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A huge part of the buildings and infrastructure of Galveston, Texas, was damaged or destroyed by Hurricane Ike that landed about the middle of September, 2008. There are many other cities throughout America that are subject to natural disasters, whether from storm, tornado, earthquake, uncontrolled fire, etc.
The Galveston County Daily News published this copyrighted report on October 10th. It shows how the arbitrary and capricious rules of government will ruin many property owners' ability to recover and will obviously cause multi-millions of dollars worth of mortgage loans to go into foreclosure.
With permission, I am posting The Daily News' Rhiannon Meyers' report for two reasons: 1) So that readers can see how this works and 2) so readers in other areas that could have a similar occurrence can see what will happen to them if disaster strikes.
Homeowners have learned for the first time that even though they have full insurance coverage on their property, if the improvements are ruled to have more than 50% damage, the home must be brought up to current building requirements, and their insurance will not cover that cost.
Consequently, the home is an economic total loss, but the insurance claim payment will only cover part of the cost of repairs.
Those who are interested in how Galveston Island is trying its best to recover can by going to The Daily News' fine web site, www.galvnews.com.
CITY PASSES FORMULA TO CLARIFY DAMAGE ASSESSMENTS
By Rhiannon Meyers
The Gslveston County Daily News
Published October 10, 2008
GALVESTON - Island property owners should have a better idea in the next month whether they'll be allowed to rebuild as federal inspectors begin inspecting the damage to homes today.
The city council adopted a standard formula Thursday for determining substantial damage.
The city will withhold building permits for homes that have damage that is more than 50 percent of the value of the home, as determined by the central appraisal district, plus 5 percent.
If a home is appraised at $100,000, then it would be considered "substantially damaged" if the damage assessed by federal inspectors is more than $52,500, per the formula adopted by city council. If the home is substantially damaged, it might have to be demolished.
Appraisal district values are generally lower than market value, which could force some property owners to demolish or elevate structures that could be repaired at less than half their market value.
Some residents are frustrated by a permitting process that they say is slowing recovery.
Jim Jolly, who lives on East Ventura Drive in the Spanish Grant subdivision, said he stood in a lengthy line to obtain a city permit three different times on three different days and received three different answers on what he should do.
"They told me everything from there are no building permits issued to this area to the permits are issued on a limited basis and I need to provide documentation, a long listing that included everything except my deceased mother-in-law's birth certificate," he said. "The story changes every time I go down there, and that's so frustrating."
Officials hope the new formula will help to clear up some of the misinformation about the permits.
Inspectors with the Federal Emergency Management Agency started inspecting homes on Thursday, beginning with the Colony Park subdivision, where they found homes were not substantially damaged. Those homeowners will be allowed to rebuild. Inspectors will be able to examine 200 homes a day - meaning it will take four days to reach all island homes.
The FEMA inspection is different from the meetings some homeowners have already had with FEMA personnel. That meeting was to determine housing needs; the meeting with damage inspectors will help homeowners determine how much damage their homes sustained.
Homeowners who disagree with the FEMA assessment or the home appraisal can appeal it through three different avenues:
· Those who disagree with FEMA's damage assessment can hire a private contractor to take an assessment of the damage and then present that evaluation to the city for approval;
· Those who disagree with the central appraisal district's home appraisal can hire a private appraiser and then present that information to the city for approval; or
· Those who disagree with the city's review of the private assessment or appraisal can appeal the decision with the Building Board of Adjustments.
Federal inspectors will begin this weekend inspecting homes with yellow or red stickers.
Homes and businesses tagged with yellow stickers mean city officials think that 30 to 70 percent of the home was damaged. Red stickers mean homes and businesses are unsafe and will most likely have to be demolished. Fewer than 10 homes and businesses have been condemned.
If homes repairs cost more than half the property's value, owners must bring their structures into compliance with the city's current codes, which includes base flood elevation requirements, said Wendy O'Donohoe, planning director.
In general, that means living areas will have to be rebuilt one story off the ground, but the exact height varies throughout town. If existing structures can be elevated, property owners don't have to demolish them. However, properties that are eligible for or already listed on the National Register of Historic Places are exempted from floodplain regulations, O'Donohoe said.
Owners of commercial properties will be allowed to floodproof buildings that cannot be elevated, which involves modifying windows and doors to keep water out. Historic downtown buildings will be exempted. |
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Bill...I don't understand why if the homeowner has replacement value why the Insurance won't cover it? Is it because it's only 50% damaged? Does that mean they would get the money if it had burned to the ground? (if so I'll bet you start seeing a lot of mysterious fires)
Or is it something that's as a result of town ordinances? Seems to me they could bend a little under the circumstances?
Miss Joanie,
It's the government. You're right. If it had burned to the ground rather than flooded, the insurance would have paid off the loss. Interestingly, a number of homes actually did burn to the ground during the storm. They win. The others lose.
If this had happened to me, I'll assure you the insurance would either pay off the mortgage or I'd let the mortgage company foreclose the lien. I'm totally sure of it. We don't buy insurance so we can get into a bunch of hoo-rah as to whether or not a natural disaster loss qualifies for proper settlement...especially when we've been paying thousands of dollars per year for coverage.