Building Repairs

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

Disaster1941-DR-MN
ApplicantSteele County
Appeal TypeSecond
PA ID#147-99147-00
PW ID#941, 947, 952, and 959
Date Signed2014-02-26T00:00:00

Citation:  FEMA-1941-DR-MN, Steele County, Building Repairs, Project Worksheets (PWs) 941, 947, 952, and 959

Cross-Reference:  General Eligibility, Pre-disaster Condition, Codes and Standards

Summary: Four buildings located in the Steele County (Applicant) Highway Operations Complex (HOC) flooded during a severe storm and flooding event.  FEMA prepared PWs 941, 947, 952, and 959 to fund repair of the disaster-related damage to each of the four buildings.  The buildings are located in a Special Flood Hazard Area.  After applying mandatory flood insurance reductions, FEMA approved $8,980; $1,925; $8,095; and $68,007 with the PWs, respectively.  The Applicant submitted a Highway Operations Complex Restoration report to FEMA which presents a feasibility study for the restoration of the HOC and includes cost estimates for repair of all damage to the buildings.  The Applicant requested FEMA use the cost estimates recommended in the report to determine the eligibility of the replacement of the HOC buildings.  Subsequently, the Applicant informed FEMA that the local floodplain manager determined Buildings 1 and 4 are substantially damaged.  If repaired, the Applicant is required to bring Buildings 1 and 4 into compliance with local floodplain ordinance by elevating or dry flood proofing the buildings.  FEMA determined that replacing the buildings was not eligible for funding.  The Applicant submitted first appeals of the approved scopes of work and cost estimates documented in the PWs.  The Applicant stated that the scopes of work and cost estimates developed by the FEMA Project Specialist “were significantly lacking” based on the results of the feasibility study presented in the report.  The FEMA Regional Administrator denied the Applicant’s first appeal of PW 941 and partially granted the first appeals of PWs 947, 952, and 959 by approving costs for disaster required work and denying the remaining requested costs.  In the second appeal, the Applicant requests funding for repairs recommended by the feasibility study and the costs to comply with the local floodplain ordinance.

Issues:  1. Does the documentation submitted by the Applicant demonstrate that the damage detailed in the feasibility study was a result of the declared the disaster?

              2. Is the Applicant required by code or standard to elevate or dry flood proof Buildings 1 and 4?

Findings:   1. No

                   2. Yes, but the work is eligible for Building 1 only as Building 4 was substantially damaged prior to by the event.

Rationale:       44 CFR §206.223 General Work Eligibility; 44 CFR §206.226(d) Restoration of Damaged Facilities, Standards


 

Appeal Letter

February 26, 2014

Kris Eide
Director
Division of Homeland Security and Emergency Management
445 Minnesota Street, Suite 223
Saint Paul, Minnesota  55101-6223

Re: Second Appeal–Steele County, PA ID 147-99147-00, Building Repairs, FEMA-1941-DR-MN, Project Worksheets (PWs) 941, 947, 952, and 959

Dear Ms. Eide:

This is in response to a letter from your office dated September 24, 2012, which transmitted the referenced second appeal on behalf of Steele County (Applicant).  The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of a portion of the scopes of work that the Applicant claims are required to repair all disaster-related damage to four of the five buildings in the Highway Operation Complex.

As explained in the enclosed analysis, I have determined that the Applicant’s appeal should be partially granted.  The Applicant has not demonstrated that all damage detailed in its contractor’s report was caused by the event.  The approved scopes of work in PWs 941, 947, 952, and 959 include all eligible repairs.  The additional repairs detailed in the report are not required by the event and are not eligible for funding; however, the work required to comply with the local floodplain ordinance for Building 1 is eligible.  By this letter, I am requesting that the Regional Administrator take appropriate action to implement my decision.  This action should include a review of alternatives for floodplain ordinance compliance for inclusion in PW 959. 

Please inform the Applicant of my decision.  This determination constitutes the final decision on this matter pursuant to 44 CFR §206.206, Appeals.

