The $64 million question
|Livingston Parish continues to battle FEMA over cleanup in aftermath of Hurricane Gustav.|
Throughout 2012, FEMA continued its steadfast refusal to pay for the post-Hurricane Gustav cleanup in Livingston Parish. Before the end of the year, the parish ended its appeals, but not before accusing some of FEMA's representatives of bungling incompetence and outright deception.
The parish says FEMA investigators, in their efforts to find reasons to deny the parish funding, often used inaccurate coordinates and outdated photographs. In one instance, says parish President Layton Ricks, an investigator took a picture of a canal, saying it posed no flooding risk to homes, when there was a subdivision just outside the camera's field of view.
“There is no doubt that Livingston Parish has been done wrong through FEMA,” Ricks says. “We have uncovered apparently intentional wrongdoing, and that's now been exposed.”
FEMA, of course, disagrees. In rejecting Livingston's appeals for reimbursement, the agency says the costs were unreasonable, the work went well beyond what was necessary, and the relevant parties never obtained the proper permits.
It could be months before Ricks knows whether the federal government will change its stance. But for now, his parish is stuck with a tab of more than $64 million.
“There's no way Livingston Parish can pay this bill,” he says.
Shortly before Gustav landed on Sept. 1, 2008, Livingston Parish hired IED as its primary post-storm debris removal contractor. It also hired Alvin Fairburn & Associates [Ricks' former employer] of Denham Springs and Professional Engineering Consultants of Baton Rouge to monitor the work.
Former Parish President Mike Grimmer stopped the cleanup project in 2009 after being asked to sign a $42 million project worksheet and, he says, panicking at the rapidly rising cost of the cleanup. Whether Grimmer followed the correct procedures has been the subject of intense debate ever since. But either way, subcontractors like Craig Watts of Kajun Wood have been caught in the middle.
Watts says he spent about $350,000 to do the job, and is still owed about $758,000, a large sum for a small business like his. He says a FEMA employee observed his work several times, without raising any issues. Watts says Grimmer suggested in one meeting that the subcontractors should sue IED to collect their fees, but Watts doesn't see much point in that.
“They're in the same situation I'm in,” he says. “They're broke. They financed the job out-of-pocket.”
IED did not respond to a call seeking comment, but a source close to the company says IED could be in financial trouble if FEMA doesn't come through. IED has sued the parish for $52 million, and the parish has hired McGlinchy Stafford to oppose the suit. However, there has been no courtroom action yet, and IED has supported Livingston's appeals to FEMA.
• Livingston Parish entities owe more than $64 million in debris cleanup after Hurricane Gustav. That's several times greater than the parish's yearly budget.
• The parish hopes FEMA will pay at least some of that bill, but so far, FEMA has shown no inclination to do so.
• FEMA has accused Livingston's contractors of doing unnecessary work to inflate their billings, while Livingston says FEMA presented fraudulent evidence to cheat the parish out of funds.
• IED, Livingston's prime post-Gustav debris removal contractor, is suing the parish for $53 million. But there's likely no way the parish can come up with that kind of cash. If FEMA doesn't help, IED, and the various subcontractors who worked on the project, could be left holding the bag.
PEC President Tony Arikol says his firm is owed more than $4 million, which has been a “huge hardship” on the firm's partners. Like Watts, Arikol says some of the same FEMA representatives who at the time said cleanup work would be eligible for reimbursement reversed themselves months later.
If FEMA doesn't pay, the prospects of anyone getting paid may be pretty slim.
“Everyone's going to say, 'Everybody will sue everybody,'” Arikol says. “But I would not be overly optimistic that you'd get recourse.” While he's frustrated, Arikol says he'd rather be fighting with FEMA than have to answer to a homeowner who lost his house to flooding because the post-Gustav work wasn't done.
For a while under the previous administration, parish officials said they wouldn't pay for any work deemed ineligible by FEMA. But IED's contract contains no such contingencies, and if it did, FEMA's rules would disallow reimbursement.
“The parish owes the money,” Ricks says.
So technically, Livingston Parish is on the hook, along with municipalities such as Port Vincent, French Settlement, Springfield, Albany and Killian that signed intergovernmental agreements with the parish for work done within their borders. Perhaps the parish could turn around and sue the monitors, alleging they didn't do their jobs, but what would be the point? The monitoring firms don't have that kind of money either.
Livingston doesn't have the $52 million IED says it is owed, much less the total $64 million tally. And while a court could render a judgment against the parish, it couldn't force the parish to pay; paying that judgment would be a legislative decision, says Roland Dartez, executive director of the Police Jury Association of Louisiana.
Having a judgment of that size sitting out there could impact the parish's bond rating. But legally, it's not like someone's going to come along and repossess the courthouse, says Marshall Harris, who chairs the parish council's finance committee. That's why the council decided to wrap up its appeals.
“We have spent $500,000 of taxpayers' money, trying to get money for IED, and they're suing us,” Harris says. And if IED gets full or partial payment, he adds, there's no guarantee the local subcontractors will be paid.
Sen. Mary Landrieu's office has pushed for a legislative change that would give aggrieved entities like Livingston the right to appeal to the inspector general for the Department of Homeland Security, of which FEMA is a part. The IG would send the appeal to an arbitration panel, if warranted.
FEMA is supposed to have 90 days from when Livingston ended its appeals in December to make a final decision, but the agency could also give itself an extension, Ricks says. For now, it's a waiting game.
Watts says if he's told that he's definitely not going to be paid, he knows just what he's doing next: go back to the jobsites where he worked, find the piles of debris that he pulled out of the water, and push them back into the creek. He says he's not kidding.
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