Disaster Preparedness and Recovery Consulting Developing a Rebuilding Plan Knowing your program and funding options is vital to a successful recovery InDisaster Recovery Today issue #4003, we discussed eligible cost determination. Once a Subrecipient, the state, and FEMA have determined which recovery costs are eligible, the next step is to develop a rebuilding plan that outlines how the Subrecipient actually intends on repairing or replacing damaged facilities (category C-G projects). In this issue we will discuss your funding options when it comes to developing a rebuilding plan. As a Subrecipient, you have several options: you can repair or replace the original facility, improve upon it, or direct the grant funds toward another project. It all starts with a baseline valuation of the facility’s damages. As we discussed in issue #4001 — "Loss Measurement" —the foundation of any valuation or measurement in scope is based on two key valuation criteria: “as it was” and “as it has to be.” IN THIS ISSUE This issue of Disaster Recovery Today focuses on the funding options and availability of funds to repair damaged facilities following a disaster. The information can be crucial in developing a rebuilding plan. Similar topics are addressed in other issues of Disaster Recovery Today. The enclosed reply card can be used to request free copies of any of these — and to ofer comments or suggestions for future issues. The reply card can also be used to schedule a disaster preparedness and recovery training workshop presented by a Tidal Basin representative.
ID 145724096 © Susan Sheldon | Dreamstime.com 2 D I SAS T E R R ECOVE RY TODAY.COM As It Was The basis for all FEMA reimbursement claims (regardless of whether insurance applies) is “as it was.” What was there immediately prior to the event provides the basis for evaluating the eligible costs associated with repairing or replacing a facility. Once the Subrecipient provides an estimate necessary to repair or replace their facility to its pre-disaster design and function — and it’s agreed upon by FEMA and the state — a baseline estimate will be established. Pre-disaster design is the size or capacity of a facility as originally constructed or subsequently modifed. For instance, if an eligible ofce building designed for a capacity of 250 employees is damaged beyond repair, the eligible funding for the replacement facility is limited to that necessary for 250 employees, even if more than 250 employees were working in the facility prior to the event. Pre-disaster function is the purpose for which the facility was originally designed or subsequently modifed; basically, “how” was it being used prior to the event. For example, if a Subrecipient designed and constructed a fre station but later altered it in accordance with applicable construction codes or standards to use as a storage facility, the pre-disaster function would be as a storage facility. Ideally a Subrecipient will have a set of plans, drawings, or at the very least photo documentation that predates the declared disaster event. In addition, any maintenance records, documentation of changes that occurred altering the size, capacity, or function of a facility, and other related data should be assembled for review. It is recommended that an applicant not provide their original documents, but rather copies, and that they are aware that any documents provided could at a later date be subject to a FOIA (Freedom of Information Act) request made to FEMA. If such documents provide sensitive data, it is recommended that discussions commence immediately with FEMA so accommodations can be made. In some
T IDALBAS INGROUP.COM instances, FEMA has asked an applicant to stamp sensitive materials with “not subject to FOIA requests” based on their internal policies and regulations. As It Has To Be Due to code compliance issues raised by requirements such as the Americans with Disabilities Act (ADA), Environmental and Historic Preservation (EHP) considerations, foodplain management and wetland protection, among others, a Subrecipient must also consider “what has to be.” Under the FEMA Public Assistance (PA) Program, additional funding is available to bring public facilities up to code. It is important to note that only the damaged elements of the facility afected by the event qualify for this additional funding. What is allowable varies and is subject to FEMA scrutiny on the following basis: FEMA provides PA funding to restore facilities on the basis of pre-disaster design and function in conformity with current applicable codes, specifcations, and standards that meet specifc eligibility criteria. Upgrades required by Federal, State, Territorial, Tribal, or local repair or replacement