FEMA Prepares for Damage Claims From Wildfires

Even as water tanker drops continue over Southern California’s burning landscape, government check writers are opening the spigots of aid money that could help determine how quickly and thoroughly the state recovers from the wildfire disaster.

The Federal Emergency Management Agency is setting up shop in a Pasadena office building to administer thousands of damage claims certain to result from the fires. As of Thursday, more than 2,100 people had called to apply for grants and low-interest loans at the agency’s toll-free number, (800) 621-3362.

FEMA has already mailed a small batch of checks for temporary housing for fire evacuees, but doling out all the relief will take months or years -- the norm for large calamities. Sharing the third-floor suite in Pasadena are FEMA workers mopping up the last aid applications from the 1994 Northridge earthquake.

“Our guideline is to do this ASAP,” said agency spokeswoman Ana Marcelo. “But we have to be good managers of the taxpayers’ money.”

The stakes in the bailout range from household budgets -- experts say most fire victims probably are underinsured for their losses, and might still come up short after receiving grants and loans -- to the state and national budgets. Political fortunes could also be on the line.

Gov.-elect Arnold Schwarzenegger is faced with balancing state contributions to the relief effort against his campaign pledges to rein in spending and roll back the vehicle license fee.

And President Bush is being lobbied, notably by fellow Republican Schwarzenegger, to maximize federal aid. Bush lost California by a wide margin in 2000, but supporters say Schwarzenegger’s easy victory in the recall election put California in play for the presidential contest.

On Thursday, California elected officials criticized the Bush administration for rejecting, after a months-long delay, an April request by Gov. Gray Davis for $430 million from FEMA to clear dead trees in fire-prone forests.

All of this comes against a background of record state and federal deficits, plus a sluggish economy.

“When the actual fires die down, the political fires will start,” said Steve Erie, a UC San Diego political scientist.

Erie and others predicted that officeholders in both parties would go out of their way to find funding for the fire-ravaged areas, which happen to be among the most vote-rich in the state.

“If they’re viewed as somehow obstructing aid,” Erie added, “the negative fallout that will follow would be quite great.”

At the Pasadena building, the FEMA workers and their state counterparts scrambled to get the relief machine rolling.

“We’re in a state of turmoil, a state of flux,” said Michael Raphael, a FEMA information officer.

He was walking through the cubicle-lined suite, as about 100 staffers fiddled with newly installed phones and computers just out of their boxes. Many of the employees, had flown in from around the country.

The state Office of Emergency Services, which handles federal aid payments to local governments, has estimated total losses from the fires at more than $2 billion.

That tally is sure to grow, officials say. As of now, it is greater than the combined relief appropriations of FEMA ($1.5 billion) and the state office ($23 million) for the current fiscal year.

Congress will be asked to allocate funds to close the gap.

FEMA typically picks up 75% of aid costs, requiring the state, counties and cities to assume 25%. With an executive order, Gov. Gray Davis has promised that the state will fully reimburse local governments for fire-related costs.

Schwarzenegger spokesman H.D. Palmer suggested that the governor-elect would press the federal government to increase its portion.

Relief money from Washington and Sacramento travels in two pipelines -- one to local governments, the other to households. The first pays for the response to disasters -- those 14,000 firefighters working overtime -- and rebuilding infrastructure, everything from scorched power lines to heat-buckled streets.

The second flows to people who are uninsured or underinsured. FEMA offers grants, which do not have to be repaid, to those who need emergency housing, a rental car, groceries and the like, regardless of their income. Grants are capped at $25,000 per household, and average about $3,000, officials said.

Otherwise, the federal Small Business Administration, working with FEMA, provides low-interest loans to individuals (2.56% in most cases, for terms as long as 30 years) for uninsured damage. In a jurisdictional quirk, the business agency handles all disaster loans for homeowners and renters, as well as for businesses of any size.

Homeowners are eligible for as much as $200,000 in loans to repair or replace their primary residence. Second homes are excluded, as are boats and aircraft not used for business.

Loans of up to $40,000, for homeowners and renters, are offered for personal property such as furniture, appliances and clothing.

The ceiling for business loans is $1.5 million, at interest rates as low as 3.1%.

Fire victims are not guaranteed lending, however. They must have good credit and enough income to demonstrate an ability to repay.

The government puts them through an approval process like that of a bank or mortgage company. Losses are verified by an inspection.

Applicants also should not expect loans to cover all their uninsured damage.

“We don’t replace antiques, we don’t replace paintings,” Raphael said. “We’re here to make your house livable again.”

For that reason, Mary Comerio, a UC Berkeley architecture professor who has studied disaster relief programs, said victims should prepare to dip into their own pockets.

“The amount of money that people think is available is less than what is available, and they’re all going to feel strapped,” she said.

“Is it a perfect process? No,” said Paul Jacks, a disaster assistance director for the state Office of Emergency Services. “Does it work reasonably well? Yes.”