Conclusion: Nashville-Davidson County (Applicant) did not demonstrate that the requested costs were associated with eligible disaster-related work. Accordingly, the appeal is denied.Summary ParagraphFrom April 30 through May 18, 2010, severe storms, flooding, straight-line winds, and tornadoes caused damage throughout Nashville-Davidson County (Applicant). As a result of the disaster, the Cumberland River overflowed and flooded the Applicant’s Metro Transit Authority Maintenance and Administration facility Facility. FEMA prepared Project Worksheet (PW) 5276 to address the damage and return the Facility to its predisaster condition. The Applicant requested an improved project and FEMA approved it, capping the costs at the original approved amount of the PW. The Applicant submitted a cost overrun request and FEMA denied it, stating that the improved project costs were correctly capped. The Applicant appealed FEMA’s determination and requested $438,287.00, reflecting the difference between the actual costs to complete the disaster-related work and the amount originally obligated. The Applicant noted that FEMA had accepted overruns on eligible scope portions within an improved project where those costs were tracked separately, as the Applicant asserted it demonstrated in this instance. The Region IV Regional Administrator (RA) partially granted the Applicant’s appeal. She determined the Applicant did not demonstrate that the costs claimed were separately documented, with a few small exceptions. She noted that the invoices submitted did not contain enough detail to accurately establish whether the reported project management costs were associated with eligible disaster-related work or with the improved project. The Applicant appeals the RA’s decision and claims only costs related to the eligible flood repair scope of work were submitted for consideration, which were tracked separately from the costs associated with the improved project. The Applicant includes spreadsheets demonstrating its overrun analysis representing the scope of work related to repair and replacement work. Authorities and Second Appeals
Stafford Act § 406.
44 C.F.R. § 206.203(d)(1).
PA Guide, at 36, 79, 110.
FEMA may reimburse costs when an applicant makes improvements, but still restores the predisaster function of a damaged facility. However, pursuant to 44 C.F.R. § 206.203(d)(1), funding for improved projects is limited to the Federal share of the approved estimate of eligible costs.
The PA Guide notes FEMA may adjust its contribution if an applicant can establish that eligible costs exceed the original estimate. To be eligible, the Applicant must provide documentation establishing the additional costs are separate from improvement costs.
FEMA approved the improved project and capped funding. The Applicant has not provided documentation to establish the costs for eligible repair work were separately documented from the improvements. As such, the costs are not eligible.
Patrick SheehanDirectorTennesse Emergency Management Agency3041 Sidco DriveNashville, TN 37204-1502 Re: Second Appeal – Nashville-Davidson County, PA ID: 037-52004-00, FEMA-1909-DR-TN, Project Worksheet (PW) 5276 – Improved Project Dear Mr. Sheehan: This is in response to a letter from your office dated April 20, 2017, which transmitted the referenced second appeal on behalf of Nashville-Davidson County (Applicant). The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s denial of costs pertaining to the repair of its Metro Transit Authority Maintenance and Administration facility (Facility). As explained in the enclosed analysis, I have determined that the Applicant has not demonstrated that the costs were associated with eligible disaster-related work, rather than with the improvement work. Accordingly, I am denying the appeal. 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/ Christopher Logan Director Public Assistance Division Enclosurecc: Gracia Szczech Regional Administrator FEMA Region IV
BackgroundFrom April 30 through May 18, 2010, severe storms, flooding, straight-line winds, and tornadoes caused damage throughout Nashville-Davidson County (Applicant). As a result of the disaster, the Cumberland River overflowed and flooded the Applicant owned and operated Metro Transit Authority Maintenance and Administration facility (Facility). The flooding damaged drywall and electrical circuits throughout the Facility, as well as its fire alarm system, elevator, boiler, and restrooms. FEMA prepared Project Worksheet (PW) 5276 to address the damage and return the Facility to its predisaster condition and estimated costs in the amount of $1,076,926.31. The PW listed 767 damaged items throughout the Facility eligible for repair or replacement. On November 4, 2011, the Applicant submitted an improved project request