[Federal Register Volume 68, Number 120 (Monday, June 23, 2003)]
[Notices]
[Pages 37166-37169]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-15781]


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DEPARTMENT OF HOMELAND SECURITY

Federal Emergency Management Agency


Private Nonprofit Facility (PNP) Eligibility

AGENCY: Federal Emergency Management Agency, Emergency Preparedness and 
Response Directorate, Department of Homeland Security.

ACTION: Notice.

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SUMMARY: We give notice of our reinterpretation of section 102(9) of 
the Robert T. Stafford Disaster Relief and Emergency Assistance Act and 
of our regulations at 44 CFR 206.221(e) and as a result the change in 
our policy concerning private nonprofit facilities.

DATES: Effective date: June 23, 2003. Applicability date: This applies 
to all disasters declared on or after January 20, 2001.

FOR FURTHER INFORMATION CONTACT: James A. Walke, FEMA, 500 C Street, 
SW., Washington, DC 20472, (202) 646-2751, or email 
[email protected].

SUPPLEMENTARY INFORMATION: In response to the September 11, 2001, 
terrorist attacks, we have been working to expeditiously provide 
assistance to as many disaster victims are possible. In order to do so, 
we have looked at our authorities and determined that in some cases, 
our interpretation of those authorities has been too restrictive. We 
give notice of our reinterpretation of the authority regarding 
eligibility of private nonprofit facilities in section 102(9) of the 
Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 
U.S.C. 5122(9) and of our regulations at 44 CFR 206.221(e).
    The definition of ``private nonprofit facility'' (PNP) in the 
Stafford Act is a ``private nonprofit educational, utility, irrigation, 
emergency, medical, rehabilitational, and temporary or permanent 
custodial care facilities (including those for the aged and disabled), 
other private nonprofit facilities which provide essential services of 
a governmental nature to the general public, and facilities on Indian 
reservations as defined by the President.'' We have interpreted that 
provision to mean all private nonprofit facilities must be open to the 
general public.
    1. The following change to the PNP definition is effective 
immediately and applies to all disasters declared on or after January 
20, 2001. This affects eligibility for the Public Assistance Program, 
as well as for the Hazard Mitigation Grant Program (HMGP) (see 
206.434(a)(2).) Only those private nonprofit facilities that do not 
meet the definition in 44 CFR 206.221 of an educational, utility, 
emergency, medical, or temporary or permanent custodial care facility 
must be open to the general public. Since this policy is applicable 
retroactively, the normal application deadlines have been extended for 
Public Assistance. The Regions and States will take appropriate 
measures to identify and re-evaluate applicants who may have been 
denied assistance in disasters declared on or after January 20, 2001. 
For HMGP, the States may amend their applications until December 31, 
2003, with respect only to PNP applicants who are now eligible because 
of the revised policy and were PNPs at time of declaration, and only 
for major disaster declarations where HMGP funds are available. The 
following is FEMA's policy on Private Nonprofit Facility (PNP) 
Eligibility.
    2. Response and Recovery Directorate Policy Number: 9521.3.
    3. Title: Private Nonprofit Facility (PNP) Eligibility.
    4. Purpose: This policy provides guidance in determining the 
eligibility of private nonprofit (PNP) organizations and facilities not 
specifically identified in 44 CFR 206.221.
    5. Scope and Audience: This policy is applicable to all major 
disasters and emergencies declared on or after January 20, 2001. It is 
intended for Federal Emergency Management Agency (FEMA) personnel 
involved in making eligibility determinations for the Public Assistance 
Program.
    6. Background: The guidelines for eligibility of PNP organizations 
and facilities have been refined over the past several years as 
eligibility issues have surfaced. The regulatory definition of a PNP 
organization and facility can be found in 44 CFR 206.221. However, PNP 
organizations offer so many types of services that it is still 
necessary to provide this additional policy guidance regarding 
organizations and services listed in the regulations and in the 
preamble of the final rule of September 14, 1993. The terms, 
``purposes,'' ``activities,'' ``uses,'' and ``services'' as used in 
this policy are derived from the governing statute, regulations and 
customary usage and may overlap. In the past, all PNPs had to be open 
to the

