Disaster Assistance
Federal Aid to the New York City Area Following the Attacks of September 11th and Challenges Confronting FEMA Gao ID: GAO-03-1174T September 24, 2003The terrorist attacks of September 11, 2001, resulted in one of the largest catastrophes this country has ever experienced. The federal government has been a key participant in the efforts to provide aid after the attacks, and it has been providing the New York City area with funds and other forms of assistance. The magnitude of the disaster in New York and the size and scope of the federal government's response in aiding the city has generated significant interest in the nature and progress of this federal assistance. This testimony focuses on (1) how much and what types of assistance the federal government provided to the New York City area following the September 11 terrorist attacks, (2) how the federal government's response to this disaster differed from previous disaster response efforts, and (3) the ongoing challenges FEMA faces as it, and its mission, are subsumed into the Department of Homeland Security.
As of June 30, 2003, an estimated $20 billion of federal assistance has been committed to the New York City area, primarily through FEMA, DOT, HUD, and the Liberty Zone tax benefits. The $2.55 billion for initial response efforts included numerous assistance programs, such as search and rescue operations, debris removal operations, emergency transportation measures, and emergency utility service repair. FEMA provided the bulk of the federal funds for initial response efforts--$2.20 billion--but DOT and HUD also provided funds. Compensation for disaster-related costs and losses totaled about $4.81 billion. This funding, provided by FEMA and HUD, compensated state and local organizations, individuals, and businesses for disaster-related costs, such as mortgage and rental assistance to individuals and grants to businesses to cover economic losses. The amount committed for infrastructure restoration and improvement efforts is $5.57 billion. The $20 billion to assist the New York City area differed from previous disaster response efforts in that it was the first time in which the amount of federal disaster assistance to be provided was set early in the response and recovery efforts, which resulted in two major changes to the federal approach. First, the specified level of funding for the entire federal response to this disaster changed the traditional approach to administering FEMA funds. In an effort to ensure that all FEMA funds were expended for this disaster, FEMA broadly interpreted its provisions within the Stafford Act, and the Congress authorized FEMA to compensate the city and state for costs such as increased security that it could not otherwise have funded within provisions of the Stafford Act. Secondly, this specific level of funding for the disaster prompted Congressional appropriations that authorized numerous forms of non-traditional assistance by agencies other than FEMA, such as the Liberty Zone tax benefit plan and improvements to the transportation infrastructure that exceeded normal replacement cost. Simultaneous to FEMA's efforts to assist the New York City area's recovery from September 11, FEMA faced the challenge of being transferred into the newly formed DHS. As we previously reported in our 2003 Performance and Accountability Series, FEMA faces ongoing management challenges resulting from its transfer into DHS, and DHS itself faces the daunting challenge of combining FEMA and 21 other agencies with various missions into an effective and collaborative agency. Recognizing the magnitude of the overall challenge in establishing DHS, GAO has designated the implementation and transformation of the department as high-risk. Several of the specific challenges that FEMA faces include the need to (1) ensure effective coordination of preparedness and response efforts, (2) enhance provision and management of disaster assistance for efficient and effective response, and (3) reduce the impact of natural hazards by improving the efficiency of mitigation and flood programs. We have ongoing work that is focusing on FEMA's challenges in each of these areas and will be reporting on these efforts in the near future.
GAO-03-1174T, Disaster Assistance: Federal Aid to the New York City Area Following the Attacks of September 11th and Challenges Confronting FEMA
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Testimony:
Before the Subcommittee on Clean Air, Climate Change, and Nuclear
Safety, Committee on Environment and Public Works, U.S. Senate:
United States General Accounting Office:
GAO:
For Release on Delivery Expected at 9:00 a.m. EST:
Wednesday, September 24, 2003:
Disaster Assistance:
Federal Aid to the New York City Area Following the Attacks of
September 11th and Challenges Confronting FEMA:
Statement of JayEtta Z. Hecker, Director Physical Infrastructure
Issues:
GAO-03-1174T:
Mr. Chairman and Members of the Subcommittee:
I appreciate the opportunity to be here to discuss issues related to
the federal government's response to recovery efforts regarding to the
September 11, 2001, terrorist attacks, particularly the role of the
Federal Emergency Management Agency (FEMA), as well as management
challenges facing FEMA as the agency adjusts to its transfer to the
Department of Homeland Security (DHS). The terrorist attacks resulted
in one of the largest catastrophes this country has ever experienced.
The federal government has been a key participant in the efforts to
provide aid after the attacks, and it has been providing the New York
City area with funds and other forms of assistance. The magnitude of
the disaster in New York and the size and scope of the federal
government's response in aiding the city has generated significant
interest in the nature and progress of this federal assistance.
In my testimony today, I will focus on (1) how much and what types of
assistance the federal government provided to the New York City area
following the September 11 terrorist attacks, (2) how the federal
government's response to this disaster differed from previous disaster
response efforts, and (3) the ongoing challenges FEMA faces as it, and
its mission, are subsumed into the Department of Homeland Security. My
comments will be based on the following GAO work on FEMA issues,
including our January 2003 Performance and Accountability Reports that
highlighted both FEMA and DHS management challenges and program
risks[Footnote 1] and our August 2003 report on FEMA public assistance
we issued to the Full Senate Committee on Environment and Public Works,
as well as ongoing work we are conducting for the Committee on the
overall federal assistance to the New York City area in the wake of
September 11. (See appendix 1 for further discussion of the objectives,
scope, and methodology.):
The President pledged, and the Congress authorized an estimated $20
billion in assistance to the New York City area following the terrorist
attacks.[Footnote 2] Many agencies of the federal government were
involved in administering this funding, but most of the federal aid--96
percent--has been provided through four sources: FEMA, the Department
of Housing and Urban Development (HUD), the Department of
Transportation (DOT), and the Liberty Zone tax benefits[Footnote 3].
The assistance provided through these sources targeted different
aspects of the response and recovery efforts, and in our work for the
Committee, we have found that it is useful to discuss the federal aid
to the New York City area in terms of four broad types of assistance
instead of by each federal source of assistance. Consequently, I will
discuss the aid in the following four broad categories:
* Initial response efforts, which include activities to save lives,
recover victims, remove debris, and restore basic functionality to city
services;
* Compensation for disaster-related costs and losses, which includes
compensation for losses incurred by individuals, businesses, and
governments;
* Infrastructure restoration, which includes efforts to restore and
enhance infrastructure that was severely destroyed by the collapse of
the World Trade Center towers and the subsequent response efforts; and:
* Economic revitalization, which includes activities to help improve
the lower Manhattan economy that was harmed by the disaster.
In summary,
* As of June 30, 2003, an estimated $20 billion of federal assistance
has been committed to the New York City area, primarily through FEMA,
DOT, HUD, and the Liberty Zone tax benefits. Figure 1 shows the amount
of assistance in each of the four broad categories.
