Commerce memo says WV flood housing progress stopped for ‘pause’

CHARLESTON, W.Va. — An internal memo from the state Department of Commerce contends this spring’s pause on a long-term flood relief contract had significant effects on the effort.

The pause affected progress for homes where construction had started, delayed ceremonies for applicants who were set to sign on as homeowners and slowed down environmental reviews that were part of the recovery process, Commerce contended.

The pause also threw construction workers into uncertainty and potentially risked sacrificing the millions of dollars administered by the U.S. Department of Housing and Urban Development, Commerce concluded.

Brian Abraham

Brian Abraham, the senior counsel for the Governor’s Office, called after this story first posted to publicly question the intent of the memo. He contended it was produced to provide cover for Commerce.

“I say we question the validity of it, given the timing and given the fact there had been no movement in spending the money for months and months,” Abraham said this evening.

He said the memo wound up with HUD officials when representatives of the Governor’s Office went to Washington, D.C., to communicate about long-term relief funds.

“We saw the memorandum, we questioned its validity, it appeared to be self-serving and a way to divert, we discovered it had been leaked to HUD prior to our trip there to resolve the issues,” Abraham said. “It obviously is something we believed was created only in response to the things we were finding out.”

He said no one in Commerce was instructed to stop help for people, but instead were to stop the contracts to manage long-term flood relief money. “To the extent that anybody called in and didn’t get service – that was never directed that that stop occurring,” he said.

Gov. Jim Justice makes a point during a news conference.

Gov. Jim Justice has said publicly several times that the pause was actually very good.

“Was the pause good or was the pause bad?” Justice asked at a press conference last Wednesday. “And I’m telling you the pause was incredibly, incredibly, life-saving good.”

The administration was examining a contract with contractor Horne LLP, worth up to $17 million, to manage federal long-term flood relief money. The Governor’s Office wanted to know more about the duties and whether the contract had gone through appropriate approval procedures.

Public attention that initially focused on questions over the contract then transitioned toward whether the pace of long-term flood relief has been as responsive as expected.

Intended or not, Justice said the pause helped provide that focus.

“Because we paused, because of the change order, because of those things, now we have a movement on to move with the same type of national recognition that we got on the FEMA effort on this effort,” Justice said last week.

Documents show the federal money for long-term relief became available this winter, just before the pause went into effect.

West Virginia made its request to start using federal long-term relief money from Housing and Urban Development this past Jan. 29.

HUD gave its OK on Feb. 20.

The pause went into effect just a little over a week after that.

The memo from Commerce specifies that Feb. 28 was the date that the RiseWV Disaster Recovery Housing Program was directed to cease operations, pending additional review by the Governor’s Office.

The memo was produced four weeks after that, March 26, by Andrew Mihallik, RISE’s program manager and an accountant in the state Office of Economic Opportunity.

It was passed along that same day from state Commerce Secretary Woody Thrasher to several contacts in the Governor’s Office, including Abraham, senior adviser Bray Cary and chief of staff Mike Hall.

Woody Thrasher

“Good morning,” Thrasher said in an email obtained by MetroNews. “I asked my staff to provide an update on RISE and any implications as to the stop work. I’ve included their response.

“If there are any concerns I suggest we deal with them and get back on track. Let me know if I can be of help.”

The memo is detailed, with specific numbers about aspects of long-term flood relief that went into limbo.

At the time of the pause, the memo stated, 55 homes were in construction. Many flood-damaged homes had been demolished, with families living in temporary housing. “These families remain in transition until we receive direction to fully resume program activities,” according to the memo.

Thirty-eight applicants had homeowner signing events scheduled at the time of the pause.

“As directed, we contacted those families and cancelled their grant award signing event. Many of these households contact the program daily inquiring when they will be rescheduled.”

More applicants, 138, were pending with environmental reviews that were a key — and usually quick step — in being eligible for homeowner signings. The Commerce memo said under normal conditions about 10 environmental reviews could be accomplished in a day, so there was about a two-week backlog no longer moving.

“Many of these applicants are contacting us inquiring why the Tier 2 environmental review is taking so long.”

The pause also affected construction workers who had signed on to do the work, the memo said.

Most of the construction workers were West Virginia residents. “Many depend on the construction anticipated under the program, which is now uncertain. Many have indicated that if construction activities continue to be suspended, they will be forced to find and commit to work elsewhere.”

Construction contractors had puts millions of dollars into mobilization costs in anticipation of getting to work, the Commerce memo stated. “This cost includes cost incurred to establish supply chains, lease staging yards and office space, purchase of materials and recruitment of skilled labor.”

More than 40 manufactured housing units were already staged in recovering communities. “These are paid for and on hold to be delivered to flood survivors,” the memo noted. “Over 30 additional manufactured housing units have been ordered with deposits paid.”

There were more long-term implications, too, Commerce wrote.

One possibility was risking the $150 million in Community Development Block Grant funds for disaster relief.

“Failure to implement and deliver program activities, as defined and authorized by HUD in the state’s approved action plan, could expose the state to recapture of funds,” Commerce wrote.

And delaying the state’s response to housing needs potentially also bumped the attention to other long-term recovery efforts such as infrastructure and economic development.

“HUD has formally advised the program to expedite delivery of the program in order not to be included on HUD’s monthly spending report as a slow-spender.”

West Virginia is listed as a “slow spender” in the most recent grant financial report by the federal agency.

That designation means spending less than 10 percent of monthly pace required to fully use the grant by target closeout date.

Of the $149,875,000 West Virginia has available, the state still has $148,428,791 left on hand.

The average of the last three months of spending is $130,178.

“Lack of demonstrable program activities and expenditures could affect the ability of the state’s congressional delegation to seek additional funding allocations,” Commerce wrote.

Commerce memo (Text)

Housing and Urban Development has asked in its own memo what is going on in West Virginia.

Two days after the Commerce memo was produced — and a month after the pause went into effect — Housing and Urban Development sent a memo asking what gives.

The agency’s deputy assistant secretary for grants programs wrote that HUD had just been informed about the suspension of activities in West Virginia.

“The state’s suspension of its housing recovery activities, potential uncertainty surrounding the state agency that will ultimately be responsible for administration of the CDBG-DR grant and the prospect of a substantial reallocation of CDBG-DR funds from housing to economic development or infrastructure activities necessarily raises questions regarding the Department’s prior certification of State capacity and the State’s implementation of the grant in a manner consistent with the requirements of the applicable Federal Register notices.”

The Governor’s Office responded with a letter signed by Abraham, the general counsel.

Abraham said West Virginia intends to be responsive and continue its compliance with federal rules.

“However, based on the tone and tenor of your letter, I believe you have been provided false and misleading information from a source obviously not associated with either the intent or the actions of the State of West Virginia regarding our unmet housing needs.

“While your correspondence references a ‘suspension of housing activities,’ we have not directed such suspension but rather have placed an operational pause upon our RISE program while this office concludes an investigation that we have conducted regarding the procurement of consulting services.”

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