New Homes & Rebuilds in Ocean, Monmouth & Atlantic County

Dream Homes Rebuilding Blog – 12-14-13

RREM – Updates, Musing and Commentary

Hello Sandsters –

Hope life is treating you well and everyone is healthy.

So much to write about, and so little time lately. Much is happening up and down the shore and a lot of recent activity is being driven by RREM. The program is a complicated, intimidating beast and that is simply not necessary. It is causing stress throughout NJ and much of the stress is due to the volume of paper everyone has to wade through as well as the number of people involved in the process.

If you get RREM money, God knows you certainly worked for it. Once you finish rebuilding your house, you will find that you can probably pursue a master’s degree with the free time you have again. Or do something really important like spend good times with your family like you used to before you had to become an attorney, insurance actuary and general contractor.

Anyway, back to some new facts and some opinions (as usual) about RREM. Please disregard the (material, germane) fact that with many of the things I am writing today, I have written the exact opposite previously in this blog.

I just call ’em as I see ’em folks – RREM literally changes on a daily basis. You just have to roll with it if you’re in the program.

(By the way, schizophrenic behavior like this in the private sector would earn you free room and board in a cozy small white space where you don’t get phone calls or internet, but when the guv’ment does it, it is perfectly ok. Aren’t you feeling better now?)

Facts as of 12/11/13:

1. You can choose if you reconstruct or rebuild. Truth, regardless of what you may think or have been told. Each homeowner absolutely has the ultimate decision about this issue. That’s an important point to remember.

2. You can elevate or rebuild (rehab or recon) regardless of whether you are on a slab or a crawl. Yes, it is true and factual. I am doing several jobs which involve slab separations, on homes that should definitely be demolished and rebuilt. The earlier RREM position of “if it is a slab, it is not eligible to be rebuilt” has been changed. I realize that is a shock, but it is true. I have quoted a dozen jobs for the RREM program which should absolutely be demolished and rebuilt, and yet there I was, quoting a lift and rehabilitation on a 65 year old bungalow with no concrete footing and 2”x3” walls.

3. You can choose Path B or C and you have some time after you sign the grant documents. In consideration of all the facts I learn daily from RREM contractor focus groups, seminars, site inspections, estimates and bid deadlines, I’ve decided that this choice is much more about your personality than any other single factor. Some of the world needs guidance and supervision and structure. Some (myself included) crave less structure, discussion, and rigmarole and want (and can manage) to steer our own rowboats. It’s just personal preference. Either choice is valid and ultimately should be the one that works for you.

Author’s note: Kudos to the RREM program for establishing 2 separate Paths and making other recent adaptive, responsive changes to people’s needs. As much as I usually bitch about administrative incompetence, one must give credit where credit is due and it is due here.

4. You can use your own plans to rebuild. If you’ve worked on a plan that works for your lot, you (or your builder) can get it approved by RREM to use on your lot. Speak up or call me if you have a strong preference either way and you are not being listened to.

5. Now for the continually annoying news. The RREM program will continue to suffer birthing pains due to the fact that the artificial costs that are being imposed upon it by HUD (which are subsequently being imposed upon the builders) cannot actually be attained in the current market.

In plain language, this is going to make everything take much longer. As I wrote in the last blog, the practice of continually bidding a service until someone decides to perform it at an artificial price is not the best practice.

My friend Rich Pezzullo, who is a great computer guy (www.netcentricnj.com), put it like this, “Oh so it’s like Obamacare where 35 knee surgeons give an estimate to do an operation and they are all within 10% of each other, and the program decides the prices are wrong. They then decide to outsource the surgeries to Guatemala, because it is much less expensive there.” Yes Rich, that’s pretty close. It’s difficult to believe, and understand, but fairly accurate. 

Sad Little Known RREM Truth #1: the Reasonable Costs for RREM rehabilitation work are 30% below where they must be in order to have work done in NJ professionally, safely and in a timely fashion.

Remember from last week’s blog: All 220 of the first bids submitted to RREM were refused and sent out to be rebid, to more of the same contractors, in the hopes that someone would decide they can perform and offer work for less than it costs to complete. That is truly a poor business model.

We  can hit those numbers in NJ if we use illegal labor and unsafe practices. No RREM contractor will do that and it’s not the course the DCA or RREM should be pursuing, either tacitly or overtly, on an ongoing basis.

So why would HUD authorize costs 30%-40% higher in Louisiana than in NJ? Now that’s an excellent question. It’s not like many people are sitting around saying, “Well the cost of living is higher in Louisiana.”

