Friday, March 21, 2008

Road Home set to revise appeals

BATON ROUGE -- State officials and the private contractor that runs the Road Home grant program will completely rewrite its appeals process for disgruntled applicants, according to the state's top recovery executive.

"We're starting with a blank sheet of paper," Louisiana Recovery Authority chief Paul Rainwater told the Legislative Audit Advisory Council on Thursday as he held up an unblemished sheet.

Appeals and "dispute resolutions" have been at the center of applicants' complaints about the state's $7.5 billion residential recovery program, which is under continued monitoring by Legislative Auditor Steve Theriot and now Inspector General Stephen Street.

"It's time to get this program done," Rainwater said, flanked by Road Home Chief of Staff Al Blankenship, an employee of contractor ICF International, which then-Gov. Kathleen Blanco selected in 2006 to run Road Home.

Blankenship echoed his commitment, and Rainwater called the former Marine "an honest broker."

It is not known how many homeowners' appeals the changes would affect, but it could represent a fundamental shift in the much-criticized program given that grant-seekers are allowed to challenge rulings at varying stages of their application process, from a denial of eligibility to the award amount.

$800,000 fine looming

ICF now is under threat of an $800,000 fine if it can't provide proof by May 8 that it has resolved pending homeowner disputes over grant amounts as it claimed to have done last year.

Rainwater and Blankenship did not offer details of what kind of changes they are considering for the state's residential recovery program.

But, making the first comments to lawmakers since last week's revelation that Blanco raised the spending cap on ICF's contract five weeks before she left office, Blankenship told lawmakers to hold him accountable for Road Home's performance.

"The buck stops with me," he said. "I take everything you say seriously . . . and I know how to get things done."

Rainwater said he expects in the next few weeks to get Theriot's and Street's findings after their examinations of the Dec. 7 contract amendment that increased the Road Home operating budget for ICF International from $756 million to $912 million.

Theriot's office is analyzing whether the increase, which would allow more compensation for ICF and its subcontractors, was appropriate. Street is examining who was involved in the process behind the decision, which was made five weeks before Blanco left office.

Rainwater said the contract will "be open for renegotiation" once Theriot and Street release their separate reports.

Auditor weighs in

Theriot, during his presentation to lawmakers Thursday, did not foretell the results of his analysis, but he said previous performance and compliance audits from his office noted that several policy changes to the program would result in increased costs.

That's when amendments to the contract should have been discussed, he said. "You don't issue change orders at the end of the process."

The contract, signed June 30, 2006, is a "time and materials" contract, meaning ICF's charges to the state are based on the numbers of applicants and numbers of varying tasks associated with those cases. The firm also takes fixed payments for travel and a management fee.

A penalty clause was added last year that would fine ICF if it failed to reach certain benchmarks.

To date, the state has received more than $600 million in invoices, including almost $13.7 million for travel and $8.6 million in management fees.

The December amendment bases the higher budget cap on the argument that ICF will pay out far more Road Home grants than originally expected. The document says the number increased from 100,000 to about 160,000.

Yet the program was launched expecting to pay more than 114,000 grants, and estimates for total grants have now dropped to as low as 128,000.

And, as lawmakers noted Thursday, the 103,679 grant closings that ICF has reported in its latest progress report includes homeowners who are still appealing for more money. Some applicants have reported program officials pressuring them to take that route.

The progress report says more than 184,000 applications have been processed, with 155,676 eligible applicants and $6.1 billion in disbursed awards.

Avenues of appeal

Theriot said he still is trying to find out how many of the cases involve ongoing appeals. Rainwater told lawmakers he did not have that number. An ICF spokeswoman referred questions about the number of appeals to the Office of Community Development, the arm of the state that has had direct supervision of the program. An OCD representative did not respond to The Times-Picayune's inquiry.

Besides the final award amount, applicants may appeal eligibility decisions; denial of additional compensation grants; prestorm home appraisals; damage estimates; and FEMA assistance or insurance payments deducted from the award amount, among other decisions.

Current policy dictates that appeals must be submitted in writing to the Road Home appeals office, but only after an applicant has attempted to settle the dispute through the Road Home Resolution Team or Post Close Grant Reconciliation Team.

The process also is particularly complicated for some applicants affected by a period of time when the program dealt with applicants principally via oral communication, leaving disgruntled homeowners lacking the necessary documentation for a written appeal.

After initially defending the oral communication policy as expeditious, the Office of Community Development and ICF agreed under pressure to establish a written record.