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Court decision could help recovery of FEMA funds in Atascadero 

atascaderoThe United States District Court for the Southern District of Florida recently ordered the Federal Emergency Management Agency to reinstate $21.8 million in federal disaster assistance funds that FEMA had provided years ago to the South Florida Water Management District. The court’s decision to reverse FEMA’s de-obligation of funding in the South Florida case may be considered a major development for the City of Atascadero, the city reports in a statement issued today.

The City of Atascadero received FEMA disaster assistance funding for temporary relocation funding during the repair and rehabilitation of the historic city hall building for damages sustained during the 6.5-magnitude San Simeon Earthquake of December 2003. FEMA later reversed its decision, stating that FEMA’s earlier decision had been flawed, and then required the city to return $2.7 million in funding. The city has appealed that decision.

FEMA’s decision to de-obligate Atascadero’s relocation funds is very similar to the Southern Florida case. The Florida funds were initially approved by FEMA in 2004-2006 to repair canals severely damaged by several hurricanes, but then were “deobligated” in 2012 after FEMA determined it had misinterpreted its own policy.

In 2003, Congress enacted Section 705(c) of the Stafford Act to protect recipients of disaster assistance from these types of FEMA retroactive claw back of funds. The requirements of the Stafford Act cited in both the South Florida and Atascadero appeals, and with which both agencies were in full compliance, are:

1. The payment was made pursuant to an approved agreement specifying the costs;
2. The costs were reasonable; and,
3. The purpose of the grant was accomplished.

The City of Atascadero had received approval for the emergency funding from FEMA, FEMA’s Office of Chief Council, and the California Office of Emergency Services (Cal OES). The city went through the funding process step by step with FEMA, and the funding was subject to multiple layers of review including an audit by Cal OES in 2010.

The city was therefore surprised in early 2012 when a report was issued by the Department of Homeland Security’s Office of Inspector General challenging the validity of the funding. The OIG made the challenge after reviewing all the same sets of facts that had been presented to, reviewed and approved by both FEMA and the Cal OES, and well after the spending commitments had already been made. The city was further surprised in July of 2013 when FEMA reversed its previous support of the city.

The full significance of the Florida District Court’s ruling is not yet clear, but the city is hopeful that it will help to pave the way for the FEMA funding originally awarded to the City and subsequently de-obligated by FEMA, to ultimately be restored to the city.

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