Birnkrant Student Residence

Appeal Brief Appeal Letter Appeal Analysis

Appeal Brief

Disaster	FEMA-1008-DR
Applicant	University of Southern California
Appeal Type	Second
PA ID#	037-90007
PW ID#	87617 & 45767
Date Signed	2000-03-22T05:00:00

Citation: FEMA-1008-DR, PA 037-90007, DSR #87617 & 45767. Second Appeal by University of Southern California for (1) increased repair costs and (2) seismic upgrade work on Birnkrant Student Residence.
Cross-Reference: Subject: (1) Eligibility of cost over-runs on repairs without submittal of documentation, and (2) approval of Section 406 Hazard Mitigation.
Summary: Birnkrant Student Residence building is an 8-story reinforced concrete residence hall which suffered minor cracking in the shear walls in the lower stories. USC has applied for more funding to cover added costs of repairs, but did not request reinspection or submit added documentation to justify the added scope and cost for the repairs. USC also requested reconsideration of the project for section 406 hazard mitigation, by submitting a reduced scope of work costing $431,473, rather than over $2 million.
Issues: Should FEMA approve added expenditures over the DSR amount based on claims which are based on rough estimates when the work has been completed? Should FEMA consider an increase in scope of repairs leading an increase in cost of over 100% when justification cannot be verified by inspection, and no documentation of the need for the added costs has been submitted? Will FEMA reconsider the rejection of a section 406 seismic mitigation based on the submittal of significantly more cost effective scheme?
Findings: On the issue of the added repair costs, the appeal is denied. On the issue of the 406 hazard mitigation funding, the appeal is approved.
Rationale: On the repair issue, FEMA does not approve a substantial increase in scope of work and project costs over that already approved in a DSR without timely submittal of documentation, and where necessary a request for reinspection at a time that the increased damage can be verified. On the issue of the hazard mitigation funding, the revision of the scheme to a much more cost-effective one does qualify it for discretionary FEMA funding. FEMA accepts this revised scheme as eligible for a fixed limit amount of $431,473.

Appeal Letter

Appeal Analysis

In their appeal letter, the Subgrantee only references DSR 87617, but part of the subject of the appeal, the hazard mitigation work, is covered by DSR #45767 which was drafted to cover that portion of the work. Since this hazard mitigation work was first referenced in DSR 87617 before the separate DSR was prepared, this appeal response will also include those appeal items covered by DSR 45767.
BACKGROUND:
This appeal pertains to damages sustained to the Birnkrant Student Residence building. The building is located approximately 20 miles southeast of the earthquake epicenter at 642 West 34th Street, in the city of Los Angeles. The Birnkrant Student Residence Building is an 8-story Type I reinforced concrete frame and shearwall building constructed in 1963. It was designed subject to the 1962 Los Angeles City Building Code.
At this date, February 1999, the building is occupied as a student dormitory, the same use for which it was originally constructed. Most of the earthquake damage has been repaired, although some construction work in the building remains incomplete.
THE DAMAGE:
Brandow and Johnston Associates, Structural Engineers, and Tomko Woll Group, Architects reviewed the earthquake damage on and subsequent to April 14, 1994. The damage is described in DSR 48680 (which funded the Architecture and Engineering (A&E) Report). The identified damage is listed below:
(1) Diagonal cracks in three of the primary interior concrete shear walls on the first floor at the south end of the structure.
(2) Diagonal cracks over door openings at various locations on every level in the north-south oriented concrete corridor shear wall.
(3) Spalls and cracks in the stair tread and handrail support at various locations in the north and south stairwells.
(4) Crack in the eighth floor column adjacent to south stairwell.
(5) Cracks in plaster and gypsum board walls in the north-south and east-west non-structural partitions
(6) Separation of door frames from partition walls along the corridors at the second through eighth floors.
(7)
DSRs WRITTEN:
As of July 22, 1997, there had been 475 Damage Survey Reports (DSRs) processed on behalf of USC, with current eligible funding in the amount of $22,630,537.
The following DSRs are specific to the Birnkrant Student Residence:
u DSR 48680 approved $58,144 to fund an Architectural and Engineering (A&E) study.
u DSR 87617 approved $80,619 to fund the repair of earthquake damages identified through physical inspection and/or review of the completed A&E study.
u DSR 45767, subgrantee request: $2,483,448, approved for $0. This DSR was prepared to evaluate various Hazard Mitigation Proposals (HMPs) related to the Birnkrant Student Residence. These proposals were determined ineligible for FEMA funding under Section 406 of the Stafford Act based on the finding that they were either (1) in the case of the non-structural work (site improvements, telephone & cable upgrades, fire alarms, pipe and equipment bracing) not related to earthquake damaged elements of the building or, in the case of the structural upgrade work, (2) not cost effective.

