River of denials can flow from FEMA
Common reasons FEMA denies money after disasters
For its part, FEMA is legally obligated to look out for the taxpayers’ money and guard against misuse and fraud by governments and organizations that overcharge the federal government or use emergency aid to undertake long-desired improvements they couldn’t otherwise afford.
Christopher Logan, FEMA’s public assistance director, said in the agency’s defense that major disasters can result in “extremely complex, technically complicated projects that span many, many years.”
But he said the agency has recently taken steps to reduce what he called misunderstandings.
An analysis by The Associated Press found that over the past decade, FEMA headquarters has denied appeals for at least $1.2 billion sought by local governments and nonprofit groups to protect or rebuild communities hit by hurricanes, floods, fires, earthquakes, tornadoes or other major disasters.
Local governments and nonprofits trying to recover from major disasters have sometimes learned the hard way that money spent on protective measures, cleanup and rebuilding is not always reimbursed.
A look at some of the common reasons money is denied:
Immediate threat: A common point of dispute is whether work undertaken was vital to address an “immediate threat” to life or property.
Sticking tightly to its definitions, this means that some appeals can be denied even when FEMA acknowledges that particular protective measures were the right thing to do.
In early 2009, heavy rains and melting snow caused flooding in parts of Washington, leading to a leak in the earthen abutment of the Howard Hanson Dam, nearly 50 miles southeast of Seattle. While repairing the dam, the U.S. Army Corps of Engineers warned downstream communities that they could be at increased risk of flooding if another severe storm hit.
Officials in King County and several cities placed giant sandbags atop downstream levees, erected flood guards around facilities such as a jail and sewage treatment plant, and temporarily relocated the county election office.
The governments sought a combined $38 million from FEMA. Upon denial, local officials flew to the nation’s capital with what they described as “a mountain of evidence” in favor of a scaled back appeal for $31.5 million.
The AP reviewed more than 900 final appeal rulings. In one-third of those cases, FEMA granted some or all of the requested funding, totaling about $250 million. Two-thirds of the appeals were rejected, probably totaling well more than the $1.2 billion tallied by the AP because the amounts denied were unclear in FEMA’s online records for more than 100 cases.
The money at stake in those cases was just a tiny fraction of the tens of billions of dollars FEMA paid out during that period. Yet the disputes may offer a glimpse of some of the challenges communities struck by Hurricanes Harvey, Irma, Maria and Nate could face in the years and even decades ahead.
“FEMA staff told us, ‘We understand why you did what you did, and it was a reasonably prudent thing to protect the public,’ ” said Mark Isaacson, King County’s wastewater treatment director who at the time led its flood control division. But “it didn’t fall within their definition of imminent flooding.”
So the local governments ate the costs, delaying other projects while taking money out of various funds.
Repair or replace: The University of Iowa’s recovery from a 2008 flood focused attention on the so-called 50 percent rule. FEMA initially promised $297 million to replace a flooded performing arts auditorium and a flooded art school building, but ruled that the school’s damaged art museum should be repaired at its same location for $5.2 million.
The university had requested $40 million to rebuild the museum on higher ground, saying it could no longer find insurance for the $500 million fine art collection at the location on the banks of the Iowa River. But FEMA rejected its appeal in 2012, saying the university’s inability to obtain coverage was a business decision by its insurer.
Two months later, an agency audit concluded that the auditorium and the art building also should not have qualified for replacements, only repairs, because staff erred in calculating the “50-percent rule.” The audit recommended suspending those projects and cutting $83.7 million in funding. FEMA officials ultimately rejected the audit’s findings and allowed the projects to go
The AP’s review found that FEMA has argued with local governments and nonprofits — and faced disagreements within its own ranks — over hundreds of matters big and small: whether buildings should be repaired or replaced; whether certain damage was caused by a disaster or by pre-existing problems; even whether tree stumps were the proper size to qualify for removal using federal aid.
Among the appeals squelched by FEMA: Florida’s attempt to get $51 million it claimed to have lost by waiving tolls for motorists evacuating from eight hurricanes in 2004 and 2005.
FEMA’s final decisions sometimes come long after a disaster has struck, and even well after the money forward.
In June, the university received permission to build a new museum outside the 500-year flood plain using donations and bonds, but the price tag has risen to $50 million.
