Result of Declared Incident

Appeal Brief

Summary Paragraph

Severe storms and flooding resulted in a disaster declaration for the State of Missouri. The City of Brentwood (Applicant) requested funding through FEMAs Public Assistance (PA) program for costs associated with construction delays caused by damage to the embankment along the Deer Creek Greenway in Deer Creek Park (Facility). At the time of the declared incident, the Facility was under construction and a contract was in place with L. Keeley Construction. The Applicant requested $1,299,815.40 in costs for damaged construction work performed in Phase I, additional project management time for the general contractor, engineering services, attorney fees, and the costs for delays under its contract with Ideal Landscape for the Great Rivers Greenway (GRG) Connector project. FEMA issued a Determination Memorandum denying the request, stating the Facility was under construction at the time of the declared incident and the contractor had legal responsibility for the project site. FEMA determined the Applicant did not have the legal responsibility for the Facility at the time of the declared incident. The Applicant appealed, requesting the project be returned for further consideration and development of costs related to the GRG Connector project. The FEMA Region 7 Regional Administrator, denied the appeal, stating the Applicant did not have legal responsibility because the Facility was under construction at the time of the declared incident, and the Applicant’s construction contractor retained responsibility under the contract. Additionally, FEMA found that the claimed work associated with the GRG Connector did not address eligible damage caused by the declared incident, and without an eligible scope of work to repair damage caused by the disaster, there is not an eligible FEMA project to associate project management and engineering costs with. The Applicant submitted a second appeal for $112,136.40 in costs related to the Ideal Landscape contract for the GRG Connector project claiming it has legal responsibility for damages to the Facility under this contract and arguing the costs at issue are authorized as contingency fees. The Applicant argues its claimed costs support the repair of disaster-related damage, because they are a contractually required payment to induce the performance of eligible work.

Authorities

• Stafford Act § 406(a)(1)(A), (e)(1).
• 44 C.F.R. §§ 206.223(a)(1), 206.226.
• PAPPG, at 51-52, 64, 65.

Headnotes

• To be eligible for PA funding, work must be required as a result of the declared incident and the applicant must demonstrate that the damage was directly caused by the incident. To be eligible, costs must be directly tied to the performance of eligible work.
  • The Applicant does not assert a claim for any work to repair damage caused by the incident. Because the construction delays are not directly tied to the performance of eligible work, the claimed costs associated with the Facility’s construction delays are ineligible. 

Conclusion

FEMA finds the Applicant has not demonstrated that the claimed costs are directly tied to the performance of eligible work. Therefore, this appeal is denied.

Appeal Letter

Appeal Analysis

Background

On August 8, 2022, the President declared a major disaster declaration for the State of Missouri in response to severe storms and flooding. The City of Brentwood (Applicant) requested Public Assistance (PA) funding for costs associated with construction delays to its Brentwood Bound (B-Bound) project caused by the damage to the embankment along the Deer Creek Greenway (Facility), within the project area. The B-Bound project is a community revitalization project that was under construction at the time of the declared incident, consisting in part of flood mitigation measures. The project also included work on the Great Rivers Greenway (GRG) Connector, to include landscaping, an irrigation system, and other improvements. The Applicant had contracts with L. Keeley Construction to perform the B-Bound Deer Creek Flood Mitigation work and Ideal Landscape to perform the GRG Connector work. 

FEMA prepared Grants Manager Project (GMP) 685236 to document a loss of soil installed as part of the B-Bound project along the Facility’s embankment due to flooding and to capture the Applicant’s requested costs for additional project management, engineering, and legal service fees. The Applicant’s claim also included additional amounts owed to Ideal Landscape based on a post-disaster change order, which noted that flooding-related delays to L. Keeley Construction’s work would cause Ideal Landscape to miss the fall planting season and delay its own work. The change order stated that a provision in the Applicant’s predisaster contract allows Ideal Landscape to charge additional amounts for delays. 

FEMA issued a Determination Memorandum (DM) on May 23, 2023, denying a total of $1,299,815.40 in requested costs, including $112,136.40 for the Ideal Landscape contract change order. FEMA found the Applicant did not have legal responsibility for repairs to the Facility at the time of the declared incident. FEMA determined that the Facility was under construction and the contractor, L. Keeley Construction, was legally responsible for the project site during that construction, based on contractual language that required L. Keeley Construction to insure itself and the Applicant against all hazards or risk of loss until work was complete and accepted by the Applicant.