FIRST APPEAL
USC submitted their first appeal of DSR 87617 to the Governor's Office of Emergency Services (OES) in a letter dated October 23, 1996. The appeal was transmitted to FEMA through a letter from OES, dated February 11, 1997. As supporting documentation, USC submitted descriptions of additional work, a seismic cost summary, and construction diagrams. (Note: the documentation described work not earthquake damages.)
In their appeal letter USC stated that the structural damage to the facility is a clear indication of the deficient overall strength of the building, and that a remedy of the building's deficiencies will reduce the potential damage and future costs to repair the facility. USC requests, "the scope of work and budget for Birnkrant Student Residence be revised to include work which will lessen the likelihood of experiencing damage in subsequent seismic events."
USC also requested funding for additional anticipated repair work which was proposed but not recommended in DSR 87617. USC asserted that the need for these additional work items was justified by the "greater than expected damage discovered during the course of completing FEMA approved and non-FEMA related work on the first and second floors of the facility."
FEMA denied this appeal because of the findings that (1) documentation of additional earthquake damages was insufficient, and (2) the additional costs for the mitigation work ($2.5 million) failed to meet the benefit/cost threshold of one.

SECOND APPEAL REQUEST:
USC filed a second appeal on November 18, 1997, which was forwarded to FEMA on January 16, 1998 by OES. In this appeal, the University raised the same issues again, adding that (1) the additional "documentation" of additional repair costs was supplied in the form of an architecture and engineering report "which supported the previously unaddressed earthquake damages." and (2) that a reduced scope of work (first floor work on shearwall and column only) and cost, which the letter cites as $312,973 , for the proposed mitigation work had not been included in the FEMA benefit/cost and eligibility review. The FEMA review had been limited to a larger $2.8 million upgrade scheme shown in the A&E Report.
Since the second appeal does not explicitly make a monetary claim for the "documentation" issue (#1 above) and has no new spreadsheet attachment to explain the "revised Hazard Mitigation proposal, one must turn to the cost numbers submitted with the first appeal for the full picture. The first appeal is based on the spreadsheet labeled "Attachment #1" dated January 8, 1997 which was attached to a letter to OES providing requested added information for the first appeal (attachment #1).
1) ADDITIONAL REPAIR COSTS ("DOCUMENTATION" ISSUE):
The second appeal requests funding for both (1) additional repair costs because "the extent of damage to the building was much greater than expected," and (2) hazard mitigation structural improvements to "lessen the likelihood of experiencing damage in subsequent seismic events." In neither the first or second appeals, is a clear and specific schedule of the additional damage made, nor has the cost of this additional work been separated out from the costs associated with the second request - the request for an increase in scope to cover structural improvements under hazard mitigation.
In Attachment #1, submitted as part of the first appeal, line 5 shows a total sum of $150,668 for "1st floor column jacketing & Crack Repairs." Since the crack repairs would have been covered by the approved scope in DSR 87617, while the requested column jacketing is included in the second appeal request, these items must be separated.
On January 28, 1999, USC provided information on the cost breakdown between the column jacketing and the epoxy reinforcement of the wall. The column jacketing is reported to have cost $95,000 for the jacketing plus $25,000 for added foundations. The epoxy grouting of the wall cost $30,000. Thus the total for the hazard mitigation work in line 5 is $125,000 and the repairs is $30,000. Thus the sum of $120,000 must be added to the $312,973 shown above to represent the subgrantee's request for hazard mitigation funding.
In order to determine the amount of funding that the subgrantee is requesting to cover the additional damage referred to in the second appeal, the only source submitted is "Attachment #1" which shows A&E costs and hazard mitigation costs together with the requested additional funds for hazard mitigation. If one takes igon items, one should then be left with the actual cost of repairs.
TOTAL ON ATTACHMENT #1: $683,911
1) SUBTRACT LINE 3, A&E Study": -$36,500*
2) SUBTRACT LINE 13, "Scoping Fee for Line "C" shearwall -$1,500*
*Note: FEMA funding has been already provided for the A&E Report by DSR 48680 ($58,144).
Since these costs are reported as only $38,000, a deobligation of the overpayment of $20,144
must be made.
3) SUBTRACT ALL HAZARD MITIGTION WORK
u A) Column Jacketing (from line 5 reported above.) -$120,000
u B) Line 7: Line "S" shearwall addition. -$55,744
u C) Line 9: Line "M" shearwall addition. -$105,729
u D) Line 19: Line "C" shearwall addition -$150,000
TOTAL REPAIRS COSTS: $214,438
4) SUBTRACT the funding already provided in DRS 87617 -$80,619
NET ADDITIONAL COST FOR REPAIRS SUBMITTED: $133,819
In the absence of specific information and documentation submitted by the subgrantee, FEMA will assume that this is the amount requested to cover the additional damages not covered by DSR 87617.

