Michelle Penaloza, a CDGB-Disaster Recovery program manager for RISE West Virginia, confirmed there are active state and federal investigations into the program. (Photo courtesy of WV Legislative Photography)

CHARLESTON — During questioning Monday, West Virginia officials representing the program still dealing with the aftermath of the 2016 flood admitted that the program is under investigation by either state or federal authorities.

The Joint Legislative Committee on Flooding heard an update Monday morning on the R.I.S.E. West Virginia program put in place after the 2017 floods to manage the spending of hundreds of millions of dollars of Community Development Block Grant funds from the U.S. Department of Housing and Urban Development for flood recovery and mitigation.

Senate Minority Leader Stephen Baldwin, D-Greenbrier, questioned Michelle Penaloza, a CDBG-Disaster Recovery program manager, about issues with R.I.S.E.’s clearance and demolition program.

“Is this program, or has it been, under federal or state investigation,” Baldwin asked.

“Yes, it has. It’s currently under investigation,” Penaloza said.

“We’ve talked about this program for the last three meetings. That has never been mentioned,” Baldwin responded.

The $6.8 million program demolishes houses or other property destroyed beyond use by the June 2016 flooding disaster. Out of 657 addresses submitted to the program, 566 projects were rejected, with only 91 projects approved. Since November, $3.6 million has been spent on 47 projects with 44 projects pending.

Most of the approved projects, 31, were in Greenbrier County, followed by seven projects in Clay County, six projects in Kanawha County, three projects listed as other counties. Of the rejected projects, 227 had no mailing address on file, 120 had non-disaster-related issues, 110 applicants withdrew from the program, and 109 projects were in non-eligible counties.

Baldwin asked about issues in Nicholas County, where only two projects received a notice to proceed. While many projects in Clay, Fayette, Kanawha, and Lincoln County are past the eligibility review process, 22 projects in Nicholas County are still in eligibility review, the most of any county. Penaloza said most of the projects submitted for Nicholas County did not meet the program’s criteria.

“What I’m saying is for those Nicholas County projects, there was nothing that we could move forward where all four of those (criteria) had been met,” Penaloza said. “Yes, there wasn’t much work done in Nicholas County.”

Penaloza said she received the paperwork files in April from the West Virginia National Guard, the group who did on-site assessments of the properties. R.I.S.E. made determinations on the properties and recommended them for eligibility review. Baldwin questioned the timelines and stated he was told something completely different in July.

“You said that happened in April,” Baldwin said. “In July, you sent me a tracker at my request to figure out what was going on with this program and all of our counties, and the tracker that you sent me in July for Nicholas County said there were 27 projects. Is that wrong?”

“There may have been 27, sir, but through case management, we’ve had to probably close a few more,” Penaloza said.

“But that was in July,” Baldwin responded. “So, in April, you said there were these cases that you began looking at for eligibility review in July. You sent me the tracker that there were cases in eligibility review. Now, here we are in December for Nicholas County, which was one of the heavily impacted counties that has zero projects.”

HUD awarded West Virginia $149.9 million in CDBG-Disaster Recovery funds between 2016 and 2017. The Department of Commerce, which oversees R.I.S.E., submitted a plan for spending those dollars, which was approved in February 2018. However, the program was paused until June 2018.

The program has been plagued with issues, including entering into illegal contracts, and lack of progress on housing construction and mobile home replacements. The West Virginia National Guard took over oversight of R.I.S.E., with several Department of Commerce officials leaving or being fired, such as former Commerce Secretary Woody Thrasher. The National Guard returned control of the program to the Department of Commerce in April.

Since 2018, the R.I.S.E. program was back on track, though progress was slow. As of November, R.I.S.E. has completed 350 housing projects and 42 bridges. According to R.I.S.E., 90% of its housing projects are complete, with 78% of bridge projects completed. Combined with the 47 demolition projects, $82.4 million has been spent.

“Again, I say what’s the holdup? What’s the pause in the program,” Baldwin asked. “What are we dealing with that we have not been told about? Because something obviously is not adding up here and I’m just concerned about my constituents.”

The R.I.S.E. program has been under HUD monitoring and a corrective action review. HUD officials came to the state in August to observe the clearance and demolition program, issuing one finding for RISE officials to correct. The state has submitted a corrective action plan and hopes to have approval from HUD in January.

Steven Allen Adams can be reached at sadams@newsandsentinel.com.