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Second Appeal Analysis
PA ID# 003-32272-00; City of Gulf Shores
PW ID# 792; Engineered Beach Sand Replacement
City of Gulf Shores; PA ID 003-32272-00
Engineered Beach Sand Replacement, Project Worksheet 792
The City of Gulf Shores (Applicant) has approximately 7.68 miles of beachfront along the Gulf of Mexico. Little Lagoon Inlet divides the shoreline into East Beach (20,300 linear feet in length) and West Beach (20,200 linear feet). These beaches are critical to the Applicant’s economy and in the late 1990s, they contracted for the design of a beach nourishment project. The design included widening of the beach, construction of a dune, installation of sand fence, and planting of dune vegetation. The project and future renourishments would be funded with a 2 percent lodging tax. While the design covered the entire shoreline of Gulf Shores, the actual sand nourishment was scheduled in phases with just East Beach nourished to design in 2001.
In September 2002, Hurricane Isidore eroded the beaches of Gulf Shores, and as a result, FEMA funded an emergency protective berm for West Beach to be constructed by trucking in sand. The Applicant chose to use dredged sand, at a lower unit cost, and constructed a larger berm with the additional sand funded by the Applicant. In September 2004, Hurricane Ivan caused severe erosion of the beaches, and FEMA again funded an emergency berm for West Beach, as well as replacement of sand on the engineered portion of East Beach. Instead of completing the eligible scope of work, the Applicant decided to nourish West Beach to the project design so that both beaches were constructed to their design. This work was started in May 2005, with the East Beach renourishment completed by August 2005. The dredge was relocated and was working on West Beach when Hurricane Katrina made landfall in late August 2005.
Hurricane Katrina resulted in significant erosion of the Applicant’s beaches. Based on pre- and post-Katrina profiles on the beaches, East Beach lost 380,000 cubic yards (CY) of sand and West Beach lost 330,000 CY of sand. Much of the sand eroded from the beaches was deposited landward on private property, roads, and other public rights-of-way (ROWs). The sand on the ROWs presented a health and safety hazard to the community and was eligible for FEMA funding for removal and disposal. The Applicant and FEMA also determined that removal of the sand from private property was eligible for reimbursement. Local ordinances prohibited the removal of sand from Gulf Shores, so this sand could not be disposal of as typical debris. The Applicant and FEMA agreed that this sand would recovered, cleaned, and returned to the beaches to replace the sand eroded by Hurricane Katrina, even though the unit costs would be higher than sand obtained from dredging offshore.
FEMA prepared Project Worksheet (PW) 792 to place and shape 710,000 CY of sand on the Applicant’s beaches, and to replace the stabilizing vegetation and sand fence. The scope of work specified that the sand would come from offshore dredging, ROWs, and private property. The estimated quantities were 300,000 CY from dredging (120,000 on West Beach and 180,000 CY on East Beach), 240,000 CY from ROW, and 170,000 from private property. The total estimated cost for the sand replacement, vegetation, sand fence, and engineering was $6,914,373.
The Applicant had the dredging contractor continue its work on West Beach and added 120,000 CY to the existing contract without a change order because it was within the variances allowed by the contract. The Applicant issued the contractor a change order to remobilize to East Beach to provide the 180,000 CY of dredged sand there. The Applicant was able to keep the unit cost for the dredged East Beach sand fairly low because it had the contractor only do part of East Beach, with the rest of the beach renourished with sand from ROWs and private property. The placement of sand from both offshore and landward sources was conducted at the same time. The West Beach dredging was completed well before completion of ROW and private property removal; while the East Beach dredging was completed around the same time as ROW and private property removal. The contractor placed 176,663 CY of offshore sand on East Beach instead of the specified 180,000 CY. The Applicant indicated this was because ROW and private property sand placed on the beach exceeded the estimates and the total volume of sand placed on the beach exceeded the design profile.
The Applicant completed the restoration of the beaches in June 2006, and in November 2006, requested reconciliation of costs through project closeout. The Applicant submitted documentation of costs totaling $9,231,052 to FEMA. FEMA prepared Version 2 to PW 792 to reflect a final eligible cost of $5,528,032. The closeout analysis determined that West Beach was under the responsibility of the dredging contractor, not the Applicant, when Hurricane Katrina eroded the beach. Therefore, the additional amount of sand placed on the West Beach was not eligible for reimbursement. The closeout also reduced the unit cost for the sand dredged to East Beach and prorated the remobilization cost between the pre-Katrina work and the post-Katrina work. FEMA also reduced the amount of sand from landward sources such that only 464,156 CY of sand replacement was eligible. Other adjustments were made to reflect actual costs for the other items. The cost summary table at the back of this analysis provides details for both the original PW 792 and the closeout version 2.