2) "HAZARD MITIGATION REVIEW" ISSUE:
The second appeal cites an estimated cost of $312,973 as the cost of the appealed Hazard Mitigation work. This amount is also derived from "Attachment #1." However, this amount includes an amount shown on line 13 identified as a "scoping fee" which would have already been covered by approved DSR 48680 which funded the A&E Study, and it does NOT include the sum identified as the cost of "1st floor column jacketing & crack repairs."
Based on the above analysis, this appeal response assumes that the following scope and cost estimate was intended by USC to be the subject of the appeal, based on the Scope and estimated costs listed in "attachment #1" and the Adamson January 3, 1995 estimate:
1) Total Project costs on Attachment #1 for "Completed " and "Pending" work: $683,911
2) SUBTRACT funding for costs shown in Line 3: "Scoping work-A&E.Report:"
($36,500) + Line 13: "Line "C" "scoping fee" ($1,500) -$38,000*
*see note above
SUBTOTAL FOR CONSTRUCTION COSTS IN "attachment #1": $645,911
SUBTRACT the REPAIR scope items shown above: -$214,438
SUBTOTAL FOR SUBGRANTEE'S 2ND APPEAL HMP REQUEST: $431,473

Based on the January 8, 1997, "attachment #1" and a site visit to the building, it is FEMA's understanding that the eligible repair work has been completed. The upgrade work currently under appeal has also been completed except for the strengthening of the shear wall at 1st floor level line "C".
FEMA requested USC to provide clarification of discrepancies by phone on about November 16, 1997. USC has provided this information on January 28, 1999. This response is based on this newly submitted information.

