The Federal Emergency Management Agency (FEMA) needs to “review and improve, as necessary, policies and procedures that protect government resources used to support disaster response and recovery activities,” according to a new Department of Homeland Security Inspector General audit of the New York City Department of Environmental Protection’s receipt of $537.94 million in FEMA Public Assistance grant funds for temporary power, heat and hot water so residents could shelter-in-place in the wake of Hurricane Sandy.
In January 2013, FEMA estimated New York City would spend $14.33 million of this essential assistance on repairs to multifamily structures, including properties with commercial owners or operators.
However, the IG found, “Although more than 3 years have passed since the completion of the work, FEMA has not identified and recovered federal funds New York City spent on repairs to commercial residential properties. These repairs included short-term measures such as temporary boilers and power generators.”
“This occurred because FEMA’s records were incomplete and the New York State Division of Homeland Security and Emergency Services has not provided FEMA with a final accounting of costs for the work. Furthermore, FEMA has no procedures to independently identify commercial residential properties New York City had assisted with federal funds,” the IG reported.
“As of July 7, 2016, the end of our audit, FEMA did not have a final accounting for the work or procedures in place to independently identify properties where New York City assisted with federal funds,” the IG said.
FEMA recognized that commercial landlords may have received an incidental benefit from the federal assistance provided to New York City and used for repairs to multifamily dwellings to ensure tenants could shelter in their homes, “however, the IG said, “it is the responsibility of New York State (the grantee) to ensure that the money that FEMA provides is spent in accordance with federal laws and regulations. Under FEMA rules, for-profit organizations are ineligible for public assistance grant funds.”
The IG noted that as a condition of FEMA’s assistance, “New York City agreed to ‘make reasonable efforts when appropriate and allowed for under state and local laws to compel commercial building owners/operators to make permanent repairs to health and safety hazards and other housing code violations addressed by FEMA-funded emergency protective measures under this initiative, and to recover from commercial owners any federal funds expended on emergency protective measures for facilities they own or operate … should the applicant obtain reimbursement from the building owner for costs associated with the emergency work performed, the applicant must reimburse FEMA the federal share of costs associated with the work.’”
Less than a month after Hurricane Sandy devastated communities on the Atlantic coast, FEMA quickly implemented the Sheltering and Temporary Essential Power (STEP) Pilot Program, an urgently needed program which provided the emergency assistance necessary to save lives, protect public health and safety and protect property.”
“Nevertheless, FEMA should improve its management oversight to more effectively protect against the vulnerabilities associated with implementing pilot programs,” the IG determined.
The IG reported that, “Although all rapid repairs work ended on March 31, 2013, and $537.94 million was disbursed to New York State for the work, FEMA has not received a final accounting and certification of costs for the work. This occurred because project closeout has not started. However, New York City has made no payments to any rapid repairs contractors since October 15, 2014.”
FEMA officials told the IG that their “expectations for receiving a final accounting and certification of costs vary based upon circumstances affecting the event and the specific projects. They noted that in an event the size and complexity of Hurricane Sandy, the timeframe is longer. They also cited factors such as New York City’s building types and sheer number of eligible residents added to the timeline for reporting. The officials further stated that, given the high level of devastation caused by Hurricane Sandy, their focus was on recovery efforts such as the restoration of basic infrastructure.”
“Nevertheless,” the IG pointed out, “because more than 3 years have passed since the completion of the work, FEMA is at an increased risk of not being able to recover these funds. We are concerned FEMA officials are not displaying a sense of urgency in accounting for and recovering federal taxpayer funds invested in the effort given that:
- Commercial property owners change or exit the business;
- Federal funds may have been spent on unauthorized repairs; and
- Expenditures of Federal funds for emergency protective measures may not be adequately supported.
FEMA concurred with all three of the IG’s recommendations.