Demolition and Debris Removal
Appeal Brief
| Disaster | FEMA-1726-DR |
| Applicant | City of Northwood |
| Appeal Type | Second |
| PA ID# | 035-58300-00 |
| PW ID# | 94 |
| Date Signed | 2010-01-11T05:00:00 |
Second Appeal–City of Northwood
FEMA-1626-DR-ND, City of Northwood, PA ID 035-58300-00
Project Worksheet (PW) 94
Citation: FEMA-1726-DR-ND, City of Northwood, Demolition and Debris Removal,
Project Worksheet (PW) 94
Cross
Reference: Insurance; Debris Removal
Summary: On August 26, 2007, a tornado struck the City of Northwood causing extensive damage to the privately owned Northwood State Bank Building. The Applicant found that the Northwood State Bank Building was substandard and violated Ordinance 326. The Applicant also determined that the costs of demolition were to be charged against the land by special assessment or by municipal lien upon the land or as a special tax against the land. FEMA prepared PW 94 for the demolition of the Northwood State Bank Building. FEMA subsequently deducted $44,000 from PW 94 based upon funds available as the result of the property owner’s insurance settlement.
In its first appeal dated August 27, 2008, the Applicant stated that FEMA should have only deducted $10,000 from insurance proceeds because the insurance policy only covered $10,000 for debris removal and demolition. In a letter dated November 24, 2008, the Disaster Assistance Division Director denied the first appeal. The Division Director concluded that the owner of the Northwood State Bank Building received $71,200 for the loss of the Northwood State Bank Building, which provided sufficient funds to cover the cost of demolition and debris removal. Therefore, a FEMA reimbursement would be a prohibited duplication of benefits.
In a letter dated February 9, 2009, the Applicant submitted its second appeal asserting that only $10,000 additional coverage for debris removal should be considered as recoverable duplicate funding. However, it is the Applicant’s responsibility to seek remedies allowed for under existing ordinances, such as filing suit or attaching liens, for the reimbursement from the property owner to offset expenses the Applicant incurred for the demolition and debris removal. FEMA is prohibited from approving funds for work that is covered by any other source of funding.
Issue: Is the cost of demolition eligible for reimbursement?
Finding: No.
Rationale: Sections 311, 312, and 403 of the Stafford Act; Disaster Assistance Policy 9523.4 Demolition of Private Structures, dated July 18, 2007.
Appeal Letter
January 11, 2010
Lonnie G. Hoffer
Disaster Recovery Chief
North Dakota Department of Emergency Services
PO Box 5511
Bismarck, ND 58506-5511
Re: Second Appeal–City of Northwood–PA ID 035-58300-00,
Demolition and Debris Removal, FEMA-1726-DR-ND, Project Worksheet (PW) 94
Dear Mr. Hoffer:
This is in response to your letter dated April 3, 2009, which transmitted the referenced second appeal on behalf of the City of Northwood (Applicant). The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) deduction of $44,000 for insurance proceeds from Project Worksheet (PW) 94 for the demolition and resulting debris removal from 4 North Main Street (“Northwood State Bank Building”).
Background
On August 26, 2007, a tornado struck the City of Northwood causing extensive damage to the privately owned Northwood State Bank Building. Due to the severity of the damage, the Applicant determined that the Northwood State Bank Building presented a threat to public health and safety. The City Council determined that the Northwood State Bank Building was a substandard building and ordered the owner to demolish it pursuant to Ordinance 326. In its Findings of Fact, Conclusions of Law and Order for Compliance issued by the City Council on February 4, 2008, the City Council ordered the owner to repair or demolish the building within a reasonable period of time, not to exceed thirty days. The owner did not repair or demolish the building, and the Applicant subsequently demolished the building. The City Council’s Findings of Fact, Conclusions of Law and Order for Compliance stated in part that the “cost of such repair or demolition be charged against the land on which the said building existed by special assessment or by municipal lien or as a special tax against the land in a suit at law against the owner….”
FEMA prepared PW 94 for $44,000 for the demolition of the Northwood State Bank Building. However, FEMA deducted $44,000 from the PW because the Applicant received an insurance settlement of $71,200 for the damage to the building. In its first appeal dated August 27, 2008, the Applicant asserted that FEMA should have only deducted $10,000 from insurance proceeds because the insurance policy provided $10,000 in coverage for debris removal and demolition.
In a letter dated November 24, 2008, the Regional Disaster Assistance Division Director denied the first appeal. The Division Director determined that the insurance coverage on the Northwood State Bank Building included $60,000 basic coverage, which included demolition if required; an additional $10,000 limit for debris removal; and a three percent inflation guard. The Division Director concluded that the owner of the Northwood State Bank Building received $71,200 for the loss of the Northwood State Bank Building, which provided sufficient funds to cover the cost of demolition and debris removal. Therefore, a FEMA reimbursement would be a prohibited duplication of benefits.
Second Appeal
In a letter dated February 9, 2009, the Applicant submitted its second appeal. In its attached legal opinion, the Applicant asserts that only $10,000 additional coverage for debris removal should be considered as recoverable duplicate funding. The Applicant claims that the insurance proceeds of $71,200 were insufficient to cover the total estimated building replacement cost of $201,178. Therefore, FEMA should claim an offset only to the extent of the insurance policy coverage available specifically for debris removal.
Discussion
Section 312 of the Stafford Act prohibits FEMA from approving funds for work covered by any other source of funding, including insurance settlements. The property owner’s insurance policy covered demolition of the property and removal of debris. The property owner received an insurance settlement of $71,200. Therefore, FEMA must reduce the amount of assistance it provides by the amount of insurance proceeds, up to the amount of eligible assistance.
The Order for Compliance that the City Council approved on February 4, 2008, stated that the City would charge the cost it incurred to demolish the Northwood State Bank Building against the land on which the building existed by special assessment or by municipal lien or as a special tax against the land in a suit at law against the owner. The Order for Compliance is clear that the property owner is legally responsible to pay the cost the City incurred in demolishing the building and removing the debris from the property. Therefore, FEMA’s funding of these costs would constitute a duplication of benefits.
Conclusion
I have reviewed the information submitted with the appeal and determined that the Division Director’s decision in the first appeal is consistent with FEMA regulations and policy. Accordingly, I am denying the second appeal.
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/ Elizabeth A. Zimmerman Assistant Administrator Disaster Assistance Directorate cc: Douglas A. Gore Acting Regional Administrator FEMA Region VIII