Author: Brian R. Haines
When a disaster strikes, such as a hurricane, tornado, flood event or whatever causes a large amount of destruction, many communities turn to the state and federal governments for assistance. Aid to these communities may come through the Public Assistance Program of the Federal Emergency Management Agency (FEMA).
Born out of the Disaster Relief Act of 1974, the Stafford Act is a 1988 amended version that provides financial public assistance to areas that have a presidential disaster declaration or an emergency declaration through FEMA. The first step in providing public assistance starts post-event when state officials have evaluated a disaster area and determined it would benefit from federal assistance, and the state’s governor applies for a major disaster declaration from the president. Once a presidential major disaster declaration has been approved, the state and FEMA conduct applicant briefings in the approved areas.
Public assistance is not available to individuals. Instead applicants for public assistance must be a state entity, territory, tribe, local government or certain private nonprofit (PNP). An eligible PNP applicant must show that it has:
- A ruling letter from the U.S. Internal Revenue Service that was in effect as of the declaration date and granted tax exemption under sections 501(c), (d), or (e) of the Internal Revenue Code; or
- Documentation from the state substantiating it is a non-revenue producing, nonprofit entity organized or doing business under state law.
Applicants work with the state and FEMA to develop the award package for a grant. The funding will be allocated once FEMA approves the award package. It is important to note that public assistance is a reimbursement system, which means applicants are required to initially pay out-of-pocket for expenses related to the grant. However, on large projects reimbursements can be made in installments of up to 75% of the project’s completion to allow for work to continue.
The difference between a large and small project is a small project reimbursement can be paid on an estimate and does not need supporting documentation, with the exception of insurance. The current threshold for a small project is $139,800, however, this figure changes so it is best to check the threshold at the time of the disaster for which you are applying. Large projects are paid on actual costs or a fixed-cost offer from FEMA, and require supporting documentation, including insurance, loans or other grants. An expedited large project may pay 50% upfront, then the remainder with supporting documentation.
Applicants can request funding for emergency or permanent work to repair a building, public works and systems, equipment or natural feature that they are legally responsible for in the designated disaster area. FEMA defines eligible emergency work as debris removal or emergency protective measures, which are actions that save lives or protect public health or safety in relation to the declared disaster. Emergency protective measures includes things like swift water rescue, fire control, ambulance services and other first responder actions. Emergency work must be completed within six months from declaration date.
Permanent work applicants have 18 months to complete their approved projects. Eligible permanent work includes repairs to roads and bridges, water control facilities, public buildings and their content, public utilities, as well as parks, recreational and other facilities. If an applicant needs more time they may submit a request to the state for consideration of a time extension.
Regardless of whether the project is emergency or permanent work, the applicant must show the work as necessary and reasonable and provide documentation of the authorized work being done to be reimbursed. FEMA will only reimburse funds spent on eligible costs such as labor, contract work, materials, equipment and administrative costs. Additionally, the public assistance program will not reimburse applicants for benefits they have already received from another source such as property and flood insurance, or assistance from another state or federal agency. To be eligible, projects must also follow environmental, historic preservation and floodplain management laws. Contracts for obtaining disaster-related goods and services must also meet certain guidelines.
While the percentages can fluctuate, in North Carolina, approximately 75% of the eligible costs are typically paid out by the federal government and North Carolina pays the remaining 25%. Many states do not pay and instead pass that expense on to local governments or agencies that are the public assistance applicants. The state also maintains, monitors and reports on the grant. When it comes time for the disaster closeout, FEMA will evaluate the performance of the grant and review financial records and appeal reconciliations and resolutions, as well as finalize reporting activities. After the closeout FEMA may still conduct audits, other adjustments and collect any outstanding debts.
To help prevent future damage FEMA also funds the state’s Hazard Mitigation Program, which helps protect areas and facilities by minimizing the impact of future storms. North Carolina qualifies for 20 percent of the total federal recovery assistance funds paid out through the public and individual assistance programs due to its Enhanced Hazard Mitigation status.