Lawmakers Grill ReBuild NC’s Director Over Performance Lapses and Budget Shortfalls

State Rep. Brenden Jones furrowed his brow, pursed his lips and seemed to spit his words rather than speak them. 

For two years, Jones, a Columbus County Republican, has served on an oversight committee over hurricane recovery that has scrutinized, with little effect, a broken program. During that time, Jones and his fellow committee members have repeatedly heard testimony by ReBuild NC officials as they defended their work, while acknowledging they had fallen short in helping survivors of Hurricane Matthew, a historic 2016 storm, and Florence, just two years later.

“If you worked for me, I’d fire you,” Jones told ReBuild NC Director Laura Hogshead on Monday, as she sat before a joint legislative oversight committee. “This is a comedy of errors. We’ve given you opportunities and every dollar you’ve asked for.”

ReBuild NC, also known as the N.C. Office of Recovery and Resiliency, runs nearly a dozen programs, including one devoted to affordable housing and another to homeowner recovery—the reconstruction and repairs to hurricane-damaged houses. 

For more than five years, Hogshead has led ReBuild NC. Under her leadership, the agency has mismanaged several aspects of its programs, which has culminated in a financial crisis. Among the program’s failures, according to state records: 

• ReBuild NC has spent $76 million housing hurricane survivors in motels or apartments, some for as long as four years, while their houses were rebuilt or rehabbed; at least a dozen people died before returning home.
• Some contractors ignored construction deadlines, creating backlogs of thousands of homes.
• Slipshod workmanship resulted in more than 830 warranty claims homeowners filed against construction companies.

And now, despite receiving $779 million in federal funding, the agency has amassed a $221 million shortfall. That’s a 26 percent increase from ReBuild NC’s original shortfall estimate in September.

In a “worst-case scenario,” Hogshead testified, the agency will need $264 million in state funds to close out the Hurricane Matthew and Florence programs. The Office of State Budget and Management calculated the amount could be as high as $324 million.

But to pay its contractors, ReBuild NC needs an immediate infusion of at least $120 million in state money over the next three months, agency officials told the committee. Otherwise, 1,400 households—many of them among the state’s poorest families—won’t receive a new or repaired home. And frustrated contractors could leave the program, putting it further behind.

“Are you telling the committee it is your fault where we are with the program?” Jones asked Hogshead. “Will you resign today?”

The oversight committee had summoned Hogshead and Pryor Gibson, dispatched by the governor’s office to assist ReBuild NC, to testify about the agency’s financial straits, after an Inside Climate News report last month. 

The situation is especially acute because ReBuild NC is expected to ask for state and federal money to manage disaster recovery in western North Carolina from Hurricane Helene. Because of the mountainous topography and vast devastation, even under the best of circumstances recovery is expected to be a complex and years-long process. 

“Why in the world, with NCORR’s past history, would we give you the west?” said state Sen. Brent Jackson, a Republican representing several southeastern counties.

Hogshead justified some of the recent excessive spending as a consequence of the hastened pace of home construction: 115 homes per month, compared to a rate of about a dozen in the first half of 2022. 

“We weren’t watching [the budget] carefully enough,” Hogshead, who has run ReBuild NC since 2019, testified. “We took for granted that we could move money around within the program.”

But now all of the programs are either out of money or nearly so. The cash crunch started last fall, when homeowners reported their housing stipends were late and contractors’ payments were also behind schedule. Nonetheless, in October 2023, the agency said it “believed it had enough funding to cover its obligations to homeowners that have applied for assistance.” 

The financial troubles continued. In January of this year, the agency requested a $5.4 million loan from the State Disaster Relief Fund to pay outstanding invoices to general contractors, according to a Jan. 9 letter from Jim Klingler, then ReBuild NC’s chief finance officer. It repaid that loan with HUD funds.

Later that month, Hogshead unsuccessfully tried to tap into pandemic relief money overseen by the Office of State Budget and Management to cover temporary housing costs for hurricane survivors who were still displaced. OSBM determined that the funds could not be legally used for hurricane relief.

Until mid-September, Gibson said, he didn’t know the extent of the financial troubles. And not until last month, based on an Inside Climate News report, did lawmakers learn of the issues.

“ReBuild NC is too far over its skis,” Gibson added. “They don’t have enough money to finish hurricane recovery and affordable housing.”

In addition to construction overruns and temporary housing costs, ReBuild NC continued to accept homeowners into the program as late as April 2023—a year longer than intended. The agency received 700 applications in the two months leading up to the deadline.

Hogshead told the committee that it “was someone in the governor’s office” who decided to extend the application period. The pandemic hampered some outreach to potential homeowners, and “we knew there were Hurricane Matthew applicants who hadn’t applied who could,” Hogshead said. 

The governor’s office did not respond to an email requesting additional information.

“Why not help those families?” Gibson said at the hearing. “The governor definitely wanted people home.”

ReBuild NC officials also thought there would be “higher attrition”—people who withdraw from the program or who are otherwise deemed ineligible, Hogshead said.

Gibson acknowledged ReBuild NC’s accounting was flawed. “One more column that said ‘funds remaining,’ and we wouldn’t be in the nightmare we’re in right now,” he said. “We deserve the scrutiny and the chewing out the agency is getting here. But please help us find a way to get people in eastern North Carolina back home.”

The Aftermath of Hurricane Helene

Hurricane Helene caused $53 billion in damage in North Carolina, according to government estimates. That’s more than double the amount incurred after Hurricane Florence, exacerbated by the rugged mountainous terrain. 

Congress has yet to vote on disaster funding related to Helene, but the state could add to the $600 million it has already appropriated to various agencies for storm recovery. Given ReBuild NC’s history, it’s unclear whether the legislature would fund even a small portion of the work the agency wants to do there. 

“Somebody needs to be held accountable,” said Republican state Sen. Buck Newton. “And we need to make decisions for a storm that’s four or five times worse.”

Hogshead said ReBuild NC is using FEMA funds for assistance it’s providing in western North Carolina. ReBuild NC is hiring case managers to work in the region, according to a job posting. The agency did not respond to a request from Inside Climate News seeking the contract and other details of the work.

Hogshead told the committee that the agency has learned from its mistakes, which came to light in 2022 after media scrutiny. Instead of offering custom modular homes, which take longer to build, the agency would rely in western North Carolina on stock floor plans. Applications there would be streamlined, and displaced homeowners would receive flat stipends instead of being housed in motels, which is more expensive.

“Somebody needs to be held accountable, and we need to make decisions for a storm that’s four or five times worse.”

— Republican state Sen. Buck Newton

She said if a different agency were in charge, it would have to “relearn hard lessons.”

“I would submit that ReBuild has the expertise,” Hogshead said. “We know what to do and what not to do.” 

Hogshead told Jones that despite his request, she would not resign. 

The legislature doesn’t have the legal authority to fire a state employee. However, lawmakers can withhold funding to make a point or to use in negotiations.

“You all have failed miserably,” Jones told Hogshead. “Come back with something more realistic. It’s hard to fund you every single time when you’ve proved your inability to handle the job.”