to the Tennessee Emergency Management Agency (Grantee), who then forwarded the request to FEMA on behalf of the Applicant. The request included replacing the first floor electrical panels, replacing the fire alarm, life safety and security systems, and reconfiguring the first floor. FEMA prepared PW 5276 Version 1, approving the improved project request, as well as a Hazard Mitigation Proposal (HMP). After adjusting for anticipated insurance proceeds, FEMA reduced funding and obligated $731,931.31. The Applicant completed work on the Facility on June 30, 2012. FEMA prepared its Final Inspection Report (FIR) on January 26, 2015, which included a cost overrun of $617,181.41 (containing actual costs and direct administrative costs (DAC)). In reviewing the cost overrun at closeout, FEMA determined that the improved project costs were capped at the original approved amount of the PW and the Applicant’s DAC were not eligible for reimbursement due to the improved project cap. Accordingly, the overrun was denied. FEMA notified the Applicant in an email dated April 27, 2015. First AppealThe Applicant appealed FEMA’s determination on June 24, 2015 and requested $438,287.00, reflecting the difference between actual costs to repair the disaster-related damage ($935,126.00) and the original repair estimate for uncompleted work noted in FEMA’s Cost Estimating Format (CEF) ($496,839.00). The Applicant disagreed with FEMA’s position to cap funding at the original estimate solely because the PW included improvements. The Applicant cited to FEMA’s policy to argue that FEMA accepts overruns for improved projects when repair costs and improvement costs are tracked separately. The Applicant asserted it tracked costs separately and included a cost breakdown (Attachment H), which was prepared for and provided to FEMA’s closeout specialist. The document purportedly associates invoices with claimed cost overrun amounts. In its appeal, the Applicant referenced two FEMA second appeal decisions where the Agency awarded costs after determining the Applicant demonstrated restoration costs were separately tracked from improvement costs. The Applicant emphasized that it similarly provided documentation distinguishing actual costs incurred to restore its facility to its predisaster condition from those related to improvements. The Grantee concurred in a September 15, 2015 letter and requested FEMA’s careful consideration of the Applicant’s claims. On April 1, 2016, FEMA sent a Final Request for Information (Final RFI) asking the Applicant to provide information, such as: an updated scope of work (SOW), reflecting separately documented improvements from repair and replacement work; an expense report to allow FEMA to clearly separate and compare eligible repair and replacement work from improvements using Attachment H; an explanation for any line item that deviated from its original estimate in the new expense report; and finally for the Applicant to indicate on the invoices submitted which costs were related to the original SOW and which were related to the improvements. FEMA also informed the Applicant that the administrative record would close at the issuance of the first appeal response, and after which time FEMA would not consider additional documentation should a second appeal be sought. The Applicant responded on April 27, 2016 and attached an Overrun Analysis excel spreadsheet, reflecting a detailed comparison of the costs for work already completed, costs associated with work yet to be completed, HMP work, improved project (unclaimed costs), ineligible costs not claimed on appeal, and costs associated with work in other PWs. The Applicant stated that the cost overrun detailed in the excel spreadsheet related to the RFI totaled $438,287.00. However, the Applicant also stated that it did not include project management costs and DAC in the spreadsheet that FEMA previously approved. The Applicant provided a description of what the Overrun Analysis reflected (descriptions of work, vendors, purchase order/invoice information, calculation of each cost overrun/underrun, and justification of each cost overrun). The Applicant also noted that it revised its overrun amount to $567,411.00 and clearly segregated those costs. It explained that the majority of the cost overrun related to repairing damages sustained to its electrical components. Finally, the Applicant provided a narrative noting the costs associated with project management and DAC. The FEMA Region IV Regional Administrator (RA) partially granted the Applicant’s appeal in a decision dated February 2, 2017. The RA determined the Applicant did not demonstrate that the claimed overrun costs were elgibile because they were not separately documented or fell outside the original SOW, with the exception of $788.00 in eligible overrun