Sincerely,

/s/

Deborah Ingram
Assistant Administrator
Recovery Directorate

Enclosure

cc:  Andrew Velasquez, III
      Regional Administrator
      FEMA Region V

Appeal Analysis

Background

Four buildings located in the Steele County (Applicant) Highway Operations Complex (HOC) flooded to an approximate depth of four to six feet during the severe storm and flooding event that occurred from September 22 to October 14, 2010.  FEMA prepared four PWs to fund repair of the disaster-related damage to each of four buildings:  Building 3 (PW 941), Building 2 (PW 947), Building 4 (PW 952), and Building 1 (PW 959).  The buildings are located in a Special Flood Hazard Area (SFHA), and the Applicant did not have National Flood Insurance Program (NFIP) coverage on the buildings.  After applying mandatory NFIP reductions to the eligible funding for the each building, FEMA approved $8,980; $1,925; $8,095; and $68,007 with each PW, respectively.

The Applicant submitted a Highway Operations Complex Restoration report, dated March 21, 2011, to FEMA which presents a feasibility study of the restoration of the HOC based on structural, architectural, mechanical, electrical, indoor air quality, fungal, hazardous materials, and environmental assessments.  The report includes cost estimates for repair of the damage identified by various assessments to the five HOC buildings, four of which are addressed in this appeal.  The Applicant requested FEMA use the cost estimates recommended in the report to determine the eligibility of the replacement of the HOC buildings.  Subsequently, the Applicant informed FEMA that the local floodplain manager determined Buildings 1 and 4 to be substantially damaged.  If repaired, the Applicant is required to bring Buildings 1 and 4 into compliance with local floodplain ordinance by elevating or dry flood proofing the buildings.

FEMA determined that replacement of the buildings was not eligible for funding, because the costs to repair the disaster-damage to each building was less than 50 percent of the cost to replace each building.  FEMA used the repair estimates from each of the PWs for the calculations instead of those in the feasibility study because the estimates proposed in the March 2011 report included costs for repairs to structural damage that was not identified by FEMA’s Project Specialists or the previous engineer hired by the Applicant.

First Appeal

The Applicant submitted first appeals of the approved scopes of work and cost estimates documented in PWs 941, 947, 952, and 959 on September 30, 2011.  In the appeals, the Applicant stated that the scopes of work and cost estimates developed by the FEMA Project Specialist “were significantly lacking” based on the results of the feasibility study presented in the March 2011 report.  The Applicant asserted that the visual damage inspections performed by the FEMA Project Specialist were inadequate and resulted in inaccurate damage assessments and repair cost estimates.  The Applicant requested that FEMA use the information from the feasibility study based on damage assessments performed by licensed engineers to perform a “scope alignment” for each PW.  The Applicant also requested that all PWs for the HOC buildings be replaced with one PW for the entire “complex.”

The Minnesota Division of Homeland Security and Emergency Management (Grantee) transmitted the first appeals to FEMA but did not support the Applicant’s requests.  A Grantee representative attended the initial site visit/damage assessment conducted by a team of FEMA Project Specialists comprising an architect and a structural engineer, and concurred that the damage descriptions in the PWs are “detailed and correct.”  The Grantee stated that the March 2011 report does not delineate the flood damage that resulted from the declared disaster, but instead summarizes the overall condition of the HOC buildings.

On April 5, 2012, the FEMA Regional Administrator denied the Applicant’s first appeal of PW 941, because the additional funding requested by the Applicant included work that was not required as a result of the declared disaster.  Also on April 5, 2012, the FEMA Regional Administrator partially granted the first appeals of PWs 947, 952, and 959, approving costs determined to be for repair of disaster-related damage and denying the remaining requested costs.  Table 1 summarizes the FEMA approved repair costs and the Applicant requested repair costs for each PW.

