RALEIGH — The Joint Legislative Commission on Governmental Operations, Subcommittee on Hurricane Response and Recovery held a hearing May 22 focusing on the recovery efforts following Hurricane Helene.
Legislators’ questions to a panel of officials centered on the selection of Horne LLP as the project management company for the contract worth $81 million related to the $1.4 billion housing reconstruction program funded by the U.S. Housing and Urban Development agency (HUD).
Concerns were expressed about Horne’s past performance in other states, the procurement process in which Horne was selected, and potential conflicts of interest involving Jonathan Krebs, a former Horne managing partner who was tapped by Gov. Josh Stein to be his western North Carolina recovery adviser.
Joining Krebs on the panel of witnesses were Matt Calabria, director of GROW NC, and Stephanie McGarrah, deputy secretary for the Department of Commerce Division of Community Revitalization.
Krebs was questioned about his role in drafting the RFP, for recovery work that led to the selection of Horne but denied direct involvement in vendor selection.
Subcommittee Co-Chair Rep. Brenden Jones (R-Columbus) asked Krebs about political contributions he made in 2023 and 2024.
“You stated your ties with Horne ended in April, but just months after you claimed leaving Horne, you cut $12,800 in checks to Gov. Stein’s campaign,” said Jones. “And then you kicked in another $29,000 this past October to the Democratic Leadership Committee and listed your employer as Horne.
“Then you’re brought into advise recovery and were sitting in the room shaping the contract your old firm wins. Tell me how this is not an example of absolute pay-to-play politics.”
Krebs, who was chastised by Jones for laughing at the questions, responded, “If you look at the paperwork for the October donation, that was an event that was hosted in March for that point in time for candidate Josh Stein.”
Krebs went on to say he was an employee of Horne in March and that he didn’t turn in the donation paperwork on time and that the Stein campaign later reached out to him to correct it.
Jones pressed Krebs, “Do you deny that your political support helped you land your advisory role?”
“It certainly led me to the introduction with him,” Krebs said. “But I don’t give money to everybody that I meet. I tend to look for folks that are contributing in a way that I think is meaningful.”
Krebs noted in his response that he met Stein in December 2023.
Jones also asked Krebs about his involvement in the RFP process.
“Did you in any way help draft, formulate, or shape the RFP that resulted in the $81 million contract to your former employer?” he said
Krebs replied he did work in it “with a team of people,” to which Jones responded that was a “blatant conflict” and asked Krebs who authorized his involvement.
Krebs replied by naming the secretary of commerce and the procurement and contracts attorneys. Jones also brought up an instance in Florida where Horne had written an RFP for a contract the company then bid on and noting that activity was illegal, but Krebs said he was unfamiliar with that situation.
Jones’ final question to Krebs was, if Horne fails, “Should we hold you accountable?” to which Krebs replied, “Certainly.”
Later in the hearing, a similar exchange between Rep. Mike Schietzelt (R-Wake) and Krebs would get heated over Krebs’ Horne ties and his political donations.
Schietzelt said the “optics were terrible” and the highlighted the “paper trail” of Krebs; donations made it look like Krebs sought to profit off the storm, a claim Krebs strongly objected.
“If there’s a campaign finance report that was filled out seven months after a contribution was made, that’s a problem,” said Schietzelt. “But the bigger problem is in looking at the paper trail right now, it looks like you left and started a consulting firm, consulted for Horne, and, in October of 2024, while people in western North Carolina were still collecting their dead and trying to put their lives back together and prepare for winter, that you saw an opportunity, made a $29,000 donation, and then about a week later …. two weeks later, joined the transition team for the governor.”
Schietzelt added, “And now here we sit today, and Horne has the contract for recovery. That’s what the paper trail says. That is exactly what the paper trail says.”
Krebs’ contributions to state Democrats and Stein’s campaign are not the only political donations with ties to hurricane recovery work. Madhu Beriwal, the CEO of IEM, also donated $5,100 to former Gov. Roy Cooper’s 2016 campaign. Beriwal also donated $6,400 to Stein’s 2024 campaign.
The contribution to Cooper’s campaign was made prior to being selected for Hurricane Matthew recovery work in a bid process that drew criticism.
WBTV’s Nick Ochsner reported that after a formal evaluation committee recommended awarding a $15 million contract to IEM in March 2018, former Emergency Management Director Mike Sprayberry tried to rewrite the recommendation memo to award the contract to all three bidding companies. Sprayberry later admitted he didn’t have the authority to make this change.
Past issues with Horne in states like West Virginia and Louisiana were also raised by lawmakers on the subcommittee, though McGarrah noted they were unaware of some issues until after the RFP closed. She noted Horne’s references were generally positive, unlike Tidal Basin, which had significant negative feedback.
McGarrah outlined the competitive bidding process, where Horne was selected over other vendors such as HGA and Tidal Basin, after two bids (Easy Wellness Consulting, IEM) were deemed nonresponsive due to missing financial documentation. She said Horne was chosen based on its qualifications, references from South Carolina, Florida and Mississippi, and its ability to handle the unique challenges posed by the terrain in western North Carolina.
In terms of monitoring progress and providing accountability in recovery work, McGarrah said that unlike NCORR, former Cooper’s N.C. Office of Recovery and Resilience, the new contract method “pays for outcomes,” not time and effort. She said an outside vendor will be monitoring contracts, projects and conducting risk assessments to avoid repeating past mistakes.
Several subcommittee members expressed frustration with the slow pace and procurement inefficiencies. McGarrah sympathized, citing her own experiences with the current required processes. She also said housing recovery is estimated to take 3-4 years, with infrastructure recovery taking longer due to federal red tape and the region’s unique topography challenges.
Will Ray, director of Emergency Management, N.C. Department of Public Safety, was also slated to testify, but the hearing was cut short due to a conflict with scheduled House activities. Wray would have addressed the progress of debris removal,l and Subcommittee Co-Chair Sen. Brent Jackson implied a follow-up hearing would take place to cover that topic.
A recent report by Inside Climate News describes Wray firing a subcontractor called PathBuilt was not brought up during the hearing, likely due to time constraints. Per Inside Climate News, Wray terminated PathBuilt’s contract on May 15 after the outlet inquired about the NCORR ties.
At issue is that PathBuilt’s founders include former NCORR’s former Director Laura Hogshead, former Chief of Staff Ryan Flynn and former Chief Recovery Officer Matt Arlyn. Hogshead allegedly left the company prior to the company being signed on as a subcontractor.
Hogshead left NCORR in November 2024 following an intense hearing where she was grilled by lawmakers over NCORR’s slow completion rates and financial issues. It’s still unclear if Hogshead was fired or if she resigned.
PathBuilt was hired through Jessica Southwell, a current Division of Emergency Management program director who previously worked at NCORR/ReBuild NC. She allegedly directed the main contractor, IEM, to hire PathBuilt in April, according to the Inside Climate News report.
All meeting materials, letters and presentations are publicly available on the Subcommittee’s website under the May 22 meeting folder.
