Key West and Upper Keys
By John Hardesty
In Broward County, Fla., we weren’t prepared for the volume of devastation following Hurricane Wilma: 98 percent loss of electricity, gasoline shortages, closed grocery stores and restaurants, broken or missing traffic lights, and unsafe drinking water. Trees, street signs, billboards and fences littered the streets. Roofing and canvas hung from trees, and there was metal everywhere. The sheer quantity of debris was daunting. Between the curfew and lack of power, we were like pioneers, our sleep habits dictated by the sun.
Amidst the ruin, the manager of Do-It-Yourself Warehousing (who wishes to remain anonymous) emerged as a savvy savior. Thanks to his quick thinking and hard work, damage at the company’s Oakland Park and Pompano Beach, Fla., facilities was minimized.
The hurricane hit on Monday, with winds that howled for seven unforgettable hours. On Tuesday, the manager arranged for a Bobcat to be delivered from nearby Fort Pierce. He proceeded to bring in work crews from Jacksonville, Fla., and replace missing roofs with tarp. Within days, the tarp was in place and much of the debris had been removed. Occupancy remained steady, and the manager’s lightning response and caring attitude is doubtless the reason tenants stayed put.
Do-It-Yourself Warehousing is an older business, built in the late ‘60s of block construction and flat roofs. Property damage after Wilma was pegged at $1.2 million. Losses included nine roofs—two of which had been replaced just a year earlier—several doors, an entire wall and many minor items. Owner John Harper said the ordeal taught him the importance of three things: a good manager, nailing down building fascia, and maintaining a large contingency fund.
A vital part of reconstruction is the owner’s choice of contractor. Harper says it’s important to choose a professional with tech savvy, as estimates produced by programs that itemize damage are more likely to be honored by insurance companies. Before a storm hits, research local companies and establish relationships. Harper admits he didn’t have a plan last year, and the omission hurt him financially in the aftermath of the storm.
Local regulations are another chief concern, and ignorance could lead to huge losses. For example, Broward and Dade County regulations dictate that total replacement is required when more than 25 percent of a roof is damaged. Most insurance companies will claim they only have to pay for the damaged portion, leaving facility owners to pay the difference. Be prepared for a fight, because your insurer should pay for whatever the law requires.
Hurricane Andrew of 1992 left devastation in its wake. Ed Westpy, a partner in American National Self Storage, gazed in silent disbelief at the condition of his facility. He had owned the site only a short time when Andrew came through and the destruction was total, with damage costing more than $1.5 million. Buildings were stripped to their skeletal framing, and only 150 of 800-plus cinderblock columns remained intact.
The property’s mortgage holder wasn’t sure if it was wise to go forward with repairs. The clock ticked during deliberation, creating more damage due to inactivity. Ultimately, demolition of the back lot cost $300,000 over a 10-week period. Rebuilding was taxing and consumed all of Westpy’s productive hours for more than six months. Overall, the facility lost one year of revenue and expended two years of concerted effort to get occupancy back above 90 percent.
Hurricane Wilma caused nearly $20,000 in damage. The main gate was blown off, debris had to be cleared, and the building lost 43 door headers. The insurance company’s high deductible was another blow, weighing in at $69,000.
Key West and Upper Keys
The Keys had survived Wilma, and most residents were sure they’d dodged the bullet. Then all of a sudden, the seawater started rising. It looked like the ocean and gulf were coming together in an awesome surge. It’s hard to imagine that 12,000 cars were lost and 40 percent of homes suffered water damage.
Sam Holland, owner of Keys Mini-Self Storage and Suncrest Mini-Self Storage in Key West, Fla., escaped with only wind damage to his fencing. At Keys, roofs were intact with the exception of shingles on the office building. Because electric gates weren’t working, they were left open for tenants. There was also some water damage, but customers were overwhelmingly supportive, and occupancy remains at 99 percent.
Ed Thames is manager of Upper Keys Commerce Center, Tavenier Mini and Wrenn Storage in the Upper Keys. He prepared his landscaping before the storm, trimming trees and eliminating or cutting loose foliage. This advance work minimized cleanup to two hours, Thames says. Roof damage was minimal—peaked roofs had some shingle loss while flat roofs were OK—and only five roll-up doors were damaged at one site.