Figure 1: Primary Purpose and Amount of Disaster Assistance Committed
By FEMA, HUD, DOT, and Liberty Zone Tax Benefits:
[See PDF for image]
[A] HUD's plans for $1.16 billion have not been finalized. These funds
are not included in the purposes listed above and according to HUD will
mostly likely be directed to either infrastructure restoration or
economic revitalization.
[End of figure]
The $2.55 billion for initial response efforts included numerous
assistance programs, such as search and rescue operations, debris
removal operations, emergency transportation measures, and emergency
utility service repair. FEMA provided the bulk of the federal funds for
initial response efforts--$2.20 billion--but DOT and HUD also provided
funds. Compensation for disaster-related costs and losses totaled about
$4.81 billion. This funding, provided by FEMA and HUD, compensated
state and local organizations, individuals, and businesses for
disaster-related costs, such as mortgage and rental assistance to
individuals and grants to businesses to cover economic losses. The
amount committed for infrastructure restoration and improvement efforts
is $5.57 billion. The majority of this funding is a combination of FEMA
and DOT funds to rebuild and enhance the lower Manhattan transportation
system, including the construction or repair of roads, subways,
ferries, and railroads. HUD is funding efforts to improve utility
infrastructure. Efforts to revitalize the economy in lower Manhattan
include the Liberty Zone tax benefit plan--an estimated benefit of
$5.03 billion[Footnote 4]--and $515 million in HUD funding for business
attraction and retention programs. Once the city, state, and HUD
finalize plans for the remaining $1.16 billion, these funds will most
likely be directed to infrastructure restoration and improvements and/
or economic revitalization.
* The $20 billion to assist the New York City area differed from
previous disaster response efforts in that it was the first time in
which the amount of federal disaster assistance to be provided was set
early in the response and recovery efforts, which resulted in two major
changes to the federal approach. First, the specified level of funding
for the entire federal response to this disaster changed the
traditional approach to administering FEMA funds. In an effort to
ensure that all FEMA funds were expended for this disaster, FEMA
broadly interpreted its provisions within the Stafford Act, and the
Congress authorized FEMA to compensate the city and state for costs
such as increased security that it could not otherwise have funded
within provisions of the Stafford Act. Secondly, this specific level of
funding for the disaster prompted Congressional appropriations that
authorized numerous forms of non-traditional assistance by agencies
other than FEMA, such as the Liberty Zone tax benefit plan and
improvements to the transportation infrastructure that exceeded normal
replacement cost.
* Simultaneous to FEMA's efforts to assist the New York City area's
recovery from September 11, FEMA faced the challenge of being
transferred into the newly formed DHS. As we previously reported in our
2003 Performance and Accountability Series, FEMA faces ongoing
management challenges resulting from its transfer into DHS, and DHS
itself faces the daunting challenge of combining FEMA and 21 other
agencies with various missions into an effective and collaborative
agency. Recognizing the magnitude of the overall challenge in
establishing DHS, GAO has designated the implementation and
transformation of the department as high-risk. Several of the specific
challenges that FEMA faces include the need to (1) ensure effective
coordination of preparedness and response efforts, (2) enhance
provision and management of disaster assistance for efficient and
effective response, and (3) reduce the impact of natural hazards by
improving the efficiency of mitigation and flood programs. We have
ongoing work that is focusing on FEMA's challenges in each of these
areas and will be reporting on these efforts in the near future.
Background:
After a disaster, the federal government, in accordance with provisions
of the Robert T. Stafford Disaster Relief and Emergency Assistance Act
(the Stafford Act)[Footnote 5],assists state and local governments with
costs associated with response and recovery efforts that exceed a state
or locale's capabilities. FEMA is the agency responsible for
coordinating federal disaster response efforts under the Federal
Response Plan, an agreement among 27 agencies and the Red Cross to
deliver federal disaster assistance. FEMA was established in 1978 to
consolidate and coordinate emergency management functions in one
agency. In November 2002, the Congress enacted legislation establishing
DHS in an effort to consolidate numerous homeland security functions in
a single entity, which involved subsuming 22 agencies, including FEMA.
FEMA's primary functions have remained intact and have been placed
primarily in DHS' Emergency Preparedness and Response Directorate.
FEMA not only coordinates the federal disaster response, it also
provides significant assistance through a variety of programs funded
through its Disaster Relief Fund. This assistance is provided when
disaster costs exceed state and local government capabilities to
respond and insurance damage proceeds. These programs include FEMA's
individual assistance program that provides aid to victims affected by
a disaster and its hazard mitigation program that provides funds to
state and local governments to reduce the risk of damage from future
disasters. However, FEMA's public assistance program is typically the
largest source of disaster relief. It is designed to provide grants to
eligible state and local governments and specific types of private non-
profit organizations that provide services of a governmental nature,
such as utilities, fire departments, emergency and medical facilities,
and educational institutions, to help cover the costs of emergency
response efforts and work associated with recovering from the disaster.
Many other agencies play active roles in federal disaster relief. For
example, the Federal Highway Administration (FHWA), an agency of DOT,
has existing authority to assist in disaster relief. FHWA can provide
up to $100 million in emergency relief funding for each natural
disaster or catastrophic failure event that is found eligible within
the provisions of the Emergency Relief Program. Other agencies within
DOT, such as the Federal Transit Administration (FTA) and the Federal
Railroad Administration, also have had roles in previous disaster
relief efforts. HUD, which has had authority to assist in disaster
relief efforts at different times in the last few decades, once again
became actively involved in providing disaster recovery assistance
following Hurricane Andrew in 1992. Since that disaster occurred, the
Congress has made available more than $5.7 billion in 15 supplemental
appropriations to HUD for disaster assistance.[Footnote 6] Typically,
HUD awards funds to the affected state or local government, and then
the funds are administered at the state or local level.
The President's declaration of September 11 as a federal disaster
activated 27 agencies, including the American Red Cross in response and
recovery efforts. On September 12, 2001, President Bush pledged to
commit at least $20 billion to help the New York City area recover. The
President sent a letter to the Speaker of the House requesting that the
Congress pass emergency appropriations to provide immediate resources.
Over the next 11 months, the Congress enacted three emergency
supplemental appropriation acts that provided more than $15 billion in
direct federal assistance as well as an estimated $5 billion economic
stimulus package for the New York City area.
Federal Disaster Assistance to the New York City Area:
The greatest role in providing federal assistance fell to FEMA, HUD,
and DOT. The funds appropriated to these agencies, along with the
Liberty Zone tax benefits, constitute over 96 percent of all federal
assistance designated to the New York City area. FEMA, the largest
single provider of assistance, was appropriated $8.80 billion for
debris removal, rescue efforts, and other assistance. Congress
appropriated HUD $3.48 billion to provide the New York City area
assistance to aid businesses and individuals and spur economic
revitalization. DOT received $2.37 billion to assist in the restoration
and enhancement of the transit system in the New York City area. The
Liberty Zone tax benefits is estimated by the Joint Committee on
Taxation to reduce federal tax revenue--and in turn increase the funds
retained by taxpayers--by $5.03 billion. An additional $0.82 billion in
assistance to the New York City area has been appropriated to 15 other
agencies to conduct numerous activities, such as environmental studies
and federal building restoration. Figure 2 shows the amount of federal
assistance, in both amount and percentage, committed to the New York
City area by the federal government.