[[Page 37167]]

general public. However, a careful reading of legislative authorities 
makes clear that in 1988, in amending the Disaster Relief Act of 1974, 
Congress did intend that facilities within the category of ``other 
private nonprofit facilities which provide essential services of a 
governmental nature'' (as defined in Sec.  206.221(e)(7)) must be open 
to the general public. Furthermore, with passage of the Disaster 
Mitigation Act of 2000 Congress added ``irrigation'' facilities to the 
extent they provide water for essential services of a governmental 
nature to the general public. These changes have been incorporated into 
the existing policy, which is presented in its entirety below.
    7. Policy: Guidance for determining the eligibility of PNP 
organizations and their facilities follows:
    A. Applicants--Basic Statutory and Regulatory Requirements.
    (1) The applicant must have a ruling letter from the U.S. Internal 
Revenue Service or satisfactory evidence from the State that it is a 
nonprofit organization doing business under State law.
    (2) The applicant must meet requirements as listed in 44 CFR 
206.221--44 CFR 206.226, including the need to own or operate an 
eligible facility and to be legally responsible for disaster-related 
repairs.
    (3)The applicant must meet the requirements of the Civil Rights Act 
of 1964.
    B. Facilities--Basic Statutory and Regulatory Requirements/
Information.
    (1) The facility, at a minimum, must meet the criteria outlined in 
44 CFR 206.221(e).
    (2) The facility must be primarily used for one of the services or 
facilities listed in 44 CFR 206.221(e).
    (3) Certain types of facilities are not required to be open to the 
general public if they meet the definition of an educational, utility, 
emergency, medical, or custodial care facility (enumerated in Sec.  
206.221(e)(1), (2), (4), (5), (6)). Other types of private nonprofit 
facilities that provide certain essential government type services to 
the general public, which include PNP irrigation facilities (as defined 
in Sec.  206.221(e)(3)) and facilities that provide ``other essential 
government services'' as defined in Sec.  206.221(e)(7), and as listed 
in 4(g) below, must be open to the general public.
    (4) Eligible PNP Facilities. The following generally are eligible 
for assistance, and may be subject to the requirements of paragraph F 
of this policy:
    (a) Educational facilities (as defined in Sec.  206.221(e)(1)),
    (b) Utilities (as defined in Sec.  206.221(e)(2)),
    (c) Irrigation facilities (as defined in Sec.  206.221(e)(3)),
    (d) Emergency facilities (as defined in Sec.  206.221(e)(4)),
    (e) Medical facilities (as defined in Sec.  206.221(e)(5) (which 
includes, rehabilitational facilities)),
    (f) Custodial care facilities (as defined in Sec.  206.221(e)(6)),
    (g) Facilities that provide essential governmental services and 
which must be open to the general public (as defined in Sec.  
206.221(e)(7)), such as:
    (i) Museums,
    (ii) Zoos,
    (iii) Community centers,
    (iv) Libraries,
    (v) Homeless shelters,
    (vi) Senior citizen centers,
    (vii) Shelter workshops, and
    (viii) Health and safety services of a governmental nature, 
including, for example:
    [sbull] Low-income housing (as defined by Federal, State or local 
law or regulation),
    [sbull] Alcohol and drug treatment centers,
    [sbull] Residences and other facilities offering programs for 
battered spouses,
    [sbull] Animal control facilities directly related to public health 
and safety,
    [sbull] Facilities offering food programs for the needy, and
    [sbull] Daycare centers for children, or individuals with special 
needs (e.g., those with Alzheimer's disease, autism, muscular 
dystrophy, etc.)
    (5) Ineligible PNP Facilities. Some PNP facilities that might have 
been assisted prior to 1993 are no longer eligible under the governing 
statutes and regulations. Examples include:
    (a) Recreation facilities,
    (b) Job counseling and training centers,
    (c) Facilities for advocacy groups not directly providing health 
services,
    (d) Public housing (other than low-income),
    (e) Cemeteries,
    (f) Performing arts facilities,
    (g) Parking garages,
    (h) Conference facilities,
    (i) Facilities maintained by property owners' associations such as 
roads and recreational facilities (except those facilities that could 
be classified as utilities or emergency facilities), and
    (j) Daycare centers for purposes other than those described in 
paragraph 4 above.
    C. Facility Eligibility Based on Primary Use. Even though an 
organization that owns the facility is an eligible PNP, the facility 
itself must be primarily used for eligible services. Space is the 
primary consideration in determining if a facility is eligible.\1\ 
Where certain spaces are used both for eligible and ineligible 
purposes, eligibility is determined by looking at the time the facility 
is used for eligible versus ineligible services.
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    \1\ PNP irigation facilities used in delivering water for 
essential governmental services are exempt from this requirement.
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    (1) A facility must have over 50% of its space dedicated to 
eligible uses in order for any of the facility to be eligible. Common 
space (lobbies, restrooms, utility closets, janitorial closets, 
elevators, stairs, parking, etc.) is not included in calculating the 
proportion of eligible use. A facility is assessed as an entire 
structure and not its individual parts such as a basement, floor or 
building wing.
    (2) When space is not dedicated to specific activities, or is used 
for eligible and ineligible purposes, primary use is determined by the 
amount of time used for eligible services.
    (3) Space dedicated to or primarily used for religious purposes is 
not eligible for Public Assistance Program assistance under the 
governing statutes and regulations.
    (4) FEMA will consider damages to the entire facility, not just to 
the portion occupied by the eligible services. However, the assistance 
is in direct proportion to the percentage of space dedicated to 
eligible services. The balance of costs to repair damages or replace a 
facility will not be funded by FEMA.
    (5) Contents that are the responsibility of an ineligible occupant 
are not eligible for reimbursement if damaged.
    D. Ownership. There are instances when an eligible organization 
will use part of a facility for eligible services and lease the 
remaining portion for an ineligible service or use. In other situations 
an eligible organization may be a partial owner in a facility with an 
ineligible organization. The following guidelines are to be used in 
determining the eligible costs for such facilities.
    (1) Total Ownership by PNP. A facility must have over 50% of its 
space dedicated to an eligible purpose/mission in order to be eligible.
    (a) If the facility meets the 50% threshold, then the eligibility 
of the repairs is in direct proportion to the percentage of space 
dedicated to its eligible purpose/mission. In any event, the applicant 
must repair the entire building. Exceptions to repairing the entire 
building may be granted in unusual situations.
    (b) A facility that does not meet the 50% space threshold is not an 
eligible PNP facility.

