Harrison County

FEMA refuses to pay $15.5 million on Biloxi’s massive Katrina project. The city is suing.

‘I’m tired of fighting.’ Biloxi resident says community has suffered after years of construction

Jackie Washington has lived among construction for years as the city continues post-Katrina reconstruction of drainage, sewer and water systems. She's played an active role demanding answers for her community, but said their voices have gone unheard.
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Jackie Washington has lived among construction for years as the city continues post-Katrina reconstruction of drainage, sewer and water systems. She's played an active role demanding answers for her community, but said their voices have gone unheard.

The city of Biloxi is suing FEMA for $15.5 million the disaster relief agency refuses to pay for post-Katrina reconstruction of drainage, sewer and water systems.

In the lawsuit filed in U.S. District Court, the city says the Federal Emergency Management Agency has rejected $8.8 million in project management expenses the agency had previously approved and even helped develop.

FEMA is also refusing to cover $6.7 million the city needs for project management costs going forward.

The city said the massive reconstruction project would take four years when it started with design work in 2008. But the lawsuit says the work won’t be finished until December 2024 — more than 19 years after Katrina hit.

Biloxi filed the lawsuit after losing its FEMA appeal for the funds. The lawsuit accuses FEMA of breaching its contract with the city and violating the Stafford Act, the law that authorizes federal emergency assistance after a disaster.

What is the city’s Plan B if it loses the lawsuit and a collateral second appeal to FEMA, after the federal agency rejected Biloxi’s first appeal?

Mayor Andrew “Fofo” Gilich wrote July 3 in the city’s second appeal to FEMA, “The impact of this debt falls directly on the citizens of Biloxi and materially defers planned programs that are essential to the health, safety and welfare of our citizens and are further intended to create economic growth for our city, which has not yet recovered from the economic damage caused by Hurricane Katrina.”

FEMA awarded the city a total of more than $344 million for the infrastructure projects, which cover 170 miles. The city spent the $8.8 million on project management with HNTB Corp., an employee-owned firm with offices across the United States and in Canada.

Experienced FEMA employees, the city’s second appeal says, helped calculate and approved the original cost estimates.

“All we’re asking from FEMA is to follow its initial cost estimates,” said Peter Abide, the city’s attorney.

Abide believes the city will ultimately prevail on its FEMA appeal. He said the city filed the lawsuit “to cover all its bases,” by securing a federal judge’s review of FEMA’s decision.

FEMA is rejecting the costs because a 2015 audit by the Inspector General’s Office for Homeland Security, which FEMA falls under, concluded the city awarded a $21 million project management contract to HNTB without considering cost, instead focusing on the contractor’s qualifications.

“As a result, other responsible firms that might have been willing to perform the work for less did not receive the city’s consideration,” the audit said. The city also negotiated the contract price based on engineering and design services when the contractor was performing project management, where “lower rates” would have been “appropriate,” FEMA said.

FEMA said project management should have been 4 percent of total project costs rather than the 6 percent the city spent.

Biloxi has since brought project management in house, hiring Walt Rode as infrastructure program manager in June 2016.

The city says in its lawsuit that FEMA has approved numerous extensions of the infrastructure project but has refused since April 2016 to provide the $6.7 million needed for project management, which would include engineering fees.

“This is by far the largest public works project ever undertaken in the history of the city,” Creel said. “Nothing about this project has been easy.”

“We’re just looking for fair treatment from FEMA. It’s a shame it has come to this.”

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