FEMA finds that $328,995.87 in additional repair costs are necessary and reasonable. However, the Applicant has not demonstrated that the remaining costs are eligible. Appeal Letter Stephen McCraney Executive Director Mississippi Emergency Management Agency 1 MEMA Drive Pearl, Mississippi, 39288 Andrew Gilich Mayor City of Biloxi 140 Lameuse Street Biloxi, Mississippi, 39533 Re: Second Appeal – City of Biloxi, PA ID: 047-06220-00, FEMA-4576-DR-MS, Grants Manager Project (GMP) 173714/Project Worksheet (PW) 261, Allowable Costs and Reasonable Costs Dear Stephen McCraney and Andrew Gilich: This is in response to the June 16, 2025 letter from the Mississippi Emergency Management Agency, which forwarded the referenced second appeal on behalf of the City of Biloxi (Applicant). The Applicant is appealing the U.S. Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) denial of $519,880.25 for repair work to the Applicant’s Lighthouse Pier. As explained in the enclosed analysis, I have determined that $328,995.87 in additional repair costs are necessary and reasonable. However, the Applicant has not demonstrated that the remaining costs are eligible. Accordingly, I am partially granting this appeal. By copy of this letter, I am requesting the Regional Administrator to take appropriate action to implement this determination. This determination is the final decision on this matter pursuant to 44 C.F.R. § 206.206. Sincerely, /S/ Robert M. Pesapane Director, Public Assistance Enclosure cc: Robert Ashe Acting Regional Administrator FEMA Region 4 Appeal Analysis Background During the incident period of October 28-29, 2020, Hurricane Zeta caused damage throughout Mississippi.[1] The City of Biloxi (Applicant) requested Public Assistance (PA) funding to repair damage to its Lighthouse Pier (Facility). The Facility is an approximately 782-ft. long wooden pier, with timber piles and a covered pavilion. The disaster damaged the Facility’s deck boards, stringers, railings, and pavilion. On March 17, 2021, FEMA conducted a site inspection. FEMA worked with the Applicant to develop the project, including the damage description and dimensions (DDD) and a cost estimate for the repairs. On November 4, 2021, FEMA created Grants Manager Project (GMP) 173714 and obligated $227,821.53 in PA funding based on FEMA’s Cost Estimating Format (hereinafter CEF or FEMA’s Estimate).[2] The Applicant submitted a request to revise the project cost based on a December 6, 2021, engineering report and an accompanying Opinion of Probable Cost (Engineering Estimate).[3] After numerous requests for information (RFIs), the Applicant clarified that it was claiming a total of $1,104,878.00 in costs based on the Engineering Estimate. The Applicant stated that FEMA’s Estimate was too low, did not use the correct type of lumber, and the DDD incorrectly captured material sizes and damage to lighting fixtures and electrical wiring. On July 26, 2024, FEMA revised the DDD, which the Applicant signed off on. FEMA then issued a Determination Memorandum on September 11, 2024, partially approving the Applicant’s additional claimed costs. FEMA approved a revised CEF estimate totaling $524,275.19 based on the mutually agreed upon DDD.[4] However, FEMA denied the remaining $580,602.81 requested. FEMA determined that some of the costs in the Engineering Estimate were unreasonable, as the claimed costs for several items were not within 10 percent of the local average unit or industry standard prices. Additionally, FEMA stated that the Applicant’s Engineering Estimate included costs for dredging that were not necessary because the work could be accomplished through a more cost-effective method of barge access. First Appeal The Applicant submitted its first appeal to the Mississippi Emergency Management Agency (Recipient) on November 7, 2024.[5] The Applicant requested an additional $580,602.81 in funding.[6] The Applicant stated that it removed from its request the work that had been denied by FEMA, except dredging because it was necessary to complete repairs as the water was too shallow to allow barge access at the end of the Facility. For the remaining costs based on the agreed upon DDD and eligible SOW, the Applicant claimed that FEMA’s CEF was inaccurate due to incorrect information, including the type of lumber to be used in the repairs, incomplete lighting repairs, and lack of roof fasteners. The Applicant also requested that FEMA adjust its CEF to account for additional soft costs, such as cost contingencies, cost escalation factors, possibility of change orders, and Architecture and Engineering (A&E) services. The Recipient transmitted the Applicant’s request to FEMA in a letter dated November 12, 2024, asking FEMA to reevaluate the documentation. On April 11, 2025, the FEMA Region 4 Regional Administrator determined that the estimated costs for lighting were reasonable. However, FEMA found