Hazard Mitigation

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

Disaster4020-DR-NY
ApplicantCity of Port Jervis
Appeal TypeSecond
PA ID#071-59388-00
PW ID#9175
Date Signed2014-09-04T00:00:00

Conclusion: The replacement of damaged drywall and studs with concrete block as part of a Hazard Mitigation Proposal (HMP) in the basement of the Port Jervis (Applicant) City Hall building is ineligible for Public Assistance (PA) funding because the Applicant has not demonstrated that the cost of the proposed replacement material in comparison to the original material is cost effective.

Summary Paragraph

FEMA prepared PW 9175 for repairs to the Applicant’s City Hall basement in the amount of $195,653.18.  The Applicant also requested a Hazard Mitigation Proposal (HMP), which was included as part of PW 9175.  The HMP consisted of 3 items:  (1) installation of a back flow prevention valve, totaling $9,200.00, (2) installation of 4 sump pumps, totaling $1,860.00, and (3) replacement of damaged drywall and studs with concrete block, totaling $124, 545.60.  FEMA determined that the HMP was not cost beneficial, as the cost of the third item exceeded the cost to repair the damaged drywall, and, therefore, denied the HMP.  The Applicant appealed FEMA’s decision, requesting a review of the entire City Hall project.  In its first appeal letter, the Applicant claimed that FEMA had misapplied Response and Recovery Policy 9526.1, Hazard Mitigation Funding Under Section 406 [Stafford Act], by comparing mitigation measures to a particular portion of the project as opposed to the whole project.  The FEMA Region II Regional Administrator (RA) partially granted the appeal, acknowledging that items 1 and 2 were eligible because they reduce the potential of future similar damages to the facility and are less than 15 percent of the eligible repair costs on the facility.  However, the RA denied funding for item 3 because Response and Recovery Policy 9526.1 states that “when the cost of proposed replacement material for a damaged component is more than the original material, the proposed material must be shown to be cost effective.”  In its second appeal, the Applicant again requests an entire re-evaluation and assessment of the project. 

Authorities Discussed

  • 44 C.F.R. § 206.226 (e)
  • Recovery Policy 9526.1 (March 30, 2010)

Headnotes

  • 44 C.F.R. § 206.226(e) provides, the RA “may require cost effective hazard mitigation measures not required by applicable standards. The cost of any requirements for hazard mitigation …will be an eligible cost for FEMA assistance.”
    • The proposed HMP item 3 has not been shown to be cost effective.
  •  Pursuant to Recovery Policy 9526.1, the following determine cost-effectiveness: (1) mitigation measures may amount to up to 15% of the total eligible cost of eligible repair work, (2) certain mitigation measures determined cost effective, as long as mitigation measure does not exceed 100% of the eligible cost of the eligible repair work on the project, and (3) for measures that exceed the above costs, the Grantee or subgrantee must demonstrate through a benefit/cost analysis (BCA) that the measure is cost effective.Further, “when the cost of proposed replacement material for a damaged component is more than the original material, the proposed material must be shown to be cost effective.”
    • The proposed HMP item 3 has not been shown to be cost effective by any one of these designated methods.  Further, the cost of the damaged component is more than the original material by 433%.


 

Appeal Letter

September 4, 2014

Mr. Andrew X. Feeney
Alternate Governor’s Authorized Representative
New York State Office of Emergency Management
1220 Washington Avenue, Building 7A, Suite 710
Albany, New York 12242  

Re: Second Appeal – City of Port Jervis, PA ID 071-59388-00, FEMA-4020-DR-NY, Project Worksheet 9175 – Hazard Mitigation

Dear Mr. Feeney:

This is in response to your letter dated March 3, 2014, which transmitted the referenced second appeal on behalf of the City of Port Jervis (Applicant).  The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $124,545.60 in funding for the third item of the Applicant’s Hazard Mitigation Proposal, submitted as part of Project Worksheet 9175. 

As explained in the enclosed analysis, I have determined that the third item of the referenced Hazard Mitigation Proposal is ineligible for Public Assistance because it has not been shown to be cost effective.  Therefore, the Applicant’s appeal is denied.

