Cedar Rapids not entitled to disaster funds for loss of hydro plant at 5-in-1 bridge

The Federal Emergency Management Agency should not pay, or should require the city of Cedar Rapids to return, $13.8 million in hard-fought-for federal disaster dollars awarded to the city for the loss of the city's disabled hydroelectric plant at the base of the 5-in-1 bridge.

That is the conclusion of a report published by the Office of Inspector General (OIG) of the U.S. Department of Homeland Security.

The OIG report urges FEMA's headquarters in Washington, D.C., to speedily address the OIG recommendation because FEMA has agreed to allow the city of Cedar Rapids to use the disaster funds for an alternative project.  That project, a new parking ramp being built near the new federal courthouse, is now underway.

In its report, the OIG notes that the city of Cedar Rapids only succeeded in securing FEMA disaster funds for the city's hydroelectric plant after a second appeal. FEMA's regional office in Kansas City, Mo., had denied a first appeal, but FEMA headquarters in Washington, D.C., subsequently sided with the city of Cedar Rapids and granted the funds upon the second appeal to the national office.

The OIG report concludes that the Cedar Rapids hydroelectric plant is not eligible for FEMA disaster funds because it was inactive at the time of the June 2008 flood and it did not meet any of three regulatory exceptions need to fund the project.

The report says this as well: “… (T)he city included materially inaccurate information in its appeal documents that FEMA headquarters relied up to make its favorable ruling. Further, the weight of the evidence that we obtained shows that the facility is not eligible for FEMA funding.”

In a statement released on Friday, Joe O'Hern, the city's executive administrator for development services, said the city of Cedar Rapids is “disappointed” with the conclusions of the OIG report and its recommendation to reverse FEMA's decision and deny funding for the hydroelectric plant project.

“We have been working with Iowa Homeland Security and Emergency Management and FEMA for years to secure the funding we need,” O'Hern said.

FEMA headquarters now must decide if it will comply with the OIG recommendation and stop the FEMA grant to the city of Cedar Rapids or if the agency itself will ask the Department of Homeland Security to adjudicate the matter between FEMA and the department's OIG.

Cedar Rapids City Manager Jeff Pomeranz on Friday said city has not received any of the funds in question, though in June 2012, the City Council decided to program about $12 million expected in federal disaster dollars for the hydroelectric plant to pay for a new parking ramp.

The broken hydroelectric plant was mothballed instead of fixed, with its ultimate future to be decided at some later time, Mayor Ron Corbett said in June 2012.

The hydroelectric plant had been damaged and was not functioning at the time of the 2008 flood, a fact that prompted FEMA to refuse to pay the city for flood damage to the facility. However, the city appealed the matter to FEMA headquarters in Washington, D.C., and in April 2012, FEMA reversed its decision and agreed that the city had been "moving in the direction" of repairing the facility at the time of the flood.

Under FEMA rules, the city gave up 10 percent of the $13.8 million FEMA disaster award so it could use the funds for an "alternate" project other than the hydroelectric plant. Corbett said using about $12 million of the award for the city's new parking ramp in the 600 block of Second Street SE meant the city would not have to take on debt for the ramp project.

The City Council had indicated in 2010 that it did not intend to renovate the hydroelectric plant and, instead, wanted to use any disaster dollars that came to the city from the hydroelectric plant for an alternate use under FEMA rules.

In a similar matter, an OIG recommendation to deny funding on three major University of Iowa disaster grants was overturned via an internal federal adjudication.

Read the full report:

http://www.oig.dhs.gov/assets/GrantReports/2013/OIG_DD-13-09_May13.pdf