Mayor says Ocean City expects repayment on Peck's Beach Village work

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Housing authority says it’s working closely with city on a resolution

60 units at Peck’s Beach Village, the city’s subsidized housing project in the 200 block of Fourth Street, were vacated for restoration. 60 units at Peck’s Beach Village, the city’s subsidized housing project in the 200 block of Fourth Street, were vacated for restoration.

OCEAN CITY — Mayor Jay Gillian said he expects the city will recoup the more than $1 million it used to repair several units at Peck’s Beach Village following Hurricane Sandy.

In his latest letter to residents dated Friday, March 21, Gillian said the Ocean City Housing Authority has received reimbursements from its insurance and the Federal Emergency Management Agency for the work the city completed after Sandy, which allowed more than 60 families to stay in their homes.

“We will work with the authority to resolve any open issues so that repayment can be made. The funds will be placed in our affordable housing trust fund, so that they are available for future construction or rehabilitation of housing units for low and moderate income residents and senior citizens,” Gillian wrote.

After Hurricane Sandy flooded the island in October 2012, 60 units at Peck’s Beach Village, the city’s subsidized housing project in the 200 block of Fourth Street, were vacated for restoration.

At its meeting on Thursday, Dec. 13, 2012, City Council authorized a shared services agreement with the Ocean City Housing Authority for the repair of the first floor of the flood-damaged buildings.

At the time, city attorney Dottie McCrosson said the intent of the agreement was to expedite the repairs and get residents back into their homes, because the housing authority did not have the funds to make the repairs.

The city proposed undertaking the repairs using COAH funds and agreed to be reimbursed to the extent that insurance and FEMA reimbursed the housing authority.

That same day, the Ocean City Housing Authority also approved the agreement contingent on the approval of the agreement by the United States Department of Housing and Urban Development.

According to Steve Lalli, the Ocean City Housing Authority vice chairman, the shared services agreement was never signed because it never received HUD approval.

Despite that, repairs moved forward under the oversight of the city. 

About $1.2 million from the city’s Council on Affordable Housing Trust Fund was spent repairing the Peck’s Beach Village units damaged during Sandy, city administrator Mike Dattilo said. 

The displaced residents began moving back to their homes in February 2013So far, Dattilo said the city has not received any reimbursement from the housing authority.

Lalli said Monday, March 24 that the authority wants to pay the city back.

“Our hope is, after HUD reviews everything we sent to them, we can sit down with the city and resolve this,” he said. “Our hope is to pay the city everything that they’re owed.”

Lalli said that there are a few reasons that HUD has not approved the shared services agreement with the city at this point, the most prominent being the contractor procurement process used by the city.

He said that when the housing authority submitted the agreement to HUD in 2012, HUD responded with a letter stating 10 requirements that would need to be met for the agreement to be valid.

“Once the work was done, the only way we could ensure the procurement requirements were met were to review the documents the city put together,” he said. “That was just completed a couple weeks ago. The review of the documents, which I performed, raised a couple of concerns.”

Lalli said the biggest concern was HUD expected to have the authority ensure that the contractors were procured within the required HUD guidelines. He said that the city skipped the bidding process when it hired contractors because it was an emergency situation.

“But that’s not the only standard for being able to give out a no-bid contract,” Lalli said. “It has to be an emergency, and it has to be not feasible to use the normal bidding process.”

Lalli said the reason it took so long to complete the review was that the city did not provide the housing authority with a full set of documents until November 2013. The housing authority began asking for the documents after the repairs were completed in 2013, Lalli said. He said that because the authority only meets once every two months, Lalli was not authorized to review the documents until the January 2014 meeting.

Still more documents are needed for the review to be complete, Lalli said, including permits.

The housing authority is now looking to HUD to give it technical assistance on how to proceed so that it can repay the city, Lalli said.

“They’ll give us some answers and direction on resolving concerns,” he said.

A meeting between the housing authority and HUD, originally scheduled for March 21, was postponed.

Alecia R. Watson, executive director of the Ocean City Housing Authority, said the authority has received between $1.3 million and $1.5 million in reimbursements from insurance and the Federal Emergency Management Authority for the repairs resulting from Hurricane Sandy.

Lalli said the responsibility of the housing authority board of commissioners is policy, oversight and advocacy for the housing authority.

The Ocean City Housing Authority is in charge of the public housing in Ocean City and receives its funds from HUD, Lalli said.

“Because we have low income residents, we don’t charge fair market rents,” he said.

The rents are subsidized by HUD, which also gives the authority money to make capital improvements.

“They don’t give it to us willy-nilly,” Lalli said. “We have to enter into a contract with them.”

That contract binds the authority to certain terms and conditions that, if not met, subject it to sanctions, he said.

“One of our concerns was that, when we did the review and we found that some of the things that were done raised some concerns, we wanted to make sure we got the blessing of HUD to pay the city back,” Lalli said. “If you spend money that you’re not supposed to spend, they can say to you, ‘Give us that money back.’

“Ultimately, it’s the residents that that could impact negatively,” he said. “We can’t worry about residents only when it’s an emergency.”

Lalli said he has been working with Dattilo for the last few weeks to come to a resolution.

Gillian wrote in his letter that at next week’s City Council meeting, the city administration will recommend the award of a $517,000 contract for the replacement of the roofs on the senior housing portion of Peck’s Beach Village, using funds from a community development block grant.

“We were in the process of replacing the roofs on the family units using grant funds when Sandy struck. That work has since been completed,” he wrote. 

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