The agency tasked with overseeing the rebuilding of homes damaged and destroyed in Hurricanes Florence and Matthew failed to control its budget, resulting in an emergency appropriation from the General Assembly, and was slow to process applications, according to a new report from State Auditor Dave Boliek.
The N.C. Office of Recovery and Resiliency “spent a considerable amount of time on process when their time should have been swinging hammers,” former FEMA Administrator Craig Fugate wrote in a note about the agency’s response that was included in the report.
State Auditor Dave Boliek said NCORR failed to track its funds, causing the agency to realize it had a $297 million shortfall when applications for rebuilding closed last year. The report also found that the agency did not track the spending of contractors and outside vendors who performed much of the work or include performance metrics in its agreements.
“Management never organized and set NCORR up for success. There was no established plan for distribution of relief dollars. The repairing and rebuilding of homes destroyed by Hurricanes Matthew and Florence became secondary to process management,” Boliek wrote in a letter transmitting the report.
NCORR's did not know the full cost of finishing rebuilding until after the application period for applicants had closed in April 2023. That failure combined with not tracking expenses resulted in the agency committing more money than it had available to it, Boliek found, resulting in the $297 million shortfall.
Laura Hogshead, NCORR's original executive director, left the agency last November shortly after lawmakers called for her resignation during a legislative oversight hearing about the shortfall.
It was not the first time lawmakers had asked for a change in leadership at the agency, but it was soon followed by the General Assembly appropriating the additional funds NCORR said it needed to finish the remaining projects.
Boliek was clear that NCORR’s flaws were not a result of theft or fraud.
“It was just mismanagement. It was just setting up a program and throwing money at a situation without sticking to a mission with incremental goals and measurements,” Boliek said Wednesday at the Wayne County Museum.
Boliek also said that while he would have liked to track how every dollar sent to NCORR was ultimately spent, the state of the agency's financial record-keeping meant that such a reconstruction would have cost well over seven figures.
"We viewed it as not worth the taxpayers' dollars to go back and necessarily reconstruct every single dime because it's already sunk costs," Boliek said.
Hurricane victims ‘deserve better’
NCORR did not start building homes until an average of four years after an application was accepted into the program.
“Quite frankly, the people of North Carolina deserve better,” Boliek said.
Applicants to NCORR’s Homeowner Recovery Program needed to go through eight steps to have their homes rebuilt.
Each of those took at least 100 days. A key step in that process, grant determination, took an average of 936 days.
Often, those delays meant that key steps like inspections and environmental reviews needed to be done again because they had become outdated by the time the homeowner moved onto the next step of the process.
Redoing those steps meant additional costs, but also took additional time, the report said.
Those delays often meant that homeowners were receiving funds from NCORR to live in temporary housing for extended periods of time. The agency has spent $74.4 million of its funds on temporary lodging and storage for people while they awaited rebuilding of their homes.
The General Assembly directed Boliek to perform a “financial and performance audit” of NCORR in Session Bill 382, a bill that had disaster recovery in the title but was largely focused with shifting power between Council of State offices after last fall’s elections. The legislation also appropriated $50 million in state funds to NCORR for its beleaguered hurricane recovery program.
That was the third tranche of additional funds shifted to the Home Recovery Program and would be followed in 2025 by a $217 million appropriation. In total, NCORR received $341.17 million to complete all remaining projects.
Pryor Gibson, who took the helm as NCORR’s executive director after Hogshead’s ouster, responded to Boliek’s report by writing, “NCORR continues to make progress in ensuring that over 4,200 families impacted by these storms return to their homes, while also moving to bring the program to a close in 2026.”
The agency has, Gibson wrote, improved financial management systems to keep projects on track to finish by October 2026; strengthened its approach to vendor contracts; and shared its lessons learned with agencies in charge of the Helene recovery.
NCORR officials say they have completed 3,924 homes and have another 254 under construction. There are a total of 328 remaining projects.
A new disaster recovery plan?
As with his audit of the Department of Motor Vehicles, Boliek stressed that he doesn’t just want to hammer an agency but propose processes that will have better outcomes.
His proposal for disaster recovery involves Gov. josh Stein, a Democrat, planning a new approach to disaster recovery with the other nine members of the Council of State.
Right now, state officials typically stand a new recovery office up when a large-scale disaster strikes North Carolina. While the office is formed by General Assembly legislation, it reports directly to the governor and manages federal rebuilding dollars.
That’s the case with the Governor’s Recovery Office for Western North Carolina, which the General Assembly formed to handle the region’s recovery from Helene.
But Boliek is proposing a new approach that would see the five Democrats and five Republicans on the Council of State work together to craft a standing disaster recovery plan, ready to be enacted as soon as the immediate response passes.
Boliek is calling the approach the Sustainable Outcomes for Long-term Impact and Disaster Recovery (SOLID) Partnership.
Such an approach would, Boliek said, allow a state recovery team to pull from the expertise of each state agency; keep key recovery personnel and technology intact; and create clear financial controls and management to prevent NCORR’s problems from arising again.
“That’s the best way to do it. Put the people at the top in charge and say, ‘Put everybody on the hook so that (everybody) can be blamed.’ And I get it, I’m putting myself up there, too,” Boliek said.
Boliek and NCORR leaders will discuss the report further Thursday during a meeting of the General Assembly’s Governmental Operations Subcommittee on Hurricane Response and Recovery.