codes or standards are eligible only if the code or standard: Applies to the type of repair or restoration required; Is appropriate to the pre-disaster use of the facility; Is reasonable, in writing, formally adopted by the State, Territorial, Tribal, or local government, and implemented by the Subrecipient on or before the declaration date, OR is a legal Federal requirement; Applies uniformly; and Was enforced during the time it was in efect.1 As YouWant It To Be Once these two elements —“as it was” and “as it has to be”— have been established, a Subrecipient must then decide how they “will” or “should” accomplish repairing or rebuilding damaged facilities as part of their rebuilding plan. As mentioned in previous issues, even if a Subrecipient knows ahead of time that they are going to improve, drastically change, or not repair a facility, it is imperative to ensure that an accurate scope and cost estimate is developed for both “as it was” and “as it has to be” in order to establish a baseline for “Under the FEMA Public Assistance Program, additional funding is available to bring public facilities up to code. … only the damaged elements of the facility affected by the event qualify for this additional funding.” 3
ID 145724096 © Susan Sheldon | Dreamstime.com 4 D I SAS T E R R ECOVE RY TODAY.COM possible grant funding. The improvements that go beyond this baseline are considered the responsibility of the Subrecipient and need to be accounted for in your recovery plan. In most cases where changes are to take place, Subrecipients will have their funding capped using the following logic: FEMA will fund the repair or replacement costs for the “as it was” condition, plus the amount necessary to comply with the “how it has to be” requirements, and this total becomes the baseline of eligible funding, or the “cap.” When that baseline estimate is determined to the Subrecipient’s satisfaction, they can decide to pursue the goal of “as we want it to be.” FEMA provides three options that provide fexibility for Subrecipients to use funding diferently than restoring the pre-disaster design and function of the facility. For these options, FEMA “caps” the amount of funding based on the estimated amount to restore the damaged facility to its predisaster design and function, including applicable and federally required codes and standards. The three capped project options are: Improved Project Alternate Project Alternative Procedures Pilot Program for Permanent Work Project (Large Projects only)
T IDALBAS INGROUP.COM Additional engineering and design EHP compliance Work required by applicable and federally required codes or standards It is important to note that the capped funding amounts do not include costs that are only related to, or only triggered by, changes to the pre-disaster design or function of the damaged facility. These include, but are not limited to, costs related to: Each of these options is subject to diferent eligibility and process requirements, which are described in detail below. Because the Alternative Procedures is still operating as a pilot program, FEMA may periodically adjust program specifcs. Therefore, Subrecipients can fnd additional policy specifcs or changes at fema.gov/ alternative-procedures. Improved Projects When performing restoration work on a damaged facility, Subrecipients may decide to use the opportunity to make improvements. Projects that incorporate such improvements are aptly called Improved Projects. Subrecipients may request improvements on either small or large projects.2 The improved facility must have the same function and at least the equivalent capacity as that of the predisaster facility. Federal funding for these projects is limited to the lesser of: the federal share of the approved estimated cost to restore the damaged facility to its pre-disaster design and function; or the federal share of the actual costs of completing the Improved Project. “Alternate Project funding cannot be used for operating costs or to meet the state or local cost share requirements on other Public Assistance projects that utilize other federal grants, but may be used for capital projects such as facilities or equipment.” FEMA may increase eligible funding for an Improved Project only if the Subrecipient identifes an error or omission in the original Scope of Work (SOW )or cost estimate related to restoring the facility to its pre-disaster design and function.3 Subrecipients must obtain approval for an Improved Project from the state. Furthermore, with any Improved Project that signifcantly changes the pre-disaster confguration of the facility, the state must 5
