The Warren County Commission passed two resolutions Monday night relating to the county’s breach of contract with a FEMA/ TEMA Hazard Mitigation grant in 2004 applied for and administrated by then-county executive and current Commissioner Kenneth Rogers.
Commissioners voted 19-4, with Rogers abstaining, to pass a resolution to pay homeowner Michael Hubbard $31,000.
Commissioners voted 20-3, with Rogers abstaining, to pass a resolution to initiate legal action to recoup $124,000, less any amount covered by a performance bond of $50,000 held by Rogers during his time as county executive.
It remains to be seen who will be named in the lawsuit as Rogers and businessman Randall Dunn are the two principals involved in the breach of contract.
In reference to the breach of contract on the $124,000 grant, FEMA/ TEMA directed the county to repay the organization’s $93,000 share of the 75-25 matching grant, and also directed the county to pay $31,000 to Hubbard, who owned the house named in the grant.
The commission had previously voted to allot $93,000 in next year’s budget to repay FEMA/ TEMA its share of the funding, but had not allotted funds to pay Hubbard.
The grant in question was requested and administered locally by Rogers. Per the contract, the $124,000 grant was specifically designated to purchase, demolish and remove a flood-damaged home owned by Hubbard.
But instead of having the home destroyed, Rogers entered into a contract with Dunn of RWRP Properties to have the home dismantled and moved, with Dunn providing a contribution of $16,000 to the county, $6,000 of which was paid back to Dunn with two checks for $4,500 and $1,500.
In an effort to recover the $124,000, the county’s Budget and Finance Committee drew up resolutions to recover the money from those responsible, and to pay Hubbard his $31,000, which he had originally agreed to forfeit in writing, according to Rogers.
It was the resolution to pay $31,000 to Hubbard which generated the most controversy as several commissioners professed confusion as to why this was necessary.
“Why are we doing this?” asked Commissioner Wayne Copeland. “Why are we paying the $31,000?”
County Executive John Pelham said even though Hubbard had originally forfeited his share of the money, which would have been paid by the county, the breach of contract negated his written forfeiture.
“Because of the breach of contract as has been explained to us by our counsel,” Pelham said. “The original contract was acquisition and demolition. But because the demolition didn’t happen, it became acquisition and relocation, and under the relocation part of it, the homeowner does not forfeit his ownership of the home. So basically, we sold a home that did not belong to us. It still belonged to Mr. Hubbard, according to the way it’s been explained to us by counsel. So because he was still a shareholder, if you will, of that piece of property, then he is due his percentage back to him of what the property was appraised at.”
“I’m still not clear on why we’ve got to pay him anything,” Copeland said.
Pelham tried to clear things up by relating the actions taken when the grant was issued.
“The original grant was a 75-25 match,” Pelham said. “And he forfeited his 25 percent on the front end. FEMA paid 75 percent of the appraised value of the home, and he forfeited his 25 percent. But because the home was not destroyed, now we are having to pay him his 25 percent.”
Pelham went on to say he and other county officials and legal representation had attended a meeting set up by FEMA/ TEMA and they were told the county did owe Hubbard the money.
Several other commissioners had questions as well, including George Smartt, Clinton Hill and Charles Morgan, some of whom said they would vote no on the resolution.
At that, Pelham explained why this could be costly course of action, since it would directly disregard FEMA/ TEMA’s requirements to correct the county’s breach of contract.
“I feel compelled to state to the court if we do not repay this money there could a possibility of repercussions against us by TEMA,” Pelham said. “So for that reason, this is a very important matter.”