RISE may lose housing contractor because of tangled agreement

CHARLESTON, W.Va. — Of the three wooden houses built on site for disaster victims under the West Virginia RISE program, all were constructed by the faith-based Appalachia Service Project.

The other 47 homes provided to 2016 flood victims through government funds have been manufactured housing through two other contractors.

Now, complications with its grant agreement mean Appalachia Service Project is likely to stop its work under RISE, although the organization plans to continue work in West Virginia through private funding.

The disruption is yet another issue that could complicate whether West Virginians who lost homes in the devastating 2016 flood are able to gain housing.

Walter Crouch

“We’re not really mad at anybody. We’re upset that this happened. But we’re not mad at anybody,” said Walter Crouch, president of Appalachia Service Project. “For homeowners, I don’t blame them for being mad. But for us, it’s not helpful.”

Appalachia Service Project was one of three organizations with agreements to supply housing when RISE was first underway in 2017. The others were Thompson Construction and Danhill Construction.

Appalachia Service Project’s initial $3,180,000 agreement said it would end either by July 1, 2018, or “when assigned construction services are completed in total,” which is still nowhere near happening.

RISE got off to a sluggish start in early 2018, with a pause in work declared when questions arose over a contract with the lead consultant, Horne LLP.

A report released June 24, 2018, by the state legislative auditor concluded that the agreements with housing contractors had been executed unlawfully, without going through proper purchasing procedures.

At that point, Appalachia Service Project had submitted no invoices and received no money.

So the construction agreements had to be bid out again.

U.S. Department of Housing and Urban Development has remained concerned about the system under which Appalachia Service Project was selected, as well as the agreement’s financial structure.

The agreement was built in a per-unit pricing structure that HUD considers insufficiently transparent. The agency says expenses need to be clear.

“The Department’s priorities are to help expedite the provision of CDBG-DR assistance to families and communities that were impacted by the 2016 flooding while also ensuring that federal financial resources are used in a manner that promotes public confidence,” HUD wrote in a 2018 memo about re-bidding the contracts.

Appalachia Service Project has viewed the agreement structure as a way it could account for its necessary overhead.

“We still want to build homes in West Virginia,” Crouch said. “I just don’t think we’re going to be able to perform with the way HUD has interpreted this subrecipient agreement. We can’t afford to build homes at a loss.”

All of the complications have meant lost time getting people back in homes, Crouch said.

“Our first contract was two years ago. In that time we could have built probably built close to 100 homes. We’ve built three,” Crouch said. “It was just slow out of the box.”

State records show that Appalachia Service Project has been paid $751,812 overall. In 2019, Appalachia Service Project has received no payment at all.

Crouch said that doesn’t totally account for what the organization has put into its work.

“So the state is caught on one end, and we’re caught on the other. Even figuring out a way to exit the contract has been tough for the state and for us. It’s just a difficult circumstance,” Crouch said.

RISE

It’s another frustrating aspect of long-term flood relief in West Virginia.

The most recent West Virginia RISE update showed that 50 homes of 479 cases have been completed from the June 23, 2016 flood.

West Virginia has $149 million available for disaster relief from HUD. The agency continues to consider West Virginia a slow spender, a designation that refers to the pace for closing out a grant.

This week’s update from RISE noted that two new housing contractors have been brought on board through West Virginia Voluntary Organizations Active in Disaster.

“Both sub-recipient agreements will help move the RISE West Virginia program forward to assist more families in need while increasing capacity for construction and rehabilitation of homes,” the update stated.

The update makes no mention about the murky status of Appalachia Service Project.

James Hoyer

Adjutant Gen. James Hoyer, the state’s point man on flood relief, has said he expects steady progress to be apparent soon.

“We’re now on a glide path that we believe by the end of June we will have 300 cases in contract management, meaning anywhere from permit to be applied or and issued all the way through nails and hammers,” Hoyer said during a late April meeting of the Joint Legislative Committee on Flooding.

Besides the 50 completed homes, 289 cases require total reconstruction, 61 cases require some form of rehabilitation, 109 cases require new mobile home replacement, and 17 cases are awaiting initial project type and undergoing the damage assessment process, according to RISE.