Figure 2: Federal Assistance to the New York City Area by the Federal
Government:
[See PDF for image]
Note: Numbers do not total 100 percent due to rounding.
[End of figure]
As the large majority of federal assistance to the New York City area
is primarily through FEMA, DOT, HUD, and the Liberty Zone tax benefits,
I would now like to discuss the assistance these sources did, or will,
provide in the four board categories I discussed earlier: (1) initial
response efforts, (2) compensation for disaster-related costs and
losses, (3) infrastructure restoration, and (4) economic
revitalization.
Initial Response Activities Totaled $2.55 Billion:
Initial response assistance in New York City began immediately after
the hijacked aircraft collided with the World Trade Center towers and
totaled $2.55 billion. This assistance was predominately funded by
FEMA. Figure 3 shows the amount each agency funded in this category of
assistance.
Figure 3: Amount of Assistance Committed to Initial Response
Activities, by Agency:
[See PDF for image]
[A] HUD's plans for $1.16 billion have not been finalized. These funds
are not included in the purposes listed above, and according to HUD,
will most likely be directed to either infrastructure restoration or
economic revitalization.
[End of figure]
Initial response activities included urban search and rescue; debris
removal operations; emergency transportation measures; other initial
response assistance by FEMA, such as cleaning buildings; and emergency
and temporary utility service.
Urban Search and Rescue Operations:
The terrorist attacks of September 11 prompted the largest search and
rescue operation in U.S. history, a $22 million effort. FEMA oversees
28 national Urban Search and Rescue Task Forces across the country and
20 were activated to respond to the attacks in New York. The teams
operate under FEMA authority and were deployed as part of the National
Urban Search and Rescue Response System. Almost 1,300 members of the
Urban Search and Rescue teams and 80 dogs worked at the World Trade
Center site.
Debris Removal Operations, Including Liability Insurance Coverage:
Immediately after the World Trade Center towers collapsed, the debris
removal operation began in order to help workers look for survivors.
The effort eventually transformed to a victim and evidence recovery
operation as well as a clean-up site. Debris removal operations totaled
$1.70 billion, although over one-half of those funds--$1 billion
dollars--is to be used to establish an insurance company with the
intended purpose of covering the City and its contractors for potential
claims resulting from debris removal at the World Trade Center site.
The New York City Department of Design and Construction and the New
York City Department of Sanitation completed the daunting task of
removing debris piled from several stories below street level to 11
stories above ground and weighing nearly 1.6 million tons, with support
from FEMA, the Federal Highway Administration, and the U.S. Army Corps
of Engineers. FEMA provided $630 million to reimburse the city for the
costs associated with removal of the debris from the World Trade Center
site and barge it to a landfill on Staten Island, New York, for
screening, sorting, and disposal. Initial estimates projected that the
recovery effort and cleanup would take two years and cost $7 billion;
however, the effort was completed substantially below these time and
cost estimates. As of September 3, 2003, FEMA had obligated $1 billion
for the insurance program; however, no funds will be disbursed until
details for the establishment of the dedicated insurance company are
finalized.
Emergency Transportation Measures:
The collapse of the World Trade Center buildings and subsequent
recovery efforts wreaked havoc on lower Manhattan's transportation
system: subway stations and the PATH commuter rail terminal were
destroyed, sections of local roads became impassable due to damage or
recovery efforts, and subways and ferries were overcrowded as commuters
returned to work using different means or routes of transportation.
FEMA and DOT coordinated with a variety of transportation, public
works, public safety, and utility providers to plan emergency/interim
projects to address issues such as shifts in travel demand after
September 11, capacity issues, and system delays associated with
revised travel patterns.[Footnote 7] Overall, FEMA and DOT provided
approximately $299 million for emergency transportation measures,
including:
* Clean-up and emergency repair of local roads and tunnels,
* Construction of a temporary PATH terminal,
* Expanded ferry service, and:
* Capital projects to improve commuter transportation.
Other FEMA Initial Response Assistance:
FEMA provided $285 million for other initial response assistance. For
example, as authorized by the Congress, FEMA entered into an
interagency agreement with the Department of Health and Human Services
to conduct a project to screen and monitor emergency services personnel
for long-term health effects of work at the World Trade Center
site.[Footnote 8] In addition, FEMA worked with EPA officials to
conduct clean-up efforts that included vacuuming streets, parks, and
other areas covered by dust from debris and fires and in conjunction
with New York City officials conducted an indoor cleaning and testing
program at private residences.
Emergency and Temporary Utility Service:
The collapse of the World Trade Center buildings and subsequent debris
removal efforts resulted in widespread damage to the energy and
telecommunications utility infrastructure. Utility firms worked to
provide service for rescue operations in the days immediately following
the disaster and to stabilize delivery of service to lower Manhattan,
including the reopening of the New York Stock Exchange 6 days after the
attacks. The Congress appropriated $250 million to HUD to reimburse
utility companies for uncompensated costs associated with restoring
service. Eligible firms will be reimbursed up to 100 percent of actual,
incurred, uncompensated, and documented costs. These funds have not
been disbursed to utility companies; however, HUD approved a city plan
for distributing these funds on September 15, 2003, and HUD officials
expect funds to begin being obligated.
Compensation for Disaster-Related Costs and Losses Totaled $4.81
Billion:
Approximately $4.81 billion in federal assistance is committed to
compensating state and local organizations, individuals, and businesses
for disaster-related costs and losses. The majority of the assistance
provided under this category was provided by FEMA. Figure 4 shows how
much each agency has committed to compensate for disaster-related costs
and losses.
Figure 4: Amount of Assistance Committed to Compensate Disaster-Related
Costs and Losses, by Agency:
[See PDF for image]
[A] HUD's plans for $1.16 billion have not been finalized. These funds
are not included in the purposes listed above, and according to HUD,
will most likely be directed to either infrastructure restoration or
economic revitalization.
Note: Numbers do not equal total due to rounding.
[End of figure]
FEMA provided funds through its Public Assistance Program, as
congressionally authorized, non-traditional assistance to New York City
and State; under its Hazard Mitigation Grant Program; Mortgage and
Rental Assistance Program, Crisis Counseling Assistance Program,
Individual and Family Grant Program, and also through a variety of
other assistance efforts. HUD provided assistance under its residential
grant program and business assistance programs.
Public Assistance to New York State, City, and Other Organizations:
FEMA reimbursed New York State, City, and other organizations about
$1.49 billion through its public assistance program to compensate for
disaster-related costs and losses. Of this funding, $643 million was
provided to the New York City Police and Fire Departments to pay
benefits and wages to emergency workers during response and recovery
efforts and to replace vehicles and other equipment. As first
responders, these departments suffered heavy casualties and damages and
received compensation for overtime costs, death benefits, and funeral
costs. FEMA also reimbursed costs to the City to relocate several
agencies' offices; establish a Family Assistance Center; reschedule
elections that were being held on September 11 and replace damaged
voting equipment; and pay for instructional time for students who
missed school due to closures, delayed openings, and school
relocations.[Footnote 9]
FEMA also provided assistance to other entities, including the Port
Authority, counties, and private nonprofit organizations; and it also
provided funds to the state of New Jersey. The Port Authority was
reimbursed for costs to replace equipment it lost when its World Trade
Center facilities were destroyed and for office relocation costs.
