OCEAN CITY – The city will have to wait a little longer before learning whether it will be repaid for $1.2 million in repairs it made to a federal housing project following Hurricane Sandy.
The city’s Housing Authority had been scheduled to meet with the U.S. Department of Housing and Urban Development in Newark Friday, but HUD cancelled the meeting in favor of working first with its general counsel in Washington, D.C., said Stephen Lalli, OCHA vice chair.
Although no deadline was given, Lalli said HUD officials “promised their best to expedite it.”
City officials were not invited to that meeting, but were hoping HUD would approve the housing authority’s repayment to the city.
“Jay remains hopeful that we’re going to resolve it,” said City Solicitor Dottie McCrosson on Monday morning, referring to Ocean City Mayor Jay Gillian. “I don’t know the mechanism for resolving it, I don’t know if meeting with HUD is the mechanism, but he just wants it to be resolved.”
Gillian’s administration authorized the funds and awarded the contracts to make repairs to Peck’s Beach Village, a neighborhood of 60 low-income units in the 200 block of Fourth Street, after damage from Sandy in October 2012 destroyed the HUD-subsidized project and displaced 150 residents.
OCHA has stated it does not want to jeopardize its energy subsidy from HUD because appliances installed after the flood do not meet HUD energy requirements, and that it does not want to be held liable for work authorized by the city should repairs to Peck’s Beach Village be found to be lacking in the future. The authority maintains it will repay the city if the city will indemnify OCHA against future claims arising from contracts and work the city authorized.
“The original agreement was the city would front the money and do the work, and the Housing Authority would reimburse up to the extent of insurance proceeds,” McCrosson said. “There was no agreement to indemnify anything coming down from HUD.”
McCrosson said she spoke briefly with the mayor after learning that HUD had referred the issue to its headquarters in Washington, D.C., and that Gillian’s response had been: “Maybe this will move it along.”
“In no event are they not going to reimburse the city,” McCrosson said. “That’s just not an option.”