[[Page 37168]]

    (c) A section 406 Hazard Mitigation grant would be eligible at the 
same percentage as the repair. However, the applicant must mitigate the 
entire building if the applicant opts to request the pro-rated 
mitigation project funding.
    (2) Partial Ownership by PNP. Reimbursement depends upon the 
percentage of ownership, amount of space being occupied by the 
applicant and amount of space dedicated to eligible services. The grant 
assistance may fund work in any part of the facility; however, 
reimbursement is contingent upon the entire facility being repaired. 
Exceptions to repairing the entire building may be granted in unusual 
situations.
    (a) The eligible applicant: (1) Must own more than 50% of the 
facility, and (2) must occupy and use for eligible services more than 
50% of the facility's space at the time of the disaster. If the 
eligible space meets that threshold, funding is in direct proportion to 
the percentage of space dedicated to the eligible use.
    (b) The percentage eligible cannot exceed the percentage 
represented by the space being occupied by the applicant. For example, 
if the applicant owns 70% of the building but only uses 60% for its 
eligible purposes, then the maximum eligible percentage is 60%.
    (c) A section 406 Hazard Mitigation grant would be eligible at the 
same percentage as the repair. However, the applicant and/or other 
owners must mitigate the entire building if the pro-rated mitigation 
project funding is requested.
    (d) Alternate project or improved project funding may be approved 
but reimbursement is based on the eligible funding of the original 
repairs. A section 406 Hazard Mitigation grant is not eligible for 
either of these funding options with the exception of an improved 
project that maintains the same facility for which the mitigation is 
approved.
    (e) If a partnership agreement states the repair responsibilities 
of each partner, the eligible reimbursement will be based on the 
percentage of responsibility.
    E. Defining ``open to the general public.'' Being ``open to the 
general public'' and ``providing services to the general public,'' are 
requirements for facilities that provide ``other essential governmental 
services'' (as defined in Sec.  206.221(e)(7)), and for irrigation 
facilities (as defined in Sec.  206.221(e)(3)) but are not requirements 
for facilities that meet the definition of an educational, utility, 
emergency, medical, or custodial care facility as defined in Sec.  
206.221(e)(1-2)-(4-6).
    (1) A private nonprofit facility that provides ``other essential 
governmental services'' (defined in Sec.  206.221(e)(7)) is likely to 
meet the ``open to the general public'' requirement if:
    (a) It is open to the general public;
    (b) Membership fees, if any, are nominal;
    (c) Membership fees, if any, are waived in instances in which 
someone can show inability to pay the fee.
    (2) A private nonprofit facility that provides ``other essential 
governmental services'' (defined in Sec.  206.221(e)(7)) is not likely 
to meet the ``open to the general public'' requirement if:
    (a) A membership fee is of such magnitude as to preclude access to 
the facility by a significant portion of the community.
    (b) The membership fee clearly exceeds what would be considered an 
appropriate user fee based upon a reasonable assumed use of a facility.
    (c) Membership is limited to a certain number of people in the 
community.
    (d) Membership is limited to a defined group of individuals who 
have a financial interest in the facilities managed by the PNP (for 
example, a condominium association).
    (e) Membership discriminates against certain discrete classes of 
people, or is limited to individuals from some geographic area that is 
more restrictive than the community from which the facility in question 
could normally be expected to draw users.
    F. Requirement for Application to the Small Business Administration 
(SBA). PNP facilities potentially eligible for permanent work 
assistance that provide ``non-critical services'' must first apply for 
a disaster loan from the SBA before applying to FEMA for disaster 
assistance. ``Non-critical'' PNPs, however, may apply directly to FEMA 
for emergency work costs. ``Non-critical services'' include educational 
facilities as well as those facilities defined in Sec.  206.221(e)(7). 
(Facilities providing ``critical services'' as defined in Sec.  
206.226(c)(1), including power, water, sewer and wastewater, 
communications, medical treatment, fire protection, emergency rescue, 
and nursing homes, may apply directly to FEMA for disaster assistance.) 
The SBA loan application process for these ``non-critical'' PNP 
facilities will result in one of three outcomes:
    1. If the PNP is declined for an SBA loan, the PNP may then apply 
to FEMA for public assistance.
    2. If the SBA loan fully covers eligible damages from the disaster 
event, then no assistance from FEMA is available.
    3. If the maximum SBA loan for which the facility is eligible does 
not fully cover eligible damages, the PNP may then apply to FEMA for 
the excess eligible damages.

