Article 7: Ineligible Costs
(Category: costs-eligilbilty)
Article Summary
FEMA Public Assistance funding is strictly restricted by the Stafford Act to expenditures directly resulting from a declared incident. The Ineligible Costs article highlights four distinct types of common project omissions:
- Loss of Revenue: Financial losses incurred because of an incident are completely ineligible. This restriction includes instances where hospitals release non-critical patients or experience decreased capacity, states waive transit or toll fees to expedite evacuations, utility networks are forced to shut down, or commercial events are canceled because a facility is utilized as an emergency shelter.
- Loss of Useful Service Life: FEMA will not provide funding for the projected reduction in an asset's operational lifespan. For instance, if a public road is submerged under floodwaters for an extended duration, an applicant cannot claim funding for the anticipated long-term structural degradation caused by that inundation.
- Tax Assessments: Expenses associated with conducting real property tax re-assessments following a disaster are ineligible. These administrative activities are neither essential for addressing immediate safety hazards nor connected to the permanent physical restoration of an eligible facility.
- Increased Operating Costs: General cost increases for operating a facility or delivering a public service post-disaster are ineligible. Short-term exceptions apply only when the extra operating expenses are directly required to accomplish specific health and safety tasks under emergency protective measures.
Five Key Takeaways for CTA FEMA Compliance
- Do Not Claim Revenue Omissions: Exclude any claims for lost operational income, such as waived transit fares, canceled facility rentals, or suspended utility billing, as FEMA explicitly prohibits revenue replacement.
- Omit Long-Term Asset Degradation: Ensure project worksheets focus entirely on discrete, immediate physical repairs; do not attempt to calculate or claim financial losses for a shortened structural lifespan (such as water-weakened pavement).
- Isolate Post-Disaster Administrative Tasks: Keep local administrative expenses—such as real property tax re-assessments—completely separate from disaster claims, as they do not qualify as permanent restoration or emergency safety work.
- Tie Operating Increases Directly to Category B: If claiming increased facility operating costs, provide meticulous documentation showing they were short-term, exigent, and explicitly dedicated to executing emergency health and safety tasks.
- Reconcile Against Pre-Existing Conditions: Maintain clear pre-disaster maintenance logs and photographs to prove that claimed damage is a direct result of the incident rather than pre-existing degradation or deferred upkeep.
