Biloxi sues FEMA, demands $8.8 million back for East Biloxi infrastructure project

Biloxi sues FEMA, demands $8.8 million back for East Biloxi infrastructure project

BILOXI, Miss. (WLOX) - The rebuilding of East Biloxi’s roads and sewer lines just hit another snag. And this snag pits the city against the federal agency paying for the $355 million project.

Biloxi just filed a lawsuit against FEMA. The city says FEMA’s decision to pull key funds from the infrastructure work has caused critical issues leading to unwanted delays.

Some of the funds originally allocated for the massive infrastructure project were deemed unnecessary and withdrawn, leaving the city to try and re-negotiate contracts.

“We have paid for project management going back to 2008. They have reimbursed us. We have paid the vendor, and now they hoping to come back years later and say, ‘Oh, no. We should not have done that’,” explained Vincent Creel, Biloxi’s public information manager.

The $8.8 million that was pulled from the project was part of the disaster funds given to Biloxi by FEMA to repair the city’s potable water, sanitary sewer collection and storm drainage system.

FEMA “de-obligated” - or took back - more than $8.8 million of that money after deeming it unnecessary, according to the lawsuit. The city is now asking for that money to be returned to Biloxi. The lawsuit also is asking that FEMA not be allowed to seize additional Hurricane Katrina funds or seek repayment for projects that have already been approved and completed.

“The decision by FEMA to de-obligate the prior payments to Biloxi and require reimbursement of those sums is ‘final agency action,’ adversely affecting Biloxi," states the lawsuit.

“We don’t think it’s fair to the citizens of Biloxi. We don’t think it’s fair to the city because we have always followed all of their procedures and policies, and we’ve never done something without their approval in advance,” Creel explained.

By taking back that money, Biloxi says FEMA failed to uphold the Stafford Act, which authorizes the federal agency to fund repairs for public facilities damaged by a major disaster. Biloxi initially received disaster assistance for 14 areas within the city that required restoration of the water, sewer, and drainage system.

FEMA agreed to 16 project worksheets for the 14 areas and two additional project worksheets for design surveys/geotech services and repairs to life stations. The funds were then transferred to a bank account with oversight by MEMA. As the repairs progressed, Biloxi said invoices were submitted to MEMA, who would then withdraw money from the account and pay the city once it was verified that the repairs had been completed.

FEMA ultimately “obligated” a total of $344 million in disaster aid to Hurricane Katrina and Biloxi’s infrastructure repair project. Of that, $21,711,231 was approved for specific project management and resident project representative services.

“There is no Plan B. Plan B is that we would have to find that money somewhere, and that’s where everybody in Biloxi starts squirming, ‘Where are you going to get that money?’,” Creel emphasized.

In a letter sent to the city in May 2018, MEMA informed Biloxi that FEMA had "de-obligated" a total of $8,820,189 that had already been transferred to the city and spent on those designated PM and RPR services. Those services, said the city, were imperative for completing the infrastructure repairs.

The process of "obligating" funds happens when FEMA decides to fund a repair project and places funds into the account established for the disaster. "De-obligating" occurs when FEMA reverses its decision and takes back the money it previously provided.

According to the lawsuit, FEMA has granted multiple extensions to Biloxi to have the timeline for the infrastructure projects extended. Right now, the completion date extends through December 2024. The lawsuit alleges because of the extensions, FEMA knew the project was complex and should not have de-obligated the $8.8 million. Additionally, despite knowing how vast and complex the projects are, FEMA has refused to give Biloxi an additional $6,678,918 needed to cover the cost of PM and RPR services needed to complete the project.

The four-count lawsuit also states: "The de-obligation of $8.8 million is arbitrary, capricious, not in accordance with the law and in excess of its statutory authority under the Stafford Act and FEMA's own Recovery Policy." Biloxi also alleges that it is a violation of the Stafford Act for FEMA to deny the city the nearly $6.7 million needed to complete the project by the end of 2024 as agreed upon.

“You could look at it like this: it’s not a lot of money to the country, and it’s not a lot of money to FEMA but $15 million - that’s a big chunk of our annual $55 million budget,” Creel said.

Copyright 2019 WLOX. All rights reserved.