Thames can’t provide tenant insurance because his facilities are not a minimum of 5 miles from the nearest body of water, as required for coverage by insurance companies. Instead, he provides customers with elevation certificates so they can add stored goods to their homeowners’ or renters’ insurance. His buildings are approximately 25 years old, and occupancy is at 100 percent.
Cape Canaveral’s Space-Mann Storage and Cape Storage, owned by Kevin Mann, held up well through Wilma. It was the spin-off tornados that damaged facility roofs. Mann is now installing Thermo roofing to flat roofs and dimensional vs. 3-tab shingles onto pitched roofs.
In cases where units were damaged, Mann moved the contents to dry units. Customers were very pleased with his efforts, as evidenced by an occupancy rate that remains in the high 90s. Mann recommends that operators back up their facility database and take it home every day to protect business and tenant information and help prevent accounting challenges.
Mike Venditti, owner of Pelican Warehouses in Fort Pierce and Sebastian, Fla., endured two storms in 2004. Hurricane Jean resulted in eight days without power, followed by Francis and another 12 days of no electricity. Pelican’s buildings are concrete block, so the most vulnerable parts of the property were the soffits and fascia. After the storms, Venditti replaced every piece of metal fascia with wood and the soffits with plywood. He never lost a tenant, having secured roofing immediately so the building suffered minimal interior damage.
One factor made a huge positive difference, says Vendetti: private insurance with a $1,000 deductible. It also helped that Sebastian’s permitting process was quick and, as a general and roofing contractor, Venditti could perform his own repairs. Because no time was lost in patching roofs, interior damage from ensuing rains was minimized.
Kathleen Hardesty is the owner of Lighthouse Investments Solutions Inc., which specializes in the sale of self-storage. She has more than 30 years of experience in selling residential and commercial real estate. A “life member” of the Institute of Business Appraisers and president-elect of Broward Professional Business Women, Ms. Hardesty is also well-versed in insurance issues. For more information, call 954.770.1022; e-mail email@example.com; visit www.lighthouseinvestments.com (coming soon).
Grappling With Insurance
in the Aftermath
By John Hardesty
The storm or some other disaster is over, and now you must repair or rebuild. You have insurance, but will the provider be fair? Will you get enough money to do what must be done? Here are a few recommendations for filing your claim.
First, before contacting your insurer, get yourself in the right frame of mind by remembering these unofficial guidelines:
- The insurance company is not your friend, it is a business. While your agent should be your advocate, the insurance adjuster represents the company’s interests.
- Insurance companies pay the amount they owe contractually and not more. Rarely does anyone get overcompensated on a claim.
- Rules and regulations designed for your protection may be loosely applied. Knowing how the system works will help you get your due.
As you and the adjuster review the property, you’ll be able to point out obvious damage. But if you don’t have fully developed construction knowledge, enlist the services of a public adjuster or licensed general contractor to ensure smaller items—and the potentially large problems behind them—are brought to light. For example, a series of small ceiling cracks may be an indication of structural damage. Water stains on walls or ceilings often indicate the presence of mold and mildew.
To determine how much the insurance company should pay, the adjuster will break repairs into specific line items. For example, in the event of a water stain, he might list:
- Seal ceiling water stain with sealer.
- Repaint ceiling with two coats of paint.
However, the actual repair may require additional steps such as furniture removal, room prep, drywall replacement, finishing and cleanup. Each of these items requires a cost per square or lineal foot and a prescribed amount time to perform the task.
The estimate should take every legitimate item into account. If the insurance company refuses to pay for certain steps or there’s a disagreement about total cost, you can use arbitration, in which you and the insurer will present your arguments to an impartial third party. Line items are likely to be examined during the meeting, so you’ll be ahead of the game if you use insurance-friendly software that can generate an accurate list. Examine the estimate item by item, and don’t be shy about fighting for what’s fair. You can be sure the insurance company won’t hesitate to make its case!
John Hardesty is the vice president and general manager of Homecrafters of America Inc., a Delray Beach, Fla.- based general-contracting company. His construction experience extends to all phases of new construction, remodeling and damage restoration. Mr. Hardesty has dealt with most of the top-10 national insurers on issues of structural repair and renovation. For information, e-mail firstname.lastname@example.org.