David W. Kane
Indiana Department of Homeland Security
302 West Washington Street
Indianapolis, Indiana 46204
RE: Second Appeal – City of Kokomo, Indiana
Dear Mr. Kane:
This is in response to your letter dated November 6, 2015, which transmitted the referenced appeal on behalf of the City of Kokomo, Indiana. The city is appealing FEMA’s suspension of Hazard Mitigation Assistance (HMA).
As early as December 2013, the City of Kokomo was planning to build the Kokomo Municipal Stadium at its current location. Around that time the city performed title searches for the eight Hazard Mitigation Grant Program (HMGP) acquired properties that would become part of the stadium site. During the search the city found the warranty deeds, including the deed restrictions, for these properties which stated, per the HMGP grant terms, that the properties were restricted to open space use in perpetuity consistent with 44 CFR 206.434. The deed restrictions for the acquired properties were also included in the State-Local Agreements between the State of Indiana and the City of Kokomo in 2000 and 2005. The city did not contact FEMA or the Indiana Department of Homeland Security (IDHS) to ask whether the existing deed restrictions would allow the city to build a stadium on the deed restricted property, or seek prior written approval from the FEMA Administrator, as required by Title 44 Code of Federal Regulations 44 CFR 206.434(e)(1)(ii)(C), 44 CFR 80.19(a)(2)(iii), and the deed restrictions. On June 10, 2014, the city leased the properties where it intended to build the Stadium, including the parcels acquired with HMGP funds, to the Kokomo Community Development Corporation (KCDC) for its exclusive use for a 50-year period ending on June 13, 2064. Contrary to the terms of the deed restrictions and the applicable regulation (44 CFR 80.19(b)(2)), the city did not obtain FEMA’s prior written approval for transfer of the city’s interest.
On November 3, 2014, FEMA sent a letter to IDHS regarding the stadium construction and described the violation of the deed restrictions and asked for a submission of a corrective action plan (CAP) by November 17, 2014. On November 20, 2014, FEMA received the city’s response to its request for a CAP. The city’s response was a legal brief arguing why the proposed stadium project met the open space requirements and, if it did not, why return of the HMGP funds to FEMA was appropriate. On November 24, 2014, IDHS sent the city a Notice of Violation letter informing the city that it had violated the terms of the grant agreements and that the city had 60 days to remedy the non-compliance or IDHS would seek legal action. On January 26, 2015, the City of Kokomo filed a lawsuit against the State of Indiana seeking an injunction against the state, which was trying to stop the stadium construction.
On February 25, 2015, FEMA took enforcement action against the State of Indiana and the City of Kokomo. FEMA notified the state that it was withholding all hazard mitigation funding from the state and the city as long as the properties remained in violation of open space requirements. In addition, FEMA notified the state that no disaster assistance, flood insurance claim payments, or any other FEMA assistance would be provided for the Kokomo Municipal Stadium.
On March 12, 2015, the IDHS appealed FEMA’s enforcement action of withholding HMA funds from the State of Indiana. On May 7, 2015, FEMA responded to the IDHS appeal and approved the restoration of HMA funds state-wide, excluding the City of Kokomo. On April 29, 2015, representatives from FEMA Region V and IDHS met with the city at the stadium site to view the status of construction and to discuss the city’s redesign Proposal No. 5, set forth in the city’s March 11, 2015 letter. During this visit FEMA’s representatives noted that, contrary to the city’s prior assertions, the city had constructed part of the Kokomo Municipal Stadium on the eight deed restricted parcels. As a result of this site visit FEMA issued a letter to the city on May 13, 2015 identifying several steps that the city must follow in order to bring the stadium project into compliance with 44 CFR 80.19. In this letter FEMA emphasized that to avoid current and future redevelopment concerns on the deed restricted parcels, the city must coordinate with IDHS and FEMA for approval prior to beginning any open space reuse activities.
On June 23, 2015, FEMA Region V received the City of Kokomo’s first appeal of FEMA’s suspension of HMA funding and IDHS’ recommendation that the appeal be denied. On July 10, 2015, FEMA denied the city’s first appeal.
On September 8, 2015, the City of Kokomo sent a letter to the IDHS appealing FEMA’s suspension of HMA funds. The city identified two reasons why future HMA funding should be reinstated. First, the city disputed that it violated FEMA’s land use and oversight regulations found at 44 CFR 80.19 and the terms of the State-Local agreements that had provided HMA grant funds for the open space acquisition projects. The city argued that it had complied with each of FEMA’s and IDHS’ requests to date, that the open space requirements on the eight parcels had been met, and that the only outstanding issue was the amendment of the leases to include deed restrictions. Second, the city argued that it is working to bring the HMGP parcels into compliance, and that it is entitled to a good faith restoration of HMA funds to the city.
On September 9, 2015, the city and IDHS entered into an Agreed Judgment settling the city’s January 26, 2015 lawsuit against the State of Indiana, which sought an injunction against the state because the state was trying to stop the stadium construction. As part of this Agreed Judgment, the city consented to constructing the Kokomo Municipal Stadium in compliance with FEMA’s May 13, 2015 letter, which IDHS accepted. In addition the city agreed that it will not use the HMGP acquired parcels for any purpose without prior written approval by IDHS and FEMA. The Agreed Judgment did not include FEMA.
On November 6, 2015, FEMA Region V received the city’s second appeal and the IDHS’ recommendation supporting the city’s appeal of the suspension of FEMA HMA funds. The city contends that they have substantially complied with FEMA’s requirements and that a continued ban on HMA funding would be detrimental to the community.
The State of Indiana supported the City of Kokomo’s appeal and contended, on the city’s behalf, that the city had substantially complied with the land use regulations found in 44 CFR 80.19 and the terms of the State-Local Agreements, which incorporated the terms of the deed restrictions, and that the HMA funding ban should be lifted. FEMA’s May 13, 2015 letter identified several steps that the city must follow to bring the stadium project into compliance with 44 CFR 80.19. Despite the settlement of the lawsuit, which was between the City of Kokomo and the State of Indiana, FEMA has not found substantial compliance with open space restrictions and cannot validate that the open space requirements for the deed restricted parcels are fully consistent with the applicable open space and land use regulations. The city has not met all of these requirements, including a certified land survey of the stadium site and evidence that the certified survey is attached to each HMGP deed restricted parcel.
I have reviewed all documentation submitted by Indiana Department of Homeland Security in connection with this appeal and have determined that the original appeal decision by the FEMA Regional Office stands.
FEMA encourages the Recipient and subrecipient to work constructively with each other to address these and other issues that may arise in the future. By copy of this letter, I request the Regional Administrator to take appropriate action to implement this determination.
My determination is the final decision on this issue in accordance with 44 CFR 206.440, Appeals.
Michael M. Grimm
Assistant Administrator for Mitigation
Federal Emergency Management Agency