Financial tempest awaits communities unprepared for post-hurricane recovery

Wayne D. Lasch
Vice President
PBS&J
Jacksonville, Florida

In coastal communities that aren't prepared for hurricanes or major storms, disaster may be ready to strike twice very quickly. Once a storm has inflicted its physical damage, the lack of a disaster recovery plan can create a second tempest—a financial one that can soak a community much longer than a hurricane's rain.

By taking time to create a formal disaster plan, coastal communities can avoid being caught off guard by unfamiliar recovery expenses and can hasten the time-critical rebuilding process.

Despite the many dangers of not having such a plan, very few of our coastal communities have one. That isn't altogether surprising: Formal planning costs money, and many local and regional governments are reducing their budgets. Also, few of the burgeoning communities along our coasts have experienced a devastating hurricane. At the same time, many local government leaders believe that the Federal Emergency Management Agency (FEMA) and state emergency response organizations will take care of any problems that may occur. For these and other reasons, many communities are temporarily enjoying a false sense of security.

A sense of urgency
It's relatively easy to predict how storms or other potential disasters may impact a community. Using that information, government leaders can anticipate the type of damage likely to occur, examine how prepared the community is, and determine how to get the necessary help. In addition to making the recovery process run much smoother for its residents, advance planning such as this can save a community a lot of money.

Consider this: A moderate hurricane can easily create a million cubic yards of vegetative, building, and other debris. The cost of removing that debris could be as much as $15 per cubic yard. While FEMA may cover 75 percent of these costs for federally declared disasters, the local community is typically responsible for the remaining 25 percent, which in this example would be about $4 million. And that's just for removing debris from a moderate storm.

In-place contracting mechanisms
To prepare for storm cleanup and rebuilding, public works officials need to pay particular attention to how they will hire and manage recovery contractors. Selecting a contractor and setting up contract documents at the last minute is extremely difficult and you will likely get unfavorable prices, incomplete scopes of work, and contract terms that do not favor the community. Even worse, if a contractor does not perform as desired, the community often has very little leverage to quickly end a contract and move on to another firm without getting into nasty legal battles.

At the very least, a community should make a rough determination of the types of help it will need for a large disaster, prepare a list of contractors it can call on, and set up a set of basic bid documents it can quickly assemble and implement if needed.

Satisfying FEMA
It's important for communities to realize that although FEMA assistance is invaluable during times of crisis, it isn't a carte blanche process. A key requirement for having FEMA reimburse recovery costs involves showing that costs are "reasonable" and "appropriate."

However, proving costs are "reasonable" for recovery work often is no small task. If a neighboring city gets the same work done for less money, FEMA may decide to use that city's cost as the basis for what is "reasonable." FEMA may then decide to reimburse everyone up to that baseline only.

For example, if one city awards an emergency contract to remove debris for $20 per cubic yard, and a neighboring city gets the same type of work done for $10, FEMA may tell the first city it will only reimburse it at a rate of $10 per cubic yard because that is the "reasonable" cost for that type of work for that disaster event.

When caught off guard and required to suspend normal bidding processes, communities can struggle to get work done quickly while also remaining within FEMA's "reasonable" costs. That's why advanced contract planning is so important.

"Gray" areas in the recovery guidelines
Public works officials need to understand that, although FEMA provides guidelines on eligible recovery costs, decisions made in the field can vary by FEMA representative and from storm to storm. One area where this is particularly true is recovery work involving beach areas in coastal communities.

For example, FEMA's guidelines do not consider restoring an eroded beach or dune system to be an eligible recovery cost. However, in some cases, FEMA will allow a community to build a protective sand "berm" in beach areas if homes are at risk to further storm damage. In other cases, sand washed or blown from the beach or dunes into public areas can be treated as "storm debris" and the costs of cleaning and returning this material to the beach can be eligible.

From response to prevention
In planning for storm recovery efforts, it is also important for communities to consider more than just the next storm that may be lying beyond the horizon. Reconstruction following storms offers town leaders an opportunity to look to the future and build in a more storm-resistant manner. For example, roads adjacent to coastlines can be moved farther inland during the rebuilding process. Or utilities can be rebuilt and located in safer locations.

In summary, planning ahead and understanding the requirements of FEMA's recovery programs will go a long way to a speedier, more cost-effective recovery for your community. Investing in this area now will pay great dividends in many ways.

To reach Wayne D. Lasch, call (904) 367-8683 or send e-mail to wdlasch@pbsj.com.