CAPE MAY — City Council has authorized the purchase of additional flood insurance for the new convention facility that would bring total coverage up to $8 million.

City officials took heat from the public in recent weeks for not having enough coverage for the new $10.5 million oceanfront hall when Hurricane Sandy hit the state Oct. 29, though the building did not suffer any damage.

After initially saying there was no flood insurance, officials later said there was $2.5 million in coverage though the city’s municipal insurance with the Atlantic County Municipal Joint Insurance Fund, also known as the JIF.

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Deputy Mayor Jack Wichterman on Friday said the city has found a company that will cover the building for an additional $5 million for $31,600 per year. The city has also applied for flood insurance through the Federal Emergency Management Agency, or FEMA, but the top coverage under this program is $500,000 for the building. It also will include $100,000 for contents. The annual cost is $51,155 for the FEMA policy.

The FEMA policy is more expensive because it would be used before the $5 million policy, which would only be needed if there were extensive damages. City Council authorized the purchase of both policies to supplement the JIF coverage.

“If you do the arithmetic, we have $8 million in flood insurance, which is about what we were looking for,” Wichterman said.

The hall, which opened over Memorial Day weekend, cost $10.5 million to construct, but that price also included funds for design, engineering, approvals and other “soft costs” the city was not looking to cover with flood insurance.

“You wouldn’t want to insure the soft costs. $8 million will cover the building,” Mayor Ed Mahaney said.

City Manager Bruce MacLeod said the JIF coverage includes a $500,000 deductible. The $500,000 in coverage through FEMA will cover the JIF deductible. The city would be liable for a $50,000 deductible on the FEMA policy.

Mahaney expects to have both the FEMA policy and the $5 million policy in place by the end of the year. The JIF coverage has been in place since April, but when residents began asking about coverage after Sandy officials were not initially aware of it.

In other news, the city has received $1,458,000 from the Casino Reinvestment and Development Authority for the convention hall project. The CRDA pledged the money several years ago and it will reduce the amount of permanent bonding the city plans to do next year on the facility. Local taxpayers authorized up to $10.5 million borrowing.

Wichterman credited local hotel owner Curtis Bashaw for securing the CRDA money several years ago when he headed the agency.

“We have Curtis Bashaw to thank for that,” Wichterman said.

Contact Richard Degener:



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