FEMA Mitigation Memorandum - Conditions for a Property Mitigated in a SFHA with FEMA Grant Funds dated March 20, 2006 states that " ... for mitigation projects that involves altering existing structures on individual properties that are sited within SFHA: When the project is implemented, all structures that will not be demolished or relocated out of the SFHA must be covered by flood insurance to an amount at least equal to the project cost or the maximum limit of coverage made available with respect to the particular property, whichever is less ... " VDEM asked FEMA to clarify the definition of "maximum limit of coverage made available with respect to the particular property." In a letter dated February 22, 2011, the FEMA Region III Mitigation Division Director stated that the phrase can be defined the "Replacement Cost Value (RCV), which is the cost to replace property with the same kind of material and workmanship without deduction for depreciation." VDEM provided a chart showing the project cost, replacement cost and the amount of flood insurance placed on each property. This information shows that the amount of flood insurance on the four (4) properties is consistent with the Region's guidance.
The questions that need to be addressed here are: (1) do program guidelines require applicants to obtain FEMA's approval before changing the scope of a project and (2) were the minor changes to components of the elevation projects that the applicant implemented considered changes to the approved scopes of work? FEMA guidance on page 13-12 of the Hazard Mitigation Desk Reference states that "States must obtain prior approval from FEMA before implementing scope changes." The Desk Reference defines scope changes as "Revision of the objectives of an approved project (regardless of budget implications). Examples: The number of houses in a retrofit or acquisition project; the size of a replacement culvert; or the expanded or reduced project area. Change in the period of availability of funds; or change in key personnel if specified in the application. For construction projects, the grantee must "obtain prior written approval for any budget revision which would result in a need for additional funds" (44CFR 13.30)."
The modifications that Gloucester County made to elevation structures are listed in Enclosure 1. These modifications did not change the objective of the project, which was to elevate structures. Although the modifications resulted in a small increase in cost for some structures, there was no increase in total project cost. It is not clear from the guidance stated in the previous paragraph whether the "additional funds" refer to individual properties in elevation projects or to the overall cost of the project. VDEM should have contacted FEMA if it had questions about this guidance. Since the modifications did not change the objective of the mitigation project and did not increase the total cost of the project, there is no compelling reason for denying the costs associated with the modifications on this grant.
Project Management Costs:
FEMA initially approved ten (10) percent of the original project costs for management cost. FEMA subsequently determined that management cost should be reduced because Gloucester County requested management costs related to five (5) properties that withdrew from the project. Gloucester County had expended management efforts on the withdrawn properties. Gloucester County's request for management cost is less than ten (10) percent of the total project cost and is reasonable.