After Sandy: Use of disaster funds questioned

Office of Emergency Management Commissioner Craig J. Craft

Office of Emergency Management Commissioner Craig J. Craft stands by generators purchased by the Board of Elections for the 2012 presidential elections. (Dec. 10, 2013) Photo Credit: Newsday / Alejandra Villa

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Long Island officials spent hundreds of thousands of dollars for expenses that went beyond clearing debris, repairing roofs and restoring power after superstorm Sandy hit. The purchases included jackets and pants, generators that were never used, iPads, laptops and catered meals.

And even during the cleanup itself, there was a broad range of expenditures. One town, for instance, spent $84 an hour on a flagman -- more than double the state's standard rate, even when including benefits and other extras.

An initial review of thousands of pages of documents, including project worksheets, invoices, purchase orders, emails and handwritten notes found that while some localities have been reimbursed for certain non-cleanup expenses, such as jackets and waterproof pants, others have had their expenditures -- such as unused generators -- rejected.

Officials and experts said questions over what expenses qualify under federal regulations provided by the Federal Emergency Management Agency, which gives assistance and financial relief to those suffering from and cleaning up after a disaster, can make it difficult for local governments to know what it will pay for and what it won't.

"Ultimately, states and municipalities don't know what FEMA is going to reimburse them for and what FEMA is not going to reimburse them for," said Daniel Rothschild, a senior fellow and director of state projects for the R Street Institute, a Washington, D.C., think tank.

But FEMA spokesman Jim Homstad pointed to specific agency regulations, noting that while the agency might not pay for equipment that was not needed, such as the generators, clothing needed to respond to the emergency would be eligible for reimbursement.

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Experts noted that often, FEMA will reimburse as long as a local government can prove its expenses were necessary and reasonable. But there have been times, according to former FEMA federal coordinating officer Scott Wells, that the scales have tipped toward excessive spending.

"I've seen where applicants were greedy and try to get as much as they can [and] I've seen where FEMA was too strict in the interpretation of FEMA public assistance policies," said Wells, now the president of Washington, D.C.-based Insight Consulting Inc. "And I've seen all kinds of things in between the two."

As of last month, Long Island had received a total of $474 million from FEMA. Of that, $288.3 million paid for debris removal, and $80.6 million went toward the category called "emergency protective measures." That usually involves security, search and rescue operations and emergency repairs, but also includes many of the extra expenses Newsday found, including clothing, meals and iPads.



Costs questioned

Annual reports from the U.S. Department of Homeland Security's Office of the Inspector General show FEMA has a history of approving expenses that remain questionable or ineligible. In a report last May, the OIG looked at disaster expenses in the years before Sandy and found $267.9 million in "questioned costs" that the office recommended FEMA disallow, and another $147.7 million in unused funds. The $415.6 million total represented more than a third of the $1.25 billion in FEMA funds the OIG audited last year.

"We continue to find problems with grant management and accounting, ineligible and unsupported costs, and noncompliance with federal contracting requirements," the OIG report said.

In one audit described in the report, for instance, OIG cited a FEMA decision to replace damaged facilities at the University of Iowa, rather than repair them. The OIG suggested FEMA "deobligate and put to better use" $83.7 million in replacement costs.

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An OIG spokesman declined to comment on the report, or on Newsday's findings, saying, "Our reports speak for themselves."

FEMA spokesman Dan Watson said the agency doesn't keep track of how much money it "deobligates," or takes back, from local governments because the spending was ineligible for FEMA reimbursement during a disaster.

Some outside experts and advocates said the purchases found by Newsday represent a government's typical struggle after a disaster as it balances meeting immediate needs and the desire not to waste taxpayer money.

"You want to do all you can for the people who suffered from this, but we all have an obligation to look out for the U.S. taxpayer and that makes the job tough," said Wells, who did not work on Sandy-related projects on Long Island.

But others said the purchases seem to stretch the bounds of reasonable government spending.

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"If you throw money at a problem, it will be spent," said E.J. McMahon, president of the Empire Center for Public Policy, a right-leaning think tank in Albany. "So we buy our iPads and our waterproof pants, but it's hard to reconcile these expenditures when there were people who were without power for weeks and people who lost everything."

Some argued local officials' decision-making might have been different if they didn't assume FEMA would eventually reimburse them.

"We all spend more money at dinner when we know someone else is paying the tab," Rothschild said.


'You need the technology'

Both Nassau and Suffolk counties spent money on far more than hauling equipment and debris removal in the days during and after the storm.

Suffolk focused much of its attention on technology. Nassau spent thousands on jackets and weatherproof pants -- and thousands more on flares, boats, portable traffic lights and car chargers, according to project worksheets the county filed with FEMA.

