CAPE MAY — Flood-insurance costs may be so high for the new $10.5 million Convention Hall because the building is too low.
“Insurance is four times more expensive than it should be,” said Trenton Avenue resident Charles Hendricks, pointing to FEMA insurance charts that show lower rates for commercial buildings constructed above flood elevation.
Hendricks first raised alarms about the hall in November, when he found out there was no flood insurance on the building when Hurricane Sandy hit in October.
Mayor Ed Mahaney said he learned there was no flood insurance the day before Sandy made landfall. The city constructed an emergency sand dune in front of the hall and the building was not harmed by the storm, but the water did remove part of the dune. The city then quickly moved to procure about $8 million in flood insurance at a cost of $101,000 annually.
But now some residents — including Hendricks, James Testa, Kevin Soler and former Mayor Jerry Gaffney — are saying the costs show the building is not high enough. Flood-insurance rates are higher for construction below the Base Flood Elevation, or BFE.
The city requires construction at 10.5 feet above BFE, but the Federal Emergency Management Agency’s new flood maps established a 14-foot BFE for this high-hazard area on the beachfront called a V-zone. Testa said FEMA also recommends an additional 3 feet, called “freeboard,” for waves to pass.
Testa said the city flood insurance policy with FEMA, one of three the city has procured, costs $51,155 for $600,000 in coverage. That includes $100,000 for contents and $500,000 for the building with a $50,000 deductible on both. Testa said FEMA charts show a policy for a commercial building at the proper height would cost about $14,000 with a $2,000 deductible, or $8,000 a year with the current deductibles.
“It’s shocking. It’s too low for a V-zone,” Testa said.
Testa said he has not done specific research on the other two flood-insurance policies, but assumes they also are higher than they need be.
The city has a secondary policy with the Atlantic County Joint Insurance Fund, which is a group of towns in Cape May and Atlantic counties that banded together to insure themselves, costing about $20,000 and providing $2.2 million in coverage.
A third policy is with a private insurer costing $31,600 and providing $5 million in coverage. The third policy is cheaper because it would be tapped last and only if damages were substantial.
Hendricks submitted public records requests several months ago requesting a copy of the flood elevation certificate that he said was missing from construction documents for the hall. He even referred to the matter as “floodgate” at last week’s City Council meeting and scolded council for what he called a lack of transparency. The Press of Atlantic City asked for the certificate and got it the same day.
Hendricks said he finally received the certificate this week and said it shows one section of the building, a room holding mechanical equipment, is at only 8.51 feet above BFE. The certificate shows the first floor of the main structure is at 15.21 feet above the BFE.
Gaffney, who retired from the insurance business, said the “15.21 feet is sufficient” but the mechanical room is the problem.
“That’s why the premiums are so high,” Gaffney said. “They should have known that when they designed the building. The lowest elevation is what they charge on. They should abandon that room and move the equipment up. Who fouled up? Who did not know about base flood elevation?”
Hendricks questions whether the Pennsylvania-based architect for the project, Kimmel-Bogrette Architecture, or the Bridgeton-based engineer, Fralinger Engineering, are liable. City Solicitor Tony Monzo noted there were three other engineering firms working on the project but he said the responsibility lies with the architects and engineers. He said the city is waiting for some information from FEMA and the state Department of Environmental Protection before deciding what to do.
“We’re not ignoring it. We’ve been meeting constantly to address these issues. If the city takes any action, you’ll know about it,” Monzo told Hendricks.
“The blame does not lie with the city. All of the firms involved participated in the design and it was certified to the city that all specifications and plans were in compliance with the laws,” Monzo added.
A message was left with Kimmel-Bogrette on Tuesday but the phone call was not returned. A spokesman for Fralinger Engineering said the firm had no comment.
Mahaney is urging the public to be patient.
“Sometimes patience works against us, but we are being thorough and deliberate,” Mahaney said.
The mayor noted the review has to consider the role of FEMA’s new flood maps and a new federal law, the Biggert-Waters Flood Insurance Reform Act, affecting flood-insurance rates. However, he noted the hall, which opened last Memorial Day, was constructed before the new regulations.
“We are reviewing all the plans as well as elevations and as-builts so we have documentation on our situation for the new FEMA requirements and National Flood Insurance Program,” Mahaney said.
Hendricks said there could be other problems. He noted the category of lowest horizontal structure, which could be a beam below the first floor BFE of 15.2, was not filled in on the flood certificate. If that beam is below 14 feet then moving the mechanical room may not matter and the city may never get lower insurance rates.
Testa, an attorney, said it is time for the city to go after the firms that made the mistake.
“This is why professionals carry liability insurance. Assess the culpability, see if it’s actionable and negotiate with the liability carriers,” Testa said.
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