First Appeal 

The Applicant submitted an appeal in a letter dated July 19, 2023, seeking the full amount denied.^[1]The Applicant also requested the project be returned for further development of costs related to the GRG Connector Project, which it claimed FEMA did not adequately address in the DM. Additionally, the Applicant claimed it is legally responsible for the contract expenses not coverable by insurance, and which are directly related to the disaster event.It argued that any possible recovery from insurance should result in a reduction of eligible costs at closeout rather than the project itself being found ineligible. On July 21, 2023, the Recipient transmitted the first appeal stating the Applicant had not adequately documented its legal responsibility for the Facility at the time of the incident.

The FEMA Region 7 Regional Administrator denied the appeal in a letter dated October 13, 2023. FEMA stated the Applicant did not have legal responsibility because the Facility was under construction at the time of the declared incident. Although the Applicant’s first appeal criticized the DM for not analyzing Ideal Landscape’s contract for the GRG Connector Project, FEMA found that the contract provisions for Ideal Landscape were identical to those for L. Keeley Construction; thus, the Applicant did not have legal responsibility for the costs related to the delays to Ideal Landscape’s work either. Additionally, FEMA stated that the Applicant did not identify damage to the GRG Connector. While the Applicant claimed work associated with the GRG Connector’s construction, engineering, and project management, it did not address damage caused by the declared incident; therefore, permanent work was not required as a result of the disaster. FEMA stated that without an eligible scope of work (SOW) to repair disaster-related damage, there is no eligible FEMA project with which to associate project management and engineering costs. Finally, FEMA found that even if there had been an eligible SOW and FEMA project, costs associated with future GRG Connector improvements, including construction delays, project management, and design services, would not be eligible because those costs do not directly support the repair of damage caused by the disaster and are therefore not necessary for the performance of the Federal award.

Second Appeal

The Applicant submitted a second appeal in a letter dated December 11, 2023, narrowing its request to $112,136.40 in costs related to the Ideal Landscape contract for the GRG Connector project. The Applicant claims that its contract with Ideal Landscape makes the Applicant legally responsible for the costs.[2]It also argues that the costs at issue are authorized as contingency fees under Title 2 of the Code of Federal Regulations § 200.433, which allows for budget estimates to factor in possible events or conditions that will likely result in additional costs.[3] Further, it disagrees with FEMA’s determination that the costs do not directly support the repair of disaster-related damage, arguing that the costs do in fact meet this requirement because they are a contractually required payment to induce the performance of eligible work. The Applicant also claims the damage descriptions it provided identify the project site area and the significant erosion that occurred which affected the work being performed under the Ideal Landscape contract. The Recipient transmitted the second appeal to FEMA on December 20, 2023, stating the Applicant has not adequately documented its legal responsibility for the Facility at the time of the incident.

Discussion

FEMA has the authority to provide assistance for the repair, restoration, reconstruction, or replacement of a public facility damaged or destroyed by a major disaster based on its predisaster design and function and in conformity with current applicable codes, specifications, and standards.[4] To be eligible for PA funding, work must be required as a result of the declared incident and the applicant must demonstrate that the damage was directly caused by the incident.^[5] To be eligible, costs must be directly tied to the performance of eligible work and adequately documented.[6] If the applicant does not provide documentation to support its claim as eligible, FEMA cannot provide PA funding for the work.^[7] 

On second appeal, the Applicant claims it incurred increased costs for its contractor’s contingency fees, which it asserts directly support and are necessary to induce the repair of disaster-related damage captured in the project’s damage description.^[8] Though the damage description for GMP 685236 documents a loss of soil along the Facility’s embankment due to flooding caused by the incident, the Applicant has not explained how the claimed contingency fees are necessary to perform eligible work to repair those damages based on the Facility’s predisaster design and function.^[9] Additionally, FEMA has not approved, and the Applicant on second appeal is not requesting, funding for any such repairs. Without a claim to the repair of disaster-caused damage, there is no eligible scope of work to which costs may be tied. Because the costs at issue, for construction delays, are not directly tied to the performance of eligible work, they are ineligible. 

Conclusion

The Applicant has not demonstrated that the claimed costs are directly tied to the performance of eligible work. Therefore, this appeal is denied.