The county paid $7,159 for 63 pairs of waterproof pants and 21 five-in-one jackets, which usually have removable sleeves, fleece layers and reflective material. The clothing was given to police and county executive personnel.

"It probably didn't occur to most people sitting in wet and in the dark after the storm that . . . local politicians would need money to buy waterproof pants," McMahon said.

County spokesman Brian Nevin defended the purchases, saying much of the equipment was necessary because of power outages and flooding. The clothing was used by administration and police department officials to assess damage and work in storm-ravaged areas, he said.

"These items are eligible for reimbursement under the Public Assistance program," Homstad said.

The county has been reimbursed for $425,650.53 off the project worksheet that included the pants and jackets, along with other expenditures. It is waiting an additional reimbursement of $47,294.50.

According to emails among officials in Suffolk's Information Technology department, conversations about the potential need for new technology began on the morning of Monday, Oct. 29, 2012, as the storm bore down.

"The list below represents the equipment that we feel is lacking in order for us to provide comprehensive support to county staff and the public," wrote Donald Rodgers, the commissioner of Information Technology for the county, in an 11:36 a.m. email on Oct. 29 to Michael Postel, the public safety technical coordinator for the county's Fire Rescue and Emergency Services division.

The list included iPads, laptops, MacBook Pro computers, Droid tablets, Google business accounts and the desire to replace BlackBerrys with iPhones.

Suffolk ultimately spent $272,916 on 16 iPads, two MacBook Pro computers, nearly 30 laptops, 10 desktop computers, eight printers, 20 cameras, 48 portable radios and a satellite communications system for Fire Island. County officials chose not to replace their BlackBerrys, Postel said.

The county is not yet sure of the final breakdown of what FEMA is reimbursing, Suffolk spokeswoman Vanessa Baird-Streeter said.

Matt A. Mayer, chief operating officer of the Liberty Foundation of America, a conservative advocacy organization based in Ohio, questioned whether such purchases are essential to storm cleanup and recovery.

"Santa's coming tonight and we know there's going to be money . . . so let's grab our wish list," Mayer said. "That's what it sounds like."

Postel said it was only as the storm was hitting and as it was leaving that officials realized the extent of what they would need. He said Suffolk officials had been discussing the possibility of purchasing tablets before Sandy. "We pulled the trigger right after the storm," Postel said.

"In 1938 [when a hurricane struck Long Island], I'm sure they ordered boxes and boxes of paper to write everything down," Postel said. "Today, you need the technology."

Postel said he knew the county would ask for FEMA reimbursement for the iPads and other technology expenses.


Some outside workers hired

Some experts said that assumption is part of the problem.

"Clearly, a lot of this smacks of simply loading up on the bill because the money was there," said Manhattan Institute's McMahon.

Wells, the former FEMA federal coordinating officer, said the iPad purchases would raise questions among FEMA officials and Office of Inspector General investigators who might look at Sandy expenditures in the future.

"You didn't need them the day before [the storm], so why do you need them now?" Wells said of likely questions. "If they can answer the question sufficiently, then give to them."

In some cases, expenses that seem extravagant are necessary, experts said. If the iPads that Suffolk bought, for instance, helped to expedite damage assessment and collect information, then they may have been worth the cost, Rothschild said.

Baird-Streeter said the iPads have been assigned to individual workers in the county's Fire Rescue and Emergency Services division. They can take the iPads with them on the road and at home, she said.

In most cases, first responders and government officials are not trying to use a storm to spend extravagantly, said Joseph Trainor, a disaster research professor at the University of Delaware. But it's difficult to look back months later and determine whether such spending was appropriate.

"That's the difficulty with doing oversight," he said. "It's easier to judge when you already know what happens."

After Sandy, municipalities needed personnel to manage the busy intersections and roads where debris was being cleared. In some cases, local governments used their own workers. In others, they contracted with electrical companies and others to supply flagmen.

The New York State Department of Labor requires flagmen to be paid at least $21.74 an hour as a prevailing wage. With fringe and other benefits, that wage can reach $40.63 an hour. The Town of North Hempstead, for instance, reported paying its vendor's flagmen from $20 to $31 an hour.

But in Brookhaven, flagmen were paid $84 an hour, according to invoices from Hinck Electrical, a Bohemia-based company that had a contract with Brookhaven that predated the storm. According to the invoices Newsday examined and Brookhaven spokesman Jack Krieger, flagmen worked 61 hours for Hinck in the Town of Brookhaven, earning $5,124. In total, Hinck billed the town for nearly $238,720 in work, including equipment rental and other needs.

"I would find it very difficult to find a situation where $84 an hour was the market clearing wage for a flagman," R Street's Rothschild said. "But when you're dealing with a situation where officials are threatened with lawsuits when they're not paying prevailing wages, I can see where it would lead to officials to err on the side of paying too much."

