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Additional Documents Released on HGI Firing Raise New Questions

Posted by Laura Denker on February 26th 2014

This afternoon, Fair Share Housing Center (FSHC) received public records, which we are making available here, from the Department of Treasury regarding the termination of the state’s contract with HGI. The public records show an ongoing dispute between the state and HGI regarding HGI’s performance with at least $18 million in public funds in the balance in addition to the previously reported $10.5 million termination fee. They raise even more questions about what happened with the HGI termination, and what the State’s plans are to effectively administer Sandy funds going forward.

State officials have refused to say why HGI was fired, but the documents we obtained indicate that there are “performance-related issues” that led to the termination of the contract through an agreement entered into on December 6, 2013.

“New Jersey’s unwillingness to be clear on what HGI did wrong makes it impossible for the public to be sure the problems have been resolved,” FSHC Staff Attorney Adam Gordon said. “If a contractor has been fired, people impacted by Sandy are entitled to know what the contractor did wrong and how the state is addressing the resulting harm. We still don’t know if, or how, the State is correcting these problems, and how much more it will cost in money that could be used to actually help people still out of their homes.”

The documents also show that in less than eight months, HGI billed the state over $51 million, when initially HGI had proposed a three-year contract for a total of $67 million. There is an ongoing dispute over at least $18 million that HGI claims it is owed, but the State has not paid; this number may grow significantly depending on the payments HGI claims are due between the December 6 termination and the January 20 date when all of HGI’s activities ceased. HGI claims that the State demanded far more work than the contract originally anticipated and that it received “express representations from State contracting officials that HGI would be paid for the work.” However, there were apparently no written amendments to the contract to account for these additional costs, which raises troubling questions about how the State managed this contract and led to the current dispute.

We also learned from our OPRA request that the state allowed HGI to act for 8 months under its contract without preparing weekly and monthly reports that HGI promised as part of its bid to run the state’s Sandy programs. The State sensibly in its Request for Proposals had required any bidder for this contract to submit weekly reports on their progress towards recovery. In response, HGI had promised that it would “generate and submit a weekly report” and also provide a monthly “Program Status Report” which would provide “an accounting of progress towards major Program milestones.” The reports would identify issues that had arisen, the current status of Sandy funds requested and distributed, and progress towards goals. We requested copies of the reports promised in the bid and were advised by the state that they do not exist. This basic failure to adhere to reporting, along with the failure to provide the integrity monitors required by state law, amounts to another missed opportunity to correct mistakes before they led to widespread systemic failure of the state’s recovery programs.

People impacted by Hurricane Sandy have told us terrible stories about their experiences with HGI. We urge the Christie Administration to be open and honest regarding what HGI did wrong, where the state fell short in overseeing the contractor, how $51 million or more in costs were incurred in less than eight months, and what steps will be taken to make the recovery programs help rather than hinder the effort to get people back in their homes.