95. Solution 2 Reconstruction Grant Award Calculation error discovered after process review by homeowners. Homeowners Reconstruction qualifying Grant Award Calculator does not match Solution 2 Homeowners Grant Award Calculator.

  • 3-5-2019
  • 95

Issue identified 3-5-2019 by Murray Wennerlund while reviewing Mellissa Capello's Reconstruction with Elevation zero grant award.


Restore Louisiana Homeowners Program managed by the State of Louisiana OCD-DRU and IEM Inc. had created a "One Size Fits All" grant calculation spreadsheet to quickly identify if a homeowners grant award was greater than any duplication of benefits. This was used to process thousands of homeowners.

A flaw was discovered to only effect homeowners in Solution 2 Reconstruction that use any federal assistance or funds that are considered duplicative to the HUD CDBG-DR grant. Homeowners that used Flood Insurance (NFIP), Increased Cost of Compliance (ICC) funds or SBA Disaster Loans may have incurred costs not recognized by the programs first grant calculator.

The initial screening calculator used by OCD-DRU and IEM assumed the home was to be elevated less than 3 feet. When select homeowners reported elevation costs covering 3' 1" or more the program did nothing to adjust the original grant award calculator. Homeowners were required to follow HUD elevation policy published December 2016 which required them to elevation to no less than base flood elevation plus 2 feet (BEF+2').

This requirement in most cases added 10's of thousands of dollars to the actual cost but are not reflected in the eGrant Award calculator.

In Action Plan Amendment 9 voted and passed July 13, 2018 by the RLHP Task Force included a table to adjust the grant award costs to homeowners that required elevation. The Elevation Allowance Table for RLHP Repair/Reconstruction Projects listed on page 29 of the RLHP Manual version 5.1 identifies what the program will offer the homeowner in additional grant funds to elevate their homes to match HUD elevation requirements.

The issue become very apparent and clear when a homeowner uses the State of Louisiana OCD-DRU Solution 2 Reconstruction and Elevation Allowance calculator using price per square foot change for elevation above 3'.

Example:
Home Square Footage: 1,771.78
Reconstruction cost estimated by old grant screening process offers $108 per square foot which includes elevation up to 3'.
$108 * 1,771.78 = $191,352.24 Material / Labor.
The program adds 20% for contractor overhead to the reconstruction costs.
20% Overhead: $191,352.24 + $38,270.45 = $229,622.69

The state then deducts any and all Duplication of Benefits.
Let's say the homeowner has over the first screening amount in DOB.

$253,439.33 DOB - Reconstruction costs $229,622.69 = Grant Award using first screening calculator -$23,816.64.

The RLHP grant award calculator would show that the homeowner was over the total grant award by $23,816.64 and the state would simply list them as a Zero award and stop the grant process.

Now let's take the real world numbers and costs and apply them to a calculator developed by the state for Reconstruction and Elevation homeowners.

The difference is now the elevation costs are included in the reconstruction estimate section of the grant award.
In the case of our 1,771.78 sqft home our elevation allowance according to APA 9 and the RLHP Manual 5.1 (Dec. 2018) the homeowner would be awarded $34.28 + 20% overhead if elevating above 6'.
So the $108 + 20% figure used in the first calculator does not apply because the homeowner is elevating above the 3' limit this calculator placed on all homeowners.

$108 + $34.28 = $142.28 per sqft + 20% ($28.46) overhead = $170.74.

If the original calculator used the actual costs the homeowners new grant award would be as follows.

$170.74 * 1,771.78 = $302,513.72

The original DOB would still be $253,439.33

The final grant award would then be, $302,513.72 - $253,439.33 = $49,074.39

In this case, the homeowner required to reconstruct their home elevated over 6' incurred an additional cost of $49,074.39 which the original one size fits all calculator did not take into account the elevation allowances that are offered.

Each of the estimated 41 homeowners in Solution 2 Reconstruction and Elevation need to have the same calculation.

The state created the "Solution 2 Reconstruction and Elevation Allowance calculator using price per square foot change for elevation above 3 feet" and applied it to homeowners Feb. 12, 2019.

We feel that the state owes it to the homeowners that did everything right by applying to the SBA and taking the SBA loan, NFIP and ICC funds and followed FEMA FVL and HUD Elevation requirements. They did follow the program to perfection, it's just the program failed to calculate their real costs of reconstruction and elevation.


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