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West Los Angeles Adult Services Office and Parkng Structure

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

DesastreFEMA-1008-DR
ApplicantLos Angeles County Internal Services Department
Appeal TypeSecond
PA ID#037-91036
PW ID#77306, 32811, 45924
Date Signed1999-10-29T04:00:00
Citation: FEMA-1008-DR-CA, P.A. 037-91036, Los Angeles County Internal Services Department, DSRs 77306, 32811 and 45924

Cross-reference: Legal Responsibility, Leased Facility

Summary: The Northridge Earthquake damaged the West Los Angeles Adult Services office building and parking structure (facility) on
January 17, 1994. The Los Angeles County Internal Services Department (County) leased the facility from the Pico-Boston Corporation (Lessor). Damage Survey Reports (DSRs) 44943 and 44947 were prepared for architectural and engineering (A&E) services; DSRs 45924 and 77306 were written to fund repairs. DSRs 77306 and 45924 were obligated for $0 because the repairs were not the legal responsibility of the County, according to its lease. DSR 32811 deobligated DSR 44947, which was to fund A&E services for the parking structure. The County submitted separate appeals for the facility on September 17, 1997. With regard to the office, the County did not address legal responsibility, but argued that FEMA's interpretation of building standards violated federal regulations. FEMA used the lease submitted with the parking structure appeal to determine legal responsibility in terms of both the office and parking structure. FEMA denied the appeals on December 9, 1998, because the County was not legally responsible for repairing the facility. The lease did not include a provision for earthquake damage and in general gave the County the option to make repairs, purchase the property, or terminate the lease if the Lessor did not make repairs. Issues related to standards were not addressed because they apply to eligible facilities. On March 1, 1999, the County submitted its second appeal. It argued that its history with the facility and its obligations under the lease constitute virtual ownership; thus, it is legally obligated to make repairs.

Issues: 1) Is the County legally responsible for repairing earthquake damage to the facility based on the terms of its lease? 2) Is the work eligible for public assistance funds?

Findings: 1) No. 2) No.

Rationale: 44 CFR 206.223(a)(3)

Appeal Letter

Mr. D.A. Christian
Governor's Authorized Representative
Governor's Office of Emergency Services
74 North Pasadena Avenue, West Annex, Second Floor
Pasadena, California 91103-3678

Re: Second Appeal - Los Angeles County Internal Services Department, West Los Angeles Adult Services Office and Parking Structure, FEMA-1008-DR-CA, DSRs 77306, 32811 and 45924

Dear Mr. Christian:

This letter is in response to the referenced second appeal. The Northridge Earthquake damaged the West Los Angeles Adult Services office building and parking structure (facility) on
January 17, 1994. The Los Angeles County Internal Services Department (County) leased the facility from the Pico-Boston Corporation. Damage Survey Reports (DSRs) 44943 and 44947 were prepared for architectural and engineering (A&E) services; DSRs 45924 and 77306 were written to fund repairs. DSRs 77306 and 45924 were obligated for $0 because the repairs were not the legal responsibility of the County, according to its lease. DSR 32811 deobligated DSR 44947, which was to fund A&E services for the parking structure.

The County submitted separate appeals for the facility on September 17, 1997. The Federal Emergency Management Agency denied the appeals on December 9, 1998, because the County was not legally responsible for repairing the facility. On March 1, 1999, the County submitted its second appeal. It argued that its history with the facility and its obligations under the lease constitute virtual ownership; thus, it is legally obligated to make repairs.

As explained in the enclosed analysis, an item of work must be the legal responsibility of an eligible applicant in order to receive financial assistance, according to 44 CFR 206.223(a)(3). In this case, the County has not shown that it was legally responsible for the repair of earthquake damages to its leased facility. Therefore, the appeal is denied. By copy of this letter, I am also asking the Deputy Disaster Recovery Manager to deobligate $12,796 for DSR 44943.

Please inform the applicant of my determination. In accordance with 44 CFR 206.206, my determination constitutes the final decision on this matter. The current appeal procedure was published as a final rule in the Federal Register on April 8, 1998, and governs appeal decisions made on or after May 8, 1998.

Sincerely,

/S/

Lacy E. Suiter
Executive Associate Director
Response and Recovery Directorate

Enclosure

cc: David Fukutomi
Deputy Disaster Recovery Manager
Northridge Long-Term Recovery Area Office

Appeal Analysis

BACKGROUND
The Northridge Earthquake struck the Los Angeles area on January 17, 1994. As a result, the West Los Angeles Adult Services office building and parking structure sustained damage. The Los Angeles County Internal Services Department (County) leased the office building and parking structure from the Pico-Boston Corporation (Lessor). The office building and parking structure are part of the same facility located at 10961-85 West Pico Boulevard in Los Angeles. A single lease covers both structures. However, separate Damage Survey Reports (DSRs), first appeals and first appeal responses were written for these structures.

Office Building
DSR 44943 was prepared for $12,796 to fund architectural and engineering (A&E) services for the office building. Based on a subsequent A&E report and a second inspection, DSR 77306 was written as a supplement to DSR 44943, and was prepared for $45,561 to fund repairs to the office building. However, FEMA determined that the repairs were not the legal responsibility of the County, according to its lease agreement. Therefore, DSR 77306 was obligated for $0 on July 2, 1997.

Prior to the ineligibility determination, the Governor's Office of Emergency Services (OES) signed a non-concurrence statement based on FEMA's interpretation of applicable building codes and standards. In its first appeal, dated September 17, 1997, the County argued for 15 pages that FEMA's interpretation of building codes and standards violated federal regulations. The appeal cited 44 CFR 206.226(b), which allows for changing the predisaster construction of an eligible facility based on standards. The County did not address the reason for the ineligibility determination, that of legal responsibility.