Additional assistance was provided to all New York counties for
cancelled election costs and to some private-non-profits, such as Pace
University, for temporary relocation. FEMA additionally provided $88
million to New Jersey for emergency protective measures.
Congressionally Authorized Non-traditional Assistance to New York City
and State:
In addition to the traditional public assistance FEMA provided to city
and state agencies, the Congress also authorized FEMA to provide
funding to the city and state for expenses associated with the
disaster, but were unreimbursable under the Stafford Act. The
legislation ensured that FEMA would be authorized to spend the entirety
of the appropriated assistance for New York recovery efforts--$8.80
billion--by allowing the city and state to be provided reimbursement
for disaster-related costs that FEMA otherwise could not have funded.
Non-traditional assistance that FEMA was authorized to fund included
reimbursements for heightened security in the aftermath of the
terrorist attacks and cost-of-living adjustments to the pensions of
survivors of firefighters and police officers killed in the line of
duty in the attacks. In order for FEMA to determine how much funding
was available for non-traditional assistance, FEMA officials
implemented an expedited close-out process, identifying and
deobligating any funds unspent as of April 30, 2003. These funds--
totaling over $1 billion--were just recently provided to both the city
and state and they will ultimately have discretion to use the funds as
they deem suitable.
Hazard Mitigation Grant Program:
FEMA also provided $377 million in hazard mitigation grants to New York
State. Created in 1988 by the Stafford Act, the Hazard Mitigation Grant
Program provides funds to states affected by major disasters to
undertake mitigation measures. At the time of the New York disaster,
FEMA could provide mitigation grants in an amount up to 15 percent on
top of the total amount of other assistance provided.[Footnote 10]
However, in the New York recovery effort, the President limited
mitigation funds to 5 percent of the funds appropriated within the
total amount of funds. According to FEMA officials, the agency reduced
the percentage of hazard mitigation grant funds available to New York
initially because it was unclear how much the disaster would actually
cost in FEMA funds, and public assistance funds were being provided at
100 percent Federal share. According to FEMA officials, as a result of
the broadened authority authorized in the Consolidated Appropriations
Resolution, New York has requested less for the Mitigation Grant
program--which contains a state and/or local matching requirement--so
that it could use funds to reimburse other disaster-related costs.
Mortgage and Rental Assistance Program:
Individuals suffering financial hardships as a result of September 11
could obtain mortgage and rental assistance from FEMA. Prior to
September 11, FEMA had provided a total of $18 million in mortgage and
rental assistance grants in all previous disasters, which provided rent
or mortgage payments to individuals in danger of losing their homes
through foreclosure or eviction as a result of a major disaster. In the
wake of September 11, this program increased tremendously, as FEMA
provided nearly $200 million in this type of assistance for the New
York City area. Initially, applicants were eligible if they resided in
certain zones around the World Trade Center site. FEMA, as directed by
the Congress, extended assistance to those working anywhere in
Manhattan and to those whose employers were not located in Manhattan
but were economically dependent on a Manhattan firm; and anyone living
in Manhattan who commuted off the island and who suffered financially
because of post-September 11 disruptions. The Mortgage and Rental
Assistance program closed on January 31, 2003, and as of August 5,
2003, $194 million had been disbursed of the $200 million available.
FEMA officials expect all funds to be disbursed as applicants receive
monthly assistance.[Footnote 11]
Crisis Counseling Assistance Program:
The Crisis Counseling Assistance Program, funded by FEMA, led to the
creation of "Project Liberty." Project Liberty, administered by the New
York State Office of Mental Health, provides short-term outreach,
education, referrals to mental health services, and a Regular Services
Program to provide support to individuals with longer-term issues. In
the past, only individuals from a declared disaster area were eligible
to receive counseling services; however, because of the broad impact of
the disaster, grants for this program were also provided to eligible
individuals in New Jersey, Connecticut, Massachusetts, and
Pennsylvania. FEMA provided more than $166 million for crisis
counseling; this sum is more than all previous counseling grants since
1974 combined. Of these funds, $99 million has been obligated and
disbursed.
Individual and Family Grant Program:
FEMA is authorized by the Stafford Act to provide individual and family
grants for individuals' necessary expenses related to disasters that
were not covered through insurance, other federal assistance, or
voluntary programs. For the September 11 disaster, FEMA's Individual
and Family Grant Program provided eligible residents of New York City
assistance for home repairs, replacement of personal property,
reimbursement for air quality products, and repair or replacement of
air conditioners. The New York State Department of Labor was tasked
with implementing and administering the program. The Individual and
Family Grant program closed on November 30, 2002. As of August 5, 2003,
$97 million had been disbursed of the $110 million available through
this program.
Other FEMA Assistance:
In addition to Mortgage and Rental Assistance and Individual and Family
Grants, FEMA also provided other temporary housing assistance,
including Minimal Home Repair and Transient Accommodations programs
totaling $34 million. Both programs address short-term needs such as
lodging expenses and temporary housing repairs. In addition, the
Stafford Act authorizes FEMA to provide unemployment assistance to
individuals who are unemployed as a result of the disaster but not
eligible for regular State Unemployment Insurance. For the New York
City area, FEMA provided $17 million for disaster unemployment
insurance administered by the State of New York.
HUD Funded Residential Grant Program:
In addition to FEMA assistance programs, $281 million in HUD funds were
used for the administration of the Residential Grant Program to provide
compensation to those affected by the disaster who remained in the
area, address the vacancy rate increases, and provide incentives to
attract residents to the area.[Footnote 12] The program consisted of
three different grants--a two-year commitment grant, a September 11
resident's grant, and a family grant. Applicants could apply for all
three types of grants; each grant's value depended on the applicant's
location and housing/rental costs. The Residential Grant Program closed
on May 30, 2003. As of June 30, 2003, over 31,000 applications totaling
$172 million were approved and $106 million had been disbursed in
grants.[Footnote 13]
HUD Funded Business Assistance Programs:
In addition, HUD funds were used for a variety of business assistance
programs, such as recovery grants and loans to compensate for economic
losses and recovery efforts. Almost 18,000 businesses in New York City,
representing approximately 563,000 employees, were disrupted or forced
to relocate as a result of the terror attacks. Approximately 30 million
square feet of commercial space was damaged or destroyed. While
businesses near the World Trade Center site suffered physical damage,
businesses all across the city felt the economic impact of the
disaster. The Empire State Development Corporation (ESDC), as a grantee
for HUD funds, administered five programs in cooperation with New York
City to compensate businesses for economic losses and to assist in
their recovery. HUD funds provided $683 million for business assistance
programs, and as of June 30, 2003, $510 million had been disbursed. The
Business Recovery Grant Program, HUD's largest September 11 business
assistance program, closed December 31, 2003, and provided $488 million
to over 14,000 businesses in lower Manhattan as of June 30,
2003.[Footnote 14] Other programs that are still available include a
$33 million plan to provide assistance to businesses that lost a
disproportionate amount of workforce due to the disaster, and a $41
million Business Recovery Loan Program.
