Atascadero appeals FEMA inelgibility finding
November 1, 2013
Atascadero officials have filed an appeal with the Federal Emergency Management Agency (FEMA) objecting to a demand that the city return $2.7 million in aid related to the 2003 San Simeon Earthquake.
Office of the Inspetor General (OIG) and FEMA investigators determined that the city’s use of $2.7 million was not permitted because of issues with conflicts of interest. The city redevelopment agency, headed by city staff, leased a building to the city to be used as a temporary city hall.
“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 its Sept. 17 appeal, city officials argue that FEMA had approved the lease knowing the situation and as such it was lawful.
“We relied on FEMA’s advice and approval all these years and now face a significant funding decrease because the very same agency that once funded us has now changed its mind,” Mayor Tom O’Malley said in a press release.
In August, city staff moved into the repaired historic city hall building.