Program for rebuilding Western NC lacks funds to help all eligible homeowners

It's been just over a year and a half since the remnants of Hurricane Helene struck Western North Carolina, and so far, 30 homes out of more than 3,500 active applications have been completed through the state program that uses federal funds to rebuild.

While the goal of the division charged with managing the rebuilding program is to have homes rebuilt within three years, there won't be enough money to serve all eligible applicants, said Stephanie McGarrah, deputy secretary of the Division of Community Revitalization within the N.C. Department of Commerce.

There's also a roadblock to getting work done quickly: People are reticent to leave their homes for rebuilding because there is not enough housing and rental inventory in the region for them to move to.

“We’ve started to have applicants who just won’t move. They don’t have anywhere they can go, so they won’t move, and we can’t repair or rebuild their homes,” said McGarrah.

Gov. Josh Stein, a Democrat, created the community revitalization division on his second day in office. That division created Renew NC, through which it manages more than $1.4 billion in federal Community Development Block Grant funds. Of those, $807 million supports the single-family housing program.

That was done instead of going through ReBuild NC, which was launched under former Democratic Gov. Roy Cooper to rebuild Eastern North Carolina and which has drawn heavy criticism for delays, with some survivors still waiting years later. Hurricane Matthew struck in 2016 and Hurricane Florence in 2018.

How much money is needed?

Estimates indicate the current weighted average cost of over $276,000 per home, multiplied by the number of active applications, would require $1.02 billion in funding for Western North Carolina, McGarrah said.

That exceeds the construction budget of $722 million, she told lawmakers on Thursday during a hearing of the Governmental Operations Subcommittee on Hurricane Response and Recovery. While the committee is bipartisan, it is chaired by Republicans and was created by the Republican-led legislature.

Sen. Ralph Hise, a top Republican appropriator from Spruce Pine, questioned what the plan was.

Will we “cut off funding when we’re out of funding? Are we hoping for Congress to kind of come in and, ‘oh yeah, here’s the extra funds?’ Because they’re so good at moving any bill right now.”

“I’m going to look at what happened with NCORR (Rebuild NC) — how do we have a plan for what’s left?,” he said.

“We’ll be closer to an exact number by the end of the year,” McGarrah said. “We’ve asked for more funds from CDBG ... but the plans are, we will stop serving people if we don’t have enough money, and we will let you know about that. And if you decide you want to try to use state funds, you can let us know,” she said.

The $1 billion estimate could change due to rising construction costs, whether they end up doing more reconstructions vs. repairs, and whether people bring in funds from elsewhere, such as through their insurance. The division is also still working through eligibility determinations, McGarrah said.

How long could it take?

According to a state dashboard, there are 2,175 applications currently in progress that have not been submitted, 3,599 total active applications and 4,325 applications that are inactive or ineligible. McGarrah said they expect to have eligibility determinations completed by early to mid-May.

Stein has asked Congress for more money, including for housing.

McGarrah told lawmakers the division is currently working through Phase 1 applications, which cover those at 60% or less of the area median income. After that, the program moves to other phases serving applicants with higher incomes.

Sen. Warren Daniel, a Morganton Republican, asked how many years the program would take, noting that at 200 homes a year it could be 12 years.

“We still think between two and 3,000 [homes] ... we, when we did our procurement for the implementation vendor, told them we wanted it done in three (years),” said McGarrah. That could look like about 800 homes yearly, but “money is still an object,” she said.

Last May, the state awarded Horne LLP a three-year, $81.5 million management contract. Construction work itself is handled through separate contracts with builders.

Temporary housing issues

A “significant choke point” is that “folks don’t have another place they can go,” McGarrah said.

She said the rental vacancy rate in Western North Carolina is 0.2%, citing Bowen National Research. A healthy rental market usually has a 6% vacancy rate, she said.

So the division is planning to offer temporary housing relocation assistance starting in 10 days.

That will cost $60 million for single-family applicants who make less than 70% of the area median income and have a demonstrated hardship.

But they need to figure out where the money will come from.

Rep. Mark Pless, a Waynesville Republican, questioned whether $120 million appropriated by lawmakers for Western North Carolina recovery to the Department of Commerce could be used for that purpose. But state law is ambiguous about where those funds can be used, said McGarrah. The federal government has also told the state to pick one — either federal or state funds — and not mix them, she added.

An option could be using the $120 million to get the ball rolling, with the legislature then clarifying the language, or reimbursing the $120 million with federal funds later and then proceeding with those funds, she said.

In Eastern North Carolina, Rebuild NC faced issues with temporary relocation assistance, with some families using it for years and having to move from place to place multiple times.

McGarrah said to avoid issues, they would not allow applicants to move out until they had a notice to proceed in construction; there would be a set maximum number of days in temporary relocation assistance; and money would be given directly to builders. She said they are also working with nonprofits to try to find where to place people. Working with nonprofits would be harder if the money comes from federal funds, as there are more strings attached than with state money, McGarrah said.

This story was originally published April 2, 2026 at 2:18 PM.

Luciana Perez Uribe Guinassi

The News & Observer

Luciana Perez Uribe Guinassi is a politics reporter for the News & Observer. She reports on health care, including mental health and Medicaid expansion, hurricane recovery efforts and lobbying. Luciana previously worked as a Roy W. Howard Fellow at Searchlight New Mexico, an investigative news organization.