About $5.57 Billion Has Been Committed for Projects to Restore and
Enhance Infrastructure:
The terrorist attacks at the World Trade Center severely damaged the
public transportation system that was used by more than 85 percent of
commuters to lower Manhattan--the highest percentage of people
commuting to work by public transit of any commercial district in the
nation. About $5.57 billion has been committed for projects to restore
and enhance infrastructure in lower Manhattan and the amount of
assistance each agency has committed is shown in figure 5.
Figure 5: Amount of Assistance Committed for Infrastructure Restoration
and Improvement, by Agency:
[See PDF for image]
[A] HUD's plans for $1.16 billion have not been finalized. These funds
are not included in the purposes listed above, and according to HUD,
will most likely be directed to either infrastructure restoration or
economic revitalization.
[End of figure]
Infrastructure efforts being funded by FEMA, DOT, and /or HUD include
restoration and enhancement of the lower Manhattan transportation
system, including a new Port Authority Trans-Hudson (PATH) terminal and
new subway stations; permanent utility infrastructure repairs and
improvements; and short-term capital projects, such as parks and open
space enhancements.
Projects Planned to Restore and Enhance the Lower Manhattan
Transportation System:
The Congress has appropriated a total of $4.55 billion for transit
projects, including $1.80 billion in Capital Investment Grants to FTA
for replacing, rebuilding, or enhancing the public transportation
systems serving Manhattan,[Footnote 15] and $2.75 billion in FEMA
funds. Under an August 2002 Memorandum of Agreement between FTA and
FEMA, FTA was designated the lead federal agency in charge of
administration and oversight. The three largest projects identified are
the restoration and improvement of the PATH Transit Terminal, and the
enhancements of the Fulton Street Transit Center and South Ferry Subway
Station.
* PATH Transit Terminal--The PATH commuter rail terminal, located
underneath the World Trade Center site, was completely destroyed in the
terrorist attacks. The Port Authority is requesting $1.4 billion to
$1.7 billion to build a permanent PATH terminal that Port Authority
officials report will be a substantial improvement over the destroyed
World Trade Center terminal. This terminal will serve PATH commuter
trains and four subway lines and is to be completed in the 2007 to 2008
timeframe.
* Fulton Street Transit Center--The current Fulton Street--Broadway
Nassau Subway Station Complex provides access to the most heavily used
subway lines in lower Manhattan and lies one block east of the World
Trade Center site. The complex is comprised of four separate subway
stations that serve nine subway lines and 62,000 riders during weekday
peak periods. The complex was not damaged on September 11, but
according to FTA and Metropolitan Transit Authority (MTA) officials, it
is difficult to navigate and not easily accessible. The MTA is planning
a $750 million project to improve the existing Fulton Street--Broadway
Nassau Subway Station Complex to create a Fulton Transit Center
designed to have a visible street level entrance pavilion, improved
intermodal connectivity, expanded platforms and mezzanines, and new
underground pedestrian concourses. The project is estimated for
completion in December 2007.
* South Ferry Subway Station--The South Ferry subway station, which is
located a half-mile from the World Trade Center site, was not damaged
on September 11; however, according to MTA officials, the South Ferry
station is outmoded: only five cars of a ten-car subway train can open
onto the platform at one time; the tunnel is curved in such a fashion
that trains have to slow down substantially to negotiate it; and it has
no direct passenger connections to nearby subway stations. MTA is
planning to improve the South Ferry subway station so that it would
accommodate the length of a standard ten-car subway train and would
provide connection to the Whitehall Street station that serves two
other subway lines. FTA officials anticipate that the project will cost
$400 million and be completed in the 2007/2008 timeframe.
The permanent PATH terminal, the Fulton Transit Center, and the South
Ferry station account for $2.55 billion to $2.85 billion of the $4.55
billion designated for lower Manhattan transit projects. At this time,
projects to be funded with the remaining $1.7 billion to $2 billion
have yet to be determined. In April 2003, various New York City and
State agencies[Footnote 16] released a report entitled Lower Manhattan
Transportation Strategies that identified priority transportation
projects. However, the total cost of these projects far exceeds the
remaining federal transportation assistance funds. High priority
projects highlighted in the report include access to JFK Airport and
Long Island, enhancement of West Street, construction of a tour bus
facility, and construction of World Trade Center underground
infrastructure. To date no decisions have been made on which of these
projects will be funded within the $4.55 billion cap. A portion of
remaining $1.16 billion in HUD funds will most likely be directed to
infrastructure improvement activities depending on the results of on-
going studies.
In addition to the transit system, the Congress appropriated $442
million for restoration and improvements to the local roads and
enhancements to ferry terminals and railroad tunnels. The Federal
Highway Administration is overseeing plans for $242 million in
resurfacing and reconstructing lower Manhattan streets through the
Emergency Relief program. These streets were damaged by the direct
impact of the collapsed World Trade Center buildings as well as wear
and tear from response vehicles and debris removal activities, and from
emergency telecommunications repairs. Ferry terminals were not damaged
on September 11; however, FHWA was appropriated $100 million in
Miscellaneous Highway funds for ferry and ferry facility construction
projects.[Footnote 17] Various ferry terminals are under consideration
for significant enhancements in both New York and New Jersey. Further,
the Federal Railroad Administration was appropriated $100 million to
renovate the New York rail tunnels. The funds are to be used by Amtrak
to modernize ventilation systems, install communication systems,
improve emergency exits from the tunnels, and structurally rehabilitate
four East River tunnels, two Hudson River tunnels, and the subterranean
section of Penn Station.
Permanent Utility Infrastructure Repairs and Improvements:
The Congress also appropriated HUD funds to provide assistance to
utility firms as they complete permanent repairs and improvements to
the damaged infrastructure around the World Trade Center site. In
addition to the $250 million for emergency repairs previously
discussed, the Congress appropriated $500 million to HUD to provide
funds to affected utility firms for permanent repairs and rebuilding.
The goals of the permanent repair program are to prevent businesses and
residences from bearing the cost of rebuilding and to enhance the
redevelopment of lower Manhattan by supporting investment in energy and
telecommunication infrastructure. New York State officials worked with
utility firms, and state and local agencies to develop the program in
order to help utility firms while developing an improved system to
attract new businesses to the area. Applicants will have until December
31, 2007, to apply for certain programs.[Footnote 18]
Short-term Capital Projects:
A New York State Agency worked with community groups, local businesses,
and city and state governments to select short-term capital projects
for HUD funding as part of its effort to improve the accessibility and
appearance of lower Manhattan. A plan submitted to HUD was approved on
August 6, 2003, detailing $68 million of proposed projects that could
be completed within one year of approval, such as parks and open space
enhancements, West Street pedestrian connections, building and
streetscape improvements, and a new school, Millennium High School. In
addition, a portion of these funds will be used to conduct an outreach
campaign to keep residents informed of rebuilding efforts.