DISCUSSION
1) Issue #1: "Documentation" of "unaddressed earthquake related damages:"
At the time that the narrative for DSR 87617 was prepared, all of the repair work, and a portion of the hazard mitigation work had been completed at the first floor level, but "the applicant did not have the actual costs/invoices available to the [FEMA] A&E team." As stated in the narrative above, the DSR was written based on the subgrantee provided estimates, rather than actual costs for all of the eligible work, regardless of whether it was completed or not. In judging whether all of the subgrantee's estimated costs were eligible for funding, the FEMA inspectors made the following judgement on page 3 of the DSR:
"review of [the] scope of work in the A&E report indicates that [a] significant portion of the repair work on undamaged elements of the building is due to repair and epoxy injection process of concrete cracks. This work consists of:
u 23,000 SF of carpeting removed & replaced,
u 2,300 LF of new vinyl base[boards],
u 8,000 SF of steel stud furring and gypsum board with paint finish,
u 100 LF of wood closets removed & replaced,
u 1,2500 LF of TV conduit in corridors removed and replaced.
The A&E team believes that a portion of this work which [is] mentioned above may be required during the epoxy injection process. However all of the applicant's request for these items could not be clearly justified in this DSR at this time. Therefore all the cost for [the] above mentioned items will not be included in this DSR. The [FEMA] A&E team has advised the applicant to request [a] supplement[al] DSR for these items (if required) at the completion of [the] repair work. The applicant should provide detail[ed] documentation of [the] performed work for these items.[when] requesting [a] supplemental DSR."
In the estimate of FEMA eligible work, the FEMA A&E team adjusted the quantities of the above items to reflect their estimate of what would be required to fix the cracks as identified in the A&E Report and surveyed by the FEMA team in the field. This resulted in a discrepancy of $250,139 between the approved DSR amount and the subgrantee's requested amount of $330,758.
In their first appeal dated October 23, 1996, the Subgrantee included a request that "the scope and costs as originally proposed" for the items listed above be reinstated. They justified this request with the statement that "the damage to the building was much greater than expected" based on the repair work already undertaken at the first and second floor levels. At the time of the first appeal submittal, the approved work on the upper floors had not been completed. In their first appeal "attachment #1," dated January 8, 1997, the estimated costs were modified from those requested earlier to those shown in "Attachment #1."
In reviewing this material under the second appeal, FEMA has found that there is no disagreement between FEMA and the subgrantee as to the scope of work for the earthquake repairs. The disagreement is only over the estimated quantities and thus the resulting total costs for the work. Since (1) the FEMA program is based on reimbursement of actual costs, and (2) the DSR 87617 itself makes clear that upon submittal of documentation of revealed damages justifying additional quantities for each of the approved scope items, any need for cost adjustment is properly deferred to the time of the completion of the work. As the DSR states, when the work is completed, the subgrantee may request that a supplemental DSR be prepared which will cover the actual added costs of repairs.
When requesting the supplemental DSR to cover cost overruns, the subgrantee must provide documentation of both the damages discovered and the actual costs of repairs directly consequential to such damage. FEMA can find no evidence that this has been done. Instead, in the first and second appeals, the subgrantee has simply referenced the A&E Report as being sufficient documentation. However, the A&E Report does not provide FEMA with the factual information needed for approval of actual cost overruns because it was produced prior to the discovery of the need for such costs.
The issue of the increased costs has to do with a difference in the estimated quantity and cost of work. It does not involve a disagreement over the nature of the work - namely epoxy injection of shearwalls and other related repair procedures. FEMA is not able to approve a request or an appeal for a supplemental DSR to cover such substantially greater costs without having sufficient documentation to reach an independent conclusion on the eligibility of the work. This documentation (or inspection) must establish that the work is (1) justified to fix damage caused by the earthquake that could not be seen at the time the original DSR was written, and/or (2) justified because thle ffinancial assistance, an item of work must: (1) Be required as the result of the major disaster event, (2) Be located within a designated disaster area, and (3) Be the legal responsibility of an eligible applicant." The common criteria under either category of eligible funding (general disaster-related work or hazard mitigation) is the work's relationship to disaster damage (i.e., the work must be directly related to disaster damage). Pursuant to 44CFR 206.202 (d); 206.203(c)(1); and 206.204 (e), it is the subgrantee's responsibility to ensure the identification of all eligible work, and to sufficiently document all disaster-related damages, their associated repairs and subsequent costs for reimbursement. Despite the fact that the FEMA's first appeal response denied the request because of the absence of supporting documentation, the subgrantee's second appeal fails to include any of the necessary supporting documentation. It is also too late to evaluate the work in the field, as the repairs have been completed and enclosed.
2) Issue #2: "Hazard Mitigation" Proposal:
In their second appeal, the subgrantee states that "FEMA did not use [the] revised information (the information submitted two months after the filing of the appeal including the costs on "attachment #1") in its review of the HMP. In effect, the benefit cost analysis was based upon outdated information.This revised proposal included the addition of shear walls and column jacketing only on the first floor of the building at an estimated cost of $312,973."
On review of this information for this second appeal, it seems clear that there was a misunderstanding over the subgrantee's first appeal submittal because the subgrantee failed to inform FEMA that the "Attachment #1" was intended to illustrate a change in their request. FEMA finds that the subgrantee may have intended the "attachment #1" to serve as a revision of their Hazard Mitigation Proposal downward from $2.8 million to $312,973, but there are no clear statements to that effect in either the appeal or the supplementary letter and attachment. FEMA could not assume that the subgrantee had intended to modify their request to only include upgrade work on the first floor level.
Since the subgrantee does state in the second appeal letter that it is their intention to submit only the first floor work for FEMA's consideration to be an eligible hazard mitigation scheme, this appeal response will consider it on its merits. The estimated cost for this work will be the $436,473 cited above, rather than the $312,973 mentioned in the appeal. As described above, this amount includes the column jacketing which was included in the narrative of the appeal, but not included in the estimated costs as added from the items in "Attachment #1".
As shown in "attachment #1," the $436,473 Hazard Mitigation Proposal consists of the following:
1) The jacketing of two specified columns at the first floor level. The rationale is that these columns continue the boundary elements of shearwalls that rest on at the 2nd floor level, extending to the roof. The other end of the wall runs continuously to the foundation. Estimated cost: $120,000
2) Additional layer on 1st floor shearwall at line "S" (South end of Building). Estimated cost: $55,744
3) Additional layer on 1st floor shearwall at line "M" (Lobby wall). Estimated cost: $105,729
4) Additional layer on 1st floor shearwall at line "C" (North end of Building). Estimated Cost: $150,000
TOTAL HAZARD MITIGATION ESTIMATE $436,473
This Hazard Mitigation Proposal limits the seismic strengthening work to the first story level. The scheme does not require new foundations nor the massive interior demolition and reconstruction that a full seismic upgrading would require. As a result, the scheme is considerably more economical than the previous proposal.
It is important to verify that this partial upgrade scheme would actually enhance, rather than detract, from the building performance. In answer to this question, because of the building's design and configuration, there is clear indication that such a proposal would address important existing seismic problems and result in significant reduction of risk. Because it contains the lobby, meeting rooms and caf?, the first floor of the building is a more open "soft" story. The building is of reinforced concrete, designed and constructed during the 1960's. Buildings of this period have proven to be especially vulnerable to irreparable earthquake damage, particularly at the first story level. Improvements at the first floor level alone can be designed to enhance the overall building safety when these conditions exist. This conclusion is supported by the analysis and recommendations of two engineering firms involved, Brandow & Johnston (letter to Steven Lohr dated January 10, 1997, and Saiful/Bouquet (undated engineer's report, page 2)
A revised Benefit/Cost model run has been produced as part of this appeal response. The $436.473 cost has been determined to generate benefits greater than 1:1.

