Paying for Flood Damage Looms as Big Challenge
For home owners whose property was destroyed or damaged from Hurricane Katrina, the widespread flooding and wind damage “creates an enormous gray area, which provides the insurance companies with an opportunity to delay or deny coverage, and it’s going to be a battleground for lawyers for years to come,” according to Finley Harckham, a partner at law firm Anderson, Kill & Olick PC, which primarily represents policyholders. Most home owners in the path of Katrina lack any flood insurance, which is excluded from standard policies and generally must be purchased from the federal government with a $250,000 cap. Class-action attorney Richard Scruggs said that he plans to ask Mississippi’s attorney general to try to override flood-exclusion clauses in home owners’ policies in the state in the interest of public policy, which could force insurers to pay many billions of dollars more toward rebuilding costs. Estimates for Katrina’s damage so far exceed $100 billion, and private-sector property-casualty insurers are expected to pay $14-$35 billion of that amount. The top of that range would be 50% more than the inflation-adjusted cost of paying for Hurricane Andrew. The insurance industry currently has more than $400 billion in assets to cover claims nationwide. (www.realestatejournal.com)
RealEstateJournal (9/9/05); Theo Francis, John D. McKinnon and Peter Sanders, Wall Street Journal
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Baton Rouge Real Estate Becomes Hot Property
The mass migration from Hurricane Katrina promises to reshape life in cities such as Houston; Jackson, Miss.; Mobile, Ala.; and Memphis, Tenn, and has increased the population of Baton Rouge, La. from 400,000 to 500,000, increasing demand for housing and office space and raising concerns over the ability of the city’s infrastructure to support the new arrivals. Class A office space in Baton Rouge has increased from $18-$19 a square foot before Katrina, to $24 now. On the residential market, where “a fast sale here was a home that sold in a week in a hot neighborhood, today, homes last for minutes,” according to Judy Burkett, a local Realtor®. “You put them into the [Multiple Listing Service] system, and they’re gone almost immediately.” Real estate agents reported to Rep. Charles Boustany (R-La.) that 250 homes were sold in one day in Lafayette, about 60 miles west of Baton Rouge, and just about every available property has been sold. If the dislocation is a permanent change, governments will be pressed to come up with the money necessary to expand services and infrastructure, and to create new jobs, schools and subdivisions to accommodate the new residents. (www.realestatejournal.com)
RealEstateJournal (9/7/05); Jeff D. Opdyke, Wall Street Journal
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New Building Materials Better Withstand Storms
Manufacturers have been re-engineering wall studs, sheet rock, insulation, paints and other building materials to ward off wind loads or minimize damage from flooding. Andersen has beefed up its line of StormWatch vinyl-clad windows with impact-resistant glass reinforced with clear plastic laminate sandwiched between two panes to resist impact. Extra silicone glazing keeps the panels stable. Jeld-Wen AuraLast wood preservative is being used to make a window that won’t rot, swell or deteriorate in post-hurricane climates. Owen Corning’s insulated Polar Wall Plus vinyl siding panels include a rolled-over double nail hem that it says can withstand winds to 200 mph. “Weep holes” at the bottom of each panel allow water and moisture to escape. Honeywell is promoting cell foam sprays as a superior insulating product that also contributes to wall sturdiness; the spray foam hardens quickly when applied between studs. NAHB says that the spray foam panels withstood wind loads that were two to three times higher than those supported by fiberglass-built panels. (www.chicagotribune.com)
Chicago Tribune (9/9/05); David Bradley, AP Weekly Features
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Louisiana Superdome’s Future Uncertain
Among discussions about rebuilding New Orleans are growing calls to demolish the 30-year-old Superdome. Large sections of the roof were shredded by Hurricane Katrina’s 233-kilometer-per-hour winds, and Warren Louis Reuther Jr., a member of the commission that oversees the Superdome says, “There is no way to repair it now. We are going to have to take it down. The roof has been peeled back. It is still underwater as of right now.” A new stadium will have to be built to higher standards, he adds, even though the Superdome did not blow down. Even before Katrina struck, the New Orleans Saints had started exploring the possibility of building a new retractable roof stadium by 2009 to replace the 27-story-tall Superdome, which is their home field. (www.voanews.com)
VOA News (9/7/05); Jim Stevenson
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Analysis: Thousands of Homes Doomed as Waters Recede
If you were to swim around inside some of the flooded homes in New Orleans, you would know right away that many of them are not likely to survive, according to Ken Ford from NAHB. “You’ll see wood flooring buckled,” he said. “You’ll see if you have vinyl sheeting it’ll be turned up at the edges. Plaster walls will have started to disintegrate. If it’s drywall, it will crumble.” Older wooden beams begin to warp and rot after sitting underwater for just 12 hours, Ford says. Newer pressure-treated beams may last a few days longer. Most bricks will survive a flood, but the mortar holding them together might not, Ford says. For all of these reasons, he expects many of the houses now flooded to start to collapse under their own weight as the floodwaters recede. (www.npr.org)
NPR: All Things Considered (9/8/05); Melissa Block, host
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Showdown Looms Over Eminent Domain Power
The San Diego Redevelopment Agency is gearing up for a battle next year over legislative proposals in California to limit or end the power of government agencies to take property and sell it to a private developer as allowed under June’s Supreme Court decision in the New London, Conn. case. The agency says that it rarely undertakes eminent domain proceedings, but that it uses the power to negotiate deals. Among the properties that the agency is attempting to buy now are 14 acres south of Diridon Station to be used for affordable housing, or a baseball stadium. John Shirey, executive director of the California Redevelopment Association, says that the Supreme Court case had no impact on California, where, as in most states, a condemnation cannot take place unless the government agency can show that the area to be taken is blighted. “We have strong laws in California that strike a balance between redevelopment and property rights,” he said. (www.bizjournals.com)Silicon Valley/San Jose BusinessJournal (9/9/05); Timothy Roberts
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