FEMA Taking Hit on Sale of Surplus Trailers
Thursday, March 8, 2007
Stored in such places as the vacant land near an airfield in Hope, Ark., an industrial park in Cumberland, Md., and a warehouse in Edison, N.J., are the results of one of the federal government's costliest stumbles in the aftermath of Hurricane Katrina -- tens of thousands of empty trailers.
The Federal Emergency Management Agency hurriedly bought 145,000 trailers and mobile homes just before and after Katrina hit, spending $2.7 billion largely through no-bid contracts. Now, it is selling off as many as 41,000 of the homes, netting, so far, about 40 cents on each dollar spent by taxpayers.
Thousands more of the homes -- critics say more than 8,000 -- have never been used and cannot be sold immediately, even though scores of people in the South have been made homeless by recent storms.
"While FEMA has 8,420 brand new, fully furnished, never-used mobile homes in a cow pasture in Hope, Arkansas, they refuse to provide the people from Desha, Back Gate and Dumas counties with help. This is crazy," said Rep. Mike Ross (D-Ark.). "If this is the new and improved FEMA, I don't want any part of it."
FEMA cannot sell unused mobile homes directly to the public because of legislation passed by Congress in October at the industry's urging. Instead, the agency must now go through a time-consuming process of trying to donate them first to federal, state and local agencies and public service groups, according to the Manufactured Housing Institute's Web site.
But FEMA has refused Ross's request to release 150 mobile homes to shelter people in his state who were displaced on Feb. 24 by two tornadoes, because President Bush has not declared the counties a federal disaster area, precluding FEMA's involvement.
Still, the number of homes the agency can sell has industry groups worried about a market glut. FEMA's potential for-sale inventory is nearly equivalent to 30 percent of the recreational-vehicle industry's U.S. sales in 2006.
"As you can imagine, a public auction of so many vehicles could devastate the market for travel trailers," Michael A. Molino, president of the 2,700-member Recreational Vehicle Dealers Association, said in a letter Friday to FEMA Director R. David Paulison.
Molino's group and the National Association of RV Parks & Campgrounds asked last week that the trailers be sold in lots of five or more so dealers can buy and resell them. Both groups said that selling directly to consumers could pose safety hazards if adequate training is not provided.
FEMA is working with the General Services Administration, the federal government's real estate arm, to auction trailers in batches of about 300 at a time "so we do not flood the market or harm business," FEMA spokeswoman Deborah Wing said.
Beyond the issue of cost, critics have also raised health concerns about the trailers. Becky Gillette, spokeswoman for the Sierra Club of Mississippi, warned that wood and glue in new trailers have released formaldehyde gas at levels that have irritated occupants' eyes and lungs, posing a health risk.
The unused units are among thousands that are rusting in depots at 13 locations nationwide. Many of them were part of a $900 million purchase of 26,300 mobile and modular homes. FEMA officials later realized that, under agency rules, those homes could not be used in flood zones, where nearly all storm victims lived. In other cases, local communities refused to host large trailer encampments, saddling FEMA with a surplus.
About 90,000 FEMA units are occupied by storm victims. FEMA will decide soon how many trailers the agency will keep on hand for future disasters and how many it will sell, Wing said. Those eligible for sale are the ones that require more than $1,500 to refurbish.
Though FEMA paid on average $18,620 for each of the trailers and mobile homes, during the past year the agency says it has received an average of only $7,367 for the 2,665 it has sold so far.
"The people who lose in this coming and going are taxpayers," said Steve Ellis, spokesman for Taxpayers for Common Sense. "They paid for trailers that were not needed or inappropriate, and now they're not able to fully recoup their losses if they're only selling them for 40 cents on the dollar," he said. "And it seems like industry has got this coming and going, because FEMA can't seem, either through their own work or through Congress's, to catch a break."