CONCLUSION
This appeal has raised two issues: (1) The "Documentation" of additional repair costs, and (2) the funding of a reduced Hazard Mitigation Proposal.
(1) REPAIR COSTS
On the issue of the additional Repair Costs, FEMA has determined that the approved scope of work in DSR 87617 was correct as written. The Subgrantee should have dealt with the additional costs for the approved scope of work by requesting a supplemental DSR, with the necessary documentation, upon the completion of the work. Whenever a substantial increase in the extent of the damage is discovered, or if the scope or cost of repair work increases significantly over the approved amount, it is incumbent on the Subgrantee to request an inspection by FEMA inspectors. This is (1) to verify that the damage is earthquake related, and/or (2) that the change in scope is justified, and therefore eligible.
In this case, now that the work is complete, the Subgrantee must submit the invoices of the actual costs to close out the project and receive the approved funding. However, it is now too late to conduct the kind of inspection that is necessary to approve such a substantial increase in the cost of the repairs over that of the DSR.
Despite the repeated requests for documentation, including FEMA's findings in the first appeal response, no documentation has been submitted to FEMA to support the Subgrantee's claims. The re-submittal of the statements made in the A&E Report are insufficient because the requested funds are for additional damages discovered and construction conditions revealed during the actual construction. The A&E Report was prepared prior to construction. The additional damages are known to the subgrantee because of what the construction revealed. Therefore, it is only this same information which must be used in support of a claim for additional funds to FEMA. This has not been done, despite the repeated requests that it be done. As a result, FEMA cannot approve the additional work
The appeal of this issue is denied.

(2) HAZARD MITIGATION
FEMA has determined that the Hazard Mitigation Proposal as modified by the Subgrantee and listed as 1-4 above (Modified HMP) is reasonable and cost effective. FEMA's approval of this work is based on the submitted estimate for both completed and uncompleted work of $436,473 Total Project Cost. This amount is approved as a fixed limit amount. Actual costs may be reimbursed up to that amount.
Since the A&E DSR was approved for $58,144, but the reported actual costs for this work on "Attachment #1" total only $38,000, the unexpended difference of $20 the Hazard Mitigation DSR will be $436,473 - $20,144 = $416,329.
The Appeal of this item is approved for $416,329.
A supplemental DSR will be prepared for the Modified HMP scope of work approved in this appeal response.