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Second Appeal Letter
PA ID# 000-UIMTF-00; Catholic Diocese of Biloxi
PW ID# Project Worksheet 10697; Small Business Administration Loan
January 16, 2009
Thomas M. Mike Womack
Governors Authorized Representative
Mississippi Emergency Management Agency
P.O. Box 5644
Pearl, MS 39208
Re: Second AppealCatholic Diocese of Biloxi, PA ID 000-UIMTF-00, Small Business Administration Loan
Project Worksheet (PW) 10697
Dear Mr. Womack:
This is in response to your letter dated June 6, 2008, which transmitted the referenced second appeal on behalf of Catholic Diocese of Biloxi (Applicant). The Applicant is appealing the Department of Homeland Securitys Federal Emergency Management Agencys (FEMAs) denial of $614,653 for the Family Life Center facility on the St. Thomas the Apostle Catholic Church campus.
High winds and heavy rainfall from Hurricane Katrina in August 2005 caused extensive damage on the St. Thomas the Apostle Catholic Church campus. FEMA determined that the Family Life Center was an eligible private nonprofit (PNP) community center. The Small Business Administration (SBA) estimated $2,355,160 in damages at the Family Life Center comprising 41 percent of the total of $5,536,033 estimated by the SBA for damages to the five campus buildings and their contents. SBA approved $1,500,000, the legislative limit, to reconstruct disaster-damaged facilities. FEMA prepared PW 10679 for $2,890,016 for FEMAs estimated replacement cost of the eligible facility. FEMA determined that the approved SBA loan covered eligible and ineligible damages. Based on the ratio of eligible SBA estimated damages to ineligible SBA estimated damages, FEMA reduced eligible assistance by $614,653.
In its first appeal letter transmitted through your office on September 27, 2007, the Applicant asserted that FEMA improperly deducted a portion of the SBA loan. The Applicant maintained that had the Applicant applied for an SBA loan as a stand-alone applicant, SBA would have denied the loan for lack of repayment ability. The Applicant stated that the SBA loan did not allocate funds to certain damaged facilities and did not require that the loan be used for repairs to the Family Life Center. The Applicant further claimed that FEMA did not have the authority to direct the use of SBA loan funds. In a letter dated February 8, 2008, the Regional Administrator denied its first appeal. The Regional Administrator concluded that applying the SBA loan
proceeds towards repairs of only FEMA-ineligible facilities was inconsistent with the intent and purpose of the legislation, regulations and policy requirements to apply for an SBA disaster loan as a condition of permanent work assistance.
In a letter dated April 10, 2008, the Applicant submitted its second appeal. The Applicant reiterates its position that it was not the intent and purpose of the SBA requirement to hinder the recovery of ineligible facilities by depriving them of the full use of the SBA funds for which they qualified. The Applicant re-asserts that if it were to apply to the SBA for additional funds to be used toward the Parish Life Center it would receive $0 and would result in $0 offset to the Parish Life Center. Finally, the Applicant requests that if FEMA decides to apportion SBA loan proceeds that it includes building contents that were not included in the SBA estimate. The Applicant provided an inventory of destroyed building contents in the amount of $841,400.
I have determined that FEMA properly apportioned the SBA loan proceeds for the facility and its contents. When an SBA disaster loan covers damages for both eligible and ineligible facilities without specifying the apportionment of the loan proceeds against respective damaged facilities, FEMA deducts the proportionate amount of loan proceeds from available permanent work assistance based on a ratio of eligible damages to ineligible damages, consistent with FEMAs practice apportioning insurance proceeds. I have reviewed the information submitted with the appeal and have determined that the Regional Administrators decision in the first appeal is consistent with Public Assistance regulations and policy. Accordingly, I am denying the second appeal.
Please inform the Applicant of my decision. My determination constitutes the final decision on this matter as set forth in 44 CFR §206.206.
Carlos J. Castillo
Disaster Assistance Directorate
cc: Major P. May
FEMA Region IV