FEMA disallows $2.7 million in Atascadero relief funds

July 11, 2013

The Federal Emergency Management Agency (FEMA) is asking the city of Atascadero to return $2.7 million in funding it received illicitly following the 2003 San Simeon Earthquake.

In April 2012, nearly eight years after the San Simeon Earthquake damaged the Printery Building and Atascadero city hall, the Office of the Inspector General (OIG) recommended that FEMA ask the city to return $8 million in relief funds because of issues with conflicts of interest and unsupported requests for monies.

FEMA officials, however, elected to take action on two of the four funding issues mentioned in the report.

OIG investigators found numerous unlawful acts in the city’s use of funds to transform a former bowling alley into a temporary city hall building while the former city hall was slated to be renovated. In addition, city officials blended their redevelopment staff and city staff, creating a conflict of interest, the report says.

“This transaction was less-than-arms-length because the same city officials with responsibility to manage FEMA’s disaster assistance funding were executive officers of the city’s redevelopment agency, thus creating a conflict of interest,” the OIG report said. “As a result of this overlap, the transaction lacked independence because city officials were able to substantially influence or control the actions associated with the transaction. Costs incurred under less-than-arms-length transactions are eligible for federal disaster assistance funding only on a limited basis.”

In addition, FEMA agreed that cost to one project had been overcharged by $1,312.

Atascadero has until Sept. 2 to submit a written appeal that is required to include what federal law, regulation or policy supports its keeping the funding.

Mayor Pro Tem Brian Sturtevant said the Atascadero City Council disagrees with the investigator’s determination and that city plans to file an appeal.

“We are greatly disappointed to learn that FEMA has reversed its long-held commitment to the city for temporary relocation assistance,” Stutevant said. “The city followed the proper channels and relied on the approval received from FEMA. It is unfortunate and frustrating that we are now seeing a reversal of this decision.”