FEMA responded to the first appeal on December 9, 1998. FEMA determined that unless it could establish that the County was legally responsible for the work, the question of standards did not apply. 44 CFR 206.226(b) provides criteria necessary to change the predisaster construction of eligible facilities based on standards. If the facility is ineligible, no public assistance funds may be provided, regardless of standards. The lease agreement (for the office building and parking structure) that was submitted with a separate appeal for the parking structure was used to analyze legal responsibility.

FEMA's analysis found that the County was not legally responsible for the repairs to the office building. The lease did not include a provision for extraordinary repairs resulting from earthquake damage. It did state that the premises were to be returned to the Lessor in good condition, with the exception of damage by earthquake. Paragraph 18 of the lease addresses damage to the building. If repairs cannot be completed within 90 days, the Lessor may begin repairs at any point during this 90-day period. Otherwise, the County could repair damages, purchase the premises, or terminate its lease. FEMA concluded that since the lease did not require the County to make repairs, it chose to do so voluntarily. In this case, the County was not legally responsible for the repair work, and therefore the work was ineligible. Because the work was ineligible, the issue of applicable building codes and standards was moot.

Parking Structure
DSR 44947 was prepared for $5,850 to fund A&E services for the parking structure. DSR 45924 was prepared to fund repairs to the parking structure, but was obligated for $0 on June 30, 1997, because FEMA determined that the repairs were not the legal responsibility of the County, according to its lease agreement. Subsequently, DSR 32811 was written to deobligate funds for DSR 44947 and was approved on August 8, 1997. Prior to this, the County had stated that the A&E report was not necessary, and instead requested to change the scope of work for DSR 45924 to include asbestos-related work.

The County submitted its first appeal of DSRs 45924 and 32811 on September 17, 1997. It claimed that under the terms of its lease, the Lessor had no obligation to repair the parking structure. Instead, the County said that it was responsible for funding repairs, and therefore, the structure was eligible for FEMA funding. The County stated that for all intents and purposes, it "owned" the structure and had a vested interest in repairing the damage.

FEMA responded to the appeal on December 9, 1998. The analysis provided by FEMA with regard to the parking structure was identical to that of the office building: the question of legal responsibility was the same for both, as was the lease agreement. Therefore, in terms of DSRs 45924 and 32811, FEMA also concluded that repairs were not the legal responsibility of the County, and thus, the parking structure was ineligible for public assistance funding.

SECOND APPEAL
On March 1, 1999, the County submitted its second appeal for DSRs 77306, 45924 and 32811, to include the office building and the parking structure. It addresses the issue of legal responsibility and also asks that DSR 77306 be re-examined in terms of the scope of repair work. The County did not provide additional documentation to support its claim.

The County agrees with FEMA's determination that its lease provides options when the facility is damaged; however, it contends that if damage is to be repaired, it has the legal obligation to do so. It states that it could not terminate lease because it could not "afford to walk away from and a facility which must remain operational." It claims that it effectively owns the property and has virtually all ownership obligations under the lease. Therefore, its legal obligation is the same as if it were the owner of the facility and repair is not a "voluntary" decision.

In terms of the scope of repair work, the County refers to its previous appeals. It states that it cannot request a specific monetary amount because the analysis of damage and detailed design of the damage repair have not yet occurred for the office building and for the parking structure.

DISCUSSION
According to 44 CFR 206.223(a)(3), to be eligible for financial assistance, an item of work must "be the legal responsibility of an eligible applicant." In cases where property is leased, legal responsibility is generally established by the lease agreement. FEMA's policy assumes the owner of a facility to be responsible for repairs when disaster damage is not specifically referred to in the lease.

The County does not legally own the office building and parking structure. Instead, it leases the property from the Pico-Boston Corporation. Therefore, the lease agreement must be examined in terms of Lessor and Lessee. FEMA's previous legal analysis with regard to these DSRs is still applicable; that is, based on the lease, the County does not have legal responsibility for earthquake-related repairs.

The lease agreement states that the County is responsible for routine repair and maintenance. A provision for extraordinary damage, such as that caused by an earthquake, is not provided. According to paragraph 18A, if the damage cannot be repaired within 90 days, the Lessor may at any time within 90 days begin restoration and repair work. Otherwise, the County has the option to repair the facility itself. It may also purchase the facility or terminate the lease.

The County argues that its financial investment in the facility prevented it from terminating the lease on a facility, "which must remain operational" to prevent "financial folly." The DSR narrative, dated March 10, 1997, stated that the extent of disaster damage did not impact the operational capacity of the facility.

The other issue raised by the County, expressly the scope of repair work, has not been addressed. The bedesign of the damage repair have not yet occurred." Because repair of the facility is ineligible, specific repair costs are moot.

Additionally, it is unclear why the County is appealing DSR 32811. In a letter dated January 22, 1997, it informed the Governor's Office of Emergency Services (OES) that an A&E evaluation was not required for the parking structure. DSR 32811 deobligated funding for an A&E evaluation of the parking structure.

DSR 44943 was obligated for $12,796 to fund an A&E evaluation of the office building. Funds obligated for this purpose will be deobligated. Only costs directly related to the performance of eligible work are to receive financial assistance through public assistance funds.

CONCLUSION
To qualify for federal assistance, an item of work must be the legal responsibility of an eligible applicant, according to 44 CFR 206.223(a)(3). The language in the lease agreement with regard to the damage or destruction of the facility is discretionary and does not constitute legal responsibility on the part of the County. Therefore, the work remains ineligible and issues related to the scope of repair work are inconsequential. The appeal is denied.