Audit: Halt University of Iowa flood recovery projects

More than $83 million in funding is at stake

IOWA CITY — A federal office has recommended reversing replacement decisions on three University of Iowa flood recovery projects, but UI officials today stressed that no de-obligation of funding has occurred at this point.

At stake is more than $83 million in funding that has been obligated to the university for replacement of the flood-damaged buildings at new sites, including Hancher Auditorium, Voxman Music Building and Art Building East, also called Studio Arts.

The recommendation comes from the U.S. Department of Homeland Security Office of Inspector General. The recommendation is to reverse previous Federal Emergency Management Agency replacement decisions for the UI’s Hancher Voxman Clapp and Art Building East facilities, all damaged in the 2008 flood. The two original facilities — Hancher Voxman Clapp and Art Building East — are planned to be replaced in three separate, new facilities. UI officials had the green light from FEMA, with FEMA funding, to replace those facilities at new sites and are in the planning stages.

The Office of the Inspector General made the recommendation for reversal to FEMA, and now it’s up to the undersecretary for administration in the federal Department of Homeland Security to make the determination. UI officials heard about the recommendation earlier this week, university Spokesman Tom Moore said. FEMA’s Region 7 office, which includes Iowa and is based in Kansas City, has stated it does not agree with this recommendation.

“Our understanding is that the national FEMA office supports FEMA Region 7,” Moore said.

There has been no de-obligation of funding to the UI at this point, and at the direction of the state Board of Regents, UI officials will continue with the planning and design process on a new Hancher Auditorium, a new Voxman Music Building and a new Studio Arts facility, Moore said.

“At this point, we are sticking to our plans, staying the course and continuing along the timeline we’ve set out,” he said.

This is essentially a “difference of opinion” between two agencies about FEMA’s internal rules and policies regarding replacement of damaged buildings within a flood plain, Moore said.

“So it is our hope that the OIG and FEMA will be able to reach a resolution in a relatively short amount of time, so that our flood recovery process is not delayed,” he said.

Gov. Terry Branstad and officials with the state Board of Regents have asked for a resolution in a matter of weeks, Moore said.

The Office of Inspector General report says the audit of FEMA Region 7's decisions to fund the replacement at new sites, rather than the repair at the current sites, of the flood-damaged UI buildings was initiated based on an anonymous complaint charging that FEMA Region 7 did not correctly apply the “50 percent rule.” Generally, FEMA can decide to fund the replacement of a damaged facility when repair costs exceed 50 percent of replacement costs, or if the facility is destroyed.

“Deciding whether to fund repair or replacement of damaged structures can be complicated, and

mistakes can result in serious financial consequences,” the report states.

The report ultimately concludes that FEMA Region 7 officials “did not correctly apply the 50 Percent Rule when deciding to replace HVC, and their decision to replace Art Building East was unsupported and likely based on inaccurate cost data.”

Here are some statements from state officials regarding the recommendation:

Gov. Terry Branstad, Members of Congress, state Board of Regents President Craig Lang, and Iowa Homeland Security and Emergency Management Administrator Mark Schouten today released statements upon learning of the U.S. Department of Homeland Security Office of Inspector General recommendations to reverse previous Federal Emergency Management Agency replacement decisions for the University of Iowa’s Hancher Voxman Clapp and Art Building East facilities.

As outlined in the agency’s initial response to the report, FEMA disagrees with the Office of Inspector General recommendations.

Branstad and Lang issued the following joint statement: “The State of Iowa, the Board of Regents, and the University of Iowa remain committed to expediting a full recovery from the devastating flooding that occurred in the summer of 2008. We are frustrated that different interpretations of internal FEMA policies are having real and negative impacts on the University of Iowa’s recovery. Although the waters have long receded, the impact of the flood continues to hinder University students. A cultural void persists that has impacted tens of thousands of Iowans. We believe the Federal government should be held accountable for flood recovery progress, especially as we mark the four-year anniversary of the historic flooding event. Project delays due to differing interpretations of Federal policy four years after the flood are unacceptable, unwelcomed and counterproductive.”

Governor Branstad and President Lang continued: “To prevent further recovery delays, we hope that FEMA’s national leadership responds to the OIG report in a matter of weeks, not months. We are now more than four years after this disaster and the University of Iowa, its students, the Iowa City community and the State cannot afford to put its recovery on hold. We expect FEMA to do the right thing and reaffirm its previous decisions to replace these buildings.”

