RUNNING ON EMPTY: Contractors Say Haven’t Been Paid Under Ken Mapp Up To $60 Million Dollars
CHARLOTTE AMALIE — After back-to-back Category 5 hurricanes blew through the U.S. Virgin Islands in fall 2017, Russell Bryan joined thousands of Americans who rushed to “chase dreams and promises” of big paychecks from the federal reconstruction effort.
A contracting firm said his crew would split about $50,000 for their work on 89 properties. So Bryan arrived with 10 friends and relatives last summer to repair blown-in doors and busted window frames and install FEMA-funded roofs, at times working up to 12 hours a day.
But the money never arrived, and Bryan could barely afford the ice water he needed to work under the blazing Caribbean sun. The 27-year-old had to call his mother and plead for a plane ticket home.
“I felt stranded,” Bryan said after he climbed down from the roof on his final day on the job earlier this month. “If I stayed here, as a guy looking for his money, it’s nothing but trouble.”
Frustration has consumed the Virgin Islands amid a wave of complaints about unpaid bills, broken promises and shoddy work in the aftermath of Hurricanes Irma and Maria. In one case, the tension culminated in an armed standoff over allegations of unpaid contractors.
The discord has cast light on how the Federal Emergency Management Agency, the Virgin Islands government and two private multibillion-dollar engineering companies are managing the recovery, and the extent to which the financial windfall is filtering down to the sweaty workers doing much of the manual labor.
“It just seems to be a very sketchy business model and based on business practices that are questionable,” said Sen. Alicia V. Barnes, a member of the territorial legislature. “It seems to be a total breakdown in bureaucratic processes where there is no appropriate oversight.”
A year and a half after Irma hit, the beaches have been cleaned and cruise ships again crowd area ports. Most residents say the overall pace of the recovery has been quicker than with past storms.
But the territory — which includes three islands and is roughly the size of Philadelphia — remains a long way from its pre-storm footing after 18,500 homes and businesses were damaged or destroyed by the hurricanes, resulting in an estimated $11 billion in damage.
Like Puerto Ricans, the 103,000 residents of the Virgin Islands are American citizens, though they cannot vote in the presidential election and have no voting representation in Congress. President Trump has complained recently about the amount of disaster aid going to Puerto Rico, amid Democrats’ calls for more funding.[H
Last summer, to try to expedite the recovery on the Virgin Islands, FEMA authorized a first-of-its-kind expansion of its Sheltering and Temporary Essential Power (STEP) program, created after Hurricane Sandy struck the U.S. East Coast in 2012, to make minor repairs on houses so residents could avoid costly relocations to hotels, temporary trailers and new rental units.
FEMA allowed the Virgin Islands to exceed the typical $25,000 cap on repairs on a case-by-case basis.
The territorial government contracted two global engineering firms, AECOM and Aptim, to carry out the construction, and more than 7,000 houses have been repaired so far. But homeowners have complained about the quality of some of the repairs, and some have alleged that workers are effecting cracks and leaks in doors, walls and roofs. In February, three major subcontractors working under AECOM said they and other firms are collectively owed more than $60 million for work performed, putting some firms at risk of insolvency or bankruptcy.
On Tuesday, the territorial government’s Senate Finance Committee voted to subpoena AECOM after the firm failed to show up for a hearing on complaints over nonpayment.
In a statement to The Washington Post, AECOM did not address whether its subcontractors have been paid in a timely manner, but said, “We are committed to doing everything we can in partnership with the Virgin Islands Territory and FEMA to provide the timely payment of services to subcontractors, including the substantial investment of our capital and resources to expedite payments in advance of the release of program funds.”
In a separate statement, Aptim Vice President Jeffrey Dorf said the company “is current with our payment terms and conditions with all subcontractors, in regard to our work.”
There could be more financial trouble to come, given the federal and Virgin Islands governments are at odds over how much the STEP program will ultimately cost.
Daryl Griffith, executive director of the Virgin Islands Housing Finance Authority, said the territory has paid out nearly all of the $187 million in federal funds received for the STEP program. FEMA has promised another $86 million, he said, for a total of $273 million.
But Michael Byrne, FEMA’s federal coordinator for the Puerto Rican and Virgin Islands recoveries, said the agency has only allocated $223 million so far. Either way, it appears the federal allocation is likely to fall far short of the nearly half-billion dollars Griffith says the program will cost when all invoices are collected.
Many local workers worry the money will never make it to their pockets anyway.
Nathaniel Phillips, a 35-year-old native of St. Thomas, one of the territory’s three islands, said he assembled seven crews in November for roofing work for an Aptim subcontractor, based on a promise that each man would earn between $150 and $500 a day.
But after about a month of unpaid work, with Christmas approaching, the workers turned their fury on Phillips.
“They would say, ‘I am going to get my gun and I’m coming for my money,’ ” Phillips said. “I literally never thought about having a gun — I am a boxer. But after my life and my family’s life was threatened, I went to buy a gun.”
