Time Extension

Appeal Brief

Summary Paragraph

FEMA wrote Project Worksheet (PW) 6364 to document the estimated costs of repairing a City of Waveland (Applicant) water tank damaged by Hurricane Katrina in 2005.  The Applicant initially planned to demolish the structure and build a new one as an improved project.  The Applicant requested and was granted several time extensions for the project in the ensuing years.  In 2011, in response to a state agency’s fire rating assessment, the Applicant decided to restore the tank.  It submitted a revised cost estimate much higher than the one originally included in PW 6364.  FEMA issued an eligibility determination stating that the original PW 6364 cost estimate, adjusted for anticipated insurance proceeds, would constitute eligible funding for the project, not the Applicant’s new, higher estimate.  The Applicant submitted a first appeal related to the eligibility determination, as well as another time extension request, stating that FEMA’s eligibility determination prevented it from moving forward on the project.  The Regional Administrator denied the request, and the Applicant filed a separate first appeal asserting that its time extension request should be accepted.  The FEMA Region IV Regional Administrator denied the appeals, noting that the Applicant had repeatedly delayed putting out bids on the project and had failed to begin the project.  The Regional Administrator deobligated all funding under PW 6364.

Authorities and Previous Appeals Discussed

• 44 C.F.R. § 206.204(d)(2)
• FEMA-1604-DR-MS, Hancock County Board of Supervisors, Time Extension (June 21, 2012)
• FEMA-1008-DR-CA, Los Angeles Brotherhood Crusade, African American Unity Center (Aug. 13, 2009)
• FEMA-1033-DR-GA, City of Albany, Turner Boat Pavilion (Sept. 10, 2003)

Headnotes

• A permanent work project must be completed within 18 months of the applicable major disaster or emergency declaration.  A Grantee may extend this deadline for 30 months if warranted by extenuating circumstances or unusual project requirements beyond the subgrantee’s control. 

Any time extension requests beyond the Grantee’s authorized extension must be submitted to the Regional Administrator.  If the Regional Administrator approves a request, the approval letter will reflect the approved completion date and any other requirements necessary to ensure that the new completion date is met.  If the Regional Administrator denies the time extension request, reimbursement for eligible project costs is available for costs incurred only up to the latest approved completion date.  If the project is not completed, no Federal funding will be provided for the project.

Appeal Letter

Appeal Analysis

Background

In August 2005, ocean surge, high winds, and flooding resulting from Hurricane Katrina (FEMA-DR-1604-MS) caused damage throughout the City of Waveland  (Applicant), including to the Applicant’s 50,000-gallon water tank located on Davis Street.  FEMA prepared Project Worksheet (PW) 6364 to the capture costs of restoring the water tank, which totaled an estimate of $60,618.00.  At the time of PW 6364’s formulation, the Applicant intended to not restore the tank but, instead, apply the funds toward constructing a new, larger tank in a different location as an improved project. 

In 2007, the Applicant sent a letter to the Mississippi Emergency Management Agency (Grantee) requesting a time extension on multiple PWs, including PW 6364, beyond an August 28, 2007 project deadline.  The Grantee granted the request in a letter dated October 4, 2007, allowing an extension to August 28, 2009. 

The Applicant requested a further extension in a letter dated June 29, 2009.  The Applicant requested an extension until January 1, 2011, citing the need to resolve an insurance dispute related to the project.  In a letter dated January 29, 2010, the FEMA Region IV Regional Administrator granted a time extension on 42 projects under FEMA-1604-DR-MS, including PW 6364, that encountered delays relating to insurance recoveries.  The Regional Administrator granted an extension on PW 6364 to January 1, 2011.  Prior to granting that extension, FEMA had reduced eligible costs under PW 6364 to account for anticipated insurance proceeds that FEMA determined the Applicant failed to pursue.  The October 2009 reduction brought the eligible amount under PW 6364 to $29,569.50. 

The Applicant again requested an additional extension in a letter dated December 20, 2010, seeking a new project deadline of February 1, 2012, and explaining that the insurance dispute had been resolved.  The Regional Administrator granted an extension on numerous Applicant PWs, including PW 6364 to July 1, 2011.  Prior to granting that extension, the Mississippi State Rating Bureau issued a letter to the Applicant dated January 21, 2011, stating that the Applicant should timely repair or replace the water tank and that failure to maintain storage capacity could hurt the Applicant’s fire rating.

The Applicant submitted a letter dated April 14, 2011to the Grantee, indicating its decision to repair the water tank to bring it into compliance with Rating Bureau requirements and avoid an adverse effect on its fire rating.  The Applicant provided a repair cost estimate totaling $234,740.00.  In July 2011, the Grantee developed an analysis and response to the new estimate, determining that $168,977.12 of the estimate is eligible for reimbursement and recommending to FEMA that PW 6364 be revised to reflect that cost estimate.

Through a letter dated July 12, 2011, the Applicant requested an additional extension until January 1, 2012, explaining its decision to repair the water tank—rather than demolish it as originally planned—in order to maintain its fire rating, and stating that it planned to begin the bid process by August 2011.  The Regional Administrator granted the request in a letter dated August 12, 2011.

On September 19, 2011, FEMA issued an eligibility determination reaffirming that eligible costs under PW 6343 amounted to $29,596.50—the amount of the original, 2005 estimate, less anticipated insurance proceeds.  FEMA rejected the Applicant’s proposed new cost estimate, explaining that the increased costs and associated expanded scope of work of the project resulted from the Applicant’s initial decision not to repair the tank but to demolish it and, therefore, the increased costs were not a direct result of the disaster. 