that deck repair work did not require dredging for barge access and denied associated costs. FEMA also found that it based its CEF estimate on generally accepted lumber types, and the Applicant’s requested lumber costs were not necessary for the type of repairs requested. In reviewing the previously estimated costs associated with lumber, FEMA identified a typographical error and reduced associated costs. FEMA denied the Applicant’s request for additional roofing and pavilion costs, consistent with the Applicant’s signed and approved DDD. FEMA also denied the Applicant’s request to increase various soft costs, given the complexity of the work, the expected timeframe, and information about similar repairs to the Facility as a result of previous disasters. The decrease in lumber estimates, increase in lighting cost estimates, and denial of all other requested costs resulted in a net reduction of total eligible costs. Accordingly, FEMA reduced its total eligible CEF estimate to $519,557.75. Second Appeal In a letter dated June 13, 2025, the Applicant submitted a second appeal, requesting the $519,880.25 denied on first appeal. The Applicant reiterates that FEMA should accept its Engineer’s Estimate of $1,039,438.00 because the engineer has extensive expertise in this type of construction and has used recent actual local costs from similar projects. The Applicant requests costs related to dredging, pressure-treated lumber suitable for a wet environment, lighting and electrical wiring costs, and roof fasteners. The Applicant also requests that FEMA adjust the soft cost factors used in the CEF. The Recipient forwards the Applicant’s appeal, in a letter dated June 16, 2025, requesting FEMA reconsider its decision. Discussion FEMA may provide funding to a local government for the repair of a public facility damaged by a major disaster.[7]For work to be eligible it must be required as a result of the declared incident.[8]For Permanent Work projects, FEMA determines the amount of PA funding based on the estimated costs to restore the damaged facility to its predisaster design and function.[9] The estimate may include a reasonable amount of anticipated soft costs.[10] In order for a cost to be eligible for PA reimbursement it must be directly tied to the performance of eligible work; adequately documented; and necessary and reasonable to accomplish the work properly and efficiently.[11] A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the applicant makes the decision to incur the cost.[12] Among other factors, FEMA evaluates an applicant-submitted cost estimate for reasonableness based on whether the cost is of a type generally recognized as ordinary and necessary for the type of facility work, and whether it is comparable to the current market price for similar goods or services in the same geographical area.[13] In determining the current market price for similar goods or services, FEMA may consider: historical documentation; average costs in the area, including weighted average unit prices; and published unit costs from national cost estimating databases.[14] The applicant is responsible for providing documentation to demonstrate its claimed costs are reasonable.[15] When FEMA develops cost estimates for certain Permanent Work large projects, FEMA uses the CEF in accordance with the CEF Instructional Guide.[16] The CEF Instructional Guide defines various factors and the range of percentage values that FEMA may apply to projects.[17] For projects that require an engineering analysis to determine the method of repair, FEMA may provide PA funding for engineering and design services.[18] FEMA may estimate the cost of engineering services for certain large projects by selecting an appropriate percentage of the estimated construction cost based on the complexity of the work.[19] FEMA accepts an applicant-submitted cost estimate if, among other items, the estimate: is prepared by a licensed Professional Engineer or other estimating professional, includes certification that the estimated cost directly corresponds to the repair of the agreed upon damage, is based on unit costs for each component of the scope of work, and is reasonable.[20] Following the award of PA funding, the applicant may identify a need to change the scope of work (SOW).[21] Changes in SOW are generally eligible if, among other reasons, the alternative repair method is more cost-effective than the original repair method, the original repair method is not feasible, or there is an increase in previously approved quantities due to errors and omissions.