19 Months After Sandy, a Vote to Pay City Back for $1.2 Million in Repairs

Pecks Beach Village in the aftermath of Superstorm Sandy in November 2012 in Ocean City, NJ. A May 20 vote will decide the fate of a $1.2 million reimbursement to the City of Ocean City for emergency repairs that helped low-income residents return to their homes in the aftermath of Superstorm Sandy. The Ocean City Housing Authority is moving forward with resolutions that would authorize repayment to the city, according to Executive Director Alesia Watson. The authority's Board of Commissioners will consider the resolutions at meeting 7 p.m. May 20 in the fifth-floor community room at Bayview Manor (635 West Avenue). The vote could put an end to a million-dollar debate over how repairs were made to a federal housing complex near Fourth Street and Haven Avenue. Floodwaters more than two feet deep filled the first-floor living spaces of the 60 units at Pecks Beach Village during Sandy in October 2012, and resident families were forced to abandon their damaged homes and take shelter in one-room hotel units provided by the Federal Emergency Management Agency (FEMA). The city had no obligation to make the repairs — the Housing Authority is autonomous and operates under the auspices of the federal Department of Housing and Urban Development (HUD). But Mayor Jay Gillian said he witnessed the slow pace of the federal relief effort and the growing frustration of residents, and he decided to step in. The city used an affordable housing fund and hired local contractors to expedite the work. The first Pecks Beach Village residents returned to their homes in early February 2013 and all were back within another month. For Housing Authority Board of Commissioners Executive Director Ed Price, the pace of work was admirable but also troublesome. The Housing Authority has to answer to HUD, and Price said in March that he feared potential repercussions from procedures and guidelines that were not followed in the rebuilding effort. “The Authority puts itself in jeopardy if it pays the city without getting HUD involved,” Housing Authority Solicitor Charles Gabage told commissioners at the time. Commissioners then voted to seek guidance from HUD before proceeding. Documentation was forwarded to Washington, D.C., for review. Watson said Monday that HUD has  responded. HUD told her in a letter that the issue should be handled locally because it does not involve federal money. She said HUD advised the Authority to work with its solicitor to resolve the issue. “The city has been a good partner to us, and I want to make sure we maintain that relationship,” Watson said. Gabage and Ocean City Solicitor Dorothy McCrosson are working on a shared services agreement that would pave the way for the Board of Commissioners vote on May 20. "I’m pretty much confident that our board will resolve this issue." Watson said. McCrosson said Monday that she does not anticipate any issues with the shared services agreement. Watson said that the Authority already has paid out $326,000 from insurance proceeds to Serv-Pro for initial flood-damage remediation. She said the Authority does have all the money to pay the city back. "The concerns raised by myself and other commissioners regarding the work completed at Pecks Beach Village were based on a letter sent by HUD on December 17, 2012 that mandated 10 requirements to be met by the Housing Authority," Housing Authority Board of Commissioners Vice Chair Stephen Lalli said in a written response. "That letter was subsequently affirmed by HUD in another letter on December 12, 2013 as well as by at least two emails.  In these letters, it was clear that HUD understood the city would be using COAH funds as a bridge loan to be paid back by the OCHA with FEMA and insurance proceeds." Lalli's statement continued as follows:

"Our assumption was that HUD considered these Housing Authority funds to be 'program income' subject to the 10 requirements they mandated. Otherwise, if public housing funds were not being used, why would they have mandated compliance with HUD regulations in the first place?" Also, at that time we were advised by counsel not to ignore HUD's request ... It is my understanding that HUD has now lifted some of the requirements they originally set forth. They have advised the board to confer with its counsel for advice on how to resolve the situation.

Nevertheless, rather than wait for a response from HUD, since the time that the March meeting with HUD was cancelled, the OCHA chairman has been negotiating with the city business administrator in an attempt to resolve all outstanding issues.  The focus has been on those issues which may directly affect the residents financially.  Based on my last conversation with the chair a while ago, substantial progress is being made and it is my expectation, and his, that a complete resolution is forthcoming soon."