Private Nonprofit

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

Desastre	4563
Applicant	St. Bartholomew Parish, Elberta
Appeal Type	Second
PA ID#	003-07015-00
PW ID#	GMP 183653
Date Signed	2023-01-27T17:00:00

Summary Paragraph

The Applicant, a house of worship and Private Nonprofit (PNP), reported damage to its church, hall and kitchen as a result of Hurricane Sally in September 2020.  The Applicant sought funding for permanent repairs.  FEMA prepared Grants Manager Project 183653, in the amount of $50,000.00 to document the Applicant’s claimed costs.  The Small Business Administration (SBA) denied the Applicant’s loan, because the Applicant’s internal rules prevented it from offering the required collateral.  FEMA denied all costs because the Applicant’s inability to offer collateral resulted in the SBA loan denial.  The Applicant appealed, seeking $50,000.00 and stating it was an eligible PNP which owns or operates a PNP facility, that it provided documentation to demonstrate the damages, and that it complied fully with the SBA’s requirements to apply for a loan.  FEMA denied the appeal, finding that the Applicant had not satisfied the requirements of the SBA loan application and, thus, any funding for the project would be limited to the amount an SBA loan would not cover.  On second appeal, the Applicant argues that it is an eligible house of worship and reiterates its first appeal arguments.

 

Authorities and Second Appeals

• Stafford Act § 406, 42 U.S.C. § 5172.
• 13 C.F.R. § 123.202, 44 C.F.R  § 206.226(c)(2).
• PAPPG, at 46, 57-58.

Headnotes

• FEMA may provide Public Assistance (PA) funding to an eligible PNP that provides noncritical but essential services only if it has applied for a disaster loan from the SBA.  When the PNP cannot accept the terms of the loan, and the SBA therefore denies the loan, such as where the PNP does not meet a collateral requirement, PA funding is limited to the costs that would not have otherwise been covered by the loan.
  • The Applicant could not offer collateral for the SBA loan; therefore, its PA funding is limited to the costs the loan would not have covered.

Conclusion

There are no costs the SBA loan would not have been able to cover because the loan would have met the Applicant’s PA funding needs.  As such, the Applicant’s appeal is denied.

Appeal Letter

Appeal Analysis

Background

From September 14-16, 2020, Hurricane Sally impacted southern Alabama, with severe winds, rain and flooding.  St. Bartholomew Parish, Elberta (Applicant), a Private Nonprofit (PNP) House of Worship, requested Public Assistance (PA) funding for the permanent repair of claimed damage to its church, hall, and kitchen/BBQ building. 

FEMA advised the Applicant that it was first required to apply for a loan from the Small Business Administration (SBA) prior to seeking PA funding.  The SBA denied the Applicant’s loan application on March 21, 2021, because the Applicant, due to its own rules, could not offer the requested collateral.[1]  In a Determination Memorandum issued June 21, 2021, FEMA denied all costs.  FEMA stated that the Applicant did not properly apply for the SBA loan as required and that the Applicant had not provided documentation validating its claims of damage or demonstrating that claimed damage was a result of the declared disaster.     

First Appeal

The Applicant appealed in a letter dated August 13, 2021, seeking $50,000.00 in PA funding.  The Applicant stated that it was an eligible applicant, its facility was eligible, and that it had provided documentation demonstrating damage caused by the disaster.  The Applicant also argued that it complied with all FEMA PA grant requirements to apply for an SBA loan.  The Alabama Emergency Management Agency (Recipient) forwarded the Applicant’s first appeal to FEMA on August 20, 2021.

The Regional Administrator for FEMA Region IV denied the appeal on August 29, 2022.  FEMA found that, although the Applicant’s SBA loan was denied, the denial was the result of the Applicant not pledging the required collateral for the loan.  Therefore, the Applicant had not satisfied SBA loan application requirements, so any funding for the project would be limited to the amount an SBA loan would not cover.  FEMA further found the project to be ineligible for PA funding because the Applicant had not provided sufficient documentation or clarifying information necessary to substantiate the claimed costs.

Second Appeal

The Applicant submitted a second appeal on October 28, 2022, reiterating prior arguments, again seeking $50,000.00 in PA funding.  The Applicant argues that its insurance adjuster’s report provides enough information to demonstrate damages.  The Recipient forwarded the Applicant’s appeal to FEMA on November 11, 2022.

 

Discussion

FEMA may provide funding for the repair, restoration, reconstruction, or replacement of eligible PNP facilities damaged or destroyed by a disaster.[2]  Houses of Worship owned and operated by eligible PNP applicants are eligible facilities providing noncritical essential social services.[3]  PNP applicants with facilities that provide noncritical, essential social services must apply for SBA disaster loans in order to receive funding for permanent work.^[4]  When the PNP cannot accept the terms of the loan, and SBA therefore denies the loan (such as where the PNP does not meet a collateral requirement), PA funding is limited to the costs that would not have otherwise been covered by the loan.^[5]  SBA disaster loans to nonprofits are available to cover up to $2,000,000.00 of physical disaster and economic injury loans.[6]

The Applicant, a PNP that owns or operates a facility that provides noncritical, essential social services, was required to apply for an SBA loan.  Because the Applicant could not accept the SBA’s collateral requirement, its available PA funding is limited to the costs the loan would not otherwise have been able to cover.  SBA loans are available to cover up to $2,000,000.00 of repair costs for disaster-caused damages, and the Applicant’s estimate of repair costs for this project is $50,000.00.[7]  Therefore, there is no available PA funding for this project, as there are no costs the loan would not otherwise have been able to cover.[8]

 

Conclusion

The SBA denied the Applicant’s $50,000.00 loan request because the Applicant could not meet the collateral requirement.  Consequently, there are no costs the SBA loan would not have been able to cover because the loan would have met the Applicant’s PA funding needs.  As such, the Applicant’s appeal is denied.

 

 

[1] Letter from Small Bus. Admin. to St. Bartholomew Par. (Mar. 31, 2021).

[2] Robert T. Stafford Disaster Relief and Emergency Assistance (Stafford) Act § 406(a)(1)(B), Title 42, United States Code (42 U.S.C.) § 5172(a)(1)(B) (2018).

[3] Stafford Act § 102 (11), 42 U.S.C. 5122 (11); Public Assistance Program and Policy Guide, FP 104-009-2, at 46 (June 1, 2020) [hereinafter PAPPG].

[4] Stafford Act § 406(a)(3)(A)(ii), 42 U.S.C. § 5172(a)(3)(A)(ii); PAPPG, at 57.

[5] Title 44 Code of Federal Regulations (C.F.R.) § 206.226(c)(2) (2019); PAPPG, at 58.

[6] Title 13 C.F.R. § 123.202(a) (2020).

[7] The Adjuster’s report offers an estimate of total cost of damages as $65,271.45, which is still below the $2,000,000.00 threshold.  In addition, although the $2,000,000.00 maximum SBA amount may also be applied toward an applicant’s economic injuries, the Applicant did not apply for an economic injury loan.  See U.S. Small Business Admin., Disaster Business Loan Application for St. Bartholomew Parish, Elberta, at 1 (Nov. 19, 2020).

[8] Although the Applicant also disputes FEMA’s previous determination that the Applicant had not provided sufficient documentation or clarifying information necessary to substantiate the claimed costs, that issue is now moot.