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Feds, North Hempstead spar over audit involving Sandy money

North Hempstead Town Hall in  Manhasset is shown 

North Hempstead Town Hall in  Manhasset is shown  Sept. 1, 2015. Credit: Newsday / William Perlman

Federal authorities and the Town of North Hempstead are sparring over an audit that calls for the North Shore municipality to return $9.9 million in disaster recovery money it was awarded after 2012’s superstorm Sandy.

The inspector general’s office for the Department of Homeland Security released an audit Friday saying that Federal Emergency Management Agency officials should take back the disaster funds that were “ineligible, unsupported or unused.”

But Town of North Hempstead officials said $5.5 million of the money cited for “recovery” was never awarded to the town and that the audit was shoddy, containing unfair language that was political rather than helpful.

The town said it also believes contracts to remove debris were executed based on what FEMA officials said, and that they met federal guidelines.

“We believe that FEMA will find that no money should be recovered based on this deeply flawed report and we trust that FEMA will recognize that we followed procedures and were careful custodians of the federal disaster relief funds,” Town Supervisor Judi Bosworth said in a statement.

FEMA spokesman Don Caetano said in an email that the agency is “reviewing the audit report and working on a corrective action plan” detailing how the agency will handle the recommendations. It is too soon to say if the town will be asked to return any money, he said.

FEMA has until Oct. 31 to decide. The town can appeal that decision within 60 days and then the state has another 60 days to support the motion.

“We’ll pursue this vigorously,” North Hempstead Town Attorney Elizabeth Botwin said.

The town received a total of $36.6 million for 30 projects aimed at removing debris, emergency protection measures and long-term recovery work after Sandy. The inspector general’s office audited four of those projects totaling $20.9 million.

That office did not respond to phone or email requests for comment Friday.

The state Division of Homeland Security and Emergency Services, which oversees the federal public assistance grant money awarded to localities, disagreed with the audit, spokeswoman Kristen Devoe said.

Officials at that agency said it was premature and confusing. It happened, the agency said, prior to all costs and benefits — such as insurance — being fully reconciled.

“The inspector general was conducting this audit as the projects were being written and worked on,” a Division of Homeland Security and Emergency Services source said. “They seemed to be way too early in their assessment of finding problems that did not exist.”

The inspector general’s office told Newsday in January that the agency switched auditing procedures after Sandy. Before the storm, projects were audited after they were completed, but the agency switched to examining them while they were ongoing to prevent mistakes or improper payments.

The audit said the town spent $4.89 million for contracts that violated federal rules on procurement; claimed costs of $3.22 million twice; billed for a project, then spent nearly $800,000 less on it; sought $405,000 on claims that insurance should have covered; and filed for $562,000 without providing proper documentation relating to equipment use.

Town and state officials said they believe they complied with contracting rules, removed one $3.22 million claim when they discovered it was duplicate and should not be penalized for another project coming in at less than originally estimated. They also said extra insurance was sought, following FEMA’s advice to reduce their claim before auditors brought it up.

Despite evidence showing GPS locations, movement, hours of operation and gas consumption being provided, some costs with vehicle use and time were turned down because individual employees did not fill out daily log books, Botwin said.

“As management in this town, I don’t know what to take away from this audit,” Deputy Town Supervisor Aline Khatchadourian said in an interview. “I’m not really sure if we have a hurricane next month what should we do differently.”

Early last month, the inspector general’s office also released an audit of $17.1 million worth of spending by the Long Beach City School District, recommending FEMA disallow $668,430 in costs because a contractor tagged on 20 percent for overhead and profits in violation of federal rules.

“Marking up costs based on a percentage of costs provides a disincentive for the contractor to save costs because the higher the cost, the higher the profit,” the audit said.

The audit said New York State should have provided more technical assistance to the school district, something also recommended in the North Hempstead audit.

School officials could not be reached for comment Friday.


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