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

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