hard costs (construction). In contrast, the rest of the overruns were soft costs (architectural, legal, engineering, and pre/post construction costs) and FEMA could not verify whether the costs were related to the original SOW or the improvements. She noted that the invoices submitted did not contain enough detail to accurately establish whether the reported project management costs were associated with eligible disaster related work or the improvements. In addition, the RA presumed that any DAC relating to the PW pertained to the restoration work, not the improvements. However, the Applicant requested a lump sum based on a completed global allocation analysis. The RA found this method of estimation insufficient to determine eligible costs because it was not based on actual costs; so FEMA reviewed the individual invoices and verified $5,628.78 in eligible DAC.Second AppealThe Applicant appeals the RA’s decision in a letter dated April 17, 2017 and requests $390,334.00 in Public Assistance (PA) funding. In its appeal, the Applicant claims the amount on appeal reflects a cost overrun of $181,782.00 and SOW overrun of $208,552.00. The Applicant points out that FEMA’s CEF identified 764 line items of eligible work to be completed as a direct result of the disaster and as soon as the actual costs were collected and reconciled against FEMA’s approved estimated amounts, the Applicant submitted a cost overrun notification. Furthermore, the Applicant emphasizes that only costs related to the eligible flood repair SOW were submitted for consideration and were tracked separately from the costs associated with the improvements. The Applicant references Schedule 1 in an attached spreadsheet to demonstrate its overrun analysis, which represents a comparison of repair related costs incurred against FEMA’s eligible approved amounts. Those costs are analyzed in further detail in Schedule 2, where the overruns are categorized as either SOW or cost related. Finally, the Applicant notes that the additional flood related repair work was either missed by FEMA when the PW was originally prepared and/or discovered by the Applicant during the repair work (detailed in Schedule 2). The Applicant also submits additional supporting documentation (such as invoices, change orders, work summaries, drawings, purchase orders, applications and certifications for payment, and project correspondence). The Grantee concurs in an April 20, 2017 letter and notes FEMA’s guidance provides that if eligible repair or replacement costs exceed the original estimate and costs can be separately tracked, an applicant can appeal. DiscussionPursuant to The Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act) § 406, FEMA may provide grant assistance for the costs to repair, restore, reconstruct, or replace a facility damaged or destroyed by a major disaster. FEMA may reimburse costs when an applicant makes improvements, but still restores the predisaster function of a damaged facility. However, funding for improved projects is limited to the federal share of the approved estimate of eligible costs, or actual costs of completing the improved project, whichever is less. If an applicant can show eligible repair or replacement costs exceed the original capped estimate and costs can be tracked separately, an applicant may appeal the amount of the subgrant. In this instance, FEMA approved the funding for the improved project, delineated the SOW and capped funding. On second appeal, FEMA evaluated the Applicant’s cost overrun and in doing so, identified and reconciled the SOWs for (1) the original SOW detailed in PW 5276; (2) the SOW listed in the Applicant’s HMP; (3) the SOW listed in the CEF; and, (4) the SOW stated in the improved project request. Once the original SOW was determined and reconciled, as part of the second appeal review, FEMA considered all of the Applicant’s supporting documentation in the administrative record. FEMA identified deficiencies with invoices, which did not contain enough information to delineate if costs claimed were for work associated with the PW’s original SOW, the requested improved project SOW, and additional items of work the Applicant claimed was inadvertently excluded from the PW or for hidden damages. Specifically, the documentation submitted depicted work clearly outside the original SOW, invoices that included repair work already completed and improvements without delineating what costs are associated with each, and damage claimed that was not supported by the damage description in the PW. In addition, in reviewing other costs claimed, FEMA is unable to distinguish work associated with each task to determine the proper allocation. Because the administrative record does not support granting any additional funding, none of the costs claimed on second appeal are eligible. ConclusionThe Applicant has not established that the work for which it sought PA funding was required as a direct result of the disaster, rather than associated with the improved project. Accordingly, the costs are ineligible.  