My opinion is that the program needs to cook for a little while longer while some of the wrinkles are ironed out and prices come to parity. That’s what happened in the last 11 years since Katrina hit New Orleans. It took them 2 years to start their first project. Let’s hope we can get our act together much more quickly.

Sad Little Known RREM Truth #2: The structure and restrictions of the RREM program itself add at least 15% to the price of any project. All other things being equal, your job will cost 15% more than dealing directly with a private contractor. There’s really no way around that if you want the grant money, but it is a fact.

Good news to keep you from searching for a high bridge:

There is some good news. The open bid system is being abandoned and all RREM work will now be on an assignment basis. RREM contractors will get a project assigned to them with an ECR (estimated cost of repair) and will meet with the Program Manager and the homeowner at the house to discuss the project in detail and accurately define the scope of work. This is how it should be since the homeowner knows their home best and should speak directly with the person doing their work to get the best results. This will cut some of the time out of the very cumbersome process and it is a much needed change that RREM and DCA made fairly quickly.

(They realized that using the present method, 31 contractors would need approximately 2 – 3 years to be awarded the 4138 bids to start work, so they changed the process. Good for them for acting quickly and good for all of us!)

They may or may not have realized that there would be an incredible public outcry at the delay. They may have remembered that they can’t spend the other $1.6 billion until they do something with the first $600 million.

It doesn’t really matter. They changed. It’s better. That’s enough. Sometimes asking why is fruitless.

If you need advice or comment prior to your RREM meeting, please call or email. I speak to dozens of people a week and sometimes a 10 minute conversation can answer a question that is really important to you. I’m happy to help – it helps everyone at the shore to work together and move things along.

As Ben Franklin said, “We must all hang together or most assuredly we will all hang separately.”

Someone else really prophetic (Jesus) said, “As you sow, so shall you reap.”

Both are excellent thoughts to consider. In NJ, we’ve been working together for a year to try and rebuild the shore and will continue to do so. What benefits one, benefits all of us.

Stay well Sandsters.

More soon.

Regards,

Vince

Dream Homes Ltd.

Atlantic Northeast Construction LLC

Licensed NJ New Home Builder & Home Improvement Contractor

PO Box 627

Forked River, NJ 08731

Office: 609 693 8881 F: 609 693 3802

Cell: 732 300 5619

Email: vince@dreamhomesltd.com

Website: www.dreamhomesltd.com

Blog:http://www.dreamhomesltd.com

Twitter: foxbuilder

New Homes & Rebuilds in Ocean, Monmouth & Atlantic County

Dream Homes Rebuilding Blog – 12-7-13 RREM – Ready Set Stop? What’s really happening with RREM

                              Dream Homes Rebuilding Blog Post 12-7-13

RREM Really Mean Ready – Set – STOP? What’s Really Happening & A Call to Arms

Good morning Sandsters –

Hopefully everyone is tucked in somewhere warm because it’s not pleasant outside. Now it’s snowing to make matters even worse. At least we’re not like the central US, most of which is freezing their collective hineys off. For sure, this blog will not make you feel warm and cozy.

Today we have a number of important topics to cover, so I will try and dispense with rhetoric and get right to it. This author is annoyed and frustrated with RREM, DCA and any other governmental agency with an acronym for a name. In my humble opinion, all of these alphabet names should all stand for “We Mean Well, but We’re Screwing This Up and You Should Just Suck it Up and Suffer in Dignified Silence.”

(I could abbreviate that to be WMWBWSTUYSJSIUSDS but that might press the bounds of acronymic reasonableness.) Now that I think about it a little, my new title for RREM is quite appropriate and I will be sending it in to DCA and recommending they change the program title. No one will understand it (like RREM), it will not work as intended (like RREM) and it will sow extreme amounts of confusion throughout the land (like RREM).

In NJ, we aren’t necessarily good (in fact we’re not good at all) at stoic patience in the face of ineptitude and stupidity. Our inclination is to get rid of the idiots in charge and vote new idiots in to attempt to address incorrect policy. Read on and become aggravated with me. Warning: You will be annoyed by the end of this blog.

A few notes to set the stage:

1. All of the feel good nonsense I wrote last week about RREM progress was fatuous and completely inaccurate. I must have been overcome with the smell of turkey. That was not my intention but I’m an incurable optimist and forever tilting at windmills. I always believe that the sun will come out tomorrow.

2. Nothing of substance is happening with RREM, and nothing will in the near future. Yes, I am serious.

3. I am genuinely sorry to write this – truly I am! – but the reality is that the Sandsters and all of NJ are getting a RGS (Royal Government Screwing). It is happening in real time and I am advocating some action on everyone’s part to break this logjam. Write and call the DCA (not FEMA or RREM) and start screaming. With enough pain and grief inflicted upon them, DCA will actually communicate with HUD and things could change. Any contractor working in NJ would be tarred, feathered and run out of town on a rail if they behaved like this with their clients.