Mark Schouten, Administrator of the Iowa Homeland Security and Emergency Management Division, stated the following: “An important element of an efficient recovery process is clear and consistent application of Federal policies. FEMA officials have repeatedly affirmed their decisions to replace the Hancher Voxman Clapp and Art Building East facilities and the University has relied upon FEMA’s decisions since the first analysis was completed in December 2008. In addition, minimizing future flooding costs by effective floodplain management is a sound long-term risk management approach that protects precious taxpayer dollars. If FEMA is going to change the interpretation of its policy, it should be a prospective change, not a retroactive change that penalizes the University financially for previous FEMA decisions and guidance. Flood recovery is difficult enough and retroactive measures would insert unnecessary uncertainty into the recovery process for communities across the country. The State and University of Iowa look forward to working with FEMA to resolve this outstanding issue expeditiously as the University and the State do not have the financial resources to shoulder the replacement of these facilities on their own. FEMA has the opportunity to officially respond to the OIG recommendations, and we will work with FEMA to add our perspective to the policy debate.”

Senator Chuck Grassley stated the following: “The effort by local and state leaders in Iowa to recover from the floods of 2008 has been extraordinary. The circumstances merited the kind of federal assistance that has been given to disasters in other parts of the country where natural disasters have also caused such tremendous damage. I’ve urged Administrator Fugate to give fair treatment to Iowa. The inspector general has issues with the way FEMA has utilized its discretion on these projects. The University of Iowa should not be penalized since it has followed FEMA’s instructions.”

Senator Tom Harkin stated the following: “The inspector General’s report is not about law or regulation, but about a policy dispute that should not result in a withdrawal of committed FEMA funds. Should the IG prevail in this dispute, it would be wrong as a matter of policy and would require the University to repay significant already spent funds,” said Senator Tom Harkin (D-IA). “In addition, the Inspector General’s view is not likely to save taxpayers the dollars claimed because FEMA will have to pay 90 percent of the actual costs of repairing the buildings. If the decision to build outside the flood plain is changed and the buildings are repaired instead, such repairs could well cost far more than what is now projected. Spending tens of millions of dollars to repair damaged buildings that may well flood again is neither in the interests of the University nor those of taxpayers.

Senator Harkin continued: “I have spoken to Administrator Fugate about these issues and I will continue to request that he disagree with the Inspector General on the University of Iowa funds.”

Representative Dave Loebsack (IA-02) said: “Simply put, it’s inexcusable that students, our community, and Eastern Iowa jobs are caught in the middle of a bureaucratic argument over policy interpretation by people in Washington D.C. It’s unfathomable that almost two years after this project was approved, recovery funds could be taken back which is why I have already secured a commitment on the floor of Congress from the Chairman of Homeland Security Appropriations to work with us to ensure Iowa’s recovery and economy moves forward and that Iowa communities don’t pay the price for a bureaucratic disagreement. Iowans shouldn’t have the rug pulled out from us after the federal government already committed to partnering with us to recover and rebuild from the devastating Floods of 2008.”

Representative Tom Latham (IA-04) stated the following: “It’s unfortunate that the Federal government appears to be sending mixed signals, wrapped up in the finest red tape Washington has available. As always, I stand ready to work with local and state leaders and with my colleagues in Congress to make sure all appropriate federal resources are made available to recover fully from natural disasters such as the flooding of 2008.”

Representative Leonard Boswell (IA-03) stated the following: “I am deeply disappointed by this sudden reversal from the Department of Homeland Security. It has been four long years and these buildings need to be replaced as soon as possible as this is hurting the recovery of the University. I urge them to do the right thing and reaffirm FEMA’s original decision.”

Representative Steve King (IA-05) said: “It’s disappointing that four years after flood waters ravaged the University of Iowa, the rules for rebuilding what was damaged may change. The University has already made significant investments in the recovery process in keeping with the guidance they’ve been given by FEMA. Injecting uncertainty into this process this late in the game will only serve to draw this four year effort out even further. I’m committed to working with the University, the state, and my colleagues in the delegation to ensure that the appropriate federal resources make their way to the University as soon as possible.”

Representative Bruce Braley (IA-01) said: “Sadly, this isn’t the first time that confusion over FEMA policies have jeopardized Iowa’s recovery from the 2008 floods. Retroactively penalizing the University of Iowa for internal policy disputes is simply unfair and unacceptable. I’m committed to working with Governor Branstad and Iowa’s Congressional delegation to protect recovery funds that have been committed to Iowa and keep FEMA from reneging on their promises.”

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