New Orleans removes barriers from home-elevation program

New Orleans removes barriers from home-elevation program

by Deon Roberts Online Editor

Builder Randy Noel, owner of LaPlace-based Reve Inc., is among those who couldn’t meet the city’s requirements for the Hazard Mitigation Grant Program.

The city has taken down barriers that were preventing homebuilders in the New Orleans area from getting work from a federal home elevation program — and keeping homeowners from rebuilding after Hurricane Katrina.

Contractors had complained the city’s insurance and bonding requirements for the Hazard Mitigation Grant Program were too onerous. New Orleans homeowners were also required to obtain three bids for work to use program money.

A July 10 CityBusiness story pointed out that out of the more than 140 New Orleans homeowners who had applied to the program, construction has not begun on any homes even though homes in other parishes have already been elevated.

In Jefferson Parish, where builders only have to meet state licensing standards to take part in the program, about 115 homes have been rebuilt or elevated. Homeowners there need to only obtain one bid.

Builder Randy Noel, owner of LaPlace-based Reve Inc., said he learned from Col. Jerry Sneed, New Orleans’ homeland security director, that the requirements had been dropped Aug. 3. Noel could not take a job in New Orleans that would have used money from the program because he could not meet the bonding requirements.

“This means we can go to work,” said Noel.

City officials declined interview requests to explain the changes, but City Attorney Penya Moses-Fields’ office provided an e-mail statement.

“The city inserted various insurance and bonding recommendations to guide the homeowners,” the statement reads. “It was never the intent of the city to make it difficult for either the homeowners or contractors to participate in this program.

“Once the city learned that contractors were experiencing difficulty meeting the insurance and/or bonding recommendations, the city immediately re-evaluated the proposed agreements.”

Jon Luther, executive vice president of the Home Builders Association of Greater New Orleans, said the city’s “arcane” requirements called for homebuilders to be bonded at a capacity that only large commercial contractors can achieve.

He said he is spreading the word among HBA members that the city has dropped the problematic requirements.

“We are pleased that they’ve taken pains to make the program more efficient and user-friendly,” Luther said. “We hope that translates into the numerous applicants commencing work immediately and getting their homes elevated out of harm’s way.”

Luther said the city’s requirements were troublesome for homebuilders. For one, residential builders were required to hold occurrence general liability policies, although they typically hold claims made coverage, he said. Occurrence policies generally have higher claim limits because they allow for a claim to be made after the policy has expired. Claims made coverage tends to have a limit that more accurately reflects the exposure and usually costs the builder less.

The city also required “construction defect coverage” in builders’ risk policies, but that provision is not included in such policies, Luther said.

The city also required automobile policies on all vehicles owned by the company, a requirement Luther said did not make sense because state law already mandates auto liability coverage.


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