Net Small Project Overrun

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

DisasterFEMA-1505-DR
ApplicantCity of Paso Robles
Appeal TypeSecond
PA ID#079-56056-00
PW ID#PWs 248, 77, 85, and 90
Date Signed2007-01-24T05:00:00
Citation: FEMA-1505-DR-CA, City of Paso Robles, PW 248, 77, 85, 90, Net Small Project Overrun

Cross-reference: Permanent repairs, Insurance deduction, Post-earthquake inspection

Summary: As a result of the San Simeon earthquake (declared January 13, 2004), the City of Paso Robles (Applicant) performed emergency protective measures and permanent repairs to various damaged facilities. The work included installation of a permanent fence at the Carnegie Library, weld inspection at the Centennial Park Gymnasium, and permanent repairs to the Senior Citizens Center. Upon completion of its small projects, the Applicant submitted a first appeal dated March 31, 2005, requesting funding for its Net Small Project Overrun (NSPO). On July 19, 2005, FEMA Region IX partially approved the Applicant’s NSPO request and determined the eligible NSPO amount to be $107,762, for a total funding amount of $212,942 for all small projects. FEMA obligated Project Worksheet (PW) 248 for $107,762 to fund the eligible NSPO. On November 10, 2005, the Applicant submitted a second appeal regarding the denial of $28,317 in funding by FEMA in connection with their NSPO on PW 248. The costs appealed are:

PW 77 Carnegie Library - Fence $16,200
PW 85 Centennial Park Gymnasium – Weld Inspection $2,300
PW 90 Senior Citizens Center – Insurance $9,817
Total: $28,317


Issues: 1. Is the cost of the installation of a permanent fence an eligible emergency protective measure?
2. Is the cost of the weld inspection where no damage was found eligible for reimbursement?
3. Is the cost of all eligible work performed less insurance proceeds eligible for reimbursement?

Findings: 1. No.
2. No.
3. Yes.

Rationale: 44 CFR §206.225; 44 CFR §206.250(c); FEMA Policy 9524.1

Appeal Letter

January 24, 2007

Mr. Paul Jacks
Governor’s Authorized Representative
Governor’s Office of Emergency Services
3650 Schriever Avenue
Mather, California 95655

Re: Second Appeal-City of Paso Robles, PA ID# 079-56056-00,
Net Small Project Overrun, FEMA-1505-DR-CA,
Project Worksheets 248, 77, 85, and 90

Dear Mr. Jacks:

This is in response to your letter dated January 10, 2006, transmitting the City of Paso Robles’s (Applicant’s) second appeal of its Net Small Project Overrun (NSPO) request related to Project Worksheets (PW) 248, 77, 85, and 90. The appeal disputes the basis on which the Department of Homeland Security’s Federal Emergency Management Agency (FEMA) denied assistance for certain emergency protective measures and permanent repair costs in connection with this disaster.

As explained in the enclosed appeal analysis, the Applicant is eligible for a reimbursement of a portion of its NSPO request under appeal. The additional funding requested for PW 90, $9,817, is eligible, while the additional funding requested for PW 77 and 85 is not. Therefore, the appeal is partially approved, and by copy of this letter, I am asking the Regional Director of FEMA Region IX to add $9,817 to a version of PW 248 (the PW that was prepared in response to the Applicant’s NSPO request).

While the cost associated with the installation of a permanent fence is not eligible under PW 77 (the PW prepared for emergency protective measures), FEMA Region IX indicates that the funding for the fence will be addressed in PW 244 (the PW prepared for the permanent repair of the Carnegie Library).
Please inform the Applicant of this decision. This determination constitutes the final decision on this matter pursuant to 44 CFR § 206.206.

Sincerely,
/s/
John R. D’Araujo, Jr.
Director of Recovery

Enclosure

cc: Ms. Nancy Ward
Regional Director
FEMA Region IX

Appeal Analysis

BACKGROUND

As a result of the San Simeon earthquake (FEMA-1505-DR-CA, declared January 13, 2004) the City of Paso Robles (Applicant) performed emergency protective measures and repaired facilities at various locations. The Applicant requested and was provided funding from the U.S. Department of Homeland Security’s Federal Emergency Agency (FEMA) for costs associated with this work.

First Appeal - Net Small Project Overrun

Upon completion of its small projects, the Applicant submitted a Net Small Project Overrun (NSPO) request, dated March 31, 2005, in accordance with 44 CFR §206.204(e) to account for cost overruns, based on actual expenditures. The Applicant requested funding for $147,629 in addition to the original funding of $105,180, for a total amount of $252,809 for all small projects.

