CEDAR RAPIDS (AP) — The City of Cedar Rapids said Tuesday it has been told the federal government will not reimburse the city $6.5 million for debris disposal at a flood-damaged former meatpacking plant complex near the Cedar River.
The former Wilson-Sinclair/Farmstead Foods food processing plant has been owned by the city since 2007. It was flooded in May 2008 and deemed unsafe. The city began the demolition process in the spring of 2010 and finished a year later.
The Federal Emergency Management Agency agreed the project was eligible for reimbursement, said Joe O’Hern, the city’s administrator for development services. About the time the project was completed FEMA officials indicated they had some issues with the bidding process for disposal of demolition debris.
FEMA documents indicate it denied reimbursement because the city could have accepted a lower bid for debris disposal and may have stacked the bidding process in favor of a local landfill.
The city’s bid specified disposal must be in a landfill about 1.5 miles from the city with which the city has a long-term solid waste contract. A Minnesota company offered a bid of $65 per ton for debris disposal but would have hauled the material to a landfill in Milan, Ill.
The bid the city accepted was from an Iowa company that bid $117 per ton but agreed to dispose of the material in the nearby landfill.
FEMA said the landfill requirement violated procurement regulations by giving bidders only one choice for a disposal site eliminating the possibility they could find one charging less, eliminating a cost savings that could have been achieved.
O’Hern said the city did nothing inappropriate and was abiding by its contract with the nearby Linn County Solid Waste Authority and ensuring that the debris was disposed of safely.
“The idea of taking tons of this stuff 90 miles down the interstate when some of it probably has asbestos and other things in it just didn’t seem to be a very wise idea,” said O’Hern, who noted he was not with the city when the decision was made.
FEMA in its final decision letter to the city said any cost above the low bid of $65 per ton for debris removal “is not substantiated as reasonable and is therefore not eligible for funding.”
The letter, signed by Deborah Ingram, assistant administrator in FEMA’s recovery unit, said FEMA would pay the city $1.3 million for the cost of the demolition excluding debris disposal.
O’Hern said the project has already been paid for but the city expected $6.5 million in reimbursement from FEMA.
FEMA so far has paid the city about $5 million for the Sinclair complex project, which cost the city about $18 million.