ID 145724096 © Susan Sheldon | Dreamstime.com 6 D I SAS T E R R ECOVE RY TODAY.COM forward the request to FEMA to ensure FEMA funding for alternate projects (in that the Improved Project complies with lieu of repairing, restoring, reconstructing, appropriate EHP laws, regulations and or replacing the damaged facility) had to Executive Orders.4 take a hit on the federal share of the costs — states and local governments could Alternate Projects only get 90 percent of the federal share, In some instances, Subrecipients may while private non-profts could get 75 determine that the public welfare will not percent. The DRRA amends the Staford be best served by restoring a damaged Act to remove the reduction in funding. facility or its function to the pre-disaster A Subrecipient can now choose to pursue design. In this event, they may request to an alternate project without facing a use the Public Assistance grant for that reduction in otherwise eligible assistance.5 facility for other purposes — Alternate Project(s). Subrecipients may request an Unlike with Improved Projects, Alternate Project in lieu of both small and Subrecipients must obtain approval from large projects, but only for permanent FEMA for all Alternate Projects, regardless restoration projects (category C-G). Debris of EHP laws, regulations and Executive removal and emergency protective Orders. If the Alternate Project involves measures projects are not eligible for the construction, the Subrecipient must also Alternate Project provisions. obtain FEMA approval prior to the start of construction. Luckily for Subrecipients, with the passage into law of the Disaster Recovery Reform Alternate Project funding cannot be used Act of 2018 (DRRA), the Alternate Project for operating costs or to meet the state reductions of the federal share have been or local cost share requirements on other removed. Previously, the Staford Act Public Assistance projects or projects that provided that Subrecipients that used utilize other federal grants, but may be “For Alternative Procedures Projects, FEMA, the state and the Subrecipient must reach agreement on the capped amount within 12 months of the declaration date.”
T IDALBAS INGROUP.COM used for capital projects such as facilities or equipment. Alternate Project funds may also be used for project shortfalls due to mandatory food insurance reductions taken from PA Program funding for repairs to buildings in Special Flood Hazard Areas, supplement funds for an Improved Project, and to conduct cost-efective hazard mitigation measures regardless of whether the facility was damaged by the incident and whether the measures reduce the risk of future damage from the same type of incident or of the same type of damage caused by the incident. Alternative Procedures Pilot Program for Permanent Work Project (Large Projects Only) This type of capped project ofers the maximum amount of funding options that allow for more fexibility with how the Subrecipient may use Public Assistance grant funds. For Alternative Procedures Projects, FEMA, the state and the Subrecipient must reach agreement on the capped amount within 12 months of the declaration date. Subrecipients can, “An Alternative Procedures Project is capped at the federal share of the estimate to restore the original facility.” however, request an extension and FEMA may approve such on a project-by-project basis. FEMA, along with the state and Subrecipient, document the agreed upon capped amount with either a Fixed Cost Agreement Letter or a Letter of Undertaking, as appropriate. Once the letter is signed by the Subrecipient, they are locked in and may not revert back to a project funded based on actual costs. If all parties cannot agree on the fxed estimate by the deadline, the project will not be eligible for the Alternative Procedures and FEMA will process it using standard procedures.6 7
ID 145724096 © Susan Sheldon | Dreamstime.com 8 D I SAS T E R R ECOVE RY TODAY.COM When a Subrecipient agrees to a capped project under the Alternative Procedures, it may utilize any one or more of the following procedures: Consolidation of multiple capped projects Elimination of reduced funding for an Alternate Project Retention of excess funds for approved purposes Third-party expert panel review for estimates with a Federal share of $5 million or greater (FEMA requires this review for estimates that exceed $25 million).7 “FEMA can fund cost-effective hazard mitigation measures that reduce or eliminate the possibility of similar damages from future events.” An Alternative Procedures Project is capped at the federal share of the estimate to restore the original facility. Unlike Improved or Alternate Projects, if a Subrecipient does not expend all Alternative Procedures Project funds, it may use the excess funds for approved