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Implementation of Flood Insurance Policy

Appeal Brief Appeal Letter

Appeal Brief

DisasterFEMA-1046-DR
ApplicantPajaro Valley Unified School District
Appeal TypeSecond
PA ID#087-91034
PW ID#Multiple
Date Signed1998-02-02T05:00:00
Citation: FEMA-1046-DR-CA; Pajaro Valley Unified School District; Multiple DSRs

Cross Reference: National Flood Insurance Program, Standard Flood Insurance Policy

Summary: Flooding from the winter storms of 1995 damaged a number of buildings that comprise the Pajaro Valley Middle School, which is located in a special flood hazard area. Costs to repair damages originally estimated in damage survey reports (DSRs) 16017, 16021, 16043, 16066, 16077, and 16078 totaled $221,658. Based on the provisions of the Stafford Act and 44 CFR 206.250 and 206.252, FEMA reduced Federal assistance to $750 per loss location (6 facilities), the value of a standard flood insurance policy deductible available through the NFIP. FEMA and NFIP-insurance adjusters conducted a review of all facilities to ensure that the subgrantee received the maximum amount of FEMA funding available for all losses which would not be covered by a standard flood insurance policy and prepared supplemental DSRs accordingly ($117,803 of supplemental funding). The subgrantee appealed FEMA's decision to reduce funding on the basis that they were unaware that flood insurance was available through the NFIP, and that such insurance was unaffordable. Therefore, the subgrantee believed that they were entitled to reimbursement for the full $221,658 originally identified in the DSRs. The Region denied this appeal in a letter dated October 4, 1996. The Regional Director stated that FEMA had already granted the subgrantee the maximum funding that they were eligible for in accordance with the mandatory statutory reduction established by section 406(d) of the Stafford Act. The subgrantee submitted a second appeal dated July 30, 1997, forwarded by the State on September 10, 1997, in which they reiterated their first appeal claims.

Issues:
  1. Is the subgrantee eligible for the full reimbursement of damages totaling $221,658?
  2. Is the subgrantee eligible for additional funding because they were unaware that insurance was available through the NFIP?
Findings:
  1. No. The maximum amount of funding available is the SFIP deductible of $750 per facility.
  2. No. Reductions in assistance are mandatory and uniformly applied regardless of insurance policy.
Rationale: In accordance with section 406(d) of the Stafford Act and 44 CFR 206.252, the eligible amount of funding available to a facility in a special flood hazard area shall be reduced by the maximum amount of the insurance proceeds which would have been received had the building and its contents been fully covered by a standard flood insurance policy.

Appeal Letter

February 2, 1998

Mr. D.A. Christian
Governor's Authorized Representative
Governor's Office of Emergency Services
Post Office Box 239013
Sacramento, California 95823

Dear Mr. Christian:

This letter is in response to your September 10, 1997, transmittal of the Pajaro Valley Unified School District's second appeal under FEMA-1046-DR-CA. The City is requesting reimbursement for damages to insurable flood damaged buildings at the Pajaro Middle School. The Pajaro Middle School is located in a special flood hazard area (SFHA). Costs for repairing damages originally estimated in damage survey reports (DSRs) 16017, 16021, 16043, 16066, 16077, and 16078 totaled $221,658. The Federal Emergency Management Agency (FEMA) determined that DSRs pertaining to flood-damaged facilities should be approved for $750, the value of a standard flood insurance policy (SFIP) deductible available through the National Flood Insurance Program (NFIP). Accordingly, $4,500 was approved for funding repairs (6 sites at $750/site). Following the first appeal, supplemental DSRs were prepared with the assistance of NFIP-certified insurance adjusters to account for costs which would not have been covered under an SFIP ($117,803). The affected DSRs are listed on an enclosure to this letter. The applicant submitted a first appeal of FEMA's decision to reduce funding, but was denied pursuant to the mandatory reductions specified in Section 406(d) of the Stafford Act. The applicant submitted a second appeal letter dated July 30, 1997.

Section 406(d) of the Stafford Act establishes that Federal assistance for an insurable building damaged by flooding and located in a SFHA identified for more than one year by the Director, shall be reduced. Pursuant to Title 44 of the Code of Federal Regulations (CFR), section 206.252(a) "The amount of the reduction shall be the maximum amount of the insurance proceeds which would have been received had the building and its contents been fully covered by a standard flood insurance policy." The maximum payment under the NFIP results from application of the minimum deductible ($750). Eligible funding may also include costs which would not have been covered under an SFIP. These reductions and limitations on funding are mandatory and uniformly applied as established by the Stafford Act and 44 CFR. Therefore, as established in the first appeal response, the applicant has received the maximum funding eligible in accordance with FEMA regulations and policy. As the applicant does not currently have flood insurance policies, receipt of Federal assistance is contingent upon the applicant procuring and maintaining such policies in the amount of eligible damages for each building.

The applicant states that flood insurance was not obtained because they were unaware that flood insurance was available through the NFIP, and that such insurance was not affordable. The NFIP was established to provide flood insurance at reasonable rates and is available at considerably less cost than other policies. Flood insurance has been available through the NFIP since 1973. Further, it is noted that more than 18,000 participants in the NFIP, emergency offices in all 50 states, and floodplain management groups were notified of the reductions required by the new law in letters sent in the spring of 1989. The effective date of the reductions was delayed 180 days from the effective date of the Stafford Act to provide sufficient notice to potential applicants. Regulations concerning the reductions were published in the 44 CFR on March 21, 1989, clearly stating the reduction will be the amount payable under an SFIP through the NFIP. Also, Section 406(d) of the Stafford Act describes the mandatory reductions to be made in Federal assistance. Therefore, the applicant should have been aware of such reductions.

Based on my review of the second appeal issues I have found no basis to overturn the Region's initial determination of ineligibility of funding for damages that would have been covered under an SFIP. Therefore, this appeal is denied.

Please inform the subgrantee of my determination. The subgrantee may submit a third appeal to the Director of FEMA. The appeal must be submitted through your office and the Regional Director within 60 days of receipt of this determination.

Sincerely,
/S/
Lacy E. Suiter
Executive Associate Director
Response and Recovery Directorate

Enclosure

cc: Ray Williams
Acting Regional Director
FEMA Region IX