State ends crisis housing program: 'Some mistakes were made'

North Carolina taxpayers spent nearly $200,000 over eight years to help a Robeson County woman with a leaky roof. Dianne Galbreath says she applied for hurricane assistance and ended up with a brand new house.

Galbreath’s story was one of several questionable cases the WRAL Investigates team found related to the Hurricane Redevelopment Center, a crisis housing program that was created after Hurricane Floyd hit North Carolina in 1999.

The program was intended to provide housing assistance to thousands of low income people who didn't qualify for federal help.

The center got another dose of state funding after hurricanes struck in 2004. State lawmakers passed the Hurricane Recovery Act of 2005, promising more than $200 million in immediate assistance, $27 million of which went to the crisis housing fund.

While her Robeson County neighbors saw no damage, Galbreath says rain caused a leak in the roof on her 1930s Maxton home. When FEMA rejected her application, she turned to the Lumber River Council of Governments, which handled the state housing money.

“It took forever (to get help),” Galbreath said. She continued living in the home through more than five years of reviews and personal credit problems. Then, a wall caved in.

The agency moved her to a rental home around the corner and paid $625 a month for two years. The state eventually took back the project from Lumber River, and tax dollars paid to demolish the original home and build Galbreath a brand new, two-story house in its place.

“I think the rental, staying in there two years, was a bit much,” Galbreath said.

According to state records obtained by the WRAL Investigates team, the state spent more than $192,000 and about eight years on Galbreath. If the state had reacted sooner, Galbreath said, she might have been able to keep her original house.

Doug Hoell, director of North Carolina’s State Emergency Management, says he began taking a closer look at the housing assistance program last year. He says he understands if the public thinks the state wasted money.

“Frankly, that's why I'm closing the program,” Hoell said, adding that the program will officially shut down after Thursday. “It was managed at the county level. It was, in a lot of cases, managed by contractors who did the work, and there was a lot of latitude.”

Hoell says block grant funding designation gave counties leeway to exceed typical emergency management assistance. Instead of getting storm damage repairs, applicants and contractors often got more.

Tax dollars paid to replace damaged single-wide mobile homes in Robeson County with more expensive double-wides. Lumber River Executive Director Jan Maynor claimed local leaders called for the bigger homes to make them more storm-worthy and to increase the county tax base. The state never received proof commissioners voted on the decision.

Either way, the move violated state guidelines that storm victims only get comparable replacements.

“Again, I think if this program is ever implemented again it needs to be managed at the state level,” Hoell said.

Preston Locklear says he was thankful to get a double-wide for his family in Rowland. Although, he says, the original house was not actually damaged in 2004 hurricanes, but rather by years of previous water damage.

The WRAL Investigates team also found problems in Haywood County, hit hard by storms in 2004. A couple who lost their mobile home took out a personal loan and bought a new one. Months later, a contractor showed up and said the couple should qualify for assistance.

Tax dollars paid off the couple's $26,000 personal loan, they received $7,000 in cash and then moved the mobile home to a newly prepared lot for an added cost of $54,000. The funds were improperly expended and are subject to recapture, according to the state.

“There are some issues here. Some mistakes were made,” Hoell said.

Hoell has called on the State Bureau of Investigation and state auditor to investigate if fraud was committed in some cases. He won't specify which ones. Still, Hoell argues, on the whole, the housing program did a lot of good.

“I just think that the program was not clearly defined for what it was intended to do,” he said.

The Housing Redevelopment Program assisted 5,100 people after Hurricane Floyd, according to Hoell. More than 2,000 families applied for help after the 2004 storms, but only 209 were accepted. Hoell says they’ve identified 16 instances of potential fraud.

Even some of those with new homes question the process.

“I appreciated it, (but I saw) money being wasted. I really did,” Galbreath said.

The North Carolina Department of Public Safety’s new secretary, Kieran Shanahan, says the program helped thousands of struggling families. "But it was a program that needed a more defined system of checks and balances," he said in a statement. He added that future assistance programs will include a centralized and improved system.

Hoell announced Thursday that he will retire on Feb. 1 after three decades of state service. He announced his retirement plans before WRAL began asking questions about the crisis housing program. Emergency Management Deputy Mike Sprayberry has been named acting director.