purposes. Other Options Available for Consideration InYour RebuildingPlan Even when a Subrecipient determines that a facility should be repaired to predisaster design and function, there may be an opportunity to make improvements to a facility that are not associated with codes and standards. FEMA can fund cost-efective hazard mitigation measures that reduce or eliminate the possibility of similar damages from future events. FEMA classifes these grants as Section 406 Hazard Mitigation. FEMA evaluates proposed 406 mitigation measures for cost-efectiveness, technical feasibility and compliance with EHP laws, regulations and Executive Orders. In addition, FEMA ensures that the mitigation does not negatively impact the facility’s operation or surrounding areas, or create susceptibility to damage from another hazard. Regarding cost efectiveness, FEMA considers mitigation measures to be cost efective if any of the following criteria are met: The cost for the mitigation measure does not exceed 15 percent of the total eligible repair cost (prior to any insurance reductions) of the facility or facilities for which the mitigation measure applies. The mitigation measure is specifcally listed in Appendix J: Cost-Efective Hazard Mitigation Measures, AND the
T IDALBAS INGROUP.COM cost of the mitigation measure does not exceed 100 percent of the eligible repair cost (prior to any insurance reductions) of the facility or facilities for which the mitigation measure applies. The Recipient or Applicant demonstrates through an acceptable beneft-cost analysis (BCA) methodology that the measure is cost-efective. FEMA’s BCA software provides appropriate BCA methodologies.8 In addition to providing funding for Section 406 hazard mitigation under the PA Program, FEMA also provides hazard mitigation funding under its Hazard Mitigation Assistance (HMA) (Section 404) programs. The eligibility criteria, procedures and timelines for implementation of the hazard mitigation measures funded under the HMA programs difer from the hazard mitigation measures funded under the PA Program. Section 404 grant funds give states and other eligible Subrecipients the opportunity to pursue mitigation measures that may have been pending due to lack of means. Eligible projects should ft within the state’s hazard mitigation plan and include “acquisition of hazard-prone property, retroftting existing buildings and facilities, elevation of food-prone structures, and other infrastructure protection measures. FEMA’s Hazard Mitigation Assistance Guidance provides further details on the HMA programs. Subrecipients may use both 406 and 404 mitigation funds to implement mitigation measures on the same facility, but not for the same work. Subsequently, they cannot use funds from one of these mitigation programs to meet the non-Federal cost share of work funded under the other mitigation program.9 Regardless of whether a Subrecipient is leaning toward an Improved, Alternate, or Alternative Procedures Project, it is imperative to work closely with the state and FEMA to develop the proper project cap and ensure that your rebuilding plan takes full advantage of the options available. As you can see, during your recovery process you have numerous opportunities as well as decisions to make. Without close coordination with the state and FEMA, however, many of these opportunities can be lost. “… it is important not only for Subrecipients to control the inspection environment, but to also be part of all discussions and decisions regarding their own overall recovery process.” 9
ID 145724096 © Susan Sheldon | Dreamstime.com 10 D I SAS T E R R ECOVE RY TODAY.COM As discussed in Disaster Recovery Today #4000, it is important not only for Subrecipients to control the inspection environment, but to also be a part of all discussions and decisions regarding their own overall recovery process. Remember, FEMA is not in the design/build business. They are there to lend assistance, but ultimately the fnal disposition of a project belongs to you. FEMA’s Changing Role The Public Assistance (PA) Program is based on a partnership of FEMA, state and local ofcials. The roles and responsibilities of these entities are being more clearly defned and responsibilities more fexibly based on the capabilities of state and local partners. In FEMA’s 2018-2022 Strategic Plan, a common theme is that disasters are federally supported, state managed and locally executed. FEMA realized that the PA Program had not evolved to meet the changing needs of its customers during the last 20 years. One of the shortfalls included using a one-size-fts-all approach to process projects, regardless of the project’s size or cost. Following an in-depth review and analysis