Efforts to Revitalize the New York Economy Include Tax Benefits and
Assistance to Businesses:
The terrorist attacks of September 11 disrupted New York City's economy
and resulted in billions in lost [or forgone] income and tax revenues.
The attacks caused tens of thousands of job losses and severely
impacted lower Manhattan's commercial and retail sectors. In response,
the Congress enacted the Liberty Zone tax benefits, estimated by the
Joint Committee on Taxation to be $5.03 billion in lost federal
revenue, and appropriated funds to HUD, of which $515 million will aid
in revitalizing the lower Manhattan economy. Figure 6 shows a breakdown
of economic revitalization assistance.
Figure 6: Estimated Amount of Assistance Committed for Economic
Revitalization, by HUD and Liberty Zone Tax Credits:
[See PDF for image]
[A] HUD's plans for $1.16 billion have not been finalized. These funds
are not included in the purposes listed above, and according to HUD,
will most likely be directed to either infrastructure restoration or
economic revitalization.
Note: Numbers do not equal total due to rounding.
[End of figure]
Liberty Zone Tax Benefits:
In Title III of the Job Creation and Worker Assistance Act of
2002[Footnote 19], Congress instituted tax benefits primarily targeted
to the Liberty Zone, the area of New York City most severely impacted
by the terrorist attacks, as shown in figure 7.
Figure 7: New York Liberty Zone:
[See PDF for image]
[End of figure]
The amount of benefits to New York that will result from the Liberty
Zone tax provisions is unclear and likely to remain unknown. Before the
Job Creation and Worker Assistance Act was passed, the Joint Committee
on Taxation estimated the amount of tax revenue projected to be lost to
the U.S. Treasury from the Liberty Zone provisions. However, an
estimate of potential lost revenue is not the same as an estimate of
the benefits received by taxpayers. Furthermore, there are
uncertainties with any estimate. As with many tax benefits, usage of
the Liberty Zone tax benefits will depend on a variety of difficult to
predict economic factors that can influence the magnitude of the
benefits. For example, an economic downturn could slow rebuilding
efforts in the New York City area, reducing the use of benefits such as
depreciation allowances. Conversely, an economic upturn could increase
benefit usage above existing estimates. Additionally, information on
usage of most Liberty Zone tax benefits is not being collected or
reported by federal, state or local agencies, and the total amount of
the benefits accruing to New York is likely to remain unknown.
HUD Business Assistance Programs and Planning for Rebuilding and
Permanent Memorial:
In addition to the Liberty Zone tax benefits, the Congress appropriated
funds to HUD to revitalize lower Manhattan. New York State agencies are
administering $515 million to provide programs to attract and retain
businesses to the area and for other projects to revitalize lower
Manhattan. Damage around the World Trade Center site displaced an
estimated 1,025 firms employing more than 75,000 workers, and many more
were displaced by subsequent recovery efforts. Of the $515 million
committed for a variety of economic revitalization efforts, $475
million is provided to create incentives for existing small and large
businesses to remain in the area and to attract new businesses to lower
Manhattan. As of June 30, 2003, $161 million had been disbursed for
these programs, providing assistance for 985 businesses. An additional
$40 million had also been committed to help plan and coordinate
rebuilding and revitalization efforts:
The Designation of a Specific Level of Assistance Contributed to a
Unique Federal Government Response for this Disaster:
In its effort to provide assistance to the New York City area following
the terrorist attacks, the federal government provided aid in all
categories of assistance--initial response efforts, compensation for
disaster-related costs and losses, infrastructure restoration and
improvements, and economic revitalization--that differed from that
provided in any previous disaster. However, the most significant
difference in the federal government's response to this disaster was
the designation of a specific level of funding for disaster assistance.
The designation of $20 billion to assist the New York City area was the
first time in which the total amount of federal disaster assistance was
set early in the response and recovery efforts, and resulted in two
major changes to the federal approach to this disaster.
* Designating a specific level of funding for the entire federal
response to this disaster changed the traditional approach to
administering FEMA funds.
* This specific level of funding for the entire disaster prompted
Congressional authorization of numerous forms of non-traditional
assistance to be provided by other agencies.
Designation of a Specific Level of Funding Altered the Traditional FEMA
Disaster Assistance Process:
The specific level of funding that was targeted by the President and
passed by the Congress changed the traditional approach taken to
administer FEMA funds. Ordinarily, FEMA assistance has no dollar limit
. When a qualifying disaster event occurs, the President declares that
a major disaster or emergency exists. This declaration activates
numerous FEMA disaster assistance programs. The funding for responding
to a specific disaster is not set; instead, the only factor limiting
the amount of assistance for response and recovery efforts is
reimbursement eligibility under the Stafford Act. Historically, FEMA
approves all applications for grants and other assistance if--and only
if--the applications meet the program requirements under the act. For
example, compensation to rebuild a public road would be an eligible
project, but compensation to improve a public road would not be.
Economic losses to a city from reduced tourism associated with a
disaster would not be eligible. Further, as some projects can be long
term and are reimbursed upon completion, it may take years to fully
reconcile how much assistance was provided for certain disasters.
In responding to September 11, however, this traditional practice was
not followed, as the President pledged at least $20 billion in federal
assistance to New York, and subsequent to that pledge, the Congress, in
authorizing this specific level of federal assistance, appropriated
over $8.80 billion to FEMA--the first time that a specified amount of
funds had been designated to FEMA to respond to a disaster.
Consequently, FEMA officials viewed the amounts legislated as the
amount of money to be spent in responding to the disaster and
administered their programs accordingly to ensure that this amount of
funding was provided to the New York area.
In addition, in order to respond to the amount of damage resulting from
the attacks and to provide the entire appropriated amount for this
disaster, FEMA expanded eligibility guidelines for many of its
programs. FEMA officials said that they broadly interpreted the
Stafford Act to provide public assistance for several projects. For
example, FEMA--in conjunction with DOT--provided funds for lower
Manhattan transportation system improvements. Previously, FEMA only
provided funds to restore damaged infrastructure to its pre-disaster
condition. In recognizing the interdependence of lower Manhattan's
transportation system, FEMA officials reported that they interpreted
their guidelines to allow maximum flexibility to permit the rebuilding
of the transportation system as a whole instead of only what was
damaged. Another example of the broadened guidelines FEMA followed in
this case is its determination that costs associated with an EPA
program to clean the interior of private residences--the first of its
kind--were eligible for reimbursement under the Stafford Act. In this
instance, FEMA determined that the dust associated with the collapse of
the World Trade Center towers was a type of debris, and therefore costs
associated with interior cleaning could be reimbursed.