Pre-existing conditions: FEMA often faces another question when deciding what infrastructure projects qualify for money: Was the damage caused by the disaster or prior neglect?
The Cromwell Recreation Center on Staten Island, a community hub since its opening on a pier in 1936, was set to get long-awaited repairs to stabilize its structure in 2010. Contractors for New York City were starting a $4 million project to retrofit the last 100 feet of the pier with concrete and steel.
But just before the work began in March 2010, a nor’easter pummeled the region with strong winds and heavy rains. Two months later, the recreation center and pier partially collapsed into the water.
The city asked FEMA for $125 million to replace the landmark where residents had played basketball, boxed and held meetings, arguing the storm was to blame for the collapse. FEMA rejected the city’s final appeal in 2013, saying the structure collapsed due to preexisting decay.
“One thousand people a day would use the space, but where do they go now?” said Kelly Vilar, founder of a group pushing to rebuild Cromwell.
—Ryan J. Foley and David A. Lieb
has been spent.
The agency also has repeatedly rejected funding requests based on the applicant’s failure to appeal within the required 60 days — even though FEMA acknowledges that it routinely exceeds its own 90-day legal deadline to rule on appeals.
FEMA’s Logan said the agency recently overhauled its disaster operations to provide each applicant with a single contact person and more information about the potential pitfalls in seeking federal aid.
The goal, he said, “is to help them understand what we can pay for and what we can’t pay for — so that we set the expectations up front so we don’t have those kind of misunderstandings.”
FEMA officials acknowledge the agency has done a
poor job of resolving appeals quickly. In 2014, just 6 percent of appeals to FEMA headquarters were decided within the law’s 90-day requirement. That’s up to 26 percent this year, agency officials said.
Hurricane Katrina accounted for 1 out every 7 appeals over the past decade. The storm illustrates how FEMA’s rulings can be financially devastating to groups and individuals and have long-lasting effects on communities.
“FEMA dropped us like a hot potato,” said Dimitre Blutcher of Harvey, La., former executive director of N’R Peace, a nonprofit organization that helps people with HIV and other sexually transmitted diseases get medical treatment.
Her group’s HIV clinic and main office were devastated by flooding and winds from Katrina in 2005. Days after the storm, she said, FEMA asked her to continue providing services to clients. FEMA paid the group $105,600 for its work, which included the long process of reconstructing clients’ files after the paper records were destroyed.
Blutcher said FEMA and state officials led her to believe the clinic would qualify for additional money, so she took out a bank loan and line of credit while awaiting reimbursement for her costs, which grew to $280,000.
But FEMA reversed course in 2011, saying it would not provide any more reimbursement and ordering the group to repay the initial $105,600, too.
The clinic soon closed its doors.
“They didn’t care that they promised us the money and we spent it. They didn’t care that I took out a line of credit to keep services going,” Blutcher said. “All they cared about was that people with HIV and other diseases got care, and then they refused to pay us several years later. How can any human do that?”
Rejecting the group’s final appeal in 2013, a FEMA administrator concluded that the cost of replacing destroyed medical files did not qualify for federal aid. The agency dismissed the group’s argument that it shouldn’t be punished for an error made by a lowerlevel FEMA official.
The Northridge earthquake shook Southern California in 1994, setting off a lengthy rebuilding process. Fifteen years later, FEMA headquarters was still deciding about a dozen appeals over funding. In some of those cases, FEMA was seeking to recoup millions of dollars that had been questioned after the fact by the agency’s auditors.
Henry Mayo Newhall Memorial Hospital in Santa Clarita, about 35 miles north of Los Angeles, received $21.5 million from FEMA for repairs. But that fell far short of the roughly $35 million the hospital said it needed to fix the twostory facility in line with California’s new earthquake codes.
The 217-bed hospital eventually sought bankruptcy protection, blaming the underfunded project. Then in 2004, FEMA asked it to give back $2.1 million, saying the work exceeded the scope of the original agreement or lacked documentation justifying the costs.
The hospital went through the full two rounds of appeals — and lost.
Hospital President and CEO Roger Seaver said it still hasn’t repaid FEMA.
“You’re struggling, you’re putting people on payment plans getting new loans at high interest rates, paying the bankruptcy costs,” he said. “Then here comes the government back to help us again by taking back money.”