4. If you are one of the 600 people who have signed your grant documents and are expecting work to start on your home in the near future, forget it. It’s not happening. Unless you do it yourself, you’re not getting in for summer 2014. I am of the opinion that RREM couldn’t oversee the construction of a modest sized dog kennel without serious issues and believe me, I’m genuinely sorry to say that.

Here are some more happy thoughts to really piss you off on this Sunday morning:

Over 300 site inspections/ bid walks were completed for the RREM program since 11/15/13. We have attended over 32 site visits to date.

  1. Over 200 bids were submitted to the RREM program for consideration from the approved contractors, with the (reasonable) anticipation that bids would be awarded and work on your homes would actually begin.
  2. NOT ONE BID WAS ACCEPTED BY RREM. EVERY SINGLE JOB IS BEING SENT BACK OUT SO IT CAN BE REBID.
  3. RREM decided, in their omnipotent, omnipresent, omniscient wisdom that EVERY SINGLE BID WAS TOO HIGH AND DIDN’T CONFORM TO HUD GUIDELINES FOR “REASONABLE COST”.

We will all take a moment to reflect on this nonsense, curse, kick our small animals, snarl at our poor family members and contemplate moving out of this socialist, ineptly governed state.

(Author’s note: I am a fiscal conservative and generally feel that the Christie administration, though flawed, generally behaves with integrity and attempts to govern in a decent manner. I’ve lived, done business in and invested in the NJ for my entire life. I love New Jersey. That being said, I empathize with the general level of frustration and will continue to express my thoughts in an attempt to better this execrable situation.)

Ok, if we’re all finished with that expression of frustration, let’s press on. Unfortunately, there is more nonsense to cover.

As I said, ALL of the bids were rejected because they did not meet the “reasonable cost” estimates that HUD has dictated to our DCA. These reasonable cost numbers were evidently handed down from on high, from Moses, on a second, smaller tablet directly behind the 10 Commandments, so they are seemingly sacrosanct, inviolable and not subject to change. That’s horsepuckey. These guidelines are dictates and cost structures derived from events in Texas, Louisiana and Florida and have little relevance to actual conditions in NJ. They should be altered to reflect existing conditions on the ground here in the Garden State. Repeat for anyone in government service who needs simple sentences: HUD guidelines for reasonable cost should be altered to reflect current conditions in NJ.

In case you missed it above, ALL of the approved contractors, after expending significant time, money, and resources to actually prepare legitimate rehabilitation bids, were ALL deemed to have bid too high and all jobs will now be sent out to be rebid. Really. Yes, it does get worse.

One of the definitions of insanity is to continue to perform the same actions in the hope that they will lead to a different result. Currently RREM is insanity writ large.

Why would anyone assume that the macro position of the entire contractor pool will substantially shift? If you get 30 highly intelligent, competent, rational people in a room and all decide that the roast is burned, can they all be wrong? Is it reasonable to assume that given enough time some will decide that the roast is actually medium rare?

If the elevation of the house alone is between $18,000 and $25,000, will this price suddenly become $12,000 if you rebid it 28 times? Bizarre. Pazzo!

A further comment on the RREM approved contractor pool is appropriate here. As you know, there are only 47 approved contractors. Of the 47, about 31 are qualified (or interested) in bidding on rehabilitation work in the RREM program. There are, at present, 4138 grants that have been approved. No, don’t bother with any deep calculus – the numbers don’t work unless you accept that the time line for completion will be 4 years or more.

Boys and girls, please remember that the RREM contractor pool is the A Team, the best of the best, the Navy Seals, the elite of the elite, the most qualified group of builders in an extremely competitive state. According to HUD & RREM all of these folks were evidently wrong (significantly wrong) about pricing for RREM work. The RREM solution? Send all the jobs out to be re-walked and re-bid in the hope that someone bids incorrectly but falls within the “reasonable cost” parameters. That’s logical (in a demented, twisted, illogical governmental way.)

Everyone involved has worked with ridiculously incomplete scopes of work (generally there are no surveys, flood elevation certificates, geotechnical studies of soil and ground conditions, engineered plans for foundations or architectural plans for remodeling), absurd time constraints for site visits and bid deadlines (most notifications were within 12 hours of site visits) and 90 day performance deadlines to complete jobs.  All of these hapless folks performed the seemingly impossible task of visiting 300 sites in 2 weeks, painstakingly preparing estimates for extremely complicated work and submitting them for consideration in the arduous manner proscribed by RREM. A bid for a state or federal program is a binding legal document and not to be taken lightly. All this effort was for naught.  