Phillips and his father cobbled together about $15,000 to hand out to the workers, though the subcontractor still had not paid him, he said, and he could not afford to buy a Christmas gift for his 12-year-old daughter. He and the rest of the workers finally walked off the job on Jan. 2, alleging they were owed a combined $150,000.
The subcontractor, Texas-based Allco Construction, did not return calls seeking comment.
After Phillips and the other workers held a protest on St. Thomas to draw attention to their plight, Allco arranged to pay some of them. Phillips wasn’t one of them.
Dorf, from Aptim, said the company “does not have direct line-of-sight into second-tier subcontractor payments” but allows them “to voice their concerns.” The responsibility for paying subcontractors ultimately rests with the company that hired them, said Brad Gair, a consultant for Witt O’Brien’s, which is advising the territory on its recovery efforts.
The layers of subcontractors working on the reconstruction is a “lesson learned” for the territorial government, Griffith said.
“Whether they pay or not on time, we don’t have visibility on that,” he said. “And all of these stories we hear are either totally heart-wrenching or incredibly infuriating.”
Licensed construction contractor Scott Johnson said the dispute over funding is indicative of broader management shortfalls .
A veteran of more than a dozen hurricane-recovery projects, Johnson was lured to St. Croix shortly after Christmas by a subcontracting firm under AECOM that promised him he could make more than $1,000 a week. He worked on four houses — all projects that had previously been started by other contractors who either walked off the job due to nonpayment or were yanked from the job because of poor craftsmanship.
At one job, he said, a homeowner cried on his shoulder because a previous contractor had done more damage to her home than the hurricanes did.
He fled back to Florida in early February, unable to finish even one roof because of chronic material shortages and poor supervision, he said.
“I have never in my life seen anything more mismanaged than this contract,” said Johnson, 46. “The people there deserve better. They should be treated on a level of eight to 10, but instead are being treated on a level of 1 to 1½.”
Gair said the quality of the work is inspected separately by the general contractor, Witt O’Brien’s, FEMA and the Virgin Islands Department of Planning and Natural Resources, a process that can take months and lead to delayed checks.[P
Vernon Eddy, 84, is one of the Virgin Islands residents who believes the process has failed him. Hurricane Irma left a few small holes in the ceiling of his living room and bathroom in his St. Thomas home. As contractors replaced his roof, Eddy said, the rain that arrives here almost daily opened up more than a dozen new holes in his ceiling.
He begged them to return to repair the damage.
“They just say they are not coming back, and they are finished with me,” he said.
The problem was particularly urgent for Eddy. His 88-year-old wife was recovering from a stroke in Nashville, and he didn’t want to bring her home until the house was in top shape.
She died earlier this month as Eddy waited.
Sarah Mickelson, a senior policy director at the National Low-Income Housing Coalition, said FEMA’s STEP program is an example of how the federal government’s outsourcing of disaster-recovery operations can shortchange residents.
That states and localities are only reimbursed for approved costs after work is completed — meaning those governments have to front sometimes hundreds of millions of dollars — has proven especially problematic for the Virgin Islands, where the government was struggling to pay bills even before the storm.
The territory has accumulated about $1.7 billion in debt and has just seven to 10 days of cash on hand. Moody’s Investors Service, which rates the territory’s credit worthiness, has assigned it the third-lowest of 21 ratings, one above Puerto Rico, which declared a form of bankruptcy in 2017.
Faith in the system is deteriorating. The U.S. attorney’s office for the Virgin Islands has launched at least one investigation. In February, a federal grand jury indicted four individuals alleged to have submitted fraudulent invoices for housing allowances, including for some workers who never performed work on the island.
Meanwhile, tensions are escalating among those who have done the work and are struggling to get paid on time.
David Burgess, a local contractor, believes many of the large contracting firms working on the STEP program are engaged in what he called “sub busting.”
He said the large firms are giving local workers incomplete blueprints or specifications for how a roof should be constructed under FEMA guidelines. Then, just as a project is about to be completed, the firms fire the workers to avoid paying them.
“It’s a way of keeping everything top-heavy so the money never reaches the ground,” said Burgess, 62, who owns J&K Roofing, which the Virgin Islands Daily News has voted the “best roofer” on St. Thomas for the past two years. “They set you up to fail, and then after you complete 60 or 70 percent of the job, they come in and say, ‘You don’t get paid.’ ”
Burgess believes that is what happened to his 33-year-old son, David Burgess Jr.
In January, Burgess Jr. put together a two-man crew to work on a roof under a subcontractor for Aptim, with a promised payout of about $30,000, he said.
After about three weeks, the company threatened to kick him off the job and not pay due to slow performance — even though various inspectors kept arriving at the job site and giving conflicting information about the building code.
Soon after, armed security guards showed up and shouted at the crew to “get off the property right now,” Burgess Jr. said.
They refused and called Burgess Sr., who also showed up armed.
The four-hour standoff attracted local media coverage. It ended when the subcontractor agreed to pay Burgess Jr. $21,500, allowing him to pocket about $7,000 after accounting for his expenses — including ensuring his co-worker on the project got paid.
–Tim Craig, The Washington Post