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Hazard Mitigation Program Implements Updated Bonding Policy, Mandatory Pre-Construction Conferences for New Payments

Dec. 2, 2011

BATON ROUGE, La. - The Office of Community Development - Disaster Recovery Unit's Hazard Mitigation Grant Program today implemented an updated bonding policy, which includes an option for companies to work in a limited capacity in the program without bonding and also adds mandatory "pre construction" meetings at the site of the house being elevated between the program, homeowner and the contractor on all new HMGP-funded projects.

Office of Community Development Executive Director Pat Forbes said, "Our first goal is always to protect homeowners from damage to their homes or from contractor fraud, which is the purpose of new insurance, warranty and bonding requirements. Under the new 'bonding alternative' option, homeowners can choose to work with a contractor they know and trust without requiring a bond. To ensure that these homeowners are protected, contractors working under this option will face stricter rules and greater oversight by the program."

Forbes said, "In addition, we are now requiring that all new HMGP projects start with an on-site meeting between the homeowner, contractor and the program staff to review the contract, engineering plans and scope of the job to improve communication about the process. This improvement will help make the program run more smoothly for homeowners and contractors. We will continue to make improvements to our policies and processes based on input from the public to better serve homeowners in the program."

Under the "bonding alternative" option, contractors without bonding will be able to participate in the program under the following rules:

  • Contractors will be limited to four projects in the program under construction at one time;
  • The homeowner must voluntarily participate in the "bonding alternative" option and sign a form acknowledging that they are voluntarily allowing their contractor to proceed without a bond;
  • Participation in this option does not change or eliminate the program's licensing, insurance and warranty requirements or the program's policies and procedures;
  • The program will make payments in four installments, in the form of a two-party check to the homeowner and the contractor, as the project reaches certain milestones. These milestones include:
  1. An initial 25 percent advance payment as an advance on the job, after the pre-construction meeting with the homeowner and program and all other advance payment requirements are met; 
  2. An additional 25 percent payment when the structure is elevated and on piers; 
  3. An additional 30 percent payment when physical work is complete on the structure, and; 
  4. Final 20 percent payment when the certificate of occupancy or completion is issued by the local jurisdiction and when proof of warranty is provided by the contractor, along with all other final payment requirements.

Program Statistics

As of December 1, the Disaster Recovery Unit's Hazard Mitigation program has paid more than $362.8 million to 7,448 households. This is in addition to more than $933.2 million in elevation grants paid to more than 32,000 homeowners and more than $138 million in Individual Mitigation Measures grants paid to more than 18,400 homeowners through the Road Home program.

Total recovery dollars for mitigation paid directly to homeowners in Louisiana to protect their homes from future damage now tops $1.43 billion.

The Disaster Recovery Unit within the Office of Community Development is dedicated to helping Louisiana's citizens recover from hurricanes Katrina, Rita, Gustav and Ike. As the state's central point for hurricane recovery, the OCD-DRU manages the most extensive rebuilding effort in American history, working closely with local, state and federal partners to ensure that Louisiana recovers safer and stronger than before.