Audit: FEMA should have contributed $10.8 million less to new Cedar Rapids library

CEDAR RAPIDS - The Federal Emergency Management Agency contributed $10.83 million more than it should have for the city's new, $46 million downtown public library, a federal audit concludes.

However, the audit by the Office of Inspector General (OIG) at the Department of Homeland Security found no fault with the city of Cedar Rapids. and is not asking the city to return any of the $18.69 million in FEMA disaster funds it received for the library construction.

Instead, the OIG report faults FEMA's Region VII office in Kansas City, Mo., for errors. The oversight office's report states that OIG is working to help the regional office clarify and improve policies related to decisions to replace, rather than repair, buildings damaged in natural disasters.

A public building like the city's flood-damaged former library, at 500 First St. SE, needed to have 50 percent damage before it qualified to be replaced with a higher financial contribution from FEMA. If the building had less than 50 percent damage, it would be repaired with less FEMA support.

FEMA went back forth before concluding that the former library met the 50 percent rule, after a second appeal of the matter by the city of Cedar Rapids. In its report, OIG said the FEMA regional office included costs it should not have in reaching the 50 percent threshold.

As a result, the library project should have received only $7.864 million for repair costs, $10.828 million less than the $18.692 million it received from FEMA for the new library's construction.

The OIG conclusion also leaves a question that Mayor Ron Corbett on Friday said was unanswerable: Would the city have built the new library at a new site, if FEMA had decided what the OIG now says it should have?

'There were a lot of players and decision-makers - the old City Council, the current one, the library board, the library foundation - so it's hard for me to say if there would have been a new library,” Corbett said.

Amber Mussman, spokeswoman for the library, said Friday that 'the Library Board operated with the information they had from FEMA. There was no reason to make other plans or question that decision.”

In total, FEMA contributed $26.5 million to the new library, including funds to replace contents destroyed in the former library, which True North Companies bought from the city and turned into its new Cedar Rapids office.

The OIG report also concludes that FEMA paid $1.276 million more than it should have on three smaller flood-damaged Cedar Rapids city buildings because of a misinterpretation of the 50 percent damage rule. Those three buildings include two buildings at the city's former animal shelter, as well as the city's former Sokol Park maintenance shop on A Street SW at Czech Village.

The OIG report concludes that $278,822 of the funding for the city's new animal shelter should be disallowed. The city of Cedar Rapids may have to return that money if FEMA concurs with the recommendation.

The report adds that the FEMA regional office, as well as the city of Cedar Rapids and the state of Iowa, disagreed with the OIG finding on the Cedar Rapids library. However, the FEMA regional office agreed with the other findings, the OIG report states.

Maria Johnson, communications manager for the city of Cedar Rapids, said Friday said that FEMA hadn't yet asked the city to return any funds. FEMA first must decide if it agrees with the OIG report on the $278,822 sum, she said.

In May 2013, OIG concluded that FEMA should recover $13.8 million from the city of Cedar Rapids for flood damage to the city's shuttered hydroelectric plant at the base of the 5-in-1 bridge. FEMA subsequently reviewed the matter and concluded that OIG was incorrect, and the city kept the funding.

'This isn't the first time OIG and FEMA have disagreed,” Corbett said, referring to the hydroelectric plant matter. He said the latest OIG report is also a battle within the Department of Homeland Security and FEMA.

'We didn't do anything wrong. It's all about interpretation, and two federal divisions disagree,” Corbett said.

The OIG report states that FEMA has approved $330 million in total disaster payments to the city of Cedar Rapids for flood-damaged city properties. That figure includes funding that has gone to 187 'large” projects and 138 'small” ones. The FEMA funds covered 90 percent of the repair or replacement costs on the FEMA-eligible parts of projects, with the state of Iowa paying 10 percent.

The OIG report states that FEMA's regional office already had begun to make changes related to the 50 percent damage rule, following direction from an earlier OIG audit of flood damage at the University of Iowa.