March 12, 2012

Steven Kuhr

Director

New York State Office of Emergency Management

1220 Washington Avenue

Building 22, Suite 101

Albany, New York 12226-2251

Re:  Second Appeal–TLC Health Care Network, PA ID 009-U68QT-00, Legal Responsibility, FEMA-1857-DR-NY, Project Worksheets (PW) 1057 and 1095

Dear Mr. Kuhr:

This letter is in response to your letter dated May 9, 2011, which transmitted the referenced second appeal on behalf of TLC Health Care Network (Applicant).  The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of funding in the amount of $2,775,954 for the cost to restore the Medical Services Building.

Background

In August 2009, severe storms and flooding damaged the Medical Services Building.  The Medical Services Building is owned by a partnership known as Memorial Drive Partners.  The partnership has two parties:  the Applicant and W.A.M.M., Incorporated.  FEMA prepared PW 1057 for the clean-up and removal of damaged portions of the Medical Services Building and prepared PW 1095 to repair the Medical Services Building.  To be eligible for Public Assistance, in accordance with 44 CFR §206.223(a), General work eligibility, work must be required as a result of the disaster event; be located within the designated disaster declaration; and be the legal responsibility of an eligible applicant. FEMA determined that PWs 1057 and 1095 were ineligible because the partnership, not the Applicant, was legally responsible for the work in PWs 1057 and 1095.

First Appeal

In its first appeal, dated May 20, 2010, the Applicant stated that:  the Medical Services Building was used for eligible activities; 65 percent of the space was controlled and used by the Applicant; and the Applicant owned 65 percent of the facility.  Therefore, the Applicant asserted that the damage sustained from the flooding were eligible at the prorated amount of 65 percent.  On April 15, 2011, the Regional Administrator partially granted the appeal allowing reimbursement of PW 732 for the replacement of pre-disaster quantities of Applicant-owned consumable supplies and inventory and for the replacement of Applicant-owned contents, such as furnishings and equipment.  The appeal of PWs 1057 and 1095 was denied because FEMA determined that the Applicant was not legally responsible to repair the Medical Services Building.  FEMA found that the partnership owned the facility and, under the lease agreement with the Applicant, was legally responsible for maintaining insurance to cover loss and damage to the facility. 

Second Appeal

The Applicant submitted its second appeal on May 5, 2011.  As part of the appeal, the Applicant provided a legal opinion that the Applicant is legally responsible for the repair of the Medical Services Building under New York State law.  

Discussion

In accordance with Disaster Assistance Policy DAP9521.3, Private Nonprofit (PNP) Eligibility, dated July 18, 2007, there are instances where an eligible organization may be a partial owner of a facility with an ineligible organization.  Reimbursement depends upon the percentage of ownership by the eligible applicant, amount of space being occupied by the applicant and amount of space dedicated to eligible services.  The eligible applicant:  (1) must own more than 50 percent of the facility, and (2) must occupy and use for eligible services more than 50 percent of the facility's space at the time of the disaster.  If the eligible space meets that threshold, funding is in direct proportion to the percentage of space dedicated to the eligible use.  The Applicant owns 65 percent of the partnership assets and used approximately 65 percent of the space in the Medical Services Building for eligible medical services.  Under New York State law, a partnership is not a separate legal entity.  Because a partnership does not have a separate existence from its partners under State law, the Applicant has the legal responsibility for restoration of the facility.  Therefore, the Applicant is an eligible applicant that owns 65 percent of the Medical Services Building.  Further, the Applicant’s second appeal indicates that 65 percent of the facility was used for eligible medical activities.

Conclusion

I have reviewed the information submitted with the appeal and have determined that the Applicant’s appeal should be granted.  Since the Applicant utilized 65 percent of the Medical Services Building for eligible medical activities, 65 percent, or $1,804,370, of the requested $2,775,954 may be eligible subject to any required insurance reductions.  By this letter, I am requesting that the Regional Administrator take appropriate action to implement my decision.

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

cc:  Lynn Canton

       Regional Administrator

       FEMA Region II