of how FEMA administered the PA Program, which averages $4.7 billion in assistance each year, the need for signifcant changes in the way FEMA implements the Public Assistance Program was clear. As a result, FEMA developed a new business model for PA Program delivery based on a lean management principle and is implementing those changes. The delivery model has three basic elements, which support a simplifed and streamlined grant application process: • Simplifed roles and responsibilities, and re-trained federal staf; • Cloud-based customer relationship and program management software known as The PA Grants Manager and Grants Portal; and • Pooled resources so multiple disaster operations can tap into trained experts when developing PA projects called Consolidated Resource Centers (CRC). Previous to the new delivery model, FEMA developed and funded every Project Worksheet (PW) using the same process regardless of project size, complexity or risk. The PW template in use then was primarily free‐form felds which allowed and even encouraged varying interpretations at every touch point through the entire project development and funding process. Additionally, Project Specialists, who developed PWs, were assigned projects without regard to their relevant skills and/or abilities to develop the projects. The following changes have been incorporated under the new delivery model construct: • Process fows are separated into three paths so that the levels of efort and expertise necessary to develop and review PWs are commensurate with project complexity and/or risk. • Standardized PW templates have content controls and directly relate to the type of infrastructure impacted and/or the work necessary for recovery. Continued on page 12
T IDALBAS INGROUP.COM “Following an in-depth review and analysis of how FEMA administered the PA Program, which averages $4.7 billion in assistance each year, the need for significant changes in the way FEMA implements the Public Assistance Program was clear.” PA Program Implementation Process Source: FEMA.gov/Public Assistance Policy Program and Policy Guide 11
CORPORATE OFFICE 126 Business Park Drive Utica, New York 13502 800.382.2468 Outside U.S. (315) 797.3035 FAX: (315) 272.2054 [email protected] Copyright © 2019 Rising Phoenix Holdings Corporation. All Rights Reserved. Tidal Basin and the Tidal Basin logo are registered trademarks of Rising Phoenix Holdings Corporation. Follow Disaster Recovery Today® on Facebook & Twitter: Facebook.com/TidalBasinGroup Twitter.com/DRToday DISASTER RECOVERY TODAY® is published as a public service by Tidal Basin. It is provided for general information and is not intended to replace professional insurance, legal or financial advice for specific cases. WEB ADDRESSES TidalBasinGroup.com DisasterRecoveryToday.com PUBLISHER Ronald A. Cuccaro, SPPA EDITOR Sheila E. Salvatore DRT19 4004-R4 Is there a topic you would like to see covered in an upcoming edition of Disaster Recovery Today? You can make topic suggestions, contact the editor, request free subscriptions and browse our back issues all from our website — DisasterRecoveryToday.com. We look forward to hearing from you. ____________________ Continued from page 10 • Detailed job aids and checklists are created that describe the steps necessary to perform every function in PA Program delivery. • FEMA, Recipient and Subrecipient agree to damage eligibility before developing scopes of work and costs. • Special considerations reviews begin in the earliest possible stage of project development. • Damage information is captured in the feld; but scopes of work and cost estimates are developed in pool locations. As with all newly developed concepts and processes there comes challenges — and the PA new delivery model is no exception. With better coordination among FEMA, state, and locals we can hopefully achieve the goal of delivering the PA Program more efciently to Subrecipients as they work to rebuild public infrastructure after a disaster. 1 PAPPG, FP-104-009-2, April 2018. Chapter 2. Sect. VII.B.1. 2 For disasters declared post October 1, 2018, the small project minimum threshold is $3,200 up to the large project threshold of $128,900. New thresholds may be implemented for post October 1, 2019 declarations based on the annual Consumer Price Index (CPI) adjustments. 3 PAPPG, FP 104-009-2, April 2018. Chapter 2. Sect. VII.G.2(a). 4 PAPPG, FP 104-009-2, April 2018. Chapter 2. Sect. VII.G.1(a). 5 DRRA 2018, Sect. 1207 (a) (1) & (2). 6 PAPPG, FP 104-009-2, April 2018. Chapter 2. Sect. VII.G.1(c). 7 PAPPG, FP 104-009-2, April 2018. Chapter 2. Sect. VII.G. 8 PAPPG, FP 104-009-2, April 2018. Chapter 2. Sect. VII.C. 9 Ibid.
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