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Second Appeal Analysis
PA ID# 000-00000; County of Kauai
DSR ID# 88374,89296,95080,95081,95082,95242,9579; Lihue Civic Center
Hurricane Iniki struck Hawaii on September 11, 1992, and the disaster was declared on September 12, 1992. The complex that was to become the Lihue Civic Center (Civic Center), consisting of three buildings (Buildings A, B, and C), was substantially damaged by the hurricane. Kauai County (subgrantee) purchased this complex in January 1987 for the purpose of renovating it into the Civic Center. Several Damage Survey Reports (DSRs) were prepared to fund both emergency and permanent repairs of the damaged buildings. The repair of the disaster-related damage as a whole was approved by the Grantee as an improved project in July 1994.
Office of Inspector General (OIG) Audit
The OIG conducted an audit of the Lihue Civic Center project. The Audit Report (#W-05-97) focused on two areas; (1) the inadequacy of the insurance proceeds received by the subgrantee and (2) the inaccuracy of the DSR estimates. The audit concluded that approximately $1.6 million in FEMA funding should be deobligated. As a result of the audit, FEMA Region IX deobligated $1,566,037 previously provided for repairs to the Civic Center.
On September 22, 1997, the subgrantee appealed the determination to de-obligate funds. In the first appeal response, the Regional Director stated that the subgrantee had sufficient insurance ($12,000,000) to cover the damages. The Regional Director also noted that the insurance policy was written on an actual cash value (ACV) basis, and therefore, the depreciation ($86,582) and the $25,000 deductible were eligible. It also was noted by the Regional Director that a review of the documentation revealed that extensive renovations were completely planned, funded and contracted for before the hurricane struck. The Regional Director also called into the question the validity of the DSRs, indicating that the cost estimates were overstated. FEMA notified the subgrantee on December 19, 1997, that their appeal was only partially granted. The total drawdown by the subgrantee against this project was $1,302,534. The appeal determination was that the deductible ($25,000) and the depreciation ($86,582) were eligible, and that the subgrantee must repay $1,190,827.
The subgrantee submitted their second appeal to the State Office of Civil Defense (Grantee) on April 15, 1998. The Grantee forwarded the second appeal on
April 24, 1998. The subgrantee's appeal does not introduce any additional support for its position concerning sufficient insurance coverage nor does it introduce additional issues to be considered. The subgrantee requested that FEMA re-obligate the full amount of the project.
Section 312(a) of the Stafford Act, Duplication of Benefits, has a general prohibition that will not allow FEMA to provide assistance for any part of a loss, for which a subgrantee has received financial assistance from insurance. The audit report stated that the insurance settlement was sufficient to cover the cost to restore the Civic Center to its pre-disaster condition. The Regional Director concurred, stating that there was a duplication of benefits for the Civic Center project, as there were sufficient insurance proceeds to pay for the damages sustained.
The Regional Director states that this project was ineligible as the "extensive renovations were completely planned, funded and contracted for before Iniki struck." Upon review, we have determined that this is not the case. The subgrantee had planned, funded and contracted for " Lihue Civic Center Phase One, construction of new roofs on Buildings A, B, and C and interior renovation of Building A only," prior to this disaster (August 10, 1992), covered under DSRs 95080 and 95796, and the roofing of Building C on DSR 95082. Not all of the Civic Center complex was a part of this contract. Buildings B and C repairs/renovations were covered under separate contracts written after the hurricane.
We have identified work in DSRs 89296, 95082 and 95242 that was not under contract prior to the disaster; nor was it covered in the insurance settlement. See Attachments 1 for a brief explanation of the eligible and ineligible work in each DSR, and Attachment 2 for a breakdown of insurance proceeds.
DSR 89296 was for emergency roofing work performed by the county by force account.
As there were no insurance proceeds for this work, the entire DSR should be eligible in the amount of $1,190.