Further, the Congress reinforced FEMA's flexible approach to
eligibility for assistance in two ways. First, the Congress authorized
FEMA to expand the eligibility guidelines of certain programs due to
the unique circumstances of the disaster and the unprecedented amounts
of assistance available for response and recovery efforts.[Footnote 20]
For example, nearly a year after September 11, Congress authorized FEMA
to make the Mortgage and Rental Assistance program more broadly
available and directed FEMA to review applications that had been
previously denied. With these new eligibility requirements, FEMA
provided funds to individuals working anywhere in Manhattan and to
those whose employers were not located in Manhattan, but who were
economically dependent on a Manhattan firm. Further, the Congress
authorized FEMA to establish an insurance company to manage a $1
billion insurance fund and to settle claims filed by, among others,
city and contractor workers who suffered ill health effects as a result
of working on debris removal operations.[Footnote 21] Although FEMA
regularly reimburses applicants for insurance costs that are part of a
contract for services, FEMA has never reimbursed for insurance to cover
a city for suits brought by its own employees.
Second, despite FEMA's broadened eligibility guidelines interpretation
and the Congress' authorization of certain activities, there were still
not enough projects eligible within the authority provided by the
Stafford Act for which the New York City area could be reimbursed to
reach the $8.80 billion target level for FEMA assistance. As a result,
the Congress passed the Consolidated Appropriations Resolution that
ensured that FEMA would spend the entirety of the FEMA-appropriated
assistance for New York by authorizing the agency to reimburse costs
that it otherwise could not have funded. This is the first time that
FEMA has been given such expansive authority to fund projects outside
of provisions of the Stafford Act. New York officials believe this was
necessary because the Stafford Act was too restrictive for responding
to a major terrorist event, as it does not allow FEMA to reimburse
affected communities for many costs directly related to the disaster.
With the authority granted by the Consolidated Appropriations
Resolution, FEMA adapted its programs and conducted an expedited close-
out process that allowed for disbursement of remaining funds to New
York years sooner than in past disasters. As part of the expedited
closeout process, FEMA provided funds for projects that the city or
state had already completed and paid for. New York City and State
officials will ultimately have discretion to use these federal funds as
they deem appropriate, in contrast to the established process under
which FEMA officials oversee distribution of federal funds to assure
that only projects eligible within the provisions of the Stafford Act
are funded. The expedited close-out resulted in FEMA reconciling the
most expensive public assistance disaster in its history years before
the process is typically accomplished.
As a result of the different approach taken to respond to this
disaster, FEMA recently initiated an effort to develop a concept for
redesigning its public assistance program. As we noted in our August
2003 report on FEMA's public assistance program efforts in New York, a
working group of the Public Assistance Program Redesign Project was
formed at the request of the director of FEMA's Recovery Division, and
held its first meeting in May 2003.[Footnote 22] Members included FEMA
public assistance and research and evaluation staff and state program
managers to provide a broader perspective on the issues and concerns.
The project was established to suggest proposals to improve the public
assistance program and make it more efficient and capable of meeting
community needs for all types and sizes of disasters, including those
resulting from terrorism. Among other things, the project seeks to
transform the program to one that is flexible enough to meet the
demands of disasters of all types and sizes and eliminate redundancies
in decision-making and processes. The working group will examine
potential options for redesigning the program that include an annual
block grant program managed by the states, a disaster-based state
management program, and a capped funding amount. The working group
plans to develop a basic design concept for revising the program by
September 30, 2003.
Designation of a Specific Level of Assistance Spurred Congressional
Appropriation and Authorization of Other Forms of Non-Traditional
Disaster Assistance:
Not only was FEMA's traditional disaster response effort changed in
assisting the New York area, but the specific level of funding that was
targeted by the President and passed by the Congress also spurred
authorization of other forms of non-traditional assistance for the New
York City area. The most notable of these is the Liberty Zone tax
benefits. To address the economic impact of the September 11 attacks on
New York, Congress passed the estimated $5.03 billion New York Liberty
Zone tax benefit package.[Footnote 23] This was a unique way for the
Congress to provide assistance for the area affected by the disaster
as, according to IRS officials, the Congress has never before passed a
tax benefits package in response to a disaster. Further, this tax
package was targeted to a geographic area, which has not generally
occurred in the past.
Additionally, DOT was authorized to fund transportation projects to
improve the overall transportation system substantially beyond pre-
disaster condition. In most disasters, DOT is authorized to provide
funds only to rebuild or restore damaged infrastructure back to its
pre-disaster condition. However, in response to September 11, the
Congress authorized DOT not only to restore transportation
infrastructure directly damaged in the disaster, but also to enhance
the overall lower Manhattan transportation system.
Further, the Congress also directed HUD to compensate businesses for
economic losses--the first time its funds have been used for this
purpose. In previous disasters, HUD funds were typically provided to
address long-term effects of the disaster, including economic
redevelopment efforts. However, after September 11, the Congress
directed HUD to focus on different aspects of relief efforts than in
previous disasters, such as compensating businesses and individuals for
economic losses and funding programs to promote tourism initiatives in
lower Manhattan, which had not been done before, according to HUD
officials.
FEMA Faces Major Management Challenges While Making the Transition to
the Department of Homeland Security:
The integration of FEMA into DHS, a department whose focus is on
security against terrorism, while maintaining FEMA's current roles is
likely to present both FEMA and DHS officials with major challenges. In
January of this year, we published the 2003 Performance and
Accountability Series[Footnote 24] that focused on major management
challenges and program risks facing the federal government. In that
series, we published reports on challenges to both FEMA and DHS. In our
report on DHS, we noted that the creation of DHS, involving the
integration of FEMA and 21 other agencies specializing in various
disciplines, is a daunting challenge; yet only through the effective
integration and collaboration of entities can the synergy expected of
the department be achieved. Recognizing the magnitude of the overall
challenge in establishing DHS, we designated the implementation and
transformation of the department as high-risk. Our Performance and
Accountability report on FEMA pointed to specific areas where its
homeland security and non-homeland security missions were being
transferred to separate DHS directorates. This divisional separation
could complicate FEMA's historical all-hazards approach--a
comprehensive approach focused on preparing for and responding to all
types of disaster, either natural or man-made. The separation of
disaster and emergency responsibilities across two directorates of the
new department will present coordination challenges for the appropriate
Undersecretaries within DHS.
Our FEMA Performance and Accountability report noted a number of other
challenges. These include:
* Enhancing the provision and management of disaster assistance for
efficient and effective response. FEMA has demonstrated its ability to
quickly get resources to stricken communities and disaster victims, but
has had problems ensuring the effective use of such assistance,
according to the Office of Management and Budget (OMB). Among other
things, FEMA will be challenged to (1) improve its criteria for
determining state and local eligibility to receive federal disaster
assistance, (2) assess the extent of and approach to assistance for
future major disasters based on the recovery efforts undertaken in the
New York City area, (3) enhance disaster assistance staff training and
resource planning, and (4) improve its existing information system
before it is used as a building block for a multi-agency disaster
management website.