Thompson Construction, which had a $49 million agreement focusing on manufactured housing, has remained active.

Thompson has been paid $2,383,566 this fiscal year, according to state records. The company was paid $604,407 last fiscal year.

Danhill, which had a $15 million contract focused on mobile homes, has only been paid $2,682 for that since 2019 began. In total, Danhill has been paid $873,836 for work through RISE.

MetroNews asked the West Virginia National Guard for clarification on the contractors.

MetroNews: “Do you know the status of Appalachia Service Project? The Auditor’s website indicates there has been no payment to ASP since 12/19/18.”

National Guard: “ASP is still working in West Virginia. We are working with ASP to close out any outstanding payments for work that has been completed.”

MetroNews: “I also wondered about the status of DanHill, which has only received a payment in 2019 of $2,682.”

National Guard: “The payment you mention is the last outstanding payment that was made to DanHill. DanHill completed all projects that were assigned on the original contract. They were not awarded a new contract in the procurement process in September 2018.”

Questions

Close observers of West Virginia flood relief would like greater clarity on Appalachia Service Project. They would also like to know just how the state will make progress on housing, considering the current situation with contractors.

Paula Brown

“If they truly have caught up on their cases and they are truly moving faster then it should be a situation where they have at least two contractors,” said Paula Brown, deputy director of Greenbrier County’s Department of Homeland Security and Emergency Management.

“If they only have one it would be a situation where they slow down the progress again.”

Brown said Appalachia Service Project has done good work both through RISE and in the private sector.

“Nobody does a better job than ASP. I can’t say a negative thing about ASP,” she said. “Their lack of payment ought to raise questions.”

West Virginia lawmakers also asked about the status of Appalachia Service Project during a meeting last week of the Joint Legislative Committee on Flooding.

Delegate Dean Jeffries, R-Kanawha, asked for an update from Mike Todorovich, director of Homeland Security and Emergency Management.

Jeffries: “Is ASP – have they been paid on all projects to date?”

Todorovich: “I don’t believe so, but I’d have to check to tell you that for sure.”

Jeffries: “Have they pulled out of the state of West Virginia, or are they agreeing to remain here and do work under contract?”

Todorovich: “I don’t know that either, but I will gladly check.”

Jeffries: “I had heard a rumor, and I actually received a call at the end of last week that they would no longer service West Virginia. If we could find an answer very quickly.”

Dean Jeffries

Delegate Jeffries got an answer, and it wasn’t one he would have liked.

“I’ve been told by General Hoyer (of the West Virginia National Guard) and Director Todorovich that we were just on a temporary hold until we resolve issues with the contract,” Jeffries said in a telephone interview. “But talking with ASP, I get a different view.”

Jeffries has been impressed by the work of Appalachia Service Project and is disappointed by the financial complications.

“I’ve met with ASP. I’ve been thoroughly impressed with their operation,” he said. “They’re good Christian men. They’re in good standing.”

Jeffries said he still has questions.

“Why has ASP not been paid in full for the three houses they have completed?” he asked over the telephone.

“I asked about that. Do you have the capacity to do more than that? The gentleman I spoke with at ASP said ‘Absolutely. We have the capacity to do 16 houses at once.’ They want to do that. They are ready to do that. They know that’s what the need is, but they’re waiting on RISE.”

Jeffries is also frustrated that the complications haven’t been fully described in front of the legislative flood committee.

“To get them built, I think we need to start getting straight answers and solving problems,” he said. “If we would all put everything on the table and work together, I think we could see more progress. It just seems like we’re not getting that done unfortunately.”

Stephen Baldwin

Senator Stephen Baldwin, D-Greenbrier, said he has been impressed by the work of Appalachia Service Project.

He said the organization will be missed for its efforts on RISE, although he believes it will continue its contributions in other ways.

“Appalachia Service Project has been a terrific partner in recovery ever since the first days,” Baldwin said.

“I’m working very hard to ensure that they continue to be an important partner for West Virginia because they work in various communities in West Virginia.”





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