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New Items
v
The HUD Office of the Inspector General (HUD
OIG) Started An Audit in June Based Upon Our Complaint
·
It is about inconsistent treatment that shortchanged applicants
to the Road Home Program (RHP) for homeowners
·
The applicants were victims of Hurricanes Katrina or
Rita in Louisiana in the summer of 2005
Ø To read the complaint Click
here
Ø The complaint addresses
· serious
mismanagement and waste of taxpayer money with evidence of fraud
· It seeks use of the remaining $1.5 billion in
the homeowners’ RHP for applicants who have been
o
unfairly shortchanged in their grants or denied
grants because of inconsistent application of rules
Ø
Unfairly
treated applicants include the following.
Road Home Program applicants who were:
o estimated
cost of damage,
o the
subtraction of insurance or FEMA benefits when they were not for structural
damage,
o the pre-storm
value that you were not able to appeal;
o about
denial of a grant that you can prove you should get according their rules,
o about
still waiting for an elevation grant that you can prove you should get according their rules,
o promised
funds won on appeal,
o about a
mistake that RH made in the calculation of the applicant’s grant.
v
HUD’s Rule of Maximum Feasible Deference: LRA
and OCD explanations are contradicted
·
http://fhasecure.gov/offices/cpd/communitydevelopment/library/stateguide/appg.pdf
24
CFR 570.480 (c) of the State CDBG regulations provides that the Secretary will
give maximum feasible
·
deference
to the state’s interpretation of the statutory requirements and the
requirements of this regulation, provided that these interpretations are not
plainly inconsistent with the HCDA and the Secretary’s obligation to enforce
compliance with the intent of Congress contained in the Act.”
·
The
general meaning is that for HUD CDBG-funded programs (like the Road Home, RH)
the State has very much freedom to set the rules as it sees fit.
·
A
specific application is to the rule that if an applicant gives RH an appraisal
that is more than 20% higher than the pre-storm value (PSV) used for grant
calculation, RH will not accept it. This detailed requirement could not have
come from HUD according to the “maximum feasible deference” regulation.
·
This
20% rule was changed on Nov. 9, 2007 after much advocacy by CHAT. The new rule
(# 188G) was that instead of rejecting the appraisal out of hand, RH would do
an evaluation of how good the appraisal was by another appraisal called a field
review appraisal, also done by certified appraisers but arranged by ICF.
·
Here
are the problems associated with this 20% rule.
1. LRA and OCD (RH state agencies,
Louisiana Recovery Authority and Office of Community Development) told us in
meetings first that OCD decided on 20% themselves (and Mike Spletto,
formerly head of Housing for OCD) said the number could have been 5%, 10%, or
20% and he thought they were generous to choose 20%).
o
LRA
later told us that HUD requires this 20% cutoff and told the Times-Picayune that
HUD gave “guidance” about this 20% rule. http://www.nola.com/news/index.ssf/2008/07/rule_changes_frustrate_road_ho.html
o
OCD
told state legislators that “HUD allows approximately 20% over the highest
valid pre-storm value to be paid to homeowners” … exceeding the 20% allowance …would
not be eligible for CDBG funds.”
The
legislative fiscal note to a Road Home reform bill http://www.legis.state.la.us/billdata/streamdocument.asp?did=497732
o
Quite
a different statement was made by Mike Spletto, former
head of Housing at OCD during a Louisiana Legislative Subcommittee at a Town
Hall meeting on RH on Feb. 6, 2008 .
On
p. 17 of the official minutes available from the Municipal Affairs Committee of
the Louisiana Senate, the following was written
(emphasis added).
“Ms. Elkins said there
have been about three policy changes on appraisals and asked Mr. Spletto to go over the most recent one. Mr. Spletto
responded, "As you heard earlier, a lot of the complaints were that when a
homeowner provided an appraisal, a post-storm pre-value appraisal greater than
twenty percent, the comment was that we just ignored it. The state had us set up a policy that twenty percent was a number
that we could accept a non arms length transaction.”