The Governor’s Office of Emergency Services of the State of California (OES) reviewed the Applicant’s claim and documentation of incurred expenses for all small projects. On May 27, 2005, OES forwarded the NSPO request to FEMA. The OES Final Inspection Report (FIR), received by FEMA on July 6, 2005, recommended that FEMA provide funding for an overrun of $128,512, for a total amount of $225,964 for all small projects.

On July 19, 2005, FEMA partially approved the NSPO request, determining the eligible overrun amount to be $107,762, for a total funding amount of $213,620 for all small projects. FEMA prepared Project Worksheet (PW) 248 for $107,762, disallowing costs as described below:

PW 77 Carnegie Library – Fence

This Category B PW was obligated for $19,144 on March 22, 2004, for safety fencing and emergency shoring of the damaged Carnegie Library. The Applicant performed the emergency shoring and installed a temporary chain link protective fence for one month while installation of a permanent tubular metal fence was underway.

The Applicant submitted a first appeal of PW 77 dated June 18, 2004, requesting funding for the rental of the temporary fence and the installation of the permanent fence. In response to the first appeal, FEMA obligated PW 77 Version 1 on August 4, 2005, for $680, to reimburse the Applicant for one month’s rental of the chain link fence. FEMA denied the cost of the permanent fence ($16,200), because “the decorative [permanent] fencing is not an emergency protective measure therefore, [it is] deemed not eligible for FEMA reimbursement.”

In its NSPO request, the Applicant claimed the $16,200 for the permanent fence. FEMA denied this portion of the NSPO for the reason stated above.

PW 85 – Centennial Park Gymnasium – Weld Inspection

PW 85 was obligated on June 9, 2004, for $13,145.11 for permanent repairs to the gymnasium, which is a concrete tilt-up wall structure. The scope of work was limited to repairing the interior damages of cracking in drywall, ceilings, concrete walls, tile grout, stucco, and clay roofing tile.

The Applicant’s NSPO request included a revised total of $41,876, and the OES FIR recommended a revised total of $41,854 (less $31 for force account administrative hours covered by the administrative allowance). The Applicant’s requested amount included $2,300 for inspection of spot welds in the building. No earthquake-related damage was found at these welds.

FEMA approved $39,523 for PW 85 and denied the $2,300 for the inspection of the spot welds. FEMA stated the testing of welds “was not part of the approved scope of work in the PW. The welds were tested and found to be undamaged. This item is damage assessment and is therefore ineligible.”

PW 90 Senior Citizens Center – Insurance

PW 90 was obligated on June 9, 2004, for $11,391.41 for permanent repairs of earthquake damage and related water damage (due to a broken water pipe) to the facility. In its NSPO request, the Applicant submitted actual costs of $52,578. The OES FIR recommended a total reimbursement of $40,797. This amount includes a deduction of $2,048 for a change order outside the approved scope of work and a deduction of $11,701 for an insurance recovery for the water damage. FEMA approved $30,065, including only the insurance deductible of $5,000 for the repairs related to the water damage.

Second Appeal

On November 10, 2005, the Applicant submitted a second appeal of FEMA’s denial of $28,317 in connection with their NSPO funded by PW 248. The costs appealed are:

PW 77 Carnegie Library - Fence $16,200
PW 85 Centennial Park Gymnasium – Weld Inspection $2,300
PW 90 Senior Citizens Center – Insurance $9,817
Total: $28,317

PW 77 Carnegie Library – Fence

The overrun associated with PW 77 ($16,200) is the cost of the installation of the permanent fence, which was denied in response to the Applicant’s first appeal of PW 77. The Applicant states that permanent repairs to the library are expected to take three years. During this time, fencing will be required to limit access to the building and protect the public from construction activities. The Applicant provided a cost comparison for three years of chain link fence rental (36 months x $680.40/month = $24,494) versus the installation of the permanent metal tubular fence ($16,200). The Applicant requests the reimbursement of $16,200 for the tubular fence as a cost-effective element of the permanent repair of the facility.

PW 85 Centennial Park Gymnasium – Weld Inspection

In its second appeal, the Applicant states, “The testing of the welds was not damage assessment. The welds had to be tested in order to ensure that the structural integrity of the Centennial Park Gymnasium was not compromised by the earthquake.” The Applicant argues that the inspection of steel structural members in welded steel buildings was mandated by FEMA after the Northridge earthquake, referencing FEMA-352, Recommended Post-Earthquake Evaluation and Repair Criteria for Welded Steel Moment-Frame Buildings (June 2000).

