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Second Appeal Brief
PA ID# 033-UXIMQ-00; Escambia Commity Holdings, Inc.
PW ID# PW 888; Alternate Project – Duplication of Benefits – Hazard Mitigation – Insurance – Pilot Program – Scope of Work – Support Documentation
In 2014, severe storms caused flooding that damaged the headquarters building (Facility) of Escambia Community Holdings, Inc. (Applicant). The Applicant requested a subgrant based on a fixed-cost estimate as part of the Public Assistance Alternative Procedures Pilot Program (PAAP Pilot Program). FEMA prepared PW 888 to address Facility restoration. The Applicant supplied restoration cost estimates, as did FEMA. FEMA also prepared hazard mitigation proposal (HMP) estimates. In January 2017, FEMA obligated $220,177.00 for estimated restoration costs, but it later reduced all those costs based on flood insurance proceeds. FEMA also obligated $1,150,331.00 for an HMP. On first appeal, the Applicant argued PW 888 didn’t document all disaster-caused damage and contained errors. It urged FEMA to rely on a $1,629,758.91 insurance adjuster’s estimate it had solicited to serve as the fixed-cost estimate. It also requested a time extension for FEMA to continue to try and reach an agreement with the Applicant on the estimate. The Applicant also argued FEMA improperly applied insurance proceeds reductions across PW 888 and two related PWs. Finally, the Applicant’s total request included costs it said it incurred to prepare its insurance adjuster’s estimate. In response to a Request for Information, the Applicant provided a contractor-prepared restoration estimate. The FEMA Region IV Regional Administrator (RA) denied the appeal, determining the new estimate included items outside the approved scope of work (SOW) and overestimated several in-scope items. The RA also determined FEMA’s flood insurance proceeds reductions were proper.
Authorities and Second Appeals
- Stafford Act §§ 312, 428
- 2 C.F.R. § 200.403; 44 C.F.R. §§ 206.202, 206.203, 206.206, 206.250
- PAAP Pilot Program Guide for Permanent Work, at 1, 6-8, 12
- PAAP Pilot Program – Permanent Work Standard Operating Procedures, at 5
- PA Guide, at 40, 101, 120
- Under the PA Alternative Procedures Pilot Program, applicants can choose to receive subgrants for large permanent work projects based on agreed-upon fixed cost estimates.
- Because the Applicant and FEMA did not reach an agreement on a fixed-cost estimate within the PAAP Pilot deadline to do so, FEMA correctly determined that the project should proceed under standard PA procedures, with funding based on actual costs.
- Under Stafford Act § 312 and 44 C.F.R. § 206.250, an applicant cannot receive assistance to the extent it has received financial assistance from another source, including insurance, and FEMA reduces otherwise eligible costs by actual and anticipated insurance recoveries.
- FEMA correctly deducted flood insurance building coverage proceeds from PWs addressing Facility restoration and emergency cleanup because their scopes of work both addressed covered building damage, and contents coverage proceeds properly are applied to the PW addressing contents damage.
- Under the PA Guide, an applicant must pursue available insurance, but legal costs it incurs pursuing insurance may be subtracted from the amount of insurance proceeds deducted from eligible project costs.
- The costs the Applicant claimed it incurred to obtain an insurance adjuster’s estimate in pursuit of additional insurance should not be subtracted from the amount of insurance proceeds deducted because the Applicant did not request these costs on appeal or provide supporting documentation, and it’s not clear from documentation that is available how the costs related to the estimate’s development.
FEMA finds that: (1) the project should proceed under standard procedures; (2) the Applicant has failed to justify a change in the SOW or estimated costs; (3) the Applicant has not demonstrated FEMA improperly applied insurance proceeds reductions to the PWs addressing building damage and contents damage; and (4) the Applicant is not entitled to recover costs incurred to obtain an insurance adjuster’s estimate.