2. LRA said that it has two letters
from HUD indicating that 20% is the highest deviation that they would consider
acceptable. With considerable difficulty, I obtained one of these letters. It
(the May 19, 2008 letter) is unconvincing. It refers to the state’s
determination of PSV and the homeowner’s appraisal, as if they were done by
similarly good methods. They are not. The state’s involves a drive-by appraisal
(“market analysis”) at best and often just a broker price opinion with a
drive-by. The appraiser for the market analysis and the evaluator (background
unspecified) need not leave their car. Moreover, there is a mistake in the
second sentence of the letter. Lastly, this letter to Suzie Elkin, former
executive director of OCD, is in response to a Mar. 31, 2008 letter from her. I
have been unable to obtain that letter despite a public records request to the
LRA for it dating from July 1, 2008. A Freedom of Information Act request to
HUD produced the May 19 letter from HUD but not this Mar. 31 Elkin’s letter to
HUD nor any second letter from HUD about this.
3. As to the second letter, Paul
Rainwater, current head of LRA and OCD, told Sen. Murray at a meeting of the
Legislative Audit Advisory Council that he had two letters from HUD about the
20% appraisal rule and would be glad to share it with the legislators.
“Mr. Rainwater said the 20% appraisal
is a HUD rule and when he started in January 2008, the former administration
had set a policy of no more than 20% and did not tell anybody. He said that he
has tried to be very transparent about this process and told his team that they
would write HUD. He went up to HUD National and met with the Secretary and
program managers said down in Louisiana you are telling us that the
differential can be no more than 20%. Louisiana Recovery Authority Board of
Directors sent a letter to the HUD Secretary asking for clarification asking if
they could exceed the 20% appraisal. Mr. Rainwater said HUD sent a letter back
very clearly which was made public to the media that they cannot exceed 20% and
if so chose to exceed it then it would come out of state general fund money.
That was the clear guidance that received from HUD…. He said he was told that
it was a HUD regulation because they use FHA's rule which is about 5%, but HUD
said we will allow up to 20%, which may not be enough, but it is the rule that
HUD set forth. Mr. Rainwater said he has two letters from HUD stating that and
would be happy to provide them to the committee or the full legislature.” http://www.lla.la.gov/legislativeservices/advisorycouncil/
p. 7 - 8
However, Mr.
Rainwater has not shared the letter with CHAT Founder, Melanie Ehrlich, despite
a public records request on July 1 2008 for the second letter and a writ of
mandamus (request for court hearing) as a follow-up to unanswered public
records requests. She received the first letter only after insisting that LRA’s statement that there were no letters was incorrect
because she had seen one of them (the May 19 letter) briefly when sheI gave testimony in Baton Rouge to a Senate
subcommittee.
4. It is arbitrary and inconsistent
for RH to accept without question for grant calculation a homeowner-supplied
appraisal that is 19% higher than the PSV determined by inferior methods by RH
but to reject one that is 21% higher or 60% higher. The more erroneous the PSV
by RH, the less chance that an applicant gets any correction.
5. Applicants who had handed in their
appraisals that were more than 20% higher than RH’s
PSV were left waiting for months without field review appraisals and then the
field review appraisals were summarily stopped. We were told first that HUD
objected to them, which made no sense because we had earlier been told that the
long delay in passing the rule in the first place was that HUD had to approve
it. In fall of 2008, we were told during a meeting with RH officials that most
applicants who had the field review appraisals objected to them because they
were giving values LOWER than the original PSV. That was amazing because the
applicants were disputing the PSV as too low and had an appraisal by a
certified appraiser to back them up. Moreover, that would imply that RH’s PSVs were too high even
though applicants said they were too low.
6. Core CHAT member Mindy Milam’s
case helps us to understand these comments from OCD about the field review
appraisals. She was mentioned in a recent article but has kindly shared more of
the details with us.
http://blog.nola.com/jarvisdeberry/2009/06/jarvis_deberry_goodbye_good_ri.html
RH did a field review appraisal of Mindy’s certified
appraisal that had been rejected because it was more than 20% higher than RH’s PSV.
One of the comparables in RH’s field review appraisal of Mindy’s home in a middle-class
neighborhood came in at an incredibly low $61/sq ft. Mindy’s house had been
demolished but RH has more faith in their field review appraisal of her
demolished home than in a certified appraisal of the inside and outside of her
home while it was still standing. This field review appraisal was done as a
“favor” to Mindy because she complained at a special meeting of RH officials
and CHAT leaders. This field review appraisal was not binding. If it had been
binding, Mindy would have had to pay back to RH $21,000 of her grant money.
7. RH tells applicants now that field
review appraisals were secretly discontinued (although if you read their
website in great detail, you could have found out 2 months after they were
discontinued that they were no longer available), that applicant can request a
RH certified appraisal. The catch is that if RH’s
appraisal comes in lower than a homeowner’s appraisal and the RH PSV the
homeowner has to pay back money to RH.