PW 90 Senior Citizens Center – Insurance

In its second appeal, the Applicant states that the actual repair cost of water damage was $26,518. The Applicant received an insurance payment of $11,701 for the water damage and argues that by approving only the deductible of $5,000, “FEMA erroneously assumed that the City had recovered full payment from the insurance company.” The Applicant requests that FEMA reimburse an additional $9,817 as part of the actual repair cost of disaster-related damages.

DISCUSSION

The Applicant’s second appeal disputes FEMA’s determination that a total of $28,317 related to cost overruns for the three PW is not eligible. The three projects under appeal are as follows:

PW 77 Carnegie Library – Fence

The initial review and first appeal review of this PW by FEMA correctly state the completed emergency shoring of the Carnegie Library eliminated the threat to public health and safety, and thus the permanent metal tubular fence can not be claimed as an emergency protective measure. However, because of the anticipated three-year construction timetable for the permanent repairs to the Library, safety fencing will be required to secure the facility and protect the public users of the surrounding park from construction activities. The Applicant demonstrated that the installation of the tubular fence is a cost-effective element of the permanent repair of the facility. Costs for the tubular fence ($16,200) are substantially less than renting temporary chain link fence for three years (36 months x $680.40/month = $24,494). However, it is not appropriate to include the cost of the permanent fence under PW 77, which wasntdressed in PW 244, which is the PW for the permanent repair of the Carnegie Library.

PW 85 Centennial Park Gymnasium – Weld Inspection

FEMA Response and Recovery Directorate Policy 9524.1, Welded Steel Moment Frame Policy, (7)(A)(3) sets the criteria under which weld testing can be reimbursed by FEMA when there is “little likelihood of significant welded steel moment frame damage.” “In circumstances where a building is not required to undergo a Preliminary Assessment or where a Green Posting is assigned according to Table 3-2 of FEMA 352 [Recommended Postearthquake Evaluation and Repair Criteria for Welded Steel Moment-Frame Buildings], we will reimburse the costs of visual inspections only for those connections where significant damage associated with the declared earthquake disaster is found.” Table 3-2 of FEMA-352 describes condition Green-2 as “Minor nonstructural damage,” defined as: “The building does not appear to have experienced significant damage to structural elements, but has experienced some damage to nonstructural components. Occupancy may continue, pending completion of detailed evaluations. Repair of nonstructural damage may be conducted at convenience.”

According to the inspection report dated May 27, 2007, prepared by the Applicant’s structural consultant, at the time of the weld inspection, the structure “[was] currently ‘green tagged’ by the local building department which indicates the structure was inspected and is safe for occupants.” The Applicant’s structural consultant agreed with the building department’s assessment and did not identify damage at the welds.

The scope of work approved in PW 85 is limited to nonstructural items such as ceiling, drywall, and stucco cracking. Thus, the building is considered to have a Green Posting as described above, and the cost of visual inspection for weld damage is eligible only for those welds where significant damage is found. As no damage was found, the cost of this inspection ($2,300) is not eligible for reimbursement.

PW 90 Senior Citizens Center – Insurance.

In accordance with 44 CFR §206.250(c), actual and anticipated insurance recoveries shall be deducted from otherwise eligible costs. As further explained in FEMA 321 Public Assistance Digest (October 2001), page 71, “For general property insurance, FEMA will use the Applicant’s insurance adjustment, if available, to reduce the eligible amount of funding by the amount of the actual insurance proceeds provided.”

The insurance company provided a settlement of $11,701 (after subtraction of the $5,000 deductible). In accordance with FEMA policy, only the actual insurance settlement of $11,701 should be deducted from the actual costs of completing eligible work as outlined in the PW scope of work. The actual cost of eligible work related to water damage is $26,519. After deducting the insurance proceeds, total eligible funding for this work is $14,817. In response to the NSPO request, FEMA approved $5,000 for this work. Accordingly, an additional $9,817 is eligible for funding.

CONCLUSION

The information provided in support of the Applicant’s second appeal is sufficient to conclude that the Applicant’s claim for $9,817 related to permanent repair work not covered by actual insurance proceeds (PW 90 – Senior Citizens Center - Insurance) is eligible for FEMA reimbursement.

However, for the reasons discussed above, the Applicant’s claim for $16,200 for tubular metal fence construction is not eligible under PW 77. The cost of the tubular metal fence construction will be addressed by FEMA Region IX in PW 244, which is the PW for the permanent repair of the Carnegie Library.

As discussed above, the Applicant’s claim for $2,300 for visual inspection of welds (PW 85) does not meet the applicable FEMA criteria and thus is not eligible for reimbursement.
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