Officials testify on RISE West Virginia program
CHARLESTON — Members of the Joint Legislative Committee on Flooding heard testimony Thursday from several former officials with a controversial disaster relief program, including one official who was a no-show at an earlier committee meeting.
Mary Jo Thompson, former director of community development in the Department of Commerce, testified under subpoena during the committee’s joint meeting with the Joint Committee on Government and Finance.
Thompson was one of two Commerce officials subpoenaed by the committee, including Andrew Mihallik, program specialist with RISE West Virginia. Thompson — along with Russell Tarry, director of the West Virginia Office of Economic Opportunity — was slated to testify before the committee June 26.
Instead, Thompson and Tarry resigned from the Commerce Department on June 25 — the same day they agreed to testify. Committee staff did not find out about the resignations until before the meeting started, which is why a subpoena was issued for Thompson. During her testimony, Thompson apologized to the committee and explained why she resigned.
“I had resigned Friday after a lot of heartfelt thought and consideration of the conditions I was in personally and professionally,” Thompson said. “I truly believed that on behalf of the program, the state, and myself, it was time to leave a clean slate for the leadership and the governor’s office and it was time to go.”
Earlier in the meeting, committee members heard from the State Auditor’s office regarding the expenditures of the RISE program, created in the wake of devastating floods in 2016.
The U.S. Department of Housing and Urban Development awarded West Virginia disaster recovery funds in the form of community development block grants. Between September 2016 and May 2017, HUD awarded the state approximately $149 million in CDBG disaster relief funds to rebuild or repair homes destroyed by flooding.
According to the State Auditor’s office, only $1.4 million of that $149 million has been spent, causing HUD to label West Virginia a “slow spender” starting in April 2018. A “slow spender” designation means the state is spending less than 10 percent of the monthly pace required to fully use the grant by the target closeout date, which is Dec. 30, for West Virginia.
Thompson blamed the “slow spender” status on the wait for environmental assessments of properties, even though the state had a waiver from the U.S. Fish and Wildlife Service.
“I believe in my heart I pushed as hard as I possible could,” Thompson said. “These are HUD-compliant regulations and you can only push so far. Yes, we’re on a slow spender list, and we are always continually running a risk of losing this money. We were pushing, but we were also reporting to HUD continuously.”
RISE West Virginia entered into six contracts with Horne LLP between May 2017 and February 2018 to help manage the grant funds and ensure compliance with federal rules, policy development, training, and support. HUD approved the state’s action plan in June 2017, and granted spending approval February 20 of this year.
But on Feb, 28, the governor’s office asked for an operational pause on the RISE program while it reviewed the contracts with Horne. That pause wasn’t lifted until June 4, when Gov. Jim Justice put James Hoyer, adjutant general of the West Virginia National Guard, in charge of RISE.
Justice has said the pause was necessary, but the State Auditor’s office questions if there was a pause at all. More than $300,000 was paid out of the RISE CDBG funds to Thompson Construction, Danhill Construction and Stonewall Retail Marketing during the operational pause.
“I present this to you not to draw a firm conclusion of a date, but I did want to draw attention that during the alleged pause you still had significant payments ongoing,” said Marty Wright, general counsel for the State Auditor’s Office. “It does raise questions about the veracity of the dates, as well as to why these people are still paid if this was a full operational pause.”
Of the $1.4 million spent, $569,000 went toward administration and expenses, $784,000 went to construction vendors and only $43,500 went to individuals for assistance. Commerce used $15,819.59 for a multi-day meeting at Stonewall Resort in Lewis County. Of the $9,944.11 spent in marketing expenses, $6,123.06 was spent on 100 yard signs.
A legislative audit released June 24 said the Commerce Department entered into six illegal contracts with Horne, totaling $18 million. These contracts were not separately bid and did not go through the Purchasing Division or the Attorney General’s Office. Commerce also entered into seven contracts with four construction companies — including Thompson Construction and Danhill Construction — totaling $71,430,000 that were inked before getting HUD approval to use the funds.
The governor’s office announced Wednesday that HUD had issued recommendations and guidance on how to proceed forward with contracts under RISE. There are 130 homes in the construction management process, with 66 of those being completely under current construction contracts. The remaining projects will be done under new construction contracts.
“My staff, the Department of Commerce, and the General have developed a course of action to make certain the program moves forward as new contracts are put in place to serve those West Virginia families still in need,” Justice said. “This allows for construction work to continue and cases to be loaded into the construction management process while new contracts go through the process for award.”