All this for victims of
the worst hurricane-flood in US history!
v
COX 10 TV’s Airing of the May 27 CHAT Meeting
Focused on Our HUD Inspector General Complaint
Thanks to Carleen Dunn and COX
10! Our 1 and a half hour meeting was/is
being shown on COX 10 as follows:
Wed., June 10, Noon-1:30 PM; Fri., June 12, Noon-1:30 PM;
Sun., June 14, 10:00-11:30; Mon., June 15, 8:00-10:00 AM; Thurs., June 18,
8:00-10:30 AM; Sat., June 20, 11:00-1:00;
Mon., June 22, 12 - 2 PM; Fri., June 26, 8-10 AM; Wed., July 1, 3 PM;
Thurs., July 2, 2:30 PM; Fri., July 3, 3 PM
v
More Background About the Road Home Program
and the HUD OIG
·
Why
is our complaint addressed to the HUD OIG and what is the nature of these
grants?
o
HUD
funds this $10.4 billion program run by the State of Louisiana and HUD has
responsibility for oversight
o RHP has given an average grant of $64,000
(including about 20,000 $30,000 house-elevation awards) to 124,000 applicants as of May, 2009
o RHP grants to homeowners are for up to
$150,000 as compensation for otherwise uncompensated structural damage
o These grants are for Louisiana victims of
Hurricanes Katrina or Rita
o There is $1.5 billion left as of June 2009 in
this program for homeowner victims of the hurricane/floods
o
LRA has not agreed to set up an independent and
fair appeals system with publicized rules for deciding appeals
o
This new appeals system should be described in
a letter to applicants who tried to appeal but still have shortchanging
mistakes
o
Fair appeals without difficult, unclear
deadlines and pre-appeals procedures should be a first priority for the
remaining RH funds
o
The other first priority should be applicants
still in grant-processing limbo through no fault of their own
·
On
May 5, the Inspector General of HUD released two audit reports in answer
to a citizen complaint about ICF staff erroneously receiving grant money
intended for low-income applicants
http://www.hud.gov/utilities/intercept.cfm?/offices/oig/reports/files/ig09a1002.pdf
http://www.hud.gov/utilities/intercept.cfm?/offices/oig/reports/files/ig09a1001.pdf
·
The
HUD OIG found that there were incorrect payments to 5 of 34 employee-applicants
and that the State did not make sure that ICF had procedures in place to
identify such errors and did not follow program rules.
·
In
addition, the HUD OIG reported duplicate payments to single addresses due to
the State’s failure to ensure that ICF had controls to identify multiple
disbursements to a single address.
·
Our
complaint to the HUD OIG, which was accepted for investigation in February,
2009, includes the following allegations:
o a lack of adequate State oversight of the
program leading to thousands of applicants having their grants short-changed
and to waste and abuse of program funds because of ICF failing to follow
program rules.
o evidence for an intentionally fraudulent
pre-appeal program that 22,650 applicants tried to navigate and arbitrary and
capricious manipulation of procedures for damage assessment and house valuation
during grant processing.
o ICF purposefully inflating numbers of
applicants and falsely arguing that it did more work than stipulated in the contract
in order to justify an increase in its contract payment.
· No investigations of the Road Home Program by the HUD Inspector General’s Office have tackled the problems of underpayment of applicants often described in the local media and addressed in several bills passed by the State Senate
One of Many Examples of
Violations of HUD Rules & Serious Mismanagement
The contractor (ICF) established an intentionally
misleading pre-appeal program (dispute resolution) and then left thousands of
applicants in limbo, unable to appeal. LRA has not given large numbers of
applicants a chance to appeal.
·
The Louisiana Legislative Auditor analyzed 50
applicant files of a total of 22,650 that had the pre-storm value (PSV) dispute
flag as of March 2008 and found that 27 of the 50 (54%) did not have an issue
related to PSV in the JIRA database for resolving issues associated with grant
processing. Without the applicant’s file being transferred to the JIRA files,
no dispute resolution or appeal was possible. http://app1.lla.state.la.us/PublicReports.nsf/6F905AB4148A123C8625753D0066BD41/$FILE/00008378.pdf
·
Third Online Survey of the Citizens’ Road Home Action
Team (CHAT): “Have you been able to find out what happened to your dispute
resolution or appeal?” Out of 188 respondents to this question, 69% wrote “no.”
