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Tonawanda News Story on Audit of FEMA Funds

FEMA: October storm money was misspent

Tonawanda News — Erie County Executive Mark Poloncarz fired back at an audit recommending the Federal Emergency Management Agency reclaim $48 million in disaster relief from the 2006 October storm auditors said the county misspent.

The audit, conducted by the inspector general for the Department of Homeland Security, which oversees FEMA, charges officials at the time preferred local firms in the clean-up effort without considering outside contractors that could have done it cheaper.

Erie County Executive Mark Poloncarz shot back, saying officials at the time were only following verbal guidance from FEMA representatives in the wake of a massive storm that downed thousands of trees and knocked out power to tens of thousands, many for more than a week.

“There is absolutely no evidence of improper use of these funds,” Polancarz said. “It has also become clear that the bulk of the funds were spent within the spirit of federal regulations.”

The audit claims that then-county executive Joel Giambra gave preference to local contractors, “limiting the competitive pool.”

According to the audit, giving preference to local contractors violates federal grant regulations and FEMA guidelines for awarding contracts, a claim Poloncarz disputes. 

“Federal auditors are legally wrong to recommend the recoupment of $48 million in federal disaster funds based on ‘local preference’ comments made by county executive Giambra at the time,” Poloncarz said. “Federal law in effect at the time of the storm specifically directs that in federally declared disasters, local officials give explicit preferences for hiring local businesses to perform disaster recovery.” 

The audit also says that Erie County claimed to receive verbal approval from FEMA over the contracts in question — but could not get approval in writing. 

Whether or not the county received approval from a FEMA representative may not even matter. The audit says a FEMA representative does not have the authority to nullify federal regulations verbally or in writing.

Of the $48 million the federal government is seeking, $39 million is directly tied to the contracts.

The audit also claims the county failed to provide records for four projects costing $9 million to complete. County leaders said the records have been lost.

FEMA, citing several federal laws, argues that documentation is required for the projects, including one that says “a cost must be adequately documented to be allowable under federal awards.”

If the county can find records showing how the $9 million was spent, auditors said the costs could be allowable.

Poloncarz warned other municipalities effected by natural disasters to be cautious in how they use federal money.

“I would caution our counterparts in New Jersey and the New York City area recovering from Superstorm Sandy to be wary of the advice you are given by federal officials because even if you do everything based on their guidance, 5 or 10 years later, federal auditors may recommend repayment,” he said.

Erie County Comptroller Stefan Mychajliw promised to work with the county and federal agencies to resolve the issue.

“Let us work together with all our partners in county government to limit or eliminate the damage that could be done from this $48 million recovery claim from the federal government,” Mychajliw said in a press release.

Poloncarz seemes to have the same goal, and warns that the audit could lead to a new disaster for Erie County — one of a fiscal nature.

“Along with our federal representatives, Erie County will do everything possible to demonstrate the misinterpretation of the law, flawed methodology used and improper opinions expressed by the federal auditors to stave off a potential new disaster —this time, a financial one — that local taxpayers need not have to bear.” 

Source: Tonawanda News
By Jeff Gillette
February 28, 2013

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