments, and ensure that the data is correct before finalizing and submitting project applications to FEMA (no projects have yet been submitted)."

The letter continued, "As part of this process, the cross-agency working group has already worked with several municipalities to make adjustments as warranted. All proposed energy projects included in Letters of Intent (including in communities that did not receive initial notice of an Energy Allocation) are also being proactively reviewed, and we will contact you promptly in the event that any adjustments are required.”

State officials also noted that the proposed $210 million NJ Energy Resilience Bank might give another chance to applicants that don’t receive funding through the HMGP Energy Allocation.

In Hoboken, meanwhile, the city council recently approved a bond ordinance to come up with the $1.7 million -- including the $700,000 they should have gotten through the Energy Allocation Program -- to pay for their original generator requests. Unlike the grant that the city should have received, this money will have to be paid back -- with interest.

Photograph of flooded Hoboken firehouse courtesy of Vincenzo Bochicchio.

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