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The Other Industry That's Too Big to Fail

Eve Troeh
A house in the Gentilly neighborhood, left unrepaired since Hurricane Katrina.

The New Jersey Sandy recovery service center had so few chairs that some customers had to wait while standing in long lines. The firm used software taken off the Internet and full of bugs. Homeowners were directed to make appointments through a call center, but employees were never told when they would show up.

That is what Sandy victims faced when they came to one of nine intake centers set up to distribute long-term federal aid to homeowners, David, a former employee, said. He said he and his colleagues wanted to help, but met repeated obstacles.

“The sense I got was that the management of the program was more interested in perpetuating their contract than they were in helping the victims of the storm,” David said. (He requested that his real name not be used in order to preserve his chances for future employment.) 

But it's not just New Jersey where the rebuilding system is broken. WNYC, in a collaboration with NJ Spotlight and New Orleans Public Radio, found excruciating delays, poor customer service and untrained workers to be commonplace after major disasters around the country. The problems begin early in each homeowner's quest for aid, as they fill out the paperwork that determines their eligibility, and long before repair crews come out to fix their roofs or elevate their homes. Governments — and the companies to whom they outsource the work — repeatedly fail to move large numbers of people through the preliminary stages of the recovery pipeline quickly. In the process, they waste millions of dollars and demoralize the storm victims they are purporting to help.

Credit NYCDOTD / Flickr
Dump trucks assist with recovery efforts in Breezy Point a week after Sandy hit.

New Jersey, for example, hired Hammerman and Gainer International based on its experience managing past disasters, including Katrina. The contract was for $68 million. But David and his colleagues actually were hired by a temp agency — which was hired by a subcontractor — which was hired by Hammerman and Gainer — which itself is a contractor to the state.

The state’s program met repeated criticism by homeowners and advocacy groups over lost paperwork, repeated delays and alleged racial discrimination. Eventually, the Christie administration cut ties with Hammerman and Gainer. According to the latest figures, it has nonetheless received $36 million for its New Jersey work.

State officials would not address David’s particular complaints, but said they had made several steps to refine the program.

“We work every day to improve customer service and employee training, and these efforts are paying off,” Lisa Ryan, a spokeswoman for the state’s Department of Consumer Affairs, said in an email.

Hammerman and Gainer did not respond to specific allegations. But in legal filings, the company complained that the state kept piling on extra work with unrealistic deadlines.

The Disaster Industry

After Hurricanes Katrina and Rita destroyed 200,000 homes in 2005, Louisiana established the Road Home program to funnel the billions of dollars coming from Washington to homeowners in the form of rebuilding grants. It gave Virginia-based ICF International $900 million to administer the program. The company went public shortly after it won the Road Home contract.

But early on, there were critics.

“The company, in hindsight, we can all say should have done a better job,” Davida Finger, an assistant clinical professor at the Loyola Law Clinic in New Orleans. “That program was plagued from the beginning: very serious issues with how the program was assessing damage, with how the program was estimating costs, with serious race discrimination issues that eventually went to federal court.”

ICF would not comment on its Road Home work for this story. But in 2009, Louisiana let ICF’s contract expire. Hammerman and Gainer International took over — the same firm which would be hired by New Jersey four years later, only to be let go within a year.

Ironically, New Jersey replaced Hammerman and Gainer with ICF. (Even critics of New Jersey’s rebuilding program admit that the process has improved since ICF took over, although they do not know how much credit to give the company and how much to changes by the state.)

Not that New Jersey had much choice. The number of disaster recovery companies is tiny. Just two firms submitted bids for post-Sandy work in New Jersey, while New York City got bids from just three companies, one of which was far too small to handle the volume.

This type of work — verifying eligibility and assessing the rebuilding needs of thousands of disaster victims — really only began after the Sept. 11 attacks in 2001, according to Carolyn Kousky, a fellow at Resources for the Future, an environmental think tank. That was when Congress began appropriating funds that would be given to individuals as grants. Before then, individuals generally only qualified for small grants and had to take out loans for major repairs.

“Disaster recovery efforts take a specific set of skills,” said Robin Keegan. She worked for Louisiana’s Recovery Authority after Katrina, and now works for a New Orleans-based consulting company. Keegan said consultants know the federal regulations that come with long-term recovery funding, and design programs meeting those rules. But, she acknowledged, the industry can do better.

“We don’t want to make the same mistakes over and over again,” she said.

An Attempt to do Better

Despite a technocratic mayor and an expensive top-down analysis of how to run a rebuilding program, New York City’s efforts ran up against many of the same obstacles as New Jersey and New Orleans.

The contractors working for New York City lost or misplaced some applicants’ paperwork, forcing homeowners to resubmit some forms or receipts.

Repairs on the first home did not begin until this past March, about 14 months after Congress approved the $50 billion Sandy aid package. The pace has picked up, but a report earlier this month by the city’s Department of Investigations found 90 percent of applicants have yet to receive any assistance from Build it Back, the city’s program.

Brad Gair, the director of the city's Office of Housing Recovery under former Mayor Mike Bloomberg, said that many of the mistakes were understandable, but that given the time pressures of the recovery process, they sometimes got worse as people tried to fix them.

“Things go wrong in the best of circumstances, so when something’s put together quickly, implemented on the fly, more things go wrong," he said. "People start scrambling for solutions and trying to do quick fixes.”

Mayor Bill de Blasio has instituted many changes and committed to begin repairs on 1,000 homes by the end of the year.

But, according to experts, it is likely that the next time a disaster hits, the city or state affected would have to begin the learning curve all over again.

Tomorrow, in the second part of our report, some of the lessons to be learned for dealing with future disasters.