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

Sincerely,                                  

/s/

William W. Roche
Director
Public Assistance Division

Enclosure

cc:

Jerome Hatfield
Regional Administrator
FEMA Region II

Appeal Analysis

Background

During the incident period, from August 26 through September 5, 2011, winds, storm surge and flooding from Hurricane Irene resulted in severe flooding and other storm related damage to the City of Port Jervis (Applicant).  The basement of City Hall was flooded with contaminated water when sanitation pipes back flowed through the bathroom plumbing, resulting in damage to the drywall, doors, flooring, baseboards, heating system, and ceiling tiles. 

The Federal Emergency Management Agency (FEMA) wrote PW 9175 (Category E) for the repairs to the City Hall basement and approved funding for these repairs, in the amount of $195,653.18, on March 25, 2013.  The scope of work included: (1) replacement of damaged drywall (15,376 square feet), (2) replacement of 4-inch vinyl cove base (1,740 linear feet), (3) reset of 38 salvaged doors, (4) replacement of hot water base board (343 linear feet), (5) replacement of 6-inch blanketed insulation (1,941 square feet), (6) replacement of vinyl floor tile (5,988 square feet), and (7) replacement of 2-foot by 2-foot acoustic ceiling tile and grid (5,988 square feet).  The total cost for these eligible repairs, as included in the Cost Estimating Format (CEF), was $166,024.00.  FEMA included an additional $29,629.18 in the PW for water extraction and restoration (completed work).   

The Applicant also requested Hazard Mitigation.  A Hazard Mitigation Proposal (HMP) was prepared and included as part of PW 9175.  The HMP consisted of three items: (1) installation of a back flow prevention valve, totaling $9,200.00, (2) installation of 4 sump pumps, totaling $1,860.00, and (3) replacement of damaged drywall and studs with concrete block, totaling $124,545.60.  The total HMP cost was $135,605.60.

FEMA determined that the HMP was not cost beneficial because the cost of the third item, consisting of replacing the damaged drywall and studs with concrete block, exceeded the cost of repairs to the damaged drywall (by approximately 433 percent), $124,545.60 and $28,753.12, respectively.  The FEMA Mitigation Review comments noted that the first and second items of the HMP, without the third item, would be approvable.[1]  

First Appeal

On May 30, 2013, the Applicant submitted a first appeal to the New York State Office of Emergency Management (Grantee).  In its appeal, which the Grantee supported, the Applicant requested an entire re-evaluation and assessment of the Port Jervis City Hall Project.  Specifically, the Applicant claimed that FEMA erroneously revised the HMP comparison, during review, to compare the cost of the drywall repair only to the cost of the proposed third item in the HMP, consisting of installation of concrete masonry units (CMUs) in lieu of drywall replacement.  The Applicant submitted that the estimated cost of replacement of (in kind) drywall would have been $28,753.12, and the estimated cost of the HMP, which was to substitute the drywall with CMUs, would have been $124,545.60, a difference of an additional $95,792.48.  Further, the Applicant claimed that the FEMA estimated total cost of the project was $194,653.18,[2] the FEMA estimate according to the project specialist totaled 56.6 percent of the repair, and restoration costs of the project fell within the guidelines of FEMA Recovery Policy (RP) 9526.1.[3]

On November 26, 2013, the Regional Administrator (RA) issued a first appeal decision, determining that the HMP was partially eligible for Public Assistance (PA) funding.  The RA found that the first and second items of the HMP, respectively consisting of installation of a back flow valve and four sump pumps, were eligible in the amount of $11,060.00, in accordance with RP 9526.1, because they reduced the potential of future similar damages to the facility and were less than 15 percent of the eligible repair costs on the facility.  The RA found the third item (the CMUs) of the HMP ineligible, citing to RP 9526.1, Section VII, Policy, subsection F, which states:  “When the cost of proposed replacement material for a damaged component is more than the original material, the proposed material must be shown to be cost effective.”[4]  According to the RA, the third item of the HMP did not meet the requirements to be considered cost effective through the first two means listed in RP 9526.1.  Further, the RA noted that since the third way to qualify required a BCA, which was not provided as part of the appeal documentation, item 3 was ineligible.  

Second Appeal

In its second appeal, dated January 16, 2014, the Applicant again requests an entire re-evaluation of FEMA’s assessment of the Port Jervis City Hall project.  The Applicant claims that FEMA incorrectly compared item 3 of the mitigation measure to particular portions of the project as opposed to the project as a whole. 

