City of Austin challenges FEMA's denial of $8M reimbursement for COVID protective lodges

In the early months of the COVID-19 pandemic, the city of Austin turned hotels into temporary shelters for people experiencing homelessness that were at high risk of contracting the virus.

Called "protective lodges," these hotels were used as temporary shelters for those at high risk of complications if they caught the virus, those who may had been exposed to COVID-19 in other shelters and those who had been discharged from city isolation facilities, according to an April 2020 city memo that detailed the program.

But the city's request for millions of dollars of federal funding it was hoping would cover costs related to these shelters was denied.

Now, the city could spend more money trying to challenge the decision to deny the reimbursement made by a federal agency.

FEMA denies $8 million reimbursement for Austin's COVID-19 homeless response

As cities across the country needed to make unexpected investments to mitigate the spread of COVID-19, the federal government and other agencies poured trillions of dollars into state and local bank accounts to help offset expenses.

Things like the Coronavirus Aid, Relief, and Economic Security (CARES) Act and American Rescue Plan Act (ARPA) dollars, state and federal grants and Federal Emergency Management Association (FEMA) Public Assistance program served as a lifeline for COVID-19 programs during a time of unprecedented need.

But, in Austin, funding the city hoped would be available through FEMA's Public Assistance program to cover around $8 million related to the operations of protective lodges from March to September 2020 has been denied.

It's not immediately clear why FEMA Region Six — which includes Texas, Louisiana, Oklahoma and other Southern states — denied Austin's $8.013 dollar reimbursement request.

The FEMA News Desk in an email to the American-Statesman said the agency "was not able to comment on active Public Assistance arbitrations currently before the Civilian Board of Contract Appeals."

The city did not provide specifics as to the exact claim FEMA made in denying the $8.013 million reimbursement request for the non-congregate shelters in it's response to the Statesman. Non-congregate shelters, like the protective lodges Austin used, provide private rooms or units as temporary shelters.

However, a May 2022 city memo from Ed Van Eenoo, the city's chief financial officer, flagged to the mayor and City Council that the protective lodges "carry a particularly high risk of being determined ineligible" by FEMA.

"The FEMA Region Six Office does not recognize homeless individuals as high-risk for COVID-19, has indicated that allowing individuals to freely come and go from the ProLodges does not ensure safety and therefore makes the program ineligible, and has determined that stays beyond (14) days are ineligible," the 2022 memo states.

Van Eenoo in the memo said the city believes FEMA's interpretation of the operation of the protective lodges was inconsistent with guidance the city followed from Public Health Authority and Centers for Disease Control and Prevention (CDC), and was inconsistent with other FEMA reimbursement criteria elsewhere for similar shelters.

At that time, Van Eenoo said the city was continuing to meet with FEMA and was "engaging" with Congressional representatives to advocate for the city.

The city was notified of FEMA's decision declining the reimbursement request for the shelters later in 2022, according to a statement from the city of Austin provided by Shelley Parks, a city spokesperson.

In March 2024, the city filed for arbitration before the Civilian Board of Contract Appeals "to challenge FEMA Region VI’s denial of certain (COVID-19) reimbursement funding," according to the statement.

The Civilian Board of Contract Appeals (or CBCA) is an independent tribunal (a special court or committee) within the General Services Administration that deals with disputes involving federal executive branch agencies, according to its website.

In particular, the city's statement said, the city is challenging the denial of around $8 million related to the creation and operation of the protective lodges.

Austin is not alone in being denied funding from FEMA related to providing non-congregate shelters for the homeless in hotels during the pandemic.

In California, the regional FEMA office is denying requests to reimburse hundreds of millions of dollars related to a COVID-19 hotel shelter program called "Project Roomkey," CalMatters, a non-profit news organization in California, reported in February.

In California, FEMA notified state officials that the agency would not pay for hotel stays from June 2021 and March 2023 that exceeded 20 days, which the agency said was in line with CDC's maximum recommended quarantine time and because transmission rates were down, CalMatters reported. However, state officials said that FEMA had no rules on how long someone could stay when the program began and the 20-day limit was not set until October 2023, after people moved out.

Other pending FEMA reimbursements

The city of Austin has submitted $88 million to FEMA for reimbursements related to COVID-19 projects, according to a March 14 statement from the city's Homeland Security and Emergency Management (HSEM) office.

Of that $88 million, FEMA has reviewed and committed to paying $55 million, according to HSEM. So far, the city has received $21 million.

The remaining $33 million is still being reviewed, according to HSEM.

The city considers the $8.013 million which was initially denied by FEMA as part of the $33 million, per the statement provided by Parks.

"To date, no other costs related to COVID-19 expenses have been declined by FEMA," the statement provided by Parks in late March said.

What happens next?

The dispute is set to go before a CBCA arbitration panel on May 21, according to the statement provided by Parks. FEMA's response to the city's filing is due in April.

The Austin City Council on Thursday will vote to increase a contract agreement with Baker, Donelson, Bearman, Caldwell & Berkowitz, PC for $76,000 for legal services related to the arbitration.

"The CBCA will decide whether FEMA Region VI correctly denied the City’s request for reimbursement of $8,013,774.67 in costs associated with City-provided non-congregate shelters for certain individuals at high risk for severe (COVID-19) illness," the City Council recommendation for action on the item states.

Ella McCarthy covers local politics for the American-Statesman. She will continue her coverage of this topic as more information becomes available. To share tips or insight with McCarthy, email her at emccarthy@statesman.com and find her on X, formerly Twitter, @byEllaMcCarthy.

This article originally appeared on Austin American-Statesman: City of Austin challenges FEMA's denial of $8M COVID-19 reimbursement