TABLE 1

 

 

Initial FEMA Approved Estimate

Initial FEMA Approved PW Amount after NFIP Reduction

Applicant’s Feasibility Study Estimate

Approved Estimate – First Appeal Determination

Current FEMA Approved PW Amount after NFIP Reduction

PW 941

$31,919

$8,980

$113,053

$31,919

$8,980

PW 947

$1,925

$1,925

$21,941

$7,617

$4,285

PW 952

$20,316

$8,095

$241,020

$45,210

$29,647

PW 959

$220,023

$68,007

$780,490

$283,366

$87,010

TOTAL

 

 

$1,156,504

$368,112

$129,922

Second Appeal

On August 13, 2012, the Applicant submitted second appeals of the scopes of work and cost estimates approved under PWs 941, 947, 952, and 959.  In general, the Applicant is requesting that FEMA approve the scopes of work for building repairs and cost estimates presented in the feasibility study.  The Applicant states that “the absence of consideration for structural damage … and environmental hazards” caused by the flooding event “has created the significant delta in scopes of work and cost estimates” between those presented in the feasibility study and those FEMA approved with the four PWs. 

For Buildings 1 and 4 (PWs 959 and 952), the Applicant is also requesting funding to elevate or dry flood proof the facilities as is required by the local floodplain ordinance if repairs are to be made to substantially damaged buildings.  The Applicant presents options for elevating the two substantially damaged buildings ($816,720) and for building a flood wall around all four buildings ($1,859,000).  According to the Applicant, a more practical and cost effective approach to repairing and flood proofing or elevating would be to replace the two buildings at a cost of $2,580,685 for Building 1 and $735,130 for Building 4.  The Applicant also reiterates that the HOC buildings should be treated as a complex and FEMA should consider funding replacement of all of the HOC buildings at a total estimated cost of $4,997,336.  Lastly, the Applicant requests that FEMA consider providing funding for Direct Administrative Costs (DAC) associated with preparing and submitting the Applicant’s first and second appeals.

The Grantee transmitted the second appeals to FEMA but did not support the Applicant’s requests, stating that the Applicant did not provide sufficient documentation to reverse the FEMA Regional Administrator’s first appeal determinations.

Discussion

According to Title 44 of the Code of Federal Regulations (44 CFR) §206.223 General Work Eligibility, to be eligible, work must be required as the result of the declared disaster.  The Applicant submitted a report identifying all damage to each of the HOC buildings; however, the Applicant did not submit documentation to support its claim that damage determined by the FEMA Regional Administrator to be ineligible was caused by the declared event.  With its appeal, the Applicant provides memos from its consultant addressing the work items found by FEMA to be ineligible for each building.  A detailed discussion of the damage and work at issue for each PW is provided below.

With respect to the Applicant’s request that FEMA consider providing funding for DAC associated with submitting the first and second appeals, the Applicant has provided no documentation that would enable FEMA to determine whether the DAC for preparing the appeals was reasonable and eligible.

PW 941

The Applicant’s consultant addresses three work items in the appeal which FEMA determined to be ineligible: the replacement of five exterior overhead doors, encapsulating a wood deck, and replacing an air compressor.  The scope of work documented in PW 941 includes replacing only the bottom two sections of each of the five exterior overhead doors as only the bottom two sections of each door were damaged by the flood.  The Applicant’s consultant states that the doors need to be completely replaced to eliminate contamination found on the surfaces; however, the information provided in the feasibility study states that any fungal, sewage, and/or chemical surface contamination can be removed by thoroughly cleaning the surfaces.  The study gives no indication that the contamination found on the undamaged sections of the overhead doors cannot be removed by cleaning. 

Regarding encapsulating a wood deck in Building 3, the Applicant’s consultant states that the Indoor Air Quality Assessment included in the feasibility study states that the “surfaces should be thoroughly cleaned and encapsulated;” however, the Indoor Air Quality Assessment specifically recommends wood encapsulation in Building 2, but not in Building 3.  Lastly, the Applicant’s consultant states that the air compressor system has to be replaced to eliminate contamination found on its surfaces; however, the Indoor Air Quality Assessment includes no recommendation to replace the air compressor system, but discusses that the existing air-handling equipment and associated ventilation ductwork, if salvaged, should be cleaned by a professional HVAC duct cleaning contractor.  FEMA denied funding for the replacement of the air compressor, because there is no documented damage to the system.  The Applicant did not provide any documentation with its second appeal to support its claim that the system was damaged.  The three work items discussed above are not required as the result of the event and are not eligible for funding.