Project Worksheet 5276, Nashville Metropolitan Transit Authority, Version 0 (Feb. 23, 2011) (the estimated $1,076,926.31 in costs was comprised of $577,115.31 in contract work, $2,972.00 in materials, and $496,839.00 for repairs in the Cost Estimating Format). Letter from Admin. Servs. Officer, Dep’t of Gen. Servs., Metro. Gov’t Nashville and Davidson Cty., to State PA Officer, Tenn. Emergency Mgmt. Agency, at 2 (June 24, 2015) (citing FEMA Second Appeal Analysis, Wheeling Township, FEMA-1507-DR-OH (May 19, 2009), and FEMA Second Appeal Analysis, Clarke Electric Cooperative, FEMA-1737-DR-IA (Jan. 12, 2015)). Letter from Reg’l Adm’r, FEMA, to Dir., Tenn. Emergency Mgmt. Agency, at 3 (Feb. 2, 2017) [hereinafter First Appeal Decision] (FEMA verified $14,357.00 as additional costs specifically associated with the original, approved SOW. After subtracting the underrun costs identified, the total eligible amount was $788.00.). The RA determined $5,628.78 in DAC was eligible based on the actual costs provided in the submitted invoices. However, the RA incorrectly setforth a presumption that “any DAC billed in relation to PW 5276 is specific to the PW and not project improvements.” First Appeal Decision, at 3. FEMA policy includes DAC as a project cost. FEMA Disaster Assistance Policy DAP9525.9, Section 324 Management Costs and Direct Administrative Costs, at 6 (Mar. 12, 2008). Additionally, costs incurred during project forumulation and development of an improved project are eligible DAC, as long as the improved project is found eligible, Memorandum from Assistant Adm’r, Disaster Assistance Directorate, to Reg’l Adm’rs (Sept. 8, 2009); however, once an improved project is approved, funding is limited to the federal share of the approved estimate, including DAC, that is “associated with repairing or replacing the damaged facility to restore its pre-disaster design, or actual costs of completing the improved project, whichever is less.” PA Guide, at 110. Second Appeal Analysis, FEMA-1791-DR-TX, University of Texas Medical Branch, PWs 14834 and 15624, at 6 (Nov. 14, 2017).  The Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988, Pub. L. No. 93-288, § 406(a)(1), 42 U.S.C. § 5172(a)(1) (2007); Public Assistance Guide, FEMA 322, at 29 (June 2007) [hereinafter PA Guide]. 44 C.F.R. § 206.203(d)(1) (2009).PA Guide, at 110.Id. FEMA did not consider any of the additional documentation submitted on second appeal in its review. The administrative record was closed at the issuance of the RA’s decision and the Applicant was properly informed as such. For example, Rains Electric Change Order (CO) #6 included expenses for 50 and 20 gallon hot water heaters, in addition to the 80 gallon hot water heater already included in the PW’s SOW. These additional hot water heaters are outside the eligible SOW. In addition, Knestrick’s CO #15 includes work to replace blown-in insulation to four rooms and the documentation indicates the existing walls were not insulated, and the PW’s SOW did not include insulation for those walls. For example, Rains Electric CO #7 appears to include items already included in CO #6, and in addition, CO #7 did not detail the work and cost associated with each task to determine allocation and the Applicant requested full reimbursement for the entire CO amount. For example, Southeast Electric CO #1 includes work not listed in the additional SOW and which the Applicant claims was hidden damage. The PW does not list this damage and it is not clear whether the work was associated with the hidden damage claimed or the improved project. Similarly TKO’s Invoice #211487, and CO #1 list a fire sprinkler as the work item but this was not included in the PW’s SOW and the Applicant has not demonstrated that this would be part of the repair work, rather than the improved project. For example, Knestrick’s Invoice #233606 does not have enough detail to delineate if the work is associated with the improved project or repair work, nor did it quantify the work performed. With regard to access control work, Knestrick’s Invoice #207623 reflects the Applicant used a percentage of total cost, but did not distinguish if the costs were associated with original repair work or the improvements, and also whether the percentage method was an acceptable basis for determining costs. In addition, the Applicant claimed the Americans with Disabilities Act required revisions to the cabinetry in Knestrick CO #4, but there is not enough information provided to support such a claim.
Last updated May 28, 2020
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