Officials confirmed this week that West Virginia is under an investigation related to its longstanding flood relief efforts, but the elements of the investigation are not yet clear.
What is it about? Who is under scrutiny? How far-ranging is the inquiry? What consequences could be at stake? How long has this been going on?
So far, none of that has been revealed to the public.
West Virginia drew down $149 million in relief from U.S. Housing and Urban Development after the 2016 flood that washed away lives and property. The effort has been contentious, with longstanding concerns about the pace of progress and whether that money has been used as it should.
Investigations of West Virginia’s challenged flood relief program have been announced in years past. In 2019, then-U.S. Attorney Mike Stuart announced an investigation of how the federal funds were being used, although no conclusions were ever made clear. “It can’t be lost on us reports of large amounts of money intended for flood relief not going to flood relief,” Stuart said at the time.
The latest revelation occurred Monday morning at a meeting of the Joint Legislative Committee on Flooding, which was established to provide oversight of how the state responds to disasters. Senator Stephen Baldwin, D-Greenbrier, asked a series of questions about complications involving a clearance and demolition program administered through the U.S. Department of Housing and Urban Development.
That discussion focused on what progress the demolition program has made — with context that routine HUD monitoring has resulted in a corrective action plan that consists of one directive to shore up duplication of benefits safeguards.
Baldwin wondered if more was being left unsaid. He asked a direct question about rumors that have circulated for months.
“Is this program or has it been under federal or state investigation?”
The answer: “Yes it has.”
Monitoring and investigation are separate matters
During a telephone interview later this week, state Department of Commerce spokesman Andy Malinoski clarified that the routine monitoring and the investigation that was revealed through Senator Baldwin’s questions are distinct.
“There’s two separate matters. It’s not our practice to discuss open investigations or other legal matters like this,” Malinoski said. “We are participating in an investigation that was unrelated to everything else in that meeting.”
A spokeswoman for U.S. Housing and Urban Development also specified in an email that the agency’s standard monitoring is distinct from an investigation.
“In accordance with federal regulations, HUD is required to annually monitor each grantee who receives funding through its Community Development Block Grant Disaster Recovery and Community Development Block Grant Mitigation programs,” stated Nika Edwards, a spokeswoman at HUD’s Mid-Atlantic region.
“This process is not called an investigation. It’s a part of HUD’s normal monitoring activities.”
That statement did not expand on what else the federal agency might be probing.
Questioning and testimony at the Legislature’s flood meeting made clear the existence of an investigation.
Michelle Penaloza, a program manager for the Community Development Block Grant for Disaster Relief, described recent progress with the clearance and demolition program for properties that were rendered unusable after West Virginia’s 2016 flood.
As she has before, Penaloza discussed issues that held up progress, such as duplication of benefits. She noted the ongoing monitoring by HUD, which resulted in a corrective action plan.
Senator Baldwin, who has been deeply involved in the details of flood relief, asked a series of questions that led up to a bombshell.
“What are we dealing with that we have not been told about?” he asked, “because something obviously is not adding up  here. I’m just concerned about my constituents that are not moving forward.”
Moments later he asked, “Is this program or has it been under federal or state investigation?”
“Yes it has,” responded Penaloza.
We’ve talked about this program for the last three meetings,” Baldwin noted. “That has never been mentioned. Why not?”
Penaloza, who was under oath, briefly described what she could: “Sir, it’s currently under investigation. My federal investigation is with HUD, and we’ve been 100 percent transparent with everything we’ve discovered. For us to walk away with one finding, I know it doesn’t feel like a success story, but it really is.”
Baldwin concluded, “So that’s the answer to the question, Why this program has been paused? Because it’s been under federal or state investigation.”
Yet that was the extend of exploration. The meeting soon transitioned to other matters, also worthy, about the state’s continued progress in replacing the housing of flood victims and what efforts state officials are undertaking to minimize the effects of flooding in the future.
Among aspects that still aren’t clear: How much overlap exists between publicly-described issues with the demolition program and the separate investigation?
