The program is financed by FEMA as a part of its Hurricane Katrina recovery aid, and U.S. Attorney Jim Letten’s office noted that the profit margins built into the state grants of up to $100,000 were so high that elevation contractors were willing to pay Davis $10,000 a pop for a signed contract.
Does everyone remember in the early days after Hurricane Katrina when FEMA was paying for hotel rooms for the displaced? Remember how artificially high the room rates were, pushed up by the rate FEMA was paying? The same concept is at play here as FEMA capped the number of houses to be raised for the money that was allotted thus effectively and drastically raising the market price to elevate a house. The increase in pricing, based upon the calculations of bureaucrats that evidently have no clue how much it costs to raise a house, greatly increased margins which in turn attracted the dregs of the business world to the program turning it into a cesspool of waste and corruption.
Now speaking of dregs, cesspools and corruption it is only fair Slabbed advances the discussion as I was leaked a few docs that illustrate the point. One of the things certain unscrupulous contractors were doing was forgiving initial “promissory notes” that were executed in advance of the funds flowing to a particular project essentially rebating up to $30,000 of FEMA funding to homeowners in the program as a sweetener to sign up with a particular contractor. I have two examples of this the first being from Goatherder elevation company Coastal Shoring (click the pic to get the 2 page pdf): Continue reading →
That said the homeowner in question was amenable to any reasonable offer Coastal Shoring would make to resolve the situation and so with Plan A of passing civil litigation threats etc not proving very effective someone with some sense must have grabbed Pappy by the ear and convinced him to make the homeowner whole and thus happy. It was a sound strategy regardless of how it came down as the homeowner has been released to hired another shoring company and the fraud charges against Kershenstine have been dropped.
Sunday, the T-P’s Hammerman checked in with another good installment covering the Home Elevation Grant boondoggle. It is a long story that I will not rehash today but the bottom line Hammerman found a bit of silver lining to homeowner protections belated added to the program by the Jindal Administration. I will not dispute the silver lining part but there was one part of the story where a huge red flag was raised and I say that as someone who knows a thing or two about construction finance. Let’s highlight it:
Of the 12 busiest elevation contractors, only the two with the richest share of the grants — Orleans Shoring and J-Con/Davie Shoring — have managed to get final payments on more than 80 percent of their projects. The state has signed off on nearly 500 jobs done by Orleans, and on 439 for J-Con/Davie.
The next closest is Coastal Shoring, with 290 jobs that received advance grant payments. But fewer than 60 percent of Coastal’s jobs have received final payment, and there’s a warrant out for owner Jerl Kershenstine’s arrest on contractor fraud charges for allegedly collecting grant money to lift a Kenner house, failing to do the job and refusing to let the owner change contractors. Kershenstine is arguing it’s a false arrest.
More troubling is that Coastal is far from the only firm taking more than six months to finish lift jobs after getting 80 percent of the money up front. The state considers more than a third of the 242 contractors with active, grant-financed jobs “noncompliant” because more than half of their projects are still unfinished six months after they were paid the advance. Continue reading →
This is a valid question since last hearing Abel stood up District Court Judge Glen Ansardi. I hope to hear something from the Gretna courthouse on this matter later today folks. Hopefully Hammerman is there as well.
Did I say there was a warrant issued for Jerl Kershenstine’s arrest? Actually I did and it is true as it is alleged Kershenstine’s company, Coastal Shoring, helped itself to money that it was not entitled from a grant recipient. Now we’ve covered Coastal Shoring some here on Slabbed and it was in fact this post which contained a good bit on Coastal Shoring that finally pushed the Goatherders to SLAPP sue me in Nova Scotia. And that doesn’t count Lockem’s guest post on the topic.
As the above links indicate, Coastal Shoring has a few management problems to go along with the psychological ones and those would certainly Continue reading →
Yep they changed the bonding requirements again. I’d like to add at this point that residential construction and homebuilders rarely, if ever, are required to post performance bonds which is why imposing a performance bond requirement on home elevation contractors effectively shuts so many out of the market. You see sureties require things to make their credit underwriting decisions such as CPA audits or reviews that can’t be done overnight. This limits competition. Now if performance bonding requirements had been put in up front you’d have none of these problems now.
Particularly disturbing is the rumors I’m hearing of inexperienced contractors being exempted from the contractor’s license testing requirements if they paid consulting fees to the right people.
The state Office of Community Development’s handling of this whole deal has been a disaster. Dysfunctional corrupt government, brought to you by Bobby Jindal.
I mention this because last night we received a contact or two on the topic including one person that gave us the skinny on Orleans Shoring owner Christian Cancienne’s prior criminal record distributing hard drugs. We already knew Christian Cancienne from the Katrina litigation folks and he was about as useless as Eric Paulsen’s legal team in Paulsen v State Farm. But ol’ Christian does have a nice jingle and some of the best former politicians money can buy to snap up a cool quarter of the market.
Hopefully in the process folks I hope everyone will understand how absolutely feckless the current contractor licensing process in Louisiana is in its current incarnation and that is the real story here.
Meantime people are looking to Slabbed to cover this issue and something tells me there is plenty enough dirt on Quinn and Cancienne to make this topic a good fit here.