First Appeals

The Applicant submitted a first appeal in a letter dated November 17, 2011 (the “Costs Appeal”), challenging FEMA’s eligibility determination on PW 6364’s eligible costs.  The Applicant asserted that, following Hurricane Katrina, the Applicant and its consultant engineers concluded that the water tank was a total loss.  The Applicant cited to contemporaneous documentation indicating that the cost to demolish and replace the tank could reach as high as $480,000.00.  The Applicant also asserted that it made a timely insurance claim that although the damage was deemed to have been caused by flooding and therefore excluded from coverage, it was undisputed that the disaster caused the entirety of the damage to the water tank.

While the Costs Appeal was pending, the Applicant requested an additional time extension request, asking for an extension to December 30, 2012.  The Applicant again explained its decision to not demolish the water tank but, instead, repair it in order to maintain its existing fire rating.  The Applicant also reiterated that the Grantee was reviewing its cost estimate and noted that FEMA was “not agreeing to the amount of funding for this project.”  The Applicant also stated that it now planned to begin the bid process by February 2012.  In a letter dated February 16, 2012, the Regional Administrator denied the request.  The Regional Administrator noted that FEMA had granted an extension until January 1, 2012 and that the project bid process, which the Applicant stated would begin in August 2011, had not yet begun.

The Applicant thereafter submitted a first appeal in a letter dated March 14, 2012 (the “Time Extension Appeal”), challenging FEMA’s denial of its latest time extension request.  The Applicant asserted that it should have been granted a time extension to allow for eligible project funds to be obligated and for repairs to the water tank to be completed and that FEMA’s denial of its cost estimate constituted “extenuating and unusual circumstances that have delayed the project.”

The Regional Administrator issued a decision dated April 4, 2013, that addressed both the Costs Appeal and the Time Extension Appeal.  Regarding the Costs Appeal, the decision noted that the water tank had not undergone routine use or maintenance since the disaster, given that the Applicant had initially decided to demolish it.  Thus, the decision stated, FEMA had concluded that the expanded scope of work and increased costs did not represent damage caused by the disaster.  The Regional Administrator concluded that the revised, increased cost estimate provided by the Applicant did not alter FEMA’s determination that the increased costs related to “maintenance over the intervening years.” 

Regarding the Time Extension Appeal, the Regional Administrator rejected the Applicant’s reliance on its assertion that it delayed repairs until it could resolve project cost issues with FEMA.  The Regional Administrator noted that, regardless, FEMA reimburses actual costs based on a project’s approved scope of work, and the Applicant had not completed any work on the water tank more than seven years after the disaster.  Applying 44 C.F.R. 206.204(d)(2), the Regional Administrator concluded that no funding would be provided under PW 6364 because the project had not been completed by the last approved project completion date.

Second Appeals

The Applicant submitted a second appeal in its Time Extension Appeal in a letter dated June 14, 2013, as well as a second appeal in its Costs Appeal in a letter dated June 15, 2013.  The Applicant reiterated the same arguments it set forth in its first appeals.  The Grantee transmitted the second appeals to the FEMA Region IV Regional Administrator in a letter dated August 12, 2013.  The Grantee supports the Applicant’s appeals.

Discussion

Time Extension Appeal

Under Public Assistance Program project performance regulations, a PA permanent work project (such as the Applicant’s water tank project) must be completed within 18 months of the applicable major disaster or emergency declaration.[1]  A Grantee may extend this deadline for an additional 30 months if warranted by extenuating circumstances or unusual project requirements beyond the control of the subgrantee.[2]  Any time extension requests beyond that point must be submitted to the Regional Administrator and include (1) the dates and provisions of all previous time extensions on the project, and (2) a detailed justification for the delay and a projected completion date.[3]  The Regional Administrator responds in writing.  If the Regional Administrator approves the request, the approval letter will reflect the approved completion date and any other requirements deemed necessary to ensure the new completion date is met.[4]  If the Regional Administrator denies the time extension request, reimbursement for eligible project costs is available for “costs incurred only up to the latest approved completion date.”[5]  Furthermore, “[i]f the project is not completed, no Federal funding will be provided for that project.”[6]

In this case, the Applicant requested a total of five time extensions for PW 6364, four of which were granted.  In each of the three extensions granted by FEMA, the Grantee was asked to remind the Applicant that, under PA Program regulations, no federal funding would be provided if the Applicant’s project was not completed.[7]  Despite these explicit reminders, the Applicant failed to begin work on its water tank project, let alone complete the work, at the time it submitted its final time extension request at the end of 2011—more than six years after the disaster event.  In its second-to-last request, the Applicant revealed that, after years of pursuing a plan to demolish the water tank and build a replacement, it had decided to restore it.  The Applicant stated that the bid process on the project would begin by August 2011 and asked for an extension until January 2012.  In its final time extension request submitted just a few months later, the Applicant stated that the bid process would then begin in February 2012.  In light of the lack of progress on the project, the numerous time extensions awarded, and the length of time that had elapsed since the disaster event, the Regional Administrator properly exercised his discretion in denying the Applicant’s final time extension request and withdrawing funding.  The Regional Administrator’s decision is consistent with prior agency decisions regarding repeated time extension requests involving long-delayed projects.[8]

Costs Appeal

In denying the Applicant’s final time extension request with work on the water tank project not completed, the Regional Administrator properly determined that no federal funding would be available for the project.  Therefore, by implication, the Applicant’s Costs Appeal also is denied.

Conclusion

The Applicant requested and was granted numerous time extensions to complete its water tank repair project under PW 6364.  Each time it granted an extension, FEMA noted that, under applicable regulations, no federal funding would be available if the project was not completed at the time of the final completion date.  The Applicant repeatedly delayed putting out bids for the project and had not begun work on it when it submitted its final time extension request.  The Regional Administrator properly exercised his discretion in denying the additional request and, in denying it, properly determined that no federal funding would be provided under PW 6364.