Discussion

For a project to be considered for Hazard Mitigation under FEMA's PA program, the proposed Hazard Mitigation must be cost effective.[5]  Any one of the following means may be used to determine cost effectiveness:

  1. Mitigation measures may amount to up to 15 percent of the total eligible cost of the eligible repair work on a particular project.
  2. Certain mitigation measures, listed in Appendix A of the Policy, may be determined cost effective as long as the mitigation measure does not exceed 100 percent of the eligible cost of the eligible repair work on the project.
  3. For measures that exceed the above costs, the Grantee or subgrantee must demonstrate through an acceptable benefit/cost analysis methodology that the measure is cost effective. FEMA’s Benefit Cost Analysis (BCA) software provides appropriate benefit/cost analysis methodologies. The benefit/cost analysis will be based on a comparison of the total project cost to the total cost of the following project benefits: 1) damage to the facility and its damaged contents, 2) emergency protective measures required as a result of that damage, 3) temporary facilities required due to the damage, 4) loss of function, 5) casualty (loss of life and injury), and 6) cost avoidance (damages avoided in the future due to mitigation measures).[6]

In addition, “when the cost of proposed replacement material for a damaged component is more than the original material, the proposed material must be shown to be cost effective.”[7]

As the RA indicated in his first appeal decision, since the cost of the proposed replacement material, CMU, for the damaged component is more than the original material, the drywall, the CMU must be shown to be cost effective.  Item 3 of the HMP cannot be determined cost effective by any one of the three designated methods listed above.  First, item 3 of the HMP, totaling $124,546.60, is more than 15% percent of the eligible repair costs on the facility, totaling $195,653.18.  Therefore, item 3 cannot be determined cost effective through the first method used to determine cost effectiveness.  Second, item 3 of the HMP cannot be determined cost effective through the second method used to determine cost effectiveness.  The second method states that certain mitigation measures, listed in Appendix A of the policy, “may be determined cost effective as long as the mitigation measure does not exceed 100 percent of the eligible cost of the eligible repair work on the project.”[8] Appendix A does not include concrete walls in the list of eligible mitigation measures,[9] so this method is not applicable.  The FEMA RA correctly calculated the percent of the proposed HMP item 3 (CMUs) compared to the repair component drywall at 433 percent ($124,545.60/$28,753.12).  Third and finally, as the RA noted in his first appeal decision, the only other means to qualify as cost effective is through a BCA.  As indicated in RP 9526.1, the burden of conducting a BCA is on the Applicant and the Grantee.[10]  Since neither the Applicant nor Grantee provided a BCA as part of the appeal documentation, item 3 of the HMP cannot be found eligible through this method.[11]

Conclusion

Item 3 of the HMP, consisting of replacing the damaged drywall with CMU block wall, is ineligible for FEMA PA funding.  The cost of the proposed replacement material for the damaged component is more than the original replacement material cost, and the Applicant has not demonstrated  that it is cost effective through a BCA.  As the RA determined on first appeal, Items 1 and 2 of the HMP remain eligible for FEMA funding.


[1] Project Worksheet 9175, City of Port Jervis, Version 1 (February 21, 2012).

[2] FEMA estimated the repair costs to be $195,653.18, not $194,653.18.  Regardless, the results of this appeal are the same.

[3] Recovery Policy RP9526.1, Hazard Mitigation,  at 3 (March 30, 2010) (stating that certain mitigation measures are “determined to be cost effective as long as the mitigation measure does not exceed 100% of the eligible cost of the eligible repair work on the project).

[4] Id. at 4.

[5] 44 C.F.R. § 206.226 (e); RP9526.1, Hazard Mitigation.

[6] RP9526.1, Hazard Mitigation, at 3.

[7] Id. at 4.

[8] Id. at 3.

[9] See RP9526.1, Hazard Mitigation, Appendix A: Potential Mitigation Measures that are Pre-determined to be Cost Effective. (March 30, 2010). 

[10] RP9526.1, Hazard Mitigation, at 3.

[11] See Second Appeal Letter from City of Port Jervis to NYSOEM (January 16, 2014) (where the Applicant stated, “It does not take an engineering study to realize flood damage to CMU’s, simply requires a hosing down and minor cleanup as opposed to the flooding of drywall partitions which positively require removal and replacement after every flood event.”  The Applicant did not provide any documentation to support this statement.)

 

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