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Lake Wales EMS Facility

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

Disaster1539-DR-FL
ApplicantPolk County
Appeal TypeSecond
PA ID#105-99105-00
PW ID#2714
Date Signed2012-09-14T00:00:00

Citation:  FEMA-1539-DR-FL, Polk County, Replacement Costs – Lake Wales EMS Facility, Project Worksheet (PW) 2714

Cross-
Reference:
  Replacement Cost

Summary:  In August 2004, Hurricane Charley produced heavy rainfall and severe winds that damaged the EMS facility’s roof exposing the building’s interior rooms to rainwater.  The facility also incurred damage to the gutter system, the soffit and fascia, and to two overhead bay doors.  Additional damage to the roof and to the building’s interior space was incurred several weeks later during Hurricane Frances and Hurricane Jeanne. 

FEMA prepared PW 2714 for $78,746 based on the estimate prepared by Polk County’s (Applicant) insurance company to repair the damaged EMS facility to its pre-disaster condition.  The Applicant later requested full replacement costs for the EMS facility and provided a replacement cost estimate of $314,662 that was also prepared by its insurance company.  FEMA reviewed both estimates and determined that the facility did not qualify for replacement cost funding, and on March 10, 2005, obligated PW 2714 Version 0 for $78,746. 
 
The Applicant submitted its first appeal to the Regional Administrator on June 23, 2005, requesting full replacement cost for the EMS facility.  The Applicant’s support documentation included a copy of the replacement cost estimate and a copy of a structural evaluation of the damaged facility from consulting engineer Robert T. Haug, P.E., which included a repair estimate in the amount of $164,439.  At the same time, the Applicant furnished the Joint Field Office (JFO) staff with copies of the repair and replacement costs estimates.  A FEMA building assessment team was assigned to re-inspect the facility and review the repair and replacement cost estimates.  The assessment team concluded that the facility was eligible for replacement rather than repair.  However, the JFO did not notify the Regional Administrator of its decision to approve replacement costs for the EMS facility, and PW 2714 Version 1 was obligated on October 13, 2005, in the amount of $235,915 bringing total project funding to $314,662.  The PW was later adjusted to deduct $78,746 for insurance proceeds, which reduced total project funding to $235,915.

The Regional Administrator denied the first appeal in a letter dated January 18, 2006, sustaining FEMA’s original level of funding in the amount of $78,746.  Due to an administrative error, FEMA the Regional Administrator’s decision was never implemented and the funds were not de-obligated. 

After requesting and receiving a time extension from the State, the Applicant completed construction on the replacement EMS facility in January 2008.  The Florida Long Term Recovery Office closed out PW 2714 in June 2009.  Inspection of project invoices and cancelled checks substantiated a cost overrun of $91,654.  As there was no mention in the project files about a first appeal, PW 2714 Version 4 was obligated for an additional $91,654, and on August 12, 2010, the project closed with actual documented costs of $327,570.  On March 16, 2011, FEMA implemented its first appeal decision and de-obligated $248,824.

The Applicant submitted a second appeal requesting reconsideration of FEMA’s decision to de-obligate replacement cost funding.  In its appeal, the Applicant states that FEMA’s decision to deny the first appeal is moot because the JFO had revised the PW to approve the replacement of the EMS facility.  The State supports the Applicant’s appeal and argues that the second appeal should be treated as a first appeal and offers the “Brandstad Doctrine” to support its position.
  
Issue:  1. Is the EMS facility eligible for replacement?

Finding:  1. No.  The estimate to repair the EMS facility is less than 50 percent of the estimate to replace the damaged facility.

