Appeal Brief | Appeal Letter | Back
Second Appeal Letter
PA ID# 055-37155-00; City of Hopkinton
PW ID# 1516; NFIP Mandatory Reduction
February 13, 2013
Iowa Homeland Security and Emergency Management Division
7105 NW 70th Avenue
Camp Dodge, Bldg. W-4
Johnston, Iowa 50131-1824
Re: Second Appeal–City of Hopkinton, PA ID 055-37155-00, NFIP Mandatory Reduction, FEMA-1930-DR-IA, Project Worksheet (PW) 1516
Dear Mr. Schouten:
This letter is in response to a letter from your office, dated September 21, 2012, which transmitted the referenced second appeal on behalf of the City of Hopkinton (Applicant). The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) deduction of $287,086 for insurance requirements.
In July 2010, significant rainfall occurred in the Maquoketa River Basin, resulting in flooding along the Maquoketa River. The Maquoketa River crested at more than ten feet above flood stage in some areas. This flooding inundated the Applicant’s Waste Water Treatment Plant (WWTP), causing damage at all of the WWTP buildings. FEMA prepared PW 1516 to reimburse the Applicant for repairs at the WWTP. PW 1516 was initially written for $430,532, which included the Cost Estimating Format (CEF) estimate of $430,118 and Direct Administrative Costs (DAC) of $414. The WWTP buildings are located in a Special Flood Hazard Area (SFHA) that has been identified on a Flood Insurance Rate Map (FIRM) for more than one year. The Applicant, however, did not have flood insurance at the WWTP. As a result, FEMA reduced funding by $287,086 for mandatory National Flood Insurance Program (NFIP) reductions.
The Applicant had previously incurred damage to the WWTP following flooding associated with DR-1763 in 2008, totaling $5,396. FEMA prepared PW 4263 to document the eligible work. Because the Applicant is located in a SFHA and did not have flood insurance, FEMA reduced funding by the maximum amount of insurance that was available to the Applicant under the NFIP ($2,777) and obligated PW 4263 for $2,619.
In preparing PW 1516 for DR-1930 in 2010, FEMA initially informed the Applicant that funding would be reduced by the amount of damage in the previous disaster ($5,396). FEMA subsequently determined that there was no requirement for the Applicant to obtain and maintain insurance for the damage from DR-1763 because it considered the damage to be less than $5,000 due to a portion of the damage being structural and a portion being equipment. It considered these projects separately, and therefore the total damage was less than $5,000 which did not trigger the obtain and maintain insurance requirements found in Title 44 Code of Federal Regulations (44 CFR) §206.252 Insurance requirements for facilities damaged by flood. The obtain and maintain requirement was removed and this is noted in PW 4263 Version 1 dated January 27, 2011. However, FEMA found that the Applicant still had not obtained flood insurance in any amount for the WWTP, though it was located in a SFHA, and reduced funding by the maximum amount available under the NFIP ($287,086).
The Applicant submitted its first appeal in a letter dated May 20, 2011. The Applicant stated that FEMA had informed them in October 2010 that because it has previously received funding, it would be ineligible to receive funding in this disaster. The Applicant also stated that at this time, it was assigned a new FEMA Project Specialist who claimed he would not begin writing PW 1516 until the project was at least 90 percent completed. The Applicant argued that the PW was not prepared in a timely manner. The Applicant also argued that it was not informed of the requirement to purchase insurance following DR-1763, and that if it had been, it would have done so. The Applicant requested that the original amount of PW 1516 be reinstated. FEMA’s Regional Administrator denied this appeal on May 15, 2012, stating that the Applicant failed to purchase flood insurance following DR-1763, and pursuant to 44CFR §206.252(a), FEMA applied the mandatory NFIP reduction.
The Applicant submitted its second appeal in a letter dated July 24, 2012. The Applicant reiterated its argument that FEMA failed to inform it of insurance purchase requirements following DR-1763 in 2008, and requested reinstatement of the full amount of PW 1516. The State forwarded this appeal to FEMA in a letter dated September 21, 2012. The State does not support the Applicant’s appeal because it states that the WWTP is in a SFHA identified on FIRM #19055CO359E, and that the Applicant has been a participating community in the NFIP since its initial Flood Hazard Boundary Map went into effect on October 29, 1976. The State also notes that the Applicant’s initial FIRM went into effect on July 2, 1987.
In accordance with the Robert T. Stafford Disaster Relief and Emergency Assistance Act, Section 406(d)(2)(B) Repair, Restoration, and Replacement of Damaged Facilities, Flood Insurance and 44 CFR §206.252(a), for a facility such as the WWTP buildings, FEMA is required to reduce funding by the “maximum amount of insurance proceeds which would have been payable with respect to such facility if such facility had been covered by flood insurance under the National Flood Insurance Act of 1968 on such date.” The Applicant meets each criterion for such a reduction. In addition to the Applicant being located in a SFHA identified on a FIRM since 1987, and located in a community that has participated in the NFIP since 1976, the Applicant also received a mandatory NFIP reduction in funding for assistance received in DR-1763.
Because FEMA considered the damage from DR-1763 as separate elements of damage (structural and equipment), the damage did not total $5,000, and thus did not trigger the obtain and maintain insurance requirements of 44 CFR §206.252(d) for the assistance received under DR-1763. Therefore, the amount of assistance received in the previous disaster DR-1763 is not being reduced from the eligible funding for DR-1930. The amount that is being reduced in PW 1516 is the mandatory NFIP reduction of $287,086.
The final cost for completion of the project was $421,471, representing an under-run from the original estimate of $430,532. At closeout review, subsequent to the submission of this second appeal, FEMA validated the costs using contractor, material, and equipment invoices and deducted $9,061. The total eligible cost for this project is $134,385, which reflects the required reduction.
I have reviewed the information submitted with the second appeal and have determined that the Regional Administrator’s 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. This determination is the final decision on this matter pursuant to 44 CFR §206.206, Appeals.
cc: Beth Freeman
FEMA Region VII