Sunday, February 20, 2005

The Color of No Money

"Everyone wonders why the beach is not rebuilt. No one is getting any money," said John Pinzino, president of the Sans Souci homeowners' association and owner of three condominium units on Pensacola Beach."
Brown. That's the predominent color of Pensacola Beach's famed "sugar white" sand these days. In all but a few areas outside the commercial core, dirty sand is piled as high as four stories waiting to be mechanically cleaned and spread along the eroded beach.

Black. That's the common color of condominium walls, like those at Regency Towers where once gleaming-white 8-story walls were so badly damaged by high winds they look, even now, like something left standing after the London blitz.

Gray. That's the color of the faces of Northwest Florida property owners whose personal assets are being drained away while property insurance companies drag their feet instead of promptly paying casualty loss claims.

The News Journal's Kimberly Blair reports Sunday on the extensive damage still visible right here on the ground in the Florida panhandle and its negative impact on the tourist economy. The cause lies with Citizens Property Insurance and other companies who aren't paying for covered flood and windstorm damage.
Regency Towers and Sans Souci Condominiums on Pensacola Beach as well as Sun Dunes on Navarre Beach usually are teeming with snowbirds this time of the year.

But rather than gearing up for spring break in March -- the kickoff to the area's peak tourism season -- the buildings are vacant because Hurricane Ivan's assault was so severe they are uninhabitable.

The same is true for other resort condominiums between Perdido Key and Navarre Beach.

Many of the buildings that traditionally generate lucrative incomes for condo owners will remain vacant through peak tourism season - and possibly through next snowbird season, the winter months when residents leave the North for warmer weather in the South. Some condominiums won't be ready to house tourists until 2007.
Blair interviewed a number of prominent condo association officers about the slow progress in re-building on Pensacola Beach, Navarre Beach, and Perdido Key. What she found (although she doesn't articulate it this way) raises the question of whether Citizens Property Insurance is lying about its claims history.

The many insureds who are having problems in rebuilding, she reports, are "blaming their insurance companies -- which, in a majority of the windstorm cases, is actually a single insurer: the state-operated Citizens Property Insurance... ."
"Everyone wonders why the beach is not rebuilt. No one is getting any money," said John Pinzino, president of the Sans Souci homeowners' association and owner of three condominium units on Pensacola Beach.
Blair dutifully repeats the assertion from the state-owned insurance company that "Citizens has 15,825 Ivan claims. As of Feb. 3, the company reported 13,296, or 84 percent, had been closed." But the anecdotal evidence she collects casts doubt on those numbers.
Judy McCabe, community association manager for JME Property Management, which manages condo associations and beach properties up and down the coast, finds it hard to believe that Citizens has closed nearly 85 percent of Ivan claims.

"No one is getting money," she said.

She attended a recent workshop in Destin with about 100 condo managers from Perdido Key to Panama City. When attorney Jay Newman, workshop organizer, asked members of the crowd how many had received settlements, "five raised their hands and said they had received little-bitty payments,'' McCabe said. "None had full settlements."

Said Pinzino of the lack of settlements: "It's causing a lot of pain for condo owners. People are really stressed out. It's financially devastating for some people.''

The situation is not unique to beach condo owners.

Thousands of residents and businesses across Escambia and Santa Rosa counties also are waiting on settlements to begin repairs.
If "thousands" are waiting, as Blair writes, and Citizens really has settled 84% of the claims made, then virtually every open claim must be from Pensacola area beaches. That, we know, is not true. There are plenty more open claims from the mainland and elsewhere in Florida.

Blair dutifully gives equal time in her article to Justin Glover, the designated flack-catcher for Citizens Property Insurance. Predictably, he repeated the usual talking points of the state-owned company:
  • "One of our immediate goals is to get advance payments to them so they can have enough to enter into contracts with repair contractors"
  • "Citizens and the association may be in a dispute over the wind damage"
  • "We are paying undisputed claims."
  • '...there likely are legitimate reasons that some of these associations have not received settlements yet' [Glover] said.
But locals like John Pinzino aren't buying the Citizens line. With each passing month of insurance company delays, "condo owners are struggling with expenses associated with condos they can no longer live in or rent."
Displaced condo residents are paying rent to live elsewhere in addition to mortgages on their condos. They still have to pay lease fees, condo fees and other costs involving condo ownership.

Many of them also are paying thousands of dollars in special assessments levied after the hurricane to pay the associations' deductibles and damage not covered under insurance policies.

Pinzino is feeling the pinch.

In addition to his residence at Sans Souci, he owns two investment properties at Clarion Suites on Via de Luna. That condominium/hotel property has yet to receive any insurance money. It's so devastated that the 70 owners of the 86 units have decided to sell the property instead of rebuild.

* * *
Ira Mae Hewitt, who manages and owns condo units on Navarre Beach, said the situation is financially devastating for many condo owners.

"The problem is two-fold. The insurance companies are not responding," she said.

"Once you finally do get money, owners have to send the money to their mortgage companies and they decide what percentage they will pay them to start repairs," said Hewitt, who owns Century 21 Island View in Navarre and a unit at Sugar Beach.

"It appears that insurance and mortgage companies are keeping the money as long as they can. The people who are getting hurt are the people who have in good faith paid insurance and mortgages over the years," she said.

* * *
"There are people who are down to their last nickel waiting on a check," [Steve Lashley, a Regency condo unit owner] said.

As Lashley waits on his own insurance settlements he knows he can't reconstruct the units that have been stripped to the bare metal studs until Regency completes its work.

[Ken] Turk, Regency Association manager, said the building won't be ready for residents or tourists until the end of the year or even the first of 2006.

Regency's recovery hinges on when it receives the remainder of its insurance settlement.

"We were able to get $1.2 million advance out of our windstorm policy to get started," Turk said.

An estimated $14 million to $16 million is needed to repair and bring the two eight-story, Gulf-front buildings up to code.

Bills are starting to stack up for the work being done: removal of sand and debris, restoring electricity to the buildings and contracting the service of a water damage restoration and mold clean up company.

"I have millions of dollars in bills sitting on my desk that I cannot pay until we get a settlement," Turk said.
Take a drive around the Pensacola area. Read the propaganda from Citizens Property. Then ask just who should you believe? Citizens Property or your own eyes?

Someone ought to conduct an independent survey of just how many of those 'claims' Citizens alleges it has paid in actuality remain open, are contested, or are unresolved. Remember, this is the insurance company that admits it doesn't even know how many cases it took back from bad adjusting firms or where those files are now.

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