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Second Appeal Analysis
PA ID# 097-UGW56-00; Dauphin Island and Beach Board of Mobile County
PW ID# Project Worksheet 2675; Applicant Eligibility
Extreme winds and the associated tidal surge from Hurricane Ivan on September 15-16, 2004, resulted in damage to buildings and other historic components in Fort Gaines.
The Dauphin Island Park and Beach Board of Mobile County (DIPBB) is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) written determination on March 26, 2007, that it is not an eligible applicant for public assistance. FEMA denied DIPBB’s claim for repairs to the historic Fort Gaines because, in part, it had determined that the Applicant existed as a non-profit corporation at the time of the application for assistance, and had failed to first apply to the Small Business Administration (SBA) for repairs to this non-critical facility pursuant to 44 CFR §206.226(c)(2). FEMA also denied the repairs on the basis that they were not disaster related, but instead stemmed from deferred maintenance, pre-existing conditions, or facility improvement.
The first appeal was denied September 26, 2007, based upon information that showed that the Dauphin Island Park and Beach Board, is not legally responsible for the repair work at Fort Gaines. According to the record of deed dated October 1, 1998, the “Dauphin Island Park and Beach Board, a public body” sold its property, including Fort Gaines, to the “Dauphin Island Park and Beach Board of Mobile County, a corporation” [emphasis added]. In addition, the appeal response stated that had the public nonprofit corporation, DIPBB, applied for public assistance it would have been denied as well on the basis that it is not an eligible applicant because it did not qualify as a public entity under Federal guidelines.
The following analysis corresponds in line item format to the Applicant’s second appeal.
1. In its second appeal, the Applicant states that it was determined to be a governmental agency, but fails to note that the appeal determination was based, in part, on analysis of the Dauphin Island Park and Beach Board of Mobile County [emphasis added] that is organized as a public non-profit corporation. On October 1, 1998, the Applicant, Dauphin Island Park and Beach Board, sold its property including Fort Gaines, to the Dauphin Island Park and Beach Board of Mobile County. Based on the record of deed, DIPBB, a public nonprofit corporation, was legally responsible for the repair of Fort Gaines at the time of the disaster in September 2004. However, DIPBB is not an eligible applicant pursuant to 44 CFR §206.222 as the majority of its funding is not received from the State or any of its political subdivisions. Based on documentation and explanation offered by the State and Applicant, it is accepted that this entity, the DIPBB, is now referred to only as the Dauphin Island Park and Beach Board. However, regardless of name, the change in status incurred by incorporation and change in ownership must be taken into consideration when determining eligibility for public assistance. The Applicant has offered substantial documentation regarding this entity as it existed prior to the transfer of ownership. This documentation has been reviewed and incorporated into this analysis when applicable, but the focus of this analysis is the Applicant as it currently exists as a public corporation.
2. (a) FEMA concurs that the Dauphin Island Park and Beach Board, as originally established by the Board of Revenue and Road Commissioners of Mobile County and approved by the Governor in 1954, is a government entity. However, as previously stated, it is the Dauphin Island Park and Beach Board of Mobile County, a public non-profit corporation that has legal responsibility for Fort Gaines (Attachment A).
3. (b, d) FEMA concedes that the Dauphin Island Park and Beach Board of Mobile County is charged with the upkeep of Fort Gaines and other historic properties and that its members are appointed by the County and confirmed by the State.
(c) In its second appeal, the Applicant provided documentation of the Dauphin Island Trust Indenture ostensibly to demonstrate its status as a depository of funds for the State or Mobile County. However, this document applies to the Dauphin Island Park and Beach Board as it was established in 1954, not the public corporation to which it subsequently sold its property. If, in fact, this Trust Indenture has been transferred to DIPBB as it currently exists, it does not demonstrate that the Trustee or the funds deposited with that Trustee become State or county funds.
4. In this second appeal, the Applicant claims that DIPBB is “no different” than many other State and County Boards such as the Mobile Water and Sewer Board, the USS ALA [sic] Battleship Board, [and the] State Parks Board and others which have been approved for assistance from FEMA.” However, review of these examples reveals substantial differences in how they are treated in comparison to the Applicant.
5.• It is assumed that the “Mobile Water and Sewer Board” refers to the Board of Water and Sewer Commissioners of the City of Mobile, which owns and operates the Mobile Area Water and Sewer System and is listed on the City of Mobile Organization Chart on the Mobile city website (Attachment B). The Board consists of five commissioners appointed by the governing body of the City of Mobile. The Board is publicly owned and has the authority to operate and maintain any water or sewer system inside or outside the Mobile corporate limits, to issue revenue bonds, and set rates and user fees. The Mobile Area Water and Sewer System has been an eligible applicant for Public Assistance.
• It is assumed that “The USS Alabama Battleship Board” refers to the U.S.S. Alabama Battleship Commission, which consists of eighteen members appointed by the Governor. It is listed in the 2004 Alabama Comprehensive Annual Financial Report (Attachment C) as a discrete entity. The U.S.S. Alabama Battleship Commission has been an eligible applicant for Public Assistance.
