Legislators on Thursday approved a bill to stop unpaid subcontractors from placing liens against Virgin Island homeowners who were beneficiaries of home repair programs, such as FEMA’s STEP program.
Daryl Griffith, executive director of the Virgin Islands Housing Finance Authority, told the Committee on Housing, Transportation, Infrastructure and Telecommunications that the FEMA STEP program has many successes but “still has one major Achilles heel in that hundreds of millions are still owed to contractors.”
AECOM and APTIM, two prime contracting companies appointed by the VIHFA to oversee subcontractors responsible for federally funded hurricane recovery repairs, have submitted 1,762 invoices to the VIHFA that Griffith said totaled $779 million.
The FEMA STEP program, also referred to as the Emergency Home Repair V.I. program, has paid out $237 million to prime contractors, Griffith said.
Hundreds of millions of dollars are still owed, Griffith said, and this is what caused a subcontractor to start trying to place liens against residential properties.
“As a result of non-payment, one subcontractor, in violation of their contract, recorded 10 construction liens against residential properties repaired under the STEP program,” Griffith said.
The homeowners then “faced the untenable possibility that subcontractors may institute actions in court to enforce the liens on their properties,” Griffith said.
“It is disappointing that a subcontractor unjustly recorded liens against homeowners whose properties were repaired by the EHRVI program. Those subcontractors used an intolerable tactic against hurricane survivors who are not responsible for any payments to subcontractors participating in the EHRVI program,” Griffith said.
The FEMA STEP program concluded on April 15 after conducting temporary repairs for 6,560 homeowners and providing permanent roof repairs to 1,648 homeowners, Griffith said. He added the program also allowed more than 24,000 residents to shelter safely in their homes during Hurricane Dorian and Tropical Storm Jerry.
Though the program was largely successful Griffith said, “Homeowners should not have been dragged into a business dispute between a contractor and its subcontractor regarding non-payment.”
When the VIHFA heard of what was occurring, Griffith said the authority immediately contacted the prime contractors and instructed them to contact their subcontractors about removing the liens. Then the VIHFA spoke with the Office of the Recorder of Deeds and requested the construction liens recorded against the residential properties be made void as they were repaired through the EHRVI program.
“The Recorder of Deeds Office subsequently voided those liens,” Griffith said. The VIHFA’s position is that the subcontractors who recorded the liens against the properties of homeowners did so in violation of their contracts.
General Counsel to the Office of the Lieutenant Governor Dolace McLean testified alongside Griffith and said the Office of the Lieutenant Governor was in support of Bill No. 33-0152 as it will “protect homeowners from predatory and unscrupulous contractors who seek to place improper liens.”
Sen. Novelle Francis Jr., who is not a member of the committee but was present for the hearing, questioned Griffith about when subcontractors would be paid, which would have avoided the entire problem of liens being placed on homeowner’s properties.
“There is light at the end of the tunnel,” Griffith said.
He explained how the authority has been waiting for correspondence from FEMA since Sept. 27 and will soon receive word for how much funding will be supplied to pay the subcontractors “so the whole thing can finally be put to bed.”
Should the bill be passed by the full body, all government owned property and property declared for public use will be exempt from construction liens. The bill also says homeowners participating in government administered home repair or construction programs will also be exempt from property liens.
Sens. Marvin Blyden, Alicia Barnes, Javan James, Donna Frett-Gregory and Stedmann Hodge Jr. all vote in favor of the bill forwarding it to the Rules and Judiciary Committee. Sens. Allison DeGazon and Myron Jackson were absent.