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Lyon County, Kansas - Acquisition Project

Appeal Brief

ApplicantKansas Division of Emergency Management
Appeal Type2nd
Project Number11
Date Signed
1st Appeal• Issueo  An approved acquisition project consisted of the acquisition and demolition of an operating commercial building in Lyon County, Kansas. At the request of the subgrantee, FEMA provided two advance payments constituting approximately 75% of the Federal share to pay off the outstanding mortgage, to clear the title for sale and to allow the business to obtain construction financing for the relocation to a new structure. These funds were dispersed to the property owner and approximately one year later the Kansas Division of Emergency Management (KDEM) requested a one year extension. It was noted that the acquisition had been completed approximately 10 months earlier, in order for the property owner to pursue a replacement facility and a waiver of the 90-day demolition rule was also requested. While funds had been dispersed to the property owner, the County had not obtained title to the property. FEMA Region VII terminated the award because of noncompliance, and Lyon County appealed.• Reason for Denialo Region VII based the denial of the 1st appeal on the fact that the project did not comply with program statutes, specifically the requirement that subapplicants take title on acquired properties within 14 days and that structures be demolished within 90 days.• Reference(s)o 44 CFR 206.434 Eligibility;   44 CFR 206.440 Appeals, 44 CFR 206.436(d) Application Procedures; The Stafford Act, Section 404; 44 CFR Parts 13.31 Real Property, 13.37 Subgrants, 13.40 Monitoring and 13.41 Financial Reporting;  80.1 Purpose and Scope, 80.19 Land Use and Oversight, 206.434 Eligibility, and 206.438 Project Management2nd Appeal• Issueo KDEM filed a second appeal on behalf of Lyon County, stating that the project was delayed due to the need for continued operation at the commercial facility and that the technical errors in grant implementation should not result in the termination of the project.• FEMA Findingso FEMA HQ denied the 2nd appeal, supporting Region VII’s decision to deny the 1st appeal.o Rationale: Subapplicants are required to settle (take title) on acquired properties within 14 days of receipt of funds from the Grantee, and demolish acquired property within 90 days of settlement. The subapplicant had not settled or demolished the structure as of approximately ten months after funds were provided. Reference(s):  44 CFR 206.440 Appeals; 44 CFR 206.434 Eligibility; 44 CFR 206.436(d) Application Procedures; HMGP Desk Reference; 44 CFR 13.43 Enforcement

Appeal Letter

MAY 18 2012   Angee Morgan Deputy DirectorKansas Division of Emergency Management2800 SW Topeka BoulevardTopeka, Kansas 66611-1287 Re: Second Appeal: Lyon County, Acquisition Project, FEMA DR-1711-KS, HMGP Project #0011   Dear Ms. Morgan:   This is in response to your letter dated February 9, 2012, regarding the Regional Administrator's decision to terminate Lyon County Acquisition Project #0011 because Lyon County did not comply with the terms of the grant. Lyon County is requesting that the Federal Emergency Management Agency (FEMA) restore funding under the Hazard Mitigation Grant Program (HMGP) for this acquisition project.   Background:On October 23, 2009, FEMA approved a HMGP project to acquire a flood prone property owned by Fanestil Meat Packing Company in Lyon County, Kansas. The period of performance for the grant was for 22 months up to August 23,2011. On June 22,2010, the Kansas Division of Emergency Management (KDEM) processed an advance payment to Lyon County in the amount of $364,132. The County in turn provided payment to Fanestil Meats on or about July 7, 2010. On July 13,2010, Fanestil Meats requested another advance from Lyon County to: 1) pay offthe outstanding mortgage balance on the subject property, 2) clear title for sale to Lyon County, and 3) enable Fanestil Meats to obtain construction financing required for relocation to a new building. In August of 2010, Lyon County disbursed an additional $862,035 to Fanestil Meats for a total advance of approximately $1.24 million against a total Federal share of approximately $1.6 million. On June 9, 2011, KDEM submitted a request to FEMA to extend the period of performance for the overall HMGP grant for DR-1711-KS by one year. KDEM indicated that Lyon County had purchased the subject property on August 13,2010, nearly 10 months earlier, in order for the owner to pursue a replacement facility. KDEM also requested a waiver of the 90-day demolition rule under 44 CFR § 80.17(d) to allow Fanestil Meats to continue operation until moving to a new facility. Although Lyon County had disbursed funds to the property owner, Lyon County had not obtained title to the property. In a letter dated June 30, 2011, to KDEM, the FEMA Region VII Mitigation Division Director terminated the project award for Project #0011 because Lyon County did not comply with program statutes, regulations and guidance, and the grant agreement articles. Specifically, the Division Director cited violations of Section 404 of the Staftord Act (Hazard Mitigation), Title 44 CFR Sections 13.31, Real Property, 13.3 7, Subgrants, 13 .40, Monitoring, 13.41, Financial Reporting, Section 80.1, Purpose and Scope, 80.19, Land Use and Oversight, 206.434, Eligibility, and 206.438, Project Management. On August 22, 2011, Lyon County appealed this decision. The Regional Administrator denied the appeal in a letter dated November 30, 2011. On February 9, 2012, KDEM submitted the second level appeal to FEMA. Analysis:The HMGP Desk Reference (pages 11-13) requires subapplicants to settle (take title) on acquired properties within 14 days of receipt of funds from the Grantee. The Desk Reference (pages 10-11) requires the subapplicant to demolish acquired properties within 90 days of settlement on the property. KDEM provided a total of $1.2 million to Lyon County in June and August 2010 for the acquisition of the property. However, as of June 2011 (10 months after disbursing funds to the property owner), Lyon County had not settled on the property, or demolished the property as required by program regulation and guidance. It is clear that Lyon County did not comply with program regulations and guidance. Title 44 Section 13.43, Enforcement, addresses remedies that the awarding agency may implement when the grant recipient does not comply with the terms of the grant agreement. One remedy is to disallow all costs of the activity that is not in compliance.   Conclusion:Based on review of all information submitted with the appeal, I have determined that the Regional Administrator's decision on the first appeal is consistent with program statute, regulations, and policy. Therefore, I deny the second appeal.   Please inform Lyon County of my determination. My determination is the agency's final decision on this matter pursuant to 44 CFR 206.440, Appeals.   Sincerely,   Sandra K. Knight, PhD, PEDeputy Federal Insurance and Mitigation Administrator, Mitigation   cc: Beth Freeman, Regional Administrator, FEMA Region VII

 

Appeal Analysis

The HMGP Desk Reference (pages 11-13) requires subapplicants to settle (take title) on acquired properties within 14 days of receipt of funds from the Grantee. The Desk Reference (pages 10-11) requires the subapplicant to demolish acquired properties within 90 days of settlement on the property. KDEM provided a total of$1.2 million to Lyon County in June and August 2010 for the acquisition of the property. However, as of June 2011 (10 months after disbursing funds to the property owner), Lyon County had not settled on the property, or demolished the property as required by program regulation and guidance. Title 44 Section 13.43, Enforcement, addresses remedies that the awarding agency may implement when the grant recipient does not comply with the terms of the grant agreement. One remedy is to disallow all costs of the activity that is not in compliance.

 

Last updated Aug 19, 2014

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