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USDA Answers

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Here are the questions KATV submitted to the USDA...along with the responses given by State Director Lawrence McCullough:

 

1.     What are the requirements a contractor must meet (if any) to be included on the USDA's list today?  

Before I discuss the requirements, let me first remind you that the contract to repair a home financed by USDA Rural Development (RD) is between the homeowner and the contractor.  Rural Development is neither involved during the contract discussions nor a party to the contract.  Until recently, USDA, Rural Development field offices sometimes gave homeowners a list of contractors who have performed work on homes financed by RD loans.  RD provided these lists in an effort to help homeowners who may have lacked the resources to locate home contractors.  Homeowners were not required to select contractors from this list, and the disclaimer on the list clearly indicates (A) that the homeowner is responsible for selecting an approved contractor, and (B) that the contract is between the homeowner and the contractor.  Unfortunately, there have been a few instances in which homeowners have not understood these terms and conditions.  As a result, USDA Rural Development no longer provides a contractor list. 

As of January 1, 2012, contractors are required to have a state contractor's license when the dwelling repair project is $2,000 or more.  If the contractor has not performed work on an RD-financed home, RD will interview the contractor and inspect homes the contractor has recently built or repaired; obtain a certified financial statement; obtain, at the contractor's expense, a commercial credit report on the firm and consumer credit reports on each of the principals; check with the local consumer protection agency or Better Business Bureau for any complaints about the contractor; and talk to homeowners about their experiences with the contractor.  

 

2.     What were the requirements in 2011?  2010?  2009?  2008?  In other words, assuming they have changed, when did the requirements change, how did they change, and why?   

The contractor requirements for 2008-2011 are the same as 2012 except for the state contractor's license.

 

3.     What process is afforded to a homeowner who, for whatever reason, is unhappy with the job done by his/her contractor?   

During the construction period, a homeowner who is not pleased with the quality of work done, should give prompt written notice to the contractor and send a copy of that notice to Rural Development.  All work performed must be in accordance with a well-defined description of work and completed in a good workman-like manner.  If not, USDA, Rural Development will not sign off on the work as complete.  A homeowner who is dissatisfied with the completion of the work should not accept the work and should refuse to provide final payment to the contractor.

 

4.     Have you ever taken a contractor off your lists?  If so, who and when? 

We will gladly answer this question as soon as we get input from our 10 field offices.

 

5.     Our FOIA shows multiple jobs where Mr. Calvere Gullett of Bearden ("Mr. Fix It") was the low-bidder, got the contract, and performed to a level that generated complaints.  Is the USDA required to take the low-bidder? 

Again the contract is between the homeowner and the contractor.  The homeowner is not required to accept the low bidder provided the bid is reasonable and there are adequate funds available to pay the bid price.

 

6.     In one of the Gullett complaints, a letter was written by the USDA encouraging Mr. Gullett to contact the homeowner about repairs, but ultimately the USDA advised the homeowner to - "think about legal options."  Is there any rule/law that prevents the USDA from being a stronger advocate for the homeowner in a case like this?  

Rural Development will contact the contractor to make an effort to resolve the issue.  If the work is within the one-year warranty period, RD will ask the contractor to complete the defects within 30 days or make arrangements within 30 days if the borrower agrees.

 

7.     USDA inspectors visited Ms. Pickens' home the day we were there.  What were their findings?

The USDA, Rural Development inspectors visited the Ruby Pickens property on September 17, 2012.  Adverse findings indicated the exterior paint was not satisfactory.

 

8.     Even before it became state law, could the USDA have required contractors who wished to apply for 504 grant projects be licensed by the state?

No.

 

And KATV has submitted these follow-up questions:

Regarding the requirements a contractor must meet in order to be considered for a USDA project, does the contractor have to be from Arkansas?

The answer to question #3 states that "A homeowner who is dissatisfied with the completion of the work should not accept the work and should refuse to provide final payment to the contractor."  Who disperses the draws, or payments, to the contractor?  Does the homeowner control the disbursement of the grant or loan money or does the USDA control disbursement of the payments following periodical inspections and the belief/observation that certain construction benchmarks have been met?

Is a copy of the USDA inspection report from the Sept. 17th visit to Ms. Pickens' home available for review?

In response to question #8, why...prior to 2012...could the USDA not have required that a contractor be licensed by the state if he wanted to be paid with federal funds through the 502 loan or 504 grant programs?