FEMA and State Dispute Rules for Quake Funds : Recovery: The federal agency refuses to bankroll requests based on informal standards. At least $2 billion in aid could be at stake.

At least $2 billion in Northridge earthquake repairs to schools, hospitals and public buildings is at stake in a developing dispute between state and federal disaster officials over what the U.S. government should pay, and presidential politics is playing a role.

The issue concerns a state attempt to shortcut the procedure for qualifying a repair project for earthquake aid from the Federal Emergency Management Agency by declaring that building codes governing the repairs can be strengthened informally.

FEMA officials are insisting that they will approve repair money to bring structures up to code, but they will not accept an informal, stricter standard mandated by the state. If the federal government agreed to pay for repairs based on the state “policy intent notices,” rather than the building code itself, more repairs and more buildings would be eligible for federal money.

It may seem mere semantics, but it was the subject of sharply conflicting advisories to Congress from FEMA and the state Office of Emergency Services (OES) last month, and it now has led to sniping in public statements between officials of the agencies.

Morrie Goodman, chief FEMA spokesman, said Wednesday the policy notices by the Wilson Administration are having the effect of defining damage in such a way as to qualify sparsely-damaged buildings for vast federal assistance, sometimes entailing total reconstruction.

“A hairline crack is not proof of structural damage,” said Goodman. “They want Cadillac repairs for Dodge damage. We certainly can’t open the bank.”

But the state official, OES director Richard Andrews, said it is a matter of public safety, not exaggeration of damage.

“FEMA standards would lead to California having less-safe buildings than they had before the earthquake,” said Andrews, who in the last three weeks has escalated his pointed criticisms of FEMA and federal disaster relief policies.

The dispute has heavy political overtones, with Gov. Pete Wilson running for President and President Clinton running for reelection.

On Wednesday, FEMA Executive Director James Lee Witt issued a warning about politicizing the matter.

“I really hope the state of California and OES does not make this a political issue,” he said. “Ultimately, the people who would be hurt are the people we’re trying to help, and I think that would be the wrong thing to do.”

But Witt’s remark followed political potshots from both sides.

FEMA’s Goodman on Tuesday assailed statements by Andrews, saying he makes his criticisms “because he wants James Witt’s job” in a Wilson White House.

Andrews replied Wednesday by pointing out that Goodman was Midwest press director for the Clinton presidential campaign.

“For him to say somebody else is political is rank hypocrisy,” Andrews said. “I’ve got a big enough job right now. I’m not coveting anybody else’s job.”

Although Goodman on Tuesday characterized the relationship between FEMA and OES as “sour from the beginning” of the Northridge recovery effort, both Andrews and Witt insisted Wednesday they had worked hard to get along.

“I don’t blame Dick in the sense that he’s trying to get all the dollars he can get for California,” Witt said. “But we’ve already put out $3.15 billion dollars in disaster aid to California, and I think a lot of people forget we’ve already helped nearly 700,000 individual applicants get their lives back together.”

Andrews said he always strives to be nonpartisan, but he believes it is “not responsible to repair only to a level that leaves buildings vulnerable to a new earthquake.”

He also remarked that one reason it has been hard to deal with FEMA is that it is “on its fourth or fifth federal coordinating officer, depending on how you count,’ for Northridge. He also said the first coordinating director, Frank Kishton, promised certain federal assistance, only to be overruled later by subsequent officers.

Goodman responded on Kishton, “It was time to move somebody else in. . . . There may have been some items approved that maybe shouldn’t have been approved.”

Another issue that divides federal and state officials has to do with the 10% state financing share of all government-assisted repairs. The federal government contributes the other 90%.

Goodman said that to his knowledge the Wilson Administration so far has borrowed from FEMA about $105 million of the $150 million it is liable for as the state share, and that efforts by FEMA to find out from state officials how much the state has actually spent out of its own pocket have been unsuccessful.

Andrews referred this matter Wednesday to James Miller, assistant program budget manager at the state Department of Finance.

Miller said that, in fact, the state has thus far borrowed from FEMA only $65 million, which the state will repay over the next three years. He said the first repayment was made just last month, and the state is willing to make all details of its payments for repairs known to federal officials.

The main substantive dispute, however, continues to be the wide discrepancy between some aid requests to FEMA and FEMA’s commitments. In the case of two Los Angeles County hospitals, , the request was for a total of $136.1 million, but FEMA only committed $15.4 million.

Applications totaling close to another $2 billion are pending, or are about to be made, according to officials. The sums at stake include a possible $975 million for the UCLA Medical Center, $170 million for the Los Angeles County Hall of Administration and $150 million for Los Angeles City Hall. There is even a question of $500,000 to repair minor damage at The Music Center in Downtown Los Angeles.

On July 10, in an advisory to Congress, FEMA declared it was “authorized to fund work that is necessary to restore a damaged, eligible facility to the condition as it existed immediately prior to the disaster, and in accordance with applicable codes and standards.”

The issue is what are applicable updated codes and standards. In a July 17 advisory to Congress, the state OES maintained that policy intent notices provide guidance to interpret how building codes “are to be applied to specific circumstances” and thus become part of the applicable codes FEMA is talking about.

FEMA says they are not, and the result is the monumental difference between what the state wants and what the federal government is ready to give.