Three-way meeting at house now required for grant approval
Facing criticism of nearly every aspect of its home elevation grant program, Gov. Bobby Jindal's administration came out with yet another set of rules changes Friday in an effort to protect homeowners and curtail contractor abuses. The new twist: Before any contractor can collect advance grant payments, a state program official must meet with the contractor and the homeowner at the house to be raised and discuss the terms of each job. The other new rule addresses a major bone of contention -- bonding requirements for contractors -- but it isn't really new. The state Office of Community Development simply made official changes it first announced Nov. 17 but never implemented.
View full sizeHome-elevation work in New Orleans was photographed in June 2006. On Nov. 17, The Times-Picayune reported that the state agency was revising its contractor bonding requirements so that, if a homeowner agreed to sign a waiver, a contractor who could not get bonded could still work a few jobs with smaller installation payments as the work got done.
But when questioned about the so-called "in-lieu-of-bonding" rule at a legislative oversight hearing on Wednesday, Office of Community Development Director Pat Forbes said his staff was still working on the details. He was then blasted by several small contractors and Sens. Ed Murray and Karen Carter Peterson who said the bonding fix wasn't good enough.
The details released by the agency Friday were basically the same as those it gave to the newspaper Nov. 17, except that now, companies hoping to operate without bonding will only be able to work four elevation jobs at a time, not six.
As before, the final policy requires homeowners to sign a waiver saying they understand their contractor is not bonded for paying his subcontractors or for performing the project to completion. Several smaller contractors have complained that bonding and insurance companies will not write pay and performance bonds for them if they don't have solid cash-flow or have pending litigation.
Also, operating without a bond would mean the contractor can't get 80 percent of the grant money up-front. Rather, non-bonded firms would only get 25 percent to start construction, a second 25 percent when the house is elevated on piers, another 30 percent of the grant when the physical work on the structure is done and the last 20 percent with the issuance of a certificate of occupancy or completion by the city or parish government and when the contractor provides a proof of warranty.
All contractors, whether bonded or not, also have to meet licensing, insurance and warranty requirements.
The state said it has heard from some contractors that they can't get letters of intent to bond without proof that a grant is forthcoming. The state's new policy is to try to help by sending insurers a letter stating that the project is in line for a grant.
Forbes said the new on-site meeting requirement should improve communication, especially for homeowners, who have often complained of being out of the loop while the state and contractors deal with grants that are actually for the homeowners. The grants have been paid for the last year or so in the form of two-party checks to the homeowner and contractor.
At the pre-job meeting, a program official will review the engineering plans and scope of the job, "to improve communication about the process," Forbes said.