·
CHAT’s Second
Online Survey: “If you received a satisfactory response to Dispute Resolution,
how many months did it take?” Out of 95 respondents who answered this question,
45% said that it took 6 months or more to get the favorable response.
·
CHAT’s Second
Online Survey: “If you have not received a satisfactory response, how long has
it been since you sent your application to Dispute Resolution?” Out of 317
respondents who answered this question, 66% said 6 months or more. Many said 1
year.
o
In answer to complaints from CHAT & others, the
following was posted in Feb., 2009 at the LRA website (not the much better
known Road Home website):
§
“For many months we have
heard of people who believe their Road Home appeal was lost in the shuffle, or
that they were never able to exercise their right to appeal because their case
was stuck in the "resolutions" process…the Louisiana Recovery … will
review these cases.”
http://lra.louisiana.gov/index.cfm?md=pagebuilder&tmp=home&pid=106
Applicants are told to contact LRA
through one of three addresses or phone numbers.
· Email info@louisianarecoveryauthority.org
with "Road Home Appeal" in the subject line
· Or call (225) 342-1700 to find out
how to request an appeal
· Or mail a letter to
the Louisiana Recovery Authority, ATTN: Ty Larkins,
150 Third Street,Suite 200, Baton Rouge, LA,
70801 (CHAT recommends certified mail}
o
However, subsequently, after LRA was swamped
with requests, LRA wrote the following to applicants who try to get this review
“Mr. Rainwater did not say he was opening appeals
to applicants who have gone pass [sic] the deadline. His comments were
directed at serving persons who were in appeals who "fell through the
cracks" and therefore, never had their matters resolved.”
o Once
again, a promised, long-needed reform was revoked by LRA with no public notice
Ø We still hear over and over about outrageous mistakes
made by ICF International, the contractor, that OCD says cannot be fixed or
that during appeals just have a rubber stamp put on the wrong data in an
applicant’s file
Ø One of numerous examples is a rural applicant whose
barn was appraised for grant calculation instead of her house;
OCD
said this could not be corrected even though they admitted the mistake
Ø How will applicants who never had a chance to
continue their pre-appeal process or had no access to their files during appeal
have a fair chance to appeal?
Ø What will LRA do with their projected “surplus” of
$200 – 300 million dollars and why are they not using that for fair appeals?
Ø A Times-Picayune editorial in 2009 stated the following about the contractor, ICF International
§ “ICF's abysmal management of the Road Home program hampered
people's recovery from the 2005 hurricanes and caused great misery and
hardship.” http://blog.nola.com/editorials/2009/02/keep_watch_on_icf.html
v
Senate subcommittee testimony on the need for the HUD OIG
investigation
Melanie Ehrlich, founder of CHAT,
was asked by Sen. Landrieu's staff to testify in DC about the Road Home Program
on May 20. Sen. Landrieu chairs the Senate Homeland
Security and Governmental Affairs Committee Disaster Recovery Subcommittee.
Click
below to see the whole testimony at the hearing: http://hsgac.senate.gov/public/index.cfm?Fuseaction=Hearings.Detail&HearingID=f7448914-51a5-41dc-8f75-1e820a008a80
Other Items:
v
Questionable contracts by the Louisiana State Government
under Gov. Jindal or former Gov. Blanco
or
by the US Government: CLICK
here to read more
·
ICF Emergency Management Services, LLC (ICF or ICF International)
·
Camp, Dressler, and McKee (CDM)
·
Hammerman & Gainer Inc.
(HGI)
v
Updated description of disappearing
dispute resolution cases that favored the contractor but left many
applicants in limbo
v
Road Home applicants who received forms to
apply for HMGP elevation grants can still send in that form or request
another copy if they did not send it yet
http://www.doa.louisiana.gov/cdbg/dr/hmgp/hmgp.htm
Ø
If you are demolishing your house and
building a new one,
Ø
your HMGP elevation grant of up to
$30,000 is determined by total allowable costs for construction and elevation
minus total Road Home grant, FEMA structural damage, insurance
benefits, and ICC money
Ø
If you are elevating and repairing your
house,
Ø
your HMGP elevation grant of up to
$30,000 is determined by total allowable costs for elevation minus Road Home
elevation grant and ICC money
Ø
For details and to determine your HMGP
eligibility to start rebuilding, contact:
1-877-744-7235 or 1-225-339-3746 or
hazardmitigation@la.gov