Duplication of benefits
Over the past several committee meetings, Penaloza has discussed challenges and progress with the demolition program. She has noted that specific rules must be followed. Proposed structures must have sustained damage from the 2016 flood beyond rehabilitation. Those structures must be vacant. They must be clear of liens and mortgages. The applicant must be the undisputed owner of the property.
Some of those requirements initially resulted in confusion.
West Virginia began its clearance and demolition program in 2018 without HUD’s authority. Penaloza has said the West Virginia National Guard, which was administering the program at the time, gathered addresses from counties and municipalities — but not all had actually qualified. Some property owners assumed they were eligible when it later turned out they were not.
Initially, 657 addresses were submitted to the demolition program.
Since then, the majority — 566 — have been ruled out. Another 47 have been completed, and 44 remain open.
Lawmakers with concerns about their constituents’ expectations have been exploring for months why so many were considered and so few completed.
“That’s been our biggest misstep is trying to define what is our HUD demolition program,” Penaloza said in this week’s telephone interview.

The National Guard had been placed in charge of the West Virginia RISE disaster relief program to work through early tangles in housing recovery. But over the longer term, the Guard’s central mission of responding to emergencies might not have been the best fit for the dense federal requirements. The Guard’s mission also needed to transform to focus on the ongoing pandemic.
The National Guard’s role in overseeing relief from the flood was ended this past April. During this week’s committee meeting, Penaloza said her agency asked for responsibility to be transferred from the Guard in September, 2020, “because we were having problems with eligibility review.”
“The National Guard was put in place to try to move through this program, but as we get into it we have had more training in the Department of Commerce, learning what we need to do — and as we’ve looked at that we’ve had more insight, learned the duplication of benefits,” said Jennifer Ferrell, director of the Community Advancement and Development division in the West Virginia Development Office, speaking in the telephone interview.
In the same interview Penaloza added, “The Guard’s mission was response and we really have had to deal and tighten up an understanding of the regulation. This grant comes with a lot of regulations.”
This past August, HUD’s monitoring of the clearance and demolition program focused on one finding — that duplication of benefits analysis had not been conducted by the West Virginia National Guard. That also should have included assurances that those who got the funding would not receive additional funds beyond the need.
The officials currently in charge of West Virginia flood relief have provided a response to HUD’s concerns. Now they await HUD’s reply.
Continued interest in revelations
Public discussion of flood relief — both progress and troubles — is important, said Delegate Dean Jeffries, R-Kanawha. The co-chairman of the Joint Legislative Committee on Flooding said he is interested in more updates from the West Virginia Development Office.
“I appreciate the time they’ve already given our members to help us understand what’s been done and what is ongoing to rebuild our flood communities. I was encouraged by their transparency this week and hearing that federal regulators have been monitoring our situation here in West Virginia. I look forward to not only putting this behind us but also rebuilding and protecting our state from future disasters,” Jeffries stated.
Baldwin agreed that it’s important to be able to explain what’s happening with West Virginia’s flood relief program to constituents who are wondering. He indicated that need is what led him to ask a direct question about the investigation that has been rumored for weeks.
“Oversight is often as simple as connecting the dots for constituents, though at times it requires asking difficult questions and digging for answers,” Baldwin said. “Sometimes citizens apply for programs that they are not eligible for, sometimes programs simply don’t communicate effectively, and sometimes programs are not administered in a way that efficiently addresses the problems they’re intended to correct. These programs are complex, and it’s not unusual for folks to need some assistance in navigating them.
“My goal is to ensure that flood survivors receive the assistance they’re entitled to. I trust that we can all work together towards that same goal. It’s important for those of us serving on oversight committees to fully understand the whole truth, successes and failures, of programs in order to recommend policy solutions and ensure our constituents are receiving the support they need.”
Gov. Jim Justice, when asked about the investigation during a briefing this week, expressed confidence that the situation will work out. The governor also seemed to assure more information will be revealed.
“A lot of those details are going to come out in time,” he said. “I can’t imagine that there’s been mishandling at the Commerce level, and I can positively guarantee you there’s been no mishandling by the people around me or myself. So I think we just let it play out, and let’s just see the outcomes. If someone has been doing something in error, I think they should be held 100 percent accountable.”

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