The Applicant submitted its first appeal to the Alabama Emergency Management Agency on July 17, 2007, and the State transmitted it to FEMA on August 21, 2007. In the appeal, the Applicant requested full reimbursement of all its costs associated with placement of sand on the beaches, totaling $9,124,676. It argued that the eroded sand on West Beach was its responsibility, and that the all additional costs from the dredging contractor be reimbursed, including the cost of the 120,000 CY on West Beach, the actual cost of the sand placed on East Beach, and all of the remobilization cost. The Applicant also requested full reimbursement of its costs for all of the sand from ROW and private property, engineering services, vegetation and fencing, beach shaping, tilling, and surveying.
The Regional Administrator responded to the first appeal on April 28, 2008. In the appeal response, FEMA allowed the requested increased unit cost and remobilization cost for the East Beach dredged sand, the full vegetation and fencing costs, the surveying costs, and approximately 25 percent of the beach shaping costs. It also allowed more ROW sand but reduced the private property sand such that the total eligible costs decreased. The first appeal response did not allow any of the West Beach dredged sand or overall coastal engineering costs. It also made a $388,750 deduction for a duplicative cost. FEMA revised PW 792 to replace 590,000 CY of sand at a cost of $4,508,147. These changes are shown in the cost summary table at the back of this analysis.
The Applicant submitted its second appeal to the Alabama Emergency Management Agency on June 30, 2008, and the State transmitted it to FEMA on July 7, 2008. The Applicant requested reimbursement of $9,023,295 and identified five items that it held in dispute: (1) the eligibility of the West Beach dredged sand; (2) the amount of ROW and private property sand; (3) the engineering costs (listed as $155,000 in the spreadsheet, but discussed as $210,000); (4) the sand shaping and tilling costs; and (5) the $388,750 FEMA de-obligated in the first appeal. The second appeal consisted primarily of arguments for reimbursement of these items. It also included an analysis that applied a 25omicant claimed that because of this factor the 638,990 CY of sand removed from the landward areas only resulted in 511,192 CY of sand measured in-place on the beach. The amount the Applicant requested in the second appeal is shown on the table at the back of this analysis.
The Applicant and its representatives met with FEMA representatives at FEMA headquarters on February 10, 2009, to provide background on the project and present the arguments in the second appeal.
The first issue is whether the Applicant was legally responsible for replacing the sand on West Beach. The Applicant determined the quantity of sand that Hurricane Katrina eroded from the beach by comparing post-Katrina beach surveys to pre-Katrina beach surveys. The Applicant used post-nourishment surveys for sections of the pre-Katrina project that the contractor had completed (East Beach and section 5 of West Beach),. It used pre-nourishment surveys for the sections for which the contractor had not begun work (sections 1 – 4 of West Beach). The contractor had completed work on section 5 of West beach and was working on section 4 when Hurricane Katrina impacted the shoreline. Although the Applicant had not formally accepted in writing section 5, this section of the beach was open to the public. General Conditions item 3.13 states that those portions of the project that are in beneficial use by the owner are not the responsibility of the contractor. These factors support the Applicant’s claim that it was legally responsible for restoring section 5 of West Beach to its pre-Katrina profile.
The contractor took responsibility for the loss of sand it placed in section 4 before Hurricane Katrina occurred. The contractor had not started work in sections 1-3. The contractor was responsible for adding sand to increase the pre-Katrina profile of sections 1-3 to the designed profile. Hurricane Katrina altered the profile of sections 1-3 before the contractor began work on these sections. It is the Applicant’s responsibility to restore the profile to the condition that existed when it signed the contract for the beach nourishment project. Accordingly, the cost to restore the pre-Katrina profile of sections 1-3 and 5 are eligible for reimbursement.
Sources of Sand for the Project
The Applicant calculated that Hurricane Katrina eroded an estimated 710,000 CY of sand from the East and West Beaches based on pre- and post-Katrina surveyed profiles of the beaches. Since the Applicant’s project consisted of more than the FEMA-eligible sand, the maximum amount of sand that is eligible for reimbursement under the Public Assistance Program is 710,000 CY.