Rationale:      Title 44 CFR 206.226(f)(1), Restoration of damaged facilities, Repair vs. replacement; Response and Recovery Directorate Policy 9524.4, Eligibility of Facilities for Replacement under 44 CFR 206.226(f) 

Appeal Letter

September 14, 2012

Bryan Koon
Director
Florida Division of Emergency Management
2555 Shumard Oak Boulevard
Tallahassee, Florida 32399-2100

Re:  Second Appeal–Polk County, PA ID 117-UIWGG-00, Replacement Costs – Lake Wales Emergency Medical Service (EMS) Facility, FEMA-1539-DR-FL, Project Worksheet (PW) 2714

Dear Mr. Koon:

This letter is in response to a letter from your office dated August 26, 2011, which transmitted the referenced second appeal on behalf of Polk County (Applicant).  The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) decision to de-obligate facility replacement cost in the amount of $248,824 for the for the Lake Wales EMS facility.

The Applicant did not provide new information with its second appeal to justify replacing the EMS facility.  The results of FEMA’s costs analysis for the damaged EMS facility indicate that replacement is ineligible in accordance with Title 44 CFR 206.226(f)(1), Restoration of damaged facilities, Repair vs. replacement.  FEMA’s cost analysis also indicates that the Applicant is eligible for an additional $84,237 for estimated repair costs.

As explained in the enclosed analysis, I have determined that the facility is not eligible for Public Assistance replacement costs funding.  Accordingly, I am denying the second appeal.  However, additional funding will be provided for estimated repair costs.

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

Sincerely,

/s/
Deborah Ingram
Assistant Administrator
Recovery Directorate

Enclosure

cc:  Major P. May
       Regional Administrator
       FEMA Region IV

Appeal Analysis

Background

The Lake Wales Emergency Management Service (EMS) facility is a 3,000 square foot metal building with overhead drive-through equipment bays and a finished interior area of approximately 1,800 square feet of office space and sleeping quarters for EMS personnel.  In August 2004, Hurricane Charley produced heavy rainfall and severe winds that damaged twenty percent of the EMS facility’s roof exposing the building’s interior rooms to rainwater.  The EMS facility also sustained damage to the gutter system, the soffit and fascia, and to two overhead bay doors.  Additional damage to the roof and to the building’s interior space was incurred several weeks later during Hurricanes Frances and Jeanne. 

FEMA prepared PW 2714 for $78,746 based on Polk County’s (Applicant) insurance company’s (Crawford & Company) estimate that captured damages and associated costs to repair the damaged EMS facility to its pre-disaster condition.  The PW Scope of Work (SOW) identified repairs to include work to the metal roof system, insulation, gutter, soffit and fascia systems, and replacement of overhead doors.  The interior repair work included the removal and replacement of plywood ceilings, doors, drywall, baseboards, carpet shelving and cabinetry, wall and ceiling insulation, as well as priming and painting interior masonry. 

The Applicant later requested full replacement costs for the EMS facility and provided FEMA with a replacement cost estimate of $314,662, also prepared by its insurance company.  FEMA reviewed both estimates and determined that the facility did not qualify for replacement in accordance with Title 44 Code of Federal Regulations (44 CFR) §206.226(f)(1), Restoration of damaged facilities, Repair  vs. replacement.  On March 10, 2005, PW 2714 Version 0 was obligated for $78,746. 
 
First Appeal

The Applicant submitted its first appeal on June 23, 2005, which was transmitted by the Florida Division of Emergency Management (State) to FEMA on July 19, 2005, requesting full replacement cost funding for the EMS facility.  The Applicant stated that the FEMA project officer who inspected the EMS facility had limited experience estimating disaster damage.  The Applicant disagreed with FEMA’s assessment that repairing the EMS facility was the appropriate method to address the disaster damage caused by Hurricanes Charley, Frances and Jeanne.  The Applicant’s supporting documentation included a copy of the $314,662 replacement cost estimate, and a copy of a structural evaluation of the damaged EMS facility from consulting engineer Robert T. Haug, P.E., which included a repair estimate and a floor plan prepared by Henkelman Construction, that increased repair costs from $78,746 to $164,439.  

