Mississippi City Sues FEMA for $15M Over Post-Katrina Recovery Project

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A city on the Mississippi Gulf Coast is suing a federal agency that rejected expenses for a Hurricane Katrina recovery project.

Biloxi is seeking $15.5 million from the Federal Emergency Management Agency for drainage, water and sewer systems, the Sun Herald reported.

The federal lawsuit says FEMA rejected $8.8 million in project management expenses the agency had previously approved and had helped develop. FEMA also said it won’t cover $6.7 million the city says it needs for project management going forward.

Biloxi said the project would take four years when design work started in 2008. The lawsuit says work won’t be finished until December 2024 – more than 19 years after Katrina.

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.

FEMA said it rejected the costs because a 2015 audit concluded Biloxi awarded a $21 million project management contract without considering cost, instead focusing on a contracting firm’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. The federal agency 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 an infrastructure program manager in June 2016.

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 Biloxi more than $344 million for the infrastructure projects, which cover 170 miles (274 kilometers). The city spent $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 city attorney Peter Abide.