• No organization entitled the “State Parks Board” could be found for Alabama. It is assumed that this refers to either the Conservation Advisory Board or the State Parks System Improvement Corporation, which is listed on the Official website of the Alabama Department of Conservation and Natural Resources. The Conservation Advisory Board created by statute and the commissioner of Conservation and Natural Resources serves as the ex-officio secretary of the board. Another related entity, the State Parks System Improvement Corporation, renovates, improves maintains, and constructs assets belonging to the State Parks System. The six members of the Corporation are State officials. The State Parks System Improvement Corporation is listed in the 2004 Alabama Comprehensive Annual Financial Report (Attachment C) as a blended entity. The Department of Conservation and Natural Resources has been an eligible applicant for Public Assistance, but the Conservation Advisory Board and the State Parks System Improvement Corporation have not.
• While it is recognized that these entities were only cited as examples, it is noteworthy that the DIPBB is not recognized in budgetary documentation for the State or Mobile County. The 2004 Alabama Comprehensive Annual Financial Report refers specifically to “component units [that] are legally separate organizations (“public corporations”) for which the primary government is financially accountable.” (Attachment C) While this description closely resembles the Applicant’s interpretation of its status, the DIPBB does not appear in this report. Nor does it appear on the Mobile County Commission website. In addition, as indicated in a December 18, 2007, email from Ms. Joyce Allen, Projects Director for the Town oil[to become part of Town government] citing statutes they claim require them to be a separate entity.”
4, 6. In accordance with 44 CFR §206.222, FEMA Public Assistance is only available to public entities, private nonprofit organizations, and Federally-recognized Indian tribes. The first appeal response was based on analysis of whether DIPBB qualifies as a public entity, and whether its application for assistance was made pursuant to 44 CFR 206.223(c). FEMA’s Public Assistance Guide, FEMA 322, October 1999, page 10, defines public entities as “those organizations that are formed for a public purpose but are not political subdivisions of a State or local government. To qualify for assistance, these types of applicants must receive the majority of their funding from the State or a political subdivision of the State.” In its second appeal, the Applicant contends that all funds received by the DIPBB are State funds. Our review of the enclosed financial statements and other documentation provided by the Applicant in the form of an audit filed with the State of Alabama Department of Examiners of Public Accounts on October 4, 2002, reveals that the vast majority of DIPBB’s funding is derived from services and products, ostensibly related to user fees charged for the use of recreational facilities such as the historic Fort Gaines, the Fort Gaines Campground, and the Main Fishing Pier. A small proportion of funding is derived from interest revenue, gas royalties, donations, grants and other sources. Region IV conferred with the FEMA Office of Chief Counsel (OCC) in September 2007, to acquire a preliminary legal interpretation on this issue. OCC concurred with our finding that DIPBB, as a public nonprofit corporation that relied primarily upon these same revenue sources, was not an eligible applicant for public assistance. In its second appeal, the Applicant provided several additional Alabama Department of Examiners audits that confirm this finding. The Applicant argues that interest revenue and gas royalties cannot be separated from direct State and County grants. However, these revenues are separated on the audit reports submitted by the Applicant and, absent documentation demonstrating otherwise, are managed under the control of this public corporation. The Applicant has provided no additional compelling evidence that a majority of its funding is derived from government sources.
5. The Applicant also argues that the requirement that DIPBB must account by audit to the State of Alabama demonstrates governmental entity status. However, according to the Alabama Department of Examiners website, this requirement is not limited to government agencies alone:
“The statutes which govern the Department’s activities can be found in the Code of Alabama 1975, Sections 41-5-1 through 41-5-24. In interpreting statutes relating to auditing by the Department of Examiners of Public Accounts, the Attorney General has upheld the Department’s authority to audit the funds of various governmental agencies and offices. The Attorney General has also ruled that the Department’s authority includes funds and the records of public corporation representing several county and or municipal governing boards. State courts have upheld the Department’s authority to examine the records of private entities contracting with governmental agencies.”
Based on the interpretation that the Department of Examiners’ audit authority extends to both public and private entities, an audit requirement is not limited to or demonstrative of governmental status.
7. Previous approval of public assistance funding does not justify funding for an applicant which, after further analysis, is determined to be ineligible.
8. The second appeal reiterates that the employees are paid by State funds administered by the Board and are members of the State Retirement and Health Insurance Programs as an argument for the governmental status of the Applicant and its decision to incorporate. However, it should be noted that inclusion in the State Retirement and Health Insurance Programs was only made possible through legislation passed specifically for the purpose (Attachment E). If DIPBB is, in fact, a government agency, it is unclear why legislation was required to authorize its employees’ participation in State Retirement and Health Insurance Systems. Moreover, the Applicant has failed to adequately explain how incorporation facilitates inclusion in these systems.
For the reasons discussed above, the Applicant’s appeal is denied.