* Reducing the impact of natural hazards by improving the efficiency of
mitigation and flood programs. For many years, FEMA has focused
increased emphasis on reducing the impact of natural hazards, not only
to lessen the impact to property and individuals, but also to reduce
federal disaster costs. Two of the agency's major efforts in this
regard have been its mitigation programs and the National Flood
Insurance Program. These programs seek to strengthen structures against
the effects of hazards or remove them from harm's way and to minimize
the need for future FEMA disaster assistance. However, concerns exist
in both these efforts that may limit their effectiveness in achieving
these objectives. Moreover, the placement of FEMA within DHS represents
a substantially changed environment in which FEMA will conduct its
missions in the future, and missions that focus on reducing the impacts
of natural hazards, such as hazard mitigation and flood insurance, may
receive decreased emphasis. Sustained attention to these programs will
be needed to ensure they maintain or improve their effectiveness in
protecting the nation against, and reducing federal costs associated
with, natural disasters.
We continue to view these areas as challenges for FEMA and expect to
assist the Congress in its efforts to examine these challenges. In this
regard, we have a number of assignments ongoing or planned that address
many of these issues, and we will be reporting on these in the near
future.
Mr. Chairman, this concludes my prepared statement. I would be happy to
answer any questions you or Members of the Subcommittee may have.
For further information on this testimony, please contact JayEtta Z.
Hecker at (202) 512-2834 or William O. Jenkins at (202) 512-8777.
Individuals making key contributions to this testimony include Kevin F.
Copping, Matthew F. Ebert, Kara A. Finnegan-Irving, John T. McGrail,
and John R. Schulze.
[End of section]
Appendix I: Objectives, Scope, and Methodology:
The Subcommittee on Clean Air, Climate Change, and Nuclear Safety,
Senate Committee on Environment and Public Works, asked us to describe
the federal government's response and recovery efforts to New York City
and how the federal government's response to this disaster differed
from previous disasters. Additionally, we were asked to describe the
management challenges FEMA faces as it integrates into the Department
of Homeland Security (DHS).
In addressing the first and second objective, we limited our work to
the four federal sources of assistance that comprise 96 percent of the
$20 billion in aid pledged by the President to help the New York City
area response to and recover from the terrorist attacks. We used
information in our August 29, 2003 report on the Federal Emergency
Management Agency's Public Assistance Program and our ongoing work on
the overall federal response to the New York City area that we are
conducting for the Senate Committee on Environment and Public Works. To
develop the information for our ongoing work that we used in this
statement, we reviewed relevant legislation and obtained and reviewed
information from the appropriate budget documents, funding plans,
status reports and other documents from the respecting agencies. We
also reviewed available Executive Orders, Presidential correspondence,
Office of Management and Budget reports, and Congressional Budget
Office reports related to federal response and recovery efforts for New
York City. We interviewed federal officials from the Office of
Management and Budget, FEMA, the Department of Housing and Urban
Development, the Federal Transit Administration, the Federal Highway
Administration, the Federal Railroad Administration, and the Internal
Revenue Service to get their perspectives on to what purposes the
assistance has been and will be used. We also obtained pertinent
documents from and interviewed officials with New York State and New
York City agencies, including the Lower Manhattan Development
Corporation, the Empire State Development Corporation, the New York
State Department of Transportation, the Metropolitan Transit
Administration, and Port Authority of New York and New Jersey. We also
interviewed officials from nonprofit planning and research
organizations in New York to gain their perspectives on use of the
funding in the city's redevelopment process. We reviewed relevant
agency documentation of program plans and execution including budget
documents and databases. We also compared agency historical data to
documentation from the New York response and recovery.
To address management challenges facing FEMA as it transfers to the
Department of Homeland Security, we used information from two reports
from GAO's Performance and Accountability Series. These were Major
Management Challenges and Program Risks: Federal Emergency Management
Agency (January 2003 GAO-03-113) and Major Management Challenges and
Program Risks: Department of Homeland Security (January 2003 GAO-03-
102.):
The work we drew upon for this statement was conducted from July 2002
through September 2003 in accordance with generally accepted government
accounting standards.
FOOTNOTES
[1] U.S. General Accounting Office, Major Management Challenges and
Program Risks: Department of Homeland Security, GAO-03-102 (Washington,
D.C.: January 2003) and Major Management Challenges and Program Risks:
Federal Emergency Management Agency, GAO-03-113 (Washington, D.C.:
January 2003).
[2] The $20 billion in federal assistance does not include the Victim's
Compensation Fund or income tax deferrals.
[3] The Liberty Zone tax benefits are benefits primarily targeted to
the area of New York City damaged on September 11, designated as the
New York Liberty Zone
[4] The Liberty Zone tax benefits are benefits targeted primarily to
the area of lower Manhattan damaged on September 11, designated as the
New York Liberty Zone. The amount of the tax benefit is an estimate
prepared by the Joint Committee on Taxation.
[5] Pub. L. No. 93-288, 88 Stat. 143 (1974), as amended.
[6] All dollars are in nominal terms.
[7] As debris removal efforts were completed, FEMA and FTA released the
"Emergency/ Interim Transportation Disaster Recovery Plan" in spring
2002, which identified 100 projects proposed by local agencies to use
available FEMA and FTA funds.
[8] P.L. 108-7.
[9] House Report 107-593.
[10] The Disaster Mitigation Act of 2000 increases this amount to 20
percent of total estimated federal assistance for states that meet
enhanced planning criteria. For states without an approved enhanced
plan, the Consolidated Appropriations Resolution of 2003 reduces the
amount available for mitigation grants to 7.5 percent of the other
assistance provided. However, neither of these provisions were
applicable on September 11, 2001.
[11] Eligible applicants received up to 18 months of assistance as part
of this program.
[12] Although the Residential Grant program and its incentives helped
to revitalize the economy of lower Manhattan, we categorized it as
compensation for disaster-related losses because of its short-term
nature and intended affect on the City in terms of restoring pre-
disaster occupancy rates.
[13] In July 2003, HUD officials announced that $50 million unallocated
from the Residential Grant Program would be used for an affordable
housing initiative in lower Manhattan.
[14] ESDC provided funds to small and large businesses through its
recovery grant program. In August 2003, HUD approved allocation of
additional funds to allow full disbursement of these programs, for a
total of $578 million.
[15] PL 107-206.
[16] LMDC, Port Authority of New York and New Jersey, Metropolitan
Transit Authority, the New York State Department of Transportation and
the City of New York.
[17] PL 107-117.
[18] HUD approved the utility plan September 15, 2003.
[19] Job Creation and Worker Assistance Act of 2002 (Public Law 107-
147)
[20] Further discussion and additional examples of public assistance
projects that we identified as non-traditional can be seen in
GAO-03-926.
[21] Public Law 108-7.
[22] GAO-03-926.
[23] Job Creation and Worker Assistance Act of 2002 (PL 107-147)
[24] U.S. General Accounting Office, Major Management Challenges and
Program Risks: Department of Homeland Security, GAO-03-102 (Washington,
D.C.: January 2003) and Major Management Challenges and Program Risks:
Federal Emergency Management Agency, GAO-03-113 (Washington, D.C.:
January 2003).