The Applicant has provided documentation that it placed 296,663 CY of offshore sand, 355,802 CY of ROW sand, and 283,188 CY of private property sand on the beaches for a total sand replacement of 935,653 CY. The total amount of sand placed on the beach exceeded the estimated amount by 225,653 CY. The Applicant claimed that because of “bulking” the 638,990 CY sand removed from the ROWs and private property should only be counted as 511,192 CY of sand measured in-place on the beach, which would only be an overfill of 97,855 CY.
Sand bulking typically is calculated for determining sand volumes used in mixing of concrete; it is not commonly used to describe the differences between in-place and transported sand. Furthermore, bulking is highly variable with moisture content, peaking at over 30 percent when the moisture content is around 5 to 6 percent, but is zero percent for dry sand and moistures over 10 percent. Sand is a granular, cohesionless soil that shows little variation between its in-place and transported states. Compaction in-place can be accomplished simply by vibration, and mechanical movement in transport is likely to densify the sand rather than loosen it. Since there is no way to know the moisture content of the sand, or its density when it was measured, the bulking factor is not appropriate to determine in-place measurements of sand on the beaches.
The Applicant placed 225,653 CY of sand on its beaches that was not eligible for FEMA funding. With three sources of sand, a decision needs to be made on the source of non-eligible sand. In the second appeal, the Applicant suggests the West Beach dredged sand (lowest unit cost). In the first appeal, FEMA took it from the private property sand (highest unit cost).
The Applicant and FEMA determined that the ROW and private property were eligible sources of sand for the beach restoration project. It is clear that the Applicant intended to use sand from ROWs and private property before dredging additional sand. The actual amount of sand removed from the ROWs is eligible as debris removal. The actual amount of sand removed from private property is eligible because it was a legitimate source of sand and met other community objectives.
Consequently, the eligible 710,000 CY of sand will consist of 355,802 CY from ROW, 283,188 from private property, and 71,010 CY from the East Beach dredging. The total remobilization cost is eligible as it was necessary as a result of the disaster. The additional 225,653 CY of dredged sand placed on the beach are not eligible for reimbursement.
The Applicant contracted with its coastal engineer on a lump-sum basis with no detailed description of work. The engineer’s invoices do not provide sufficient detail to assess eligibility of the work. A detailed itemization is even more important where only a part of the costs for dredging are being charged as eligible work. Furthermore, part of the project is also being funded by PWs from Hurricane Ivan, so itemization of the services is even more critical. The lump-sum fee for services was originally $155,000, but increased to $210,000 in the spring of 2006 (as noted on the engineer’s invoices). The second appeal has $155,000 in the spread sheet that provides the total of $9,023,295 being requested, but the appeal discusses reimbursement of $210,000.
Engineering costs are eligible since the contractor performed work on the project. Without detailed itemization of the services, the engineering fees will be estimated using Curve B, Average Complexity, Engineering and Design Services, from the 1995 Public Assistance Guide (FEMA 322). This curve provides a percentage of construction costs for design, permitting, construction management, and general project oversight. The percent varies by construction cost. The Applicant’s coastal engineer was responsible for the dredged sand on East Beach, including remobilization, replacing the vegetation and fencing, shaping of sand removed from ROWs and private property, and monitoring endangered species. Based on the cost summary table at the back of this analysis, these costs total $1,885,405. From Curve B, the engineering fees should be 5.75 percent for a total of $108,411. The Applicant submitted invoices from their coastal engineer that showed that the engineer paid $46,103 for surveys. Surveys are not a part of the Curve B costs and need to be added directly to the project costs. This is shown as a new line item on the cost summary table.
ROW and ROE Sand Shaping and Tilling
The Applicant’s contract for debris removal included the removal of sand from ROW and private property, cleaning the sand, and placing it on the beaches. The contract was amended to allow for distributing and shaping of the sand into the design profiles. FEMA determined in the first appeal that the Applicant incurred $974,022.68 for distributing and shaping the ROW and private property sand. Since all of the ROW and private property sand is eligible for funding, this full amount is also eligible for reimbursement.
The second appeal also identifippeaother PWs. The second appeal provides no documentation to change that determination.
The Applicant claimed the FEMA deducted $388,750 during final inspection and again during first appeal. The documentation supports the Applicant’s claim that FEMA deducted the same amount twice. FEMA will reinstate $388,750.
The Applicant placed 935,653 CY of sand on its beaches when only 710,000 CY was eligible for FEMA funding. The cost to remove all sand from ROWs and private property is eligible. The cost to place the additional 225,653 CY of sand on the beach is not eligible. Other associated costs have been adjusted accordingly and are shown in the following cost summary. The total eligible project cost is $8,435,011, or an additional $3,926,864. The appeal is partially approved.