City of Cedar Rapids drops fight with FEMA over consultants

CEDAR RAPIDS - City officials have thrown in the towel in their dispute with the Federal Emergency Management Agency over high-priced fees for consultants and project managers during the city's recovery from the 2008 flood.

City Manager Jeff Pomeranz said Monday the city and FEMA's regional office in Kansas City, Mo., reached an agreement to settle for the top rate FEMA considers 'reasonable” for consultants and project managers, which is $155 an hour.

Michael Cappannari, spokesman for FEMA's regional office, said FEMA will not reimburse the city for an estimated $2 million to cover direct administrative costs (DACs) and project management fees (PMs).

'It's been six years since the flood, and the city certainly has incurred substantial costs in excess of $155 an hour,” Pomeranz said. 'But we felt at this time that it was in the city's best interest to accept the FEMA proposal. … It allows us to move on and receive a reasonable rate - not all - but a reasonable rate.”

The city's agreement with FEMA concludes a dispute that began in the first days after the flood of 2008, when experienced consultants with Hurricane Katrina on their resumes showed up almost instantly to help the city begin its recovery.

Initially, the city signed on with disaster recovery consultant John Levy for $425 an hour.

By September 2008, about three months after the flood, the city sought proposals from disaster firms following what it believed were guidelines set out by FEMA.

The city hired two firms: Levy's newly created firm, Base Tactical Disaster Recovery Inc. of suburban Detroit, and Adjusters International Inc. of Utica, N.Y.

The city contracts set out a top rate of $225 an hour for Levy (which later increased to $235 an hour), and a top rate of $195 an hour (which increased to $200 an hour) for Levy's top assistant. The top rate for Adjusters International was $285 an hour.

Casey Drew, Cedar Rapids' finance director, has said that the city paid Adjusters International about $2 million; Base Tactical about $2.2 million; and Globe Midwest (the firm John Levy worked for when he came to Cedar Rapids) $772,114.

On Monday, Pomeranz said the city has agreed to set aside 62 project appeals with FEMA, all of which had the city seeking higher rates for both direct administrative costs and/or project management costs than FEMA's top rate of $155 an hour.

Base Tactical and Ryan Companies US Inc. were among firms that worked as project managers for the city, Pomeranz said.

Pomeranz and FEMA's Cappannari said the city has only two active appeals of FEMA decisions remaining from the 2008 flood.

Those are the city's appeal of about $200,000 related to the cost of an ADA ramp for the Time Check Recreation Center and an appeal of about $60,000 related to documentation on water meters replaced by the city as a result of the flood.

Mayor Ron Corbett said Monday that he called into question some of the money the city was paying to consultants when he campaigned in 2009.

By March 2010, Corbett's third month in office, Levy's contract with the city ended. By then, much of his work for the city had been completed.

A year ago, Grey Eyerly - who served as the city's flood recovery director from July 2009 through January 2011 - said, 'If I was stranded on a deserted island with one phone call to make, I'd call John Levy. I wouldn't ask him how he did it, but I know I'd hear chopper blades thumping in the distance in a couple of hours.”