Pascrell, Pallone Call for State Action on Mismanagement of Superstorm Sandy Funds

Pascrell, Pallone Call for State Action on Mismanagement of Superstorm Sandy Funds

MOONACHIE, N.J. – Today, Congressman Bill Pascrell, Jr. (D-NJ-09) and Congressman Frank Pallone, Jr. (D-NJ-06) hosted a press conference in Moonachie, NJ calling on the State to respond to the findings of improper management, oversight, and disbursement of federal recovery dollars to Hammerman & Gainer Inc. in a U.S. Department of Housing and Urban Development (HUD) Office of Inspector General OIG audit.

The Congressmen also sent a letter to State officials calling on Governor Chris Christie to proactively address the documentation issues the HUD Office of Inspector General notes in its audit; ensure Hammerman & Gainer is held accountable for every dollar it improperly spent; and implement oversight programs to adequately administer future disaster fund contracts.

"We want answers for the folks who were left without homes," said Pallone and Pascrell.

"We want answers because this federal funding was spent improperly. We want answers and we want action to ensure this doesn't happen again when the next storm hits New Jersey."

In January 2014, Reps. Pascrell and Pallone wrote a letter to HUD requesting they investigate the State’s contract with Hammerman & Gainer.

The HUD Office of Inspector General conducted the audit because the contract involved a significant amount of funds, was critical to the implementation of three of the State’s disaster programs, and was terminated less than one year into the three-year contract. The audit concluded that New Jersey did not use federally accepted controls, overspent on real estate and labor, and dozens of expenditures were submitted without receipts or not authorized by compliance officers.

The HUD Office of Inspector General audit is available here.

Today’s letter is attached and text is below:

Dear Governor Christie,

As you know, the U.S. Department of Housing and Urban Development (HUD) Office of Inspector General (OIG) issued a report this week after investigating the State of New Jersey's contract with Hammerman & Gainer Inc. (HGI) to distribute Community Development Block Grant – Disaster Recovery (CDBG-DR) funds after Hurricane Sandy. In light of the revelations and recommendations included in the report, we are writing to express our strong concerns with the State’s oversight of this contract. Additionally, we urge you to fully account for CDBG-DR funds spent by HGI and ensure that HGI pays back any funds that HUD determines must be returned. New Jersey taxpayers should not be on the hook to repay federal funds because of HGI’s mismanagement or your Administration’s inadequate oversight.

As you know, Hurricane Sandy housing recovery programs are funded with federal CDBG-DR dollars provided through the Disaster Relief Supplemental Appropriations Act, which became law on January 29, 2013. These funds were to be spent on expenses related to disaster relief, long-term recovery, restoration of infrastructure and housing, and economic revitalization in the most impacted and distressed storm-affected areas. However, throughout the Sandy recovery process, there have been numerous complaints of a lack of transparency in the selection criteria and distribution process of certain CDBG-DR funded programs in New Jersey.

In January 2014 we wrote a letter to HUD because we were concerned about this lack of transparency and accountability. More specifically, we requested that HUD investigate the manner in which New Jersey’s contract with HGI, the firm handling the largest Sandy recovery program, was terminated.

The HUD OIG report resulting from this request concluded that New Jersey did not disburse disaster funds to HGI in accordance with HUD and other federal requirements. Specifically, the report notes that your Administration “did not ensure that (1) disbursements met a national objective, (2) expenses were incurred after the contract was executed, (3) other direct costs were fully supported and the prices paid were fair and reasonable, (4) labor costs were fully supported, (5) travel costs were fully supported, and (6) disbursements were for costs that were reasonable and necessary.” The report highlights this happened because New Jersey “did not have adequate controls in place to administer its contract and monitor contract performance and was not fully aware of Federal procurement and cost principle requirements.”

As a result, we urge you to proactively provide HUD with the proper documentation necessary to demonstrate that the federal dollars paid to HGI were eligible, supported, reasonable, and necessary. Further, we urge you to ensure HGI is held accountable for any improper funds it was paid, not New Jersey taxpayers. Finally, we urge you to put in place adequate controls to administer future disaster recovery funds so New Jerseyans can swiftly receive the support they need to put their lives back together after an extreme weather event.

We fought hard to ensure that New Jersey got its fair share of federal disaster recovery dollars after Sandy, which is why it is disappointing that the State did not do all it could have to ensure these funds were spent in compliance with federal requirements. The New Jerseyans who struggled to recover from the devastation of Hurricane Sandy deserved better. Thank you for your attention to this request, and we look forward to your response.

Sincerely,


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