PW 947

The Applicant’s consultant addresses two work items in the appeal which FEMA determined to be ineligible: the removal and replacement of contaminated dirt and hazardous materials abatement.  The Applicant’s consultant states that the environmental report contained in the feasibility study shows that the soil is contaminated with regulated substances and must be removed and discarded in accordance with the Minnesota Pollution Control Agency (MPCA) and Minnesota Department of Public Safety.  Further, the Applicant states that the hazardous material abatement is related to the disposal of the contaminated soil.  The environmental report does recommend that the Applicant notify the MPCA; however, the Applicant did not submit any documentation supporting that the MPCA required the removal of the soil.  Further, the report does not establish that the regulated substances found in the soil were deposited by or during the event; therefore, the removal of the soil and the associated hazardous materials abatement is not eligible for funding.

PW 952

The Applicant’s consultant addresses numerous work items in the appeal which FEMA determined to be ineligible, including the repair of extensive damage to the exterior wall and interior masonry systems and the replacement of the cracked concrete slab.  The Applicant asserts that this structural damage was caused by the event and points to statements included in the feasibility study to support that assertion.  While the feasibility study does include statements that some of this damage was caused by the event, the Applicant did not provide sufficient documentation in support of those statements, such as information regarding the pre-disaster condition of the building.  According to the documentation and the information gathered by both FEMA and Grantee representatives, the building was in poor structural condition prior to the event, and the structural damage described in the feasibility study was not caused by the event.  Accordingly, the repair of this damage and the work associated with the repair, such as shoring the roof and replacing the aluminum windows, is not eligible for funding.

Other work items addressed by the Applicant’s consultant in the appeal are discussed below.

  • Clean and encapsulate wood and deck, replace laundry tubs, and clean and sanitize interior of conduit:  The Applicant states that these work items are required due to surface contamination identified in the Indoor Air Quality Assessment; however, the assessment does not recommend this work.  This work is not required as the result of the event and is not eligible for funding.
  • Remove wood framing systems and replace architectural woodwork and floor and deck cleaning:  The Applicant incorrectly includes these items in the list of ineligible items.  This work is included in the scope of work of PW 952.
  • Clean and video waste system: The Applicant states that cleaning and scoping the waste system is required to determine if the waste lines are damaged.  As stated in FEMA’s Public Assistance Guide (FEMA 322, June 2007), page 85, FEMA does not provide funding for general surveys to look for damage; therefore, this work is not eligible. 

In its appeal, the Applicant also requests funding for elevating or dry floodproofing Building 4.  The Applicant is required to comply with the local floodplain ordinance, because the City of Owatonna has determined that Building 4 is substantially damaged (damaged beyond 50 percent of its fair market value.)  To comply with the floodplain ordinance the Applicant must either elevate or dry flood proof the building if it makes repairs to the building. 

While the City of Owatonna’s floodplain ordinance meets the eligibility criteria outlined in
44 CFR §206.226(d) Standards, the general work eligibility criteria discussed above also applies.  Only work required as the result of the disaster is eligible.  The Applicant’s cost estimate for the repair to Building 4 includes over $100,000 for the repair of structural, non-disaster damage.  The fair market value of the building is $94,500, based on the city’s tax assessment record used by the floodplain administrator.  Therefore, Building 4 was substantially damaged prior to the event, and the work required to comply with the local floodplain ordinance is not required by the event.