DSR 95082 contains both eligible and ineligible work. The eligible work is in three contracts, which were written after the disaster, and were not covered in the insurance settlement. The contracts are contract #3968 for asbestos removal ($18,000), contract #3969 for asbestos air monitoring ($3,438), and contract #5163 for repair of the Clerestory Ceiling in Building C ($28,544). This work is eligible in the total amount of $49,982.
DSR 95242 is for removal of 11,000 SF of asbestos floor tile damaged by water in Building B. The contract was written after the disaster, and $15,017 of the work was not covered by the insurance settlement. This amount should be eligible.
Because the buildings had considerable work done beyond repair of disaster damage, specific information cannot be ascertained at this late date on actual disaster-related damages, cost for repairing those damages, or why they were not covered by insurance. In the absence of evidence that the insurance proceeds were not available to cover the repair work, except for the items noted here, we have determined that the subgrantee had sufficient insurance to pay for the damages sustained to the Civic Center and to restore the facility to its pre-disaster condition. Work items not covered by insurance are eligible, as summarized in the Attachment 1. Accordingly, the appeal is partially granted and the funding for those items, $177,771, will be approved.
ANALYSIS OF DAMAGE SURVEY REPORTS
COUNTY OF KAUAI - LIHUE CIVIC CENTER
FEMA - 961 - DR - HI
DSR 88374 - "Demolition and repair of building interior including partitions, flooring, ceiling, lighting, concrete fin walls, and painting" for Building B. This DSR is covered in Phase II under contract #4692 dated 9/94 - This work in Building B included renovation well beyond simple repair. Specific information was not available to ascertain actual disaster-related damages, nor the cost for repairing those damages. Disaster-related damages were covered by the insurance proceeds. This DSR is not eligible for reimbursement.
DSR 89296 - "High winds blew down a section of the asphalt shingles and was repaired by owner of building to prevent further damages to building and contents." This work was emergency work performed by county labor and is eligible. No insurance proceeds were received. $1,190
DSR 95080 - "76,301 SF roof and 15 balcony dividers restore to pre-disaster condition. Repair pitch and flat roof with built-up gravel roof; remove asbestos shingles; replace concrete and wood laminated balcony dividers on building "B" (NOT DONE) to pre-disaster condition and current codes." Roofing work performed under Phase I, contract #3877 dated 6/92. Therefore, it is not eligible.
DSR 95081 - "1854 SF .25" tempered plate glass safety glass. Replace broken plate glass (safety) windows and window glass door on building "B" - exterior-building windows." Covered in Phase II under contract #4692 dated 9/94 and is eligible less insurance proceeds. Insurance proceeds exceeded DSR amount.
DSR 95082 - "115,000 SF room, 1254 SF plate glass, 4700 SF suss 3877 DATED 6/92 and is ineligible. Repairs to Bldg. C are included in the DSR, were not completed, will not be claimed and therefore are ineligible.
The remaining contracts were dated after the disaster, and also were not covered by the insurance settlement: asbestos removal under contract #3968 dated 10/92 ($18,000); air monitoring for asbestos under contract #3969 ($3,438); repair of the Clerestory Ceiling in Building C under contract #5163 dated 11/95 ($28,544). Total eligible: $49,982
DSR 95242 - "Removal of 11,000 SF asbestos - containing floor tile. Removal and disposal of 11,000 SF asbestos - containing floor tile and mastic damage by high wind and rain water located in Building B."This DSR is covered under Contract #4485 dated 2/94 and is eligible less insurance proceeds. $15,017
DSR 95796 - "19,500 SF - Roof and additional misc., repairs to both the interior and exterior, repair pitch and flat roof with built-up gravel roof which includes metal flashing gravel stop with drip edge; Finish work such as store front, interior, exterior electrical acoustical suspended ceiling and vinyl flooring"- This DSR is covered under Phase I Contract #3877 and is ineligible. (Contract in place at time of disaster)
TOTAL ELIGIBLE COSTSyyyyy$177,771
DSR ANALYSIS - 88374, 89296, 95080, 95081, 95082, 95242, 95796.