Simultaneous with sending the appeal to FEMA’s Region IV Regional Administrator, the Applicant furnished the Joint Field Office (JFO) with copies of the repair and replacement cost estimates.  A FEMA building assessment team re-inspected the EMS facility and reviewed the repair and replacement costs estimates.  The assessment team concluded that the repair cost was approximately 64 percent of the cost to replace the damaged EMS facility, and therefore the facility was eligible for replacement.  However, the JFO did not notify the Regional Administrator of its decision to approve replacement costs for the EMS facility.

On October 13, 2005, PW 2714 Version 1 was obligated for $235,915 (including demolition, soft costs, profit and overhead) bringing the total funding amount to $314,662, which was then reduced by $78,746 for insurance proceeds. 

In a letter dated January 18, 2006, the Regional Administrator denied the first appeal, sustaining FEMA’s original level of funding in the amount of $78,746.  The Regional Administrator stated that the repair cost was found to be 34 percent of the replacement cost, and therefore, the damaged facility did not meet the requirements for replacement as set forth in Response and Recovery Directorate Policy 9524.4, Eligibility of Facilities for Replacement under 44 CFR 206.226(f).  However, due to an administrative oversight, FEMA did not de-obligate funds to implement the Regional Administrator’s decision. 

After requesting and receiving a time extension from the State, the Applicant completed construction on the replacement EMS facility in January 2008.  The Florida Long Term Recovery Office closed out PW 2714 in June 2009.  Inspection of project invoices and cancelled checks substantiated a cost overrun of $91,654. 

The FLTRO obligated PW 2714 Version 4 for $91,654 on August 12, 2010, and the project closed with actual documented costs of $327,570.  However, as a result of the administrative oversight, on March 16, 2011, FEMA implemented the first appeal decision and disallowed $248,824 for facility replacement costs.

 

 

 

 

PW

PW Amount

PW Action

2714 Version 0

$78,746.21

Obligate Repair Cost

2714 Version 1

$235,915.41

Obligate Replacement Cost

2714 Version 2

$0.00

Insurance Review

2714 Version 3

($78,746.21)

Insurance Proceeds

2714 Version 4

$91,654.43

Obligate Closeout Overrun

Total Obligated Funding

$327,569.84

 

2714 Version 5

($248,823.63)

De-obligate 1st Appeal Denial

 

 

 

Second Appeal

The Applicant submitted a second appeal in a letter dated May 17, 2011, which was forwarded to FEMA by the State on August 26, 2011, requesting reconsideration of FEMA’s decision to deobligate $248,824 of replacement cost funding for the EMS facility.  The Applicant states that FEMA’s decision to deny the first appeal is moot since the JFO revised the PW to approve the replacement of the EMS facility.  The Applicant did not provide new information to support the second appeal.  The State supports the Applicant’s appeal and contends that the second appeal should be treated as a first appeal and offers the “Brandstad Doctrine” as argument to its position.
 
Discussion

Repair versus Replacement

In accordance with Title 44 Code of Federal Regulations (44 CFR) §206.226(f), Restoration of damaged facilities, Repair vs. replacement, a facility is considered repairable when disaster damages do not exceed 50 percent of the cost of replacing a facility to its pre-disaster condition.  If a damaged facility is not repairable, approved restoration work may include replacement of the facility.  In determining whether to repair or replace a facility, the repair cost is limited to the cost to repair damaged components only.  It does not include code and standard upgrades, demolition, site work, or applicable project management costs.  The replacement cost equals the cost of reconstructing the facility based on current codes and standards. 

A repair estimate prepared by the Applicant’s insurance company provides a detailed, line-item description of costs to repair the EMS facility to its pre-disaster condition in the amount of $78,746.  A second repair estimate, prepared by Henkelman Construction, lists general repair categories with corresponding lump-sum amounts that total $164,439.  The replacement cost estimate of $314,662, also prepared by the insurance company, provides a detailed description of materials and building items required for a replacement-in-kind facility.