Eligible PNPs are also required to apply to SBA for any 406 Hazard 
Mitigation costs.
    G. Lease Agreements. An eligible applicant must be legally 
responsible for disaster-related repairs whether they own a facility or 
lease it. An eligible applicant that leases an asset of an otherwise 
ineligible applicant and uses it in a way that normally would qualify 
it for assistance may be eligible for assistance. The lease, pre-dating 
the disaster, must clearly specify that the eligible applicant is 
responsible for repair of major damage and not just maintenance or 
minor repairs.
    H. Examples. Several examples are offered for clarification 
purposes in the attached Appendix A. In addition, RR Policy 
9521.1, ``Community Center Eligibility,'' and RR Policy 
9521.2, ``Private Nonprofit Museum Eligibility'' should be 
reviewed as complementary policies and for more examples of partial 
eligible use.
    8. Supersession:
    A. RR Policy 9521.3, `` Private Nonprofit (PNP) Facility 
Eligibility'' dated April 25, 2000.
    B. All other relevant provisions of other public assistance policy 
documents on this subject.
    9. Authorities: Robert T. Stafford Disaster Relief and Emergency 
Assistance Act, 42 U.S.C. 5121-5206, and 44 CFR part 206.
    10. Originating Office: Recovery Division, Emergency Preparedness & 
Response Directorate.
    11. Review Date: One year from date of publication.

APPENDIX A

Private Nonprofit Facility (PNP) Eligibility

Case Examples

    Below are examples of private nonprofit facilities that could be 
expected to request eligibility determinations. See also: 
``Community Center Eligibility'', RR Policy 9521.1.

Parkland Hospital Medical Office Building

    Parkland Hospital is an eligible PNP that owns a medical office 
building and leases a portion of it to doctors and laboratories that 
are providing for-profit services. The for-profit leases are 70% of 
the floor space excluding the common area floor space as defined in 
this policy.
    Analysis: The building is not eligible because the eligible 
services were offered in less than 50% of the building space. If the 
for-profit leases had not exceeded the 50% threshold, the grant 
assistance would have been pro-rated based on the percentage of the 
building occupied by the eligible nonprofit services.

