• The newly created Division of Community Revitalization’s (DCR) proposed allocation for reconstructing houses for the direct victims of Helene is likely insufficient by hundreds of millions of dollars
  • To increase funding for home reconstruction, DCR should eliminate its proposed allocations for affordable housing
  • Legislators should also reclaim the $500 million allocated to NCInnovation and redirect it to Helene recovery efforts

On Gov. Josh Stein’s first day in office, he created two agencies to oversee Helene recovery efforts instead of the North Carolina Office of Recovery and Resiliency (NCORR).

NCORR was created in 2018 by former Gov. Roy Cooper to oversee rebuilding efforts for Hurricanes Matthew and Florence. After six years, the bureaucracy completed homes for only 68 percent of the hurricane victims before running out of money.

To supersede NCORR, Stein established the Governor’s Recovery Office for Western North Carolina (GROW NC), which is primarily tasked with administrative duties, and the Division of Community Revitalization (DCR) to oversee rebuilding efforts.

Within a week of the new agencies being established, the federal Department of Housing and Urban Development (HUD) awarded North Carolina $1.65 billion to fund the state’s long-term Helene rebuilding efforts, with $225 million allocated specifically to the city of Asheville.

In January committee meetings, representatives from GROW NC and DCR made convincing arguments to legislators about the lessons they learned from NCORR’s failures. If the NCORR debacle taught us anything, however, actions speak louder than words.

DCR’s Helene recovery action plan

In February, DCR released the first draft of its proposed action plan for the HUD grant. The purpose of the action plan is for DCR to explain its recovery strategy and budget allocations to HUD and the public.

Although HUD awarded $1.65 billion in total, the action plan focuses only on the $1.43 billion that DCR will receive, not the additional $225 million that will go directly to Asheville.

Before critiquing DCR’s budget allocations, it is worth shedding light on some of the action plan’s favorable policies:

  • Private contractors, instead of government bureaucrats, will be used to manage the reconstruction of damaged homes.
  • Households with senior citizens, disabled individuals, children, or people with accessibility needs will receive priority.
  • HUD requires that 15 percent of North Carolina’s unmet needs estimate, or $186.3 million, be set aside for mitigation activities. Instead of creating a separate spending category for mitigation, which would reduce funding for other areas, DCR embedded the $186.3 million into already established spending categories.

DCR’s proposed allocations

As depicted in Table 1, DCR proposed allocating $807.4 million to its Reconstruction and Rehabilitation (R&R) program, which is designed to help direct victims, those whose homes suffered major damage. This may seem like a substantial sum of money; a quick look at the math, however, causes concern.

Baseline from NCORR

To begin the analysis, we should establish a baseline using NCORR’s Homeowner Recovery Program (HRP) as our reference point. As shown in Table 2, when NCORR ran out of money, the estimated total need for the HRP was $980 million, or $226,799 per home.

Author’s projections based on DCR’s allocations

DCR’s proposed action plan states that 8,827 homes have been officially determined to have major damage. This figure, however, “is expected to be much higher as inspections are conducted,” and “FEMA IA data show 26,585 units described as [having] major damage.”

For the following reasons, 26,585 is likely a conservative estimate that will be appropriate for the analysis:

  • The estimated number of homes that incurred major damage from Florence was 11,650.
  • The damage caused by Helene is estimated to be more than three times that of Florence.

As depicted in Table 3, if we assume that only 25 percent of families whose homes incurred major damage enroll in DCR’s R&R program, there will be 6,646 houses to complete (this figure mimics the 26 percent enrollment for Matthew and Florence victims). Using the estimated average cost per house from NCORR’s Homeowner Recovery Program for Matthew and Florence, $226,779, provides us with an estimated total need for the R&R program of $1.5 billion.

This means that DCR’s proposed allocation of $807 million would be $700 million short to cover potential needs.

Fortunately, there is still time for DCR to change its proposed allocations and a way for legislators to increase funding for Helene recovery efforts without reducing spending on other core government services.

Recommended adjustments

During NCORR’s journey to destitution, it decided to spend $54.3 million on rental affordable housing units available to anyone below a certain income threshold, not just those directly impacted by the hurricanes. Meanwhile, thousands of direct hurricane victims lived in motels. It would be prudent for DCR to avoid this mistake.

DCR should transfer the $191.3 million designated for rental affordable housing units and the $53.4 million for workforce housing, which is affordable housing for purchase, to the R&R program. As shown in Table 4, if we assume that $200 million from Asheville’s grant also goes to the R&R program, we narrow the budget shortfall to $255.3 million.

Thankfully, NCInnovation has $500 million eagerly waiting to be reclaimed by legislators.

House Bill 154: “Reclaim assets from NCInnovation”

NCInnovation is a controversial venture capital ploy attempting to “grow the university-to-industry pipeline right here in North Carolina” with $500 million of taxpayer money.

House Bill 154 is “an act to dissolve the relationship between the state and NCInnovation and to require NCInnovation to return state funds and assets.” The funds would be transferred to the state’s General Fund, from which legislators could allocate the $500 million to Helene recovery efforts.

Final thoughts

Based on informed projections, DCR’s R&R program does not have enough funds to address the housing reconstruction needs of Helene victims. If DCR is serious about not repeating NCORR’s mistakes, it would be wise to transfer the $244.7 million in proposed spending on affordable housing to the R&R program.

Now is the time for legislators to reclaim the $500 million from NCInnovation; it is the public’s money, and our people in the western part of the state desperately need it.