Upon review of the Applicant’s documentation, FEMA prepared an independent cost analysis using RS Means CostWorks 2012 data, the repair and replacement estimates formulated by the insurance company, and a dimensioned floor plan prepared by Henkelman Construction.  FEMA did not use the Henkelman Construction repair estimate as it does not include sufficient detail or scope of work to estimate the various tasks involved to repair the damaged EMS facility. 

The results of FEMA’s costs analysis indicate that replacement is ineligible under the 50% Rule (see CEF attached).  The repair/replacement ratio is only 21.4 percent.  The repair estimate using RS Means CostWorks 2012 data and the CEF is $162,983.  Therefore, the Applicant is eligible for an additional $84,237 for estimated repair costs.


 

 

 

CEF Total Project Summary

Uncompleted

Total

Base Costs

$ 74,328

$ 74,328

General Requirements and Conditions

$ 10,592

$ 10,592

Construction Costs Contingencies

$ 18,258

$18, 258

General Contractor’s Overhead and Profit

$ 22,802

$22,802

Reserve for Construction

$ 8,819

$8,819

Project Management and Design Costs

$ 28,184

$ 28,184

Total for Uncompleted Work

$ 162,983

$ 162,983

 

 

 

Status of the First Appeal as a Matter of Law

The question at hand is whether the settlement of an issue under administrative appeal automatically makes the appeal moot without any further affirmative action being necessary on the part of the appeal party.  The State argues that under the “Branstad Doctrine”, the first and the second appeal are moot. 

Pursuant to the “Brandstad Doctrine,” as reflected in the August 26, 2011, letter from the State addressed to the Regional Administrator, “[a]n administrative claim being adjudicated under a tribunal’s quasi-judicial powers does fail for mootness when: 1. [t]he issue being adjudicated is settled so that the issue may no longer be considered an active case or controversy, 2. [t]he method of settlement clearly includes concessions by at least one party that would moot the issue in a court of law or equity, and 3. [t]he controlling statute does not affirmatively state that the issue will survive through conditions that would ordinarily moot the issue in a court of law or equity.”

If each of these elements must be satisfied in order for the Brandstad Doctrine to apply, then the
Brandstad Doctrine does not apply in this case.  FEMA’s legal authority on the appeals process for the provision of Federal assistance is 44 CFR §206.206, Appeals.  44 CFR §206.206(b), Appeals, Levels of Appeal, provides that “[t]he Regional Administrator will consider first appeals for public assistance-related decisions…”  (Emphasis added).  The legal authority to render first appeal decisions rests with FEMA Regional Administrators not with the JFOs. 

In this case, the issue being adjudicated was not “settled so that the issue may no longer be considered an active case or controversy” when the JFO approved facility replacement because this was not a first appeal decision, as requested by the Applicant.  First appeal decisions are rendered by FEMA Regional Administrators, pursuant to FEMA regulations.  Thus, element #1 of the Brandstad Doctrine was not met as a result of the JFO approving replacement in this case.  Additionally, element #2 of the Brandstad Doctrine was not met as a result of the JFO approving replacement of the facility in this case because the JFO is not the party authorized to settle an issue or make any concessions on behalf of FEMA regarding first appeals, pursuant to 44 CFR §206.206.  The approval of the replacement decision made by the JFO in this case did not make the issue moot, and in fact, had no bearing on the first appeal process, pursuant to 44 CFR §206.206 Appeals.

On June 23, 2005, the Applicant submitted its first appeal for the consideration of the Regional Administrator.  The Regional Administrator rendered the first appeal decision on January 18, 2006.  On May 17, 2011, the Applicant submitted its second appeal.  Thus, the Applicant was given two opportunities to appeal FEMA’s determination pursuant to 44 CFR §206.206 Appeals and the Applicant has exercised both its first and second right to appeal.

Conclusion

The cost to repair the EMS facility is less than 50 percent of the replacement costs, and therefore the EMS facility is not eligible for replacement funding under FEMA’s Public Assistance Program.  However, an additional $84,237in funding will be provided for estimated repair costs.