Dream Homes Rebuilding Blog Post Thanksgiving 2013
Choices between RREM Pathway B & C – Pros and Cons of Picking Your Own Contractor Or Going With the RREM Flow
(PS: Remember Sandsters – Don’t Deep Fry Your Frozen Turkey!)
Happy Thanksgiving Sandsters!
Hopefully everyone is doing something food related right now and your turkey is already in the oven.
Just a few quick notes for those who are lucky enough to have been approved for the RREM grant, on the very important subject of choosing your contractor and Pathway B vs. Pathway C.
After receiving over a dozen calls in the last week with specific questions about this point, I am feeling a little guilty for not explaining it about a week ago. There have just been too many site visits, and many bids due at one time and too little of me…J I figure if that many people called me directly, there are another 100 who read this blog who need this information, and probably half of the 4138 people who were approved who are confused as well.
So I am writing on Thanksgiving, in between making stuffed mushrooms & deviled eggs…J I initially intended to be brief, but that seems to be impossible for me.
In any case, once you sign your RREM grant documents, you are presented with a choice between Pathway B & Pathway C.
(For the life of me, I can’t figure out exactly why they skipped Pathway A, but that doesn’t really matter).
In either case, once you choose a pathway, you are committed to that direction.
In both cases, Lead Based Paint, Asbestos and Environmental Studies have been, or will be done, prior to any work commencing. If there is lead or asbestos present, with either pathway, these items will need to be addressed during the course of the job.
In both cases, if you haven’t had these items completed already, once this decision is made you will need to do soil engineering and foundation analysis, have an architect design a foundation system or piling plan and generally prepare your project for submission to your township for a building permit. Either you or your builder will oversee those items with Pathway B, or RREM will do them with Pathway C.
So, here are some comparisons to help you make your decision.
With Pathway B, you pick your own builder or contractor and are essentially in charge of overseeing your rebuilding project. You contract and work with someone you know, and discuss the scope of work and pricing directly with your builder or contractor. Most importantly, you can start (essentially) immediately. There is no more waiting since the ball is now definitively in your court once you choose Pathway B.
Another important distinction between Pathway B & C is that you control the money with B. Your grant money goes into an escrow account and you are allowed 3 draws of any amount (examples are $50,000, $80,000, $20,000 or 3 draws of $50,000, assuming you received the entire $150,000 grant). You decide the timetable, when to start and at what points to release payments to your builder. If you decide on extras over your approved grant, you do not have to deposit the money in escrow ahead of time, but can pay it as you go along.
Your builder or contractor has the same requirements as a RREM approved contractor. They should be Section 3 certified, need a payment bond, and must be an insured and licensed builder or home improvement contractor in NJ.
Construction standards are the same also. Where applicable, your builder must comply with Green Retrofit and Energy Star standards, as well as all local codes.
The only inspections are at the time of each draw request to verify that work has been completed. This includes the last request at the time the work is finished and you receive a certificate of Occupancy. You do sign a Declaration of Covenants and Restrictions which stays in place while you are under construction, essentially to insure that you complete the work and don’t retire to Bimini.
This option is good for people who are comfortable interacting with a builder and overseeing progress on their own job, want more control over the money and when it is disbursed and who desire a somewhat quicker timeline.
With Pathway C you are assigned a RREM approved contractor, who has bid on your job and produced either the lowest or most accurate and comprehensive estimate (from the 2nd bid pool, which happens about a month after the first Site Inspection/Bid meeting at your house where you are not permitted to talk directly to any of the contractors who visit your house!). After the bid is awarded, you are allowed to meet directly with the builder who won the bid, and discuss any changes or additional work outside of what RREM has authorized.
You will need to place any additional money for extra work in escrow with RREM before any work begins, and as the project happens RREM disburses the money to the contractor as work is completed.
There are a greater number of inspections and outside oversight with Pathway C, since it is assumed that you are either not interested in or are not capable of, gauging progress of your project. The process will take somewhat longer to get started, since there are bids, 2nd bids, awarding of bid, meeting with you to discuss exact scope of work and all funds being placed in escrow before anything actually starts. Everything other than the scope of work requires an approved change order.
As a note, NJ, DCA & RREM want you to choose Pathway C. That is not necessarily a bad choice (just because the state is advocating it) and is probably the correct path for many people who are not capable or not interested in closely following the work on their home.
If you do not have a builder you are comfortable with, or have literally no knowledge of or familiarity with construction, Pathway C might be your best choice. It might take a bit longer and cost a bit more, but you have the advantage of many, many eyes watching your rehabilitation or reconstruction job very closely. You will have a RREM caseworker assigned to you, that you are supposed to consult with questions and clarifications during the process.
With Pathway C, there is a strict 90 day time line which must be adhered to, which is counted from the receipt of all building permits. I do not believe Pathway B has the same strict timetable, but I am uncertain on that point.
Most rehabilitation projects (lift, new foundation, renovate) take less than 90 days from start to finish. Most reconstruction jobs, including demolition of your old home, will realistically take longer, although RREM is requiring the same timetable.
Sobering facts about the RREM Approved Contractor pool – Read This:
There are only 47 Contractors qualified for RREM of which only 37 are qualified to receive assignments for reconstruction and only 33 of the 47 are qualified to do rehabilitation projects. There are currently 4138 grants that have been approved and 517 people have signed their grant documents. Everyone who has gone through the FEMA/RREM gamut and arrived at this point, wants to start right now. The salient issue is that there aren’t enough people to bid and complete all this work in a timely fashion, so there will be certain delays that you will have to deal with. (See earlier blogs for my estimates about how long all of this will take.)
If you haven’t been approved for RREM and are on a wait list, take heart:
Another $1.6 billion has been released from HUD to NJ, so another 10,000 people will eventually be approved and included in the RREM program. The largest obstacle currently is that the first $600 million has to be actually spent before the balance is authorized to be disbursed. (Author’s note: This delay seems incredibly stupid. What do the 2nd 10,000 people who need their homes fixed have anything to do with the first 4138 people who have been approved? Statistically, since every single project is separate and distinct, there is an equal potential for error in each job, regardless of how many jobs are undertaken at once. Again, no one at RREM, DCA or HUD consulted me, so it is what it is.)
Hope this helps today. It’s a bit confusing, but simple enough once the important points are laid out for review. As always, if you need clarification or more information, call me directly and I will try and help you. If there is a topic I haven’t covered, please email or post a comment and I will try and address it.
Stay well Sandsters and Happy Thanksgiving!
Dream Homes, Ltd.
Atlantic Northeast Construction LLC
Rebuild, Renovate, Raise or Repair Your Home from Storm Sandy
Rebuilding NJ One Home at a Time…
Residential Construction & Development for over 20 years in NJ
314 Rt.9, Forked River, NJ 08731 Mailing: PO Box 627, Forked River, NJ 08731
609 693 8881 x 102 Fax: 609 693 3802 Cell: 732 300 5619 New Home Builder License # 045894 HIC License # 13VH07489000