Letter From HUD Inspector General Vows Strict Audit and Enforcement Oversight of NJ Sandy Funds

Press Release

For Immediate Release: Wednesday, February 5, 2014

Contact:  Bill Wolfe (609) 397-4861; Leola Webb (202) 265-7337

New Christie Sandy Spending Plan Has Gaping Holes

HUD Beefs up Audits for Jersey Expenditures; 2-Year Use-It-or-Lose-It Deadline

Trenton — New Jersey Governor Chris Christie’s long-awaited plan for spending the bulk of federal funds awarded to the state for post-Super Storm Sandy relief suffers from several gaps and flaws.  At the same time, the U.S. Department of Housing & Urban Development (HUD) Office of Inspector General has signaled that it has expanded its audit and enforcement efforts in New Jersey, including a “spending deadline” for use of funds, according to a letter released today by Public Employees for Environmental Responsibility (PEER) which had asked for this more intensive review.

Earlier this week, the Christie administration unveiled its plan for spending nearly $1.5 billion in federal reconstruction aid.  While more problems will be uncovered during scheduled hearings—which will be the first time public input has been solicited on New Jersey’s plans–several key features jump out on first review:

• The Christie administration proposes to pay the state match with federal funds, a clear misuse of federal funds for which the state is required to provide a partial match with its own funds;

• Each state is supposed to have a comprehensive “science-based” risk analysis that it “has or will employ to select, prioritize, implement, and maintain infrastructure projects or activities.” However, New Jersey has no such risk analysis.  Nor does the plan specify any mechanism for ensuring these analyses would be implemented if they were written; and

• For the largest pot of funds, the Homeowner Reconstruction, Rehabilitation, Elevation and Mitigation (RREM) Program, in Tier One New Jersey found 12,389 homes eligible  but just 5,124 (41%) have “received a grant award” (this may not be actual cash in hand for the homeowner).  In the new Tier Two plan, New Jersey requests $390 million more for RREM, yet fails to explain the delay in disbursement or disclose why the contractor was abruptly fired, or provide a plan for fixing whatever it was that caused the delay in the first place.

“It takes a lot of nerve to use federal funds for the state match to qualify for federal funds,” stated New Jersey PEER Director Bill Wolfe. “This is less a plan than a vague promise to write a plan.”

On January 15, 2014, PEER asked the HUD Inspector General to broaden its current investigation on the “Stronger than the Storm” media contract to include New Jersey’s compliance with a host of federal rules, ranging from incorporating climate change to using a “transparent and inclusive process” to select projects.  In a response dated January 28^th, Randy McGinnis, Assistant Inspector General for Audit, wrote that the federal agency is committing “significant audit, evaluation and investigative resources” to oversight and pledged that “we will ensure that HUD is enforcing Federal requirements” cited by PEER.

In addition, the letter indicated that “HUD established a spending deadline for Hurricane Sandy funds which is 2 years from the date of the grantee’s grant agreement.”  For Tier Two funding, that deadline will start to run once HUD accepts New Jersey’s just unveiled funding plan.  For Tier One funds, however, the deadline is already running and, at its current rate, New Jersey may have to forfeit unspent funds.

“HUD appears to have woken up to the fact that the Christie administration has made a mess of post-Sandy reconstruction,” Wolfe added.  “Unless the federal rules are enforced, New Jersey will use these funds to recreate the pre-Sandy highly vulnerable development pattern, ensuring that billions of federal dollars will be wasted on projects virtually certain to be destroyed by climate change-driven sea level rise and extreme storm events.”

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Read the HUD IG letter

See PEER call for expanded federal audit of Jersey Sandy spending

Look at new Christie $1.5 billion Sandy spending plan

View language on New Jersey using federal funds for state match

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New Jersey PEER is a state chapter of a national alliance of state and federal agency resource professionals working to ensure environmental ethics and government accountability