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Letter to Lieutenant Governor Kim Guadagno

October 24, 2016

Kim Guadagno

Lieutenant Governor

State of New Jersey

Re: Recommendations

Improvements to the RREM Program

Builder / general contractor licensing & guidelines to prevent fraud

Dear Mrs. Guadagno:

My name is Vincent Simonelli, and I am the president of several construction and development companies based in NJ. These companies are Dream Homes Ltd. and Atlantic Northeast Construction LLC. In the last few years, my companies have completed numerous RREM and private elevation projects and constructed over 1500 new homes in 200 developments in NJ since 1993. For the last 3 years, I’ve written a blog about rebuilding (blog.dreamhomesltd.com) and host rebuilding seminars to educate homeowners about aspects of rebuilding, new construction, contractor fraud and other important items in the construction process.

I am writing to you in the hope that you can achieve immediate, material changes in the RREM program, as well as the current guidelines in which contractors and builders can pursue the business of home improvement and new construction in NJ. I am writing today in the interest of both assisting NJ homeowners to rebuild and return to their homes, and helping ourselves and other builders and general contractors to more effectively function under the existing regulatory and legal structure.

When I heard you speak at a builder’s convention several years ago, you struck me as being one of the few people in our current administration who was

oriented towards achieving results, as opposed to simply practicing politics.  I am contacting you in an effort to cut through the layers of bureaucracy, with a direct communication from someone who is continually living through the experience of building and rebuilding in NJ. I feel that you are in the unique position to act on new, pointed information and immediately impact thousands of affected homeowners in NJ.

The three topics I would like to discuss are as follows.

  1. Instituting financial controls and penalties to prevent homeowners from fraudulently spending RREM grant money and not paying their builders and contractors.
  2. Instituting controls to prevent contractor fraud committed repetitively by the same companies or individuals.
  3. Streamlining the RREM payment request and funding process.

Category 1 – Addressing Homeowner Fraud under the RREM program: Unfortunately, a situation currently exists where many RREM homeowners are receiving RREM funds, spending those grant funds on upgraded improvements other than those specified in the RREM scope of work, and failing to pay their contractors for completed work. This is obvious, egregious fraud and is unfortunately prevalent throughout the RREM world. Though this may seem like a self-serving point, I am writing to inform you that I personally know of dozens of small builders and contractors who are being either put out of business completely or are being harmed significantly by this very disturbing trend. A continuation of this situation will be very detrimental to the overall rebuilding process. Homeowners should not be permitted to utilize state or federal funds to upgrade the finishes in their homes, through defrauding contractors. This is occurring daily throughout the state of NJ.

This disturbing trend delays the rebuilding process, specifically harms small business people who are the backbone and one of the strongest drivers in the economy and causes a critical delay in returning homeowners to their homes and real estate to the tax rolls.

On a positive note, in the Rebuilding blog that I write, as well as on our Facebook page, numerous honest contractors have weighed in expressing strong support for this position. Addressing this issue could be a very simple, though quite

important procedural change to the RREM program. This change could be both quickly implemented as well as immediately effective.

Solution: A policy should be immediately placed into effect wherein homeowners who engage in this type of behavior should suffer both financial as well as criminal penalties.

Category 2: Addressing repeated contractor fraud: While the overwhelming majority of contractors and builders are fundamentally honest, there is a very disturbing trend towards dishonest contractors who repeatedly defraud homeowners. Unfortunately, these contractors are not being sanctioned by the state in any manner, and thus are not being prevented from committing the same types of fraud. Though due process is an integral part of our legal code, there is something inherently wrong with public policy that permits the continuous perpetration of a fraudulent activity, especially where it concerns a professional interacting with a layperson.  If a builder or contractor has numerous recorded instances of consumer fraud, allegations of consumer fraud or misrepresentation or complaints to the attorney

general, local authorities or county prosecutor, that company and individual should be sanctioned and not permitted to pursue their trade until due process has time to occur. In the

meantime, licenses should be suspended and additional contracting work should not be permitted.

 By doing nothing, the state of NJ is passively sanctioning this type of fraudulent behavior. Statistically, those who commit fraud in the building and contracting business have a much greater likelihood of repeating that type of behavior, than those who have had few or no complaints lodged against them.  Many consumers have fallen prey to this type of behavior and this should not be allowed to continue.

Solution: Implement an immediate policy change regarding contractor licensing which prohibits builders or contractors from filing for new permits if numerous open complaints exist at the Department of Consumer Fraud, the county prosecutor and/or the state attorney general.

 Category 3 – Payment schedule, Clawback & Final Payment – RREM program:

The 3rd item that I listed above concerns the administration of the payment process as well as the claw back provisions within the RREM program.

Currently checks are being written to homeowners once per month. Increasing the frequency to weekly would substantially assist homeowners return to their homes, through being able to more correctly fund their rebuilding projects. This simple solution would improve the situation tremendously and should be fairly straightforward to implement.

The clawback provision under the RREM program is being administered in a very arbitrary, haphazard manner. Homeowners should not be subject to having their grant funds recalled if all items on their scopes of work have been completed, and a certificate of occupancy, flood elevation and correct final survey are in good order. Homeowners live in fear of this occurrence, which shouldn’t be the case.

Finally, the payment of the final 10% of the grant should not take 3-12 months to process. As stated in the above paragraph, once all items are obtained at the township level, the scope of work has been completed and the final inspection is scheduled, the payment should be made, deed restrictions lifted and the file closed in a timely manner.

Solution: Change RREM payment schedule to weekly from monthly, revise clawback provisions to accurately reflect completed work and tender final inspections and payments in a more timely manner.

 Feel free to contact me directly at any time for further discussion at 732 300 5619. Thank you for your attention to these matters.

Regards,

Vincent Simonelli

President

Dream Homes Ltd.

Atlantic Northeast Construction LLC