[[Page 37169]]

Springtown Recreation Center

    The PNP Springtown Recreation Center claims that it provides 
eligible essential government services in addition to its recreation 
activities and should be eligible for assistance. The organization 
claims that its services now include day care for elderly adults, 
senior citizen center programs, programs for battered spouses, and 
shelter workshops. These programs are provided by the recreation 
center staff and offered five days a week. Recreation activities are 
limited to evenings and weekends. The entire center is used for the 
eligible services.
    Analysis: The organization would not appear to be eligible based 
upon its name and presumed mission. A detailed examination is 
necessary to determine the eligibility of the organization and its 
facility based upon the eligible services provided. In cases where 
space is not dedicated to any specific activity, the amount of time 
dedicated to eligible purposes in such spaces will determine 
eligibility and the level of assistance. Therefore, even though the 
entire facility is used for eligible purposes, the level of FEMA 
assistance will be pro-rated based on the proportion of the total 
time it is used for eligible services.

Community Church School

    The Community Church operates a State certified school offering 
first through eighth grades. The teaching curriculum includes math, 
science, English, history, physical education and religious 
doctrine. The school has an average attendance of 500 students. The 
church has constructed three education buildings that are used 
exclusively by the school. The church occasionally uses the 
education buildings for religious activities. The school 
occasionally uses the church, but that use is always substantially 
less than 50%.
    Analysis: Look at the church and three education buildings 
separately. The three education buildings are eligible because: (a) 
The school meets FEMA requirements to be considered an eligible 
education institution; (b) the buildings generally are not used for 
ineligible purposes and their primary purpose is to serve the 
school; and (c) the few religious classes in the curriculum is not 
sufficient to influence the primary use for secular education. 
However, in the spaces used for eligible and ineligible purposes, 
the level of FEMA assistance will be based on the proportion of the 
total time that such spaces are used for eligible purposes. The 
church's primary use is an ineligible service under the governing 
statutes and regulations and its peripheral use by the school is not 
sufficient to establish its eligibility.

Southlake Hospital Parking Garage

    The parking garage is owned by an eligible PNP hospital to 
support its nearby hospital facility. The ground floor that faces a 
busy public street is leased to retail businesses. The leased space 
occupies 15 percent of the total space of the garage.
    Analysis: 44 CFR 206.221(e) authorizes assistance for 
administrative and support facilities essential to the operation of 
medical facilities and emergency facilities, which in this example 
includes Southlake Hospital's parking garage. Since the hospital 
uses more than 50% of the parking garage, the facility is eligible 
based on primary use. The leased space does not make the garage 
ineligible because it only represents 15% of the total space in the 
facility. FEMA assistance would be pro-rated based on the percentage 
of space used for the eligible parking purpose. If the leased space 
had exceeded 50% of the facility space, the primary use of the 
facility would become ineligible. The parking garage is eligible 
only because of its association with the hospital.

Woodlands Homeowners' Association

    The Woodlands Homeowners' Association is a PNP organization 
responsible for providing certain services for a two hundred home 
development. The Homeowners' Association's services are local 
neighborhood streets, water system, sewage system, fire station, 
medical clinic, neighborhood park, community center and a 
recreational lake and dam.
    Analysis: The Homeowners' Association operates facilities that 
provide essential government services and therefore is an eligible 
PNP. The lake and dam, park and streets do not meet the definition 
of eligible facilities. The water and sewage systems meet the 
definition of a utility and are eligible for assistance. The fire 
station and medical clinic are eligible as emergency and medical 
facilities. The community center might be eligible if it is open to 
the general public outside the Homeowners' Association community and 
if it is established and primarily used as a gathering place for a 
variety of social, educational enrichment and community service 
activities (i.e., meeting the requirements of RR Policy 9521.1).

Midwest Methodist University

    The University is a private nonprofit education facility as 
defined in the Stafford Act, section 102. It is supported by the 
United Methodist Church organization and offers both secular and 
religious education. The State's Department of Education officially 
recognizes the University as a school of higher education offering 
courses such as history, math, English, science, theology, religious 
education and religious counseling. The University offers 
undergraduate and graduate degrees in all fields of study. The 
campus consists of a large number of buildings for education, 
administration and religious worship.
    Analysis: Damaged buildings that are primarily used for secular 
courses normally found on university campuses are eligible. 
Buildings containing student and administrative services also are 
eligible because they support educational, emergency, or medical 
facilities (as outlined in 44 CFR 206.221). The damaged buildings 
with religious courses must be carefully reviewed for eligibility. 
If a damaged building is primarily used for religious worship or 
religious instruction, it is not eligible because a peripheral 
eligible service is not sufficient to establish the eligibility of a 
facility.

    Dated: June 17, 2003.
Michael D. Brown,
Under Secretary, Emergency Preparedness and Response.

[FR Doc. 03-15781 Filed 6-20-03; 8:45 am]
BILLING CODE 6718-02-P