PW 959

The Applicant’s consultant addresses numerous work items in the appeal which FEMA determined to be ineligible, including the removal and replacement of the exterior wall and interior masonry systems, removal and replacement of the wood mezzanine, and removal of the wood framing system.   The Applicant asserts that although the structural report in the feasibility study does not state that the removal and replacement of the interior and exterior walls are required to repair the walls, the walls have to be removed and replaced due to the surface contamination described in the Indoor Air Quality Assessment.  The assessment does not recommend complete removal and replacement of all walls and the framing system, but recommends cleaning all surfaces.  It does state that cleaning may not remove all potential odor sources from the concrete block in the addition section of Building 1; however, the Applicant has given no indication that it has completed any cleaning at all.  Should the cleaning of some surfaces not be adequate to address the issues, removal and replacement of some portion of the structure may be necessary.   The removal and replacement of the walls and framing system are not required by the event and are not eligible for funding.  The additional work items associated with this work, such as shoring the roof and slab and replacing aluminum windows, are also not eligible for funding.

Other work items addressed by the Applicant’s consultant in the appeal are discussed below.

  • Remove and replace concrete slab:  The Applicant asserts that the cracking in the concrete slab was caused by the event and points to a statement included in the feasibility study that there is evidence of slab subsidence due to saturated soil under the slab.  The Applicant states that some cracking “appears to be fresh” and the pre-existing cracks got worse after the event.  According to the documentation and the information gathered by both FEMA and Grantee representatives, the building was in poor structural condition prior to the event.  The Applicant did not provide sufficient documentation to support the claim that the slab subsidence and cracking was caused by the event.  Accordingly, the repair of this damage is not eligible for funding.
  • Replace gas pump and meter and remove and replace car lift:  The Applicant states that it had the condition of both the gas pump and the car lift assessed separately from the assessment performed as part of the feasibility study.  The Applicant states that the results of both assessments indicated that the gas pump and car lift required replacement.  The Applicant did not submit any documentation in support of those statements, such as inspection reports.  There is no documented disaster related damage to the gas pump and car lift; therefore, the replacement of both is not eligible for funding.
  • Clean and sanitize interior of conduit and clean and disinfect domestic water piping:  The Applicant states that these work items are required due to surface contamination identified in the Indoor Air Quality Assessment; however, the assessment does not recommend this work.  This work is not required as the result of the event and is not eligible for funding.
  • Re-commission mechanical system:  The Applicant states that the system should be cleaned and re-commissioned to eliminate contamination identified in the Indoor Air Quality Assessment; however, the assessment states that the system was not in direct contact with flood waters and should be re-commissioned to ensure reliable operation.  There is no indication in the feasibility report that the mechanical system was damaged by the event; therefore, the re-commissioning is not required by the event and not eligible for funding.
  • Clean and video waste system: As stated above, this work is not eligible.

Similar to Building 4, the City of Owatonna has determined that Building 1 is substantially damaged, and the Applicant is requesting funding for elevating or dry flood proofing Building 1 to comply with the local floodplain ordinance.   Based on the documentation, Building 1 was not substantially damaged prior to the event.  Further, the FEMA approved cost estimate for the repairs ($283,000) is greater than the fair market value of the building ($275,000).  Therefore, the work required to comply with the floodplain ordinance is required by the event.

The Applicant has provided two alternatives for compliance – elevation and construction of a flood wall around the entire site.  The construction of a flood wall around the entire site exceeds what would be required to comply with the floodplain ordinance.  The Applicant did not provide sufficient documentation regarding a technically feasible and cost effective alternative for compliance for Building 1.  Additional information is required to determine the eligible scope of work required to comply with the floodplain ordinance.

Conclusion

The Applicant has not sufficiently documented that the complete scopes of work detailed in the feasibility study are required as the result of the event.  The scopes of work approved in PWs 941, 947, 952, and 959 include the repairs of all disaster related damage and no additional requested repair work is eligible.  However, the Applicant is required to elevate or flood proof Buildings 1 and 4 if it moves forward with the building repairs, because the City of Owatonna determined the buildings are substantially damaged.  The cost of the work required to comply with the ordinance for Building 1 is eligible for reimbursement, up to the replacement cost of the building.  The work necessary to comply with the ordinance for Building 4 is not required by the event and, therefore, not eligible.

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