Andrew Baumgardner from Baumgardner House Lifting (another RREM contractor and a preferred trade partner of ours) put it very succinctly: “We’re like a bunch of blindfolded kids swinging at a piñata that isn’t there”.

Words to ponder, fellow Sandsters.

An off the cuff estimate shows us that there were over 4000 man hours of labor expended to achieve this result. That is time and money not spent on the other 36,000 people in NJ who need their homes raised. All of this time and money was essentially wasted. Happy times.

Now we get to go back to the dance and do it all again. And presumably, again and again, until the correct results are achieved.

Someone stop the merry-go-round and let me off. How many contractors will deem the effort fruitless and stop bothering with the RREM program? How will this impact homeowners in NJ? How long will this actually take to accomplish? There are no evident good answers, but there are obviously solutions that can be implemented to get the program on track.

As you all know, I have been working with Robert Wolfe Construction on all of these RREM bids. They are an approved RREM contractor and I am their NJ partner. Since July, they have expended over $200,000 gearing up and preparing for RREM and I have spent a significant percentage of that amount here in NJ mobilizing my team and producing estimates. Robert Wolfe has been rebuilding from Katrina in New Orleans for over 9 years and has performed hundreds (actually thousands) of renovations. They are competent, capable and aware of federal program constraints and limitations, having worked within similar parameters for years. They – and others in the program – are now questioning the logic of continuing to pursue the confusing RREM course, with no reasonable, logical rules or guidelines to follow. The loss of RWC – or any – approved contractor from the RREM program would be a very unfortunate occurrence for NJ homeowners…and RWC is symbolic of others who will eventually simply abandon an illogical, non-fruitful pursuit. Losing even one of the approved contractors will materially impact the outcome of the program and is not to be taken lightly – losing many others will cause progress to literally grind to a halt.

Everyone involved in bidding on RREM work is considering the wisdom and intelligence of continuing to expend resources on a hopeless cause (Don Quixote died at the end remember?) We need 100 more competent builders to accomplish this huge rebuilding task and they are simply not there.

Author’s sad note: All rehabilitation work is graduate level construction and some of the most difficult, complicated and demanding work I have encountered in 22 years of building. One cannot simply call another contractor to do these jobs – they are simply too confusing for the average contractor to accomplish.

Repeat:            Sobering facts about the RREM Approved Contractor pool – Read This:

There are only 47 Contractors qualified for RREM of which only 37 are qualified to receive assignments for reconstruction and only 31 of the 47 are qualified to do rehabilitation projects. There are currently 4138 grants that have been approved and 517 people have signed their grant documents. Everyone who has gone through the FEMA/RREM gamut and arrived at this point, wants to start right now. This is not happening.

Repeat:            If you haven’t been approved for RREM and are on a wait list, take heart: Another $1.6 billion has been released from HUD to NJ, so another 10,000 people will eventually be approved and included in the RREM program. The largest obstacle currently is that the first $600 million has to be actually spent before the balance is authorized to be disbursed.

Caveat: Based on this blog, one must unfortunately consider their actuarial life expectancy when trying to determine if you will wait for Round 2. IE: You may die first, gentle Sandsters.

           So what do you do today or tomorrow? Call RREM and yell and scream about progress. Call and email DCA, forward this blog and ask when your house will be worked on. Go to church and pray for the administrators of the program to gain wisdom and intelligence and refine the program guidelines. Or give up and choose Pathway B, pick a contractor and get on with your life.

            I apologize for the vitriol and angst in this post – please don’t shoot the unhappy messenger. I am as frustrated as you are and field a dozen calls a week from homeowners who are adrift trying to figure out what to do and how to move forward. I feel like I didn’t help you much today, but hopefully I let you know what is actually happening. As always, if you need clarification or more information, call me directly and I will try and help you.

Stay well Sandsters. Hang in there. 90% of all wars in history were won with patience, perseverance and fortitude.

Regards,

Vincent

Dream Homes, Ltd.

Atlantic Northeast Construction LLC

Robert Wolfe Construction Inc.

Rebuild, Renovate, Raise or Repair Your Home from Storm Sandy

Rebuilding NJ One Home at a Time…

Residential Construction & Development for over 20 years in NJ

314 Rt.9, Forked River, NJ 08731 Mailing: PO Box 627, Forked River, NJ 08731

609 693 8881 x 102 Fax: 609 693 3802 Cell: 732 300 5619 New Home Builder License # 045894  HIC License # 13VH07489000

vince@dreamhomesltd.com  www.dreamhomesltd.com  http://blog.dreamhomesltd.com