Hinck representatives did not return calls for comment.

Brookhaven Parks Commissioner Ed Morris, who now also serves as chief of staff to town Supervisor Edward P. Romaine, confirmed that Hinck's flagmen received $84 an hour -- and that Brookhaven paid Hinck's bills that included those fees and submitted them to FEMA for reimbursement. He said Hinck's contract was competitively bid before the storm.

"That's his rate and that's what he billed," Morris said. "Our biggest concern is that they were paying at least the minimum of what was required under prevailing wage. It would have been more of a problem if they were paying under it."

But after studying the documentation, Morris said the hourly rate "certainly seems high." The town has yet to be reimbursed by FEMA for the flagmen, Krieger said.


75 generator go unused

Immediately after the storm, Nassau officials worried about getting power to their electronic voting machines for the presidential election. They began to look for generators to buy -- and had a difficult time finding them. Eventually, they purchased 105 generators from vendors in West Virginia and Illinois.

"All through this, we notified everybody, we're buying these," said William Biamonte, the Democratic commissioner for the Nassau Board of Elections. "They said 'no problem. Make sure you have all the paper documented, FEMA will pay for it.' "

But the Long Island Power Authority restored electricity to many of the precincts before the election -- and 75 of the generators went unused. FEMA then refused to reimburse the expense for the unused generators -- $643.08 each, or $48,231, according to the project work sheet and Nassau officials.

"It's a shift off what they said" in meetings early on, Biamonte said. "The fact that it was disallowed came as a surprise, more so to me because I was under the impression from [the] FEMA director that it was going to get covered."


Few bills for food

Under FEMA regulations, materials purchased must be needed for and used directly in connection with the disaster for which a municipality is seeking reimbursement. For superstorm Sandy, the federal government has established a cost-share that reimburses 90 percent of eligible costs incurred by local governments and nonprofits.

The unused generators are now housed at the county's Office of Emergency Management facilities. The Board of Elections is holding on to two dozen others. Nevin said they all will "help ensure emergency preparedness for Nassau County . . . "

County taxpayers won't be on the hook for the unused generators, Nevin said.

"Despite the FEMA disallowance, OEM has funding available under a DHS grant to recoup the cost of these generators," he said. "So, the [county] taxpayer will not be impacted by the FEMA decision."

Nassau County Comptroller George Maragos said the money spent on each of the unused generators was "insignificant."

"Over $120 million in expenditures occurred," Maragos said. "We're talking about an error of $48,000. It's very insignificant."

But McMahon said the county might not have bought so many generators if there was any possibility that FEMA wouldn't reimburse them.

"If the local officials had to pay for the generators themselves, they'd think twice about how much they needed to buy," he said.

Part of the problem is that the number of federally declared disasters has increased considerably over the past three decades, a change that has "eroded both the willingness and the expectations that municipal governments will take on the cost," Rothschild said.

In the thousands of pages of invoices and project worksheets Newsday examined, there were few bills for workers' meals.

But one invoice billed the Town of North Hempstead for $8,100 in meals provided by Harbor Links Golf Course in Port Washington. The invoice didn't provide detail on how many people were served or what food was provided.

"You have to show some justification," Insight's Wells said. "You can't throw a $10,000 bill there. It would be a warning flag that says, 'Hey, I need to look into this.' "

A total of 450 meals were served by the town-owned golf course over an eight-day period at $18 per person, town spokesman Collin Nash said. The meals served Solid Waste Management Authority personnel, North Hempstead employees who were staffing the town's call center, staffers from the Department of Aging and others.

"Harbor Links . . . had power, and food and no patrons," Nash said. "So it made perfect sense to have them prepare trays of food for the town staffers rather than have it just sit there."

An examination of other project worksheets across Long Island shows that North Hempstead spent more on meals than either Suffolk, which paid $12 per meal, or Nassau, which spent $15 per meal. In the project worksheets that did mention meals, stipends went as low as $10 per meal, the cost in Farmingdale.

FEMA has reimbursed North Hempstead for its meal costs, which were included in the town's "emergency protective measures" category, Nash said. Wells said that Nash's explanation could be enough to help the town justify the spending.

But Mayer, who has written extensively about homeland security and FEMA, said there's a need for additional transparency and, at times, a financial ceiling to even basic needs like food.

"FEMA could say 'we'll reimburse $10 a meal, but we're not going to reimburse so someone can get lobster and steak,' " Mayer said. "There should be some flexibility that doesn't hamstring everyone . . . but there should be standards."

The central question on disaster-related expenditures, Wells noted, is, "Are they reasonable and necessary to accomplish the work, and is the work eligible?"

"You leave a lot to judgment," Wells said. "The devil is in the details."

With Sarah Crichton



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