Inspector General: Cedar Rapids Shouldn't Get Funds To Repair Hydro Dam

By Rick Smith, Reporter

CEDAR RAPIDS, Iowa -- The Federal Emergency Management Agency should not pay, or should require the city of Cedar Rapids to return, $13.8 million in hard-fought-for federal disaster dollars awarded to the city for the loss of the city's disabled hydroelectric plant at the base of the 5-in-1 bridge.

That is the conclusion of a report published by the Office of Inspector General (OIG) of the U.S. Department of Homeland Security.

The OIG report urges FEMA's headquarters in Washington, D.C., to speedily address the OIG recommendation because FEMA has agreed to allow the city of Cedar Rapids to use the disaster funds for an alternative project. That project, a new parking ramp being built near the new federal courthouse, is now underway.

In its report, the OIG notes that the city of Cedar Rapids only succeeded in securing FEMA disaster funds for the city's hydroelectric plant after a second appeal. FEMA's regional office in Kansas City, Mo., had denied a first appeal, but FEMA headquarters in Washington, D.C., subsequently sided with the city of Cedar Rapids and granted the funds upon the second appeal to the national office.

The OIG report concludes that the Cedar Rapids hydroelectric plant is not eligible for FEMA disaster funds because it was inactive at the time of the June 2008 flood and it did not meet any of three regulatory exceptions need to fund the project.

The report says this as well: "... (T)he city included materially inaccurate information in its appeal documents that FEMA headquarters relied up to make its favorable ruling. Further, the weight of the evidence that we obtained shows that the facility is not eligible for FEMA funding."

FEMA headquarters now must decide if it will comply with the OIG recommendation and stop or retrieve the $13.8 million FEMA grant from the city of Cedar Rapid, or if the agency itself will ask the Department of Homeland Security to adjudicate the matter between FEMA and the department's OIG.

On Friday, the city issued this comment from Joe O'Hern, the city's executive administrator for development services, to the OIG recommendation: "The City of Cedar Rapids is disappointed that the Office of Inspector General has objected to FEMA's decision to fund the facility. We have been working with Iowa Homeland Security and Emergency Management Division and FEMA for years to secure the funding we need."

City Manager Jeff Pomeranz said Friday that the city had not received any of the FEMA funding in question to date. The funding has been intended to be used to fund the new parking ramp now going up on the south end of downtown, he said.

In a similar matter, an OIG recommendation to deny funding on three major University of Iowa disaster grants was overturned after an internal federal adjudication.

Early on after the 2008 flood disaster, an OIG review identified some $10 million in federal disaster dollars that were incorrectly handed out to flooded businesses in Cedar Rapids. In the end, little of the money needed to be returned after businesses complied with paperwork requirements.
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