[22] The Applicant requested a cost revision to FEMA’s Estimate based on the addition of a line item for dredging; additional costs for, among other items, lumber, lighting and wiring, and roofing; and increased soft costs, including escalation factors and A&E costs. On second appeal, FEMA reviewed the Applicant’s Engineering Estimate and related documentation to determine whether it contained items of work that were required as a result of the disaster, and cost items that were reasonable and necessary to accomplish the work properly and efficiently:[23] As indicated below, FEMA approved the Applicant’s request for dredging, and generally included additional cost items from the Engineer’s Estimate. For the SOW and cost items that were approved, FEMA reviewed the Engineer’s Estimate for reasonableness by following the procedures established in FEMA policy, including verifying whether costs were within 10 percent of industry standard construction data or other price data.[24] Based on this review, FEMA found the Engineer’s estimate to be unreasonable, and therefore FEMA used its own cost estimate based on industry standard construction data and vendor costs to award reasonable costs. Dredging: The Applicant demonstrated that the area where work needs to be done is not accessible by workboat during daily low tides, and that a crane situated on the beach could not reach the area to perform the work, and that the costs are reasonable. The Applicant’s request for $85,500.00 in dredging costs is granted. Lumber/Woodwork: The Applicant requests FEMA approve the costs of marine grade lumber. The Applicant has demonstrated that marine grade lumber is necessary, but the costs requested for the marine grade lumber are not reasonable. FEMA reviewed local costs for available marine lumber considering the correct type, and accordingly updated the cost estimate for lumber, installation, and fasteners, resulting in additional woodwork costs of $59,440.25, for a total of $201,147.00.[25] Lighting: The Applicant requested additional funding to replace lighting fixtures at the Facility’s pavilion. The lighting which was in place prior to the disaster is no longer available, but a similar fixture is currently available and appropriate. Therefore, the additional lighting costs of $19,287.89 are eligible, for a total of $45,931.91. Wiring/Electrical Components: FEMA’s Estimate previously omitted electric wiring and therefore the Applicant requested costs for 6,480 LF of electrical wiring. The DDD included multiple electrical components, and FEMA finds that wiring should be included with the costs associated with the electrical component repairs. The wiring and revised electrical component costs resulted in an increase of $11,535.84 in eligible costs, for a total of $47,593.03 for wiring and electrical components. Roofing: The Applicant has requested additional costs for roofing based on its understanding that FEMA’s Estimate did not include fasteners. FEMA confirmed that its previous estimate included those costs. However, based on FEMA’s review of design drawings and site conditions, changes in materials that are more appropriate for this project, and additional labor costs, additional roofing costs of $1,661.40 are eligible, for a total of $4,641.75. Plumbing: FEMA reviewed the Applicant’s predisaster design drawings and developed an updated estimate for plumbing costs to more accurately reflect the information in that document. The additional plumbing costs of $5,461.86 are eligible, for a total of $18,665.72. A&E Design and Contract Costs: FEMA previously found that this project involved basic inspection services only. However, on second appeal, FEMA has considered the need for design drawings in this project, as well as projects addressing similar repairs to the Facility in prior disasters and finds that the project’s complexity would require A&E services for design drawings. Therefore, additional A&E costs of $68,140.09 are eligible, for a total of $82,309.85. Additional soft costs: The increase of base construction costs and various other factors related to those costs result in a number of adjustments to soft costs. For soft costs based on a percentage of base construction costs, FEMA applied those percentages to the increased base construction costs in its revised estimate, and certain soft cost factors were omitted from FEMA’s prior estimate. Accordingly, FEMA increased costs for: construction contingencies ($45,421.27), general requirements and general conditions ($70,546.78) general contractor’s overhead and profit ($117,762.37), cost escalation factors ($8,882.60), Applicant’s reserve for change orders ($35,223.75), Applicant’s project management - Design Phase ($7,119.71), and Applicant’s project management - Construction Phase ($33,759.57). Lastly, because FEMA developed a new cost estimate on second appeal based on industry standard construction data and vendor costs rather than the Engineer’s Estimate, FEMA awarded reasonable costs that were below what the Applicant requested for a number of cost items, adjusted some costs to account for price changes in current cost data publications and vendor cost documentation, and denied the remainder of appealed costs. Conclusion