Convention Hall Operating Without Flood Insurance

CAPE MAY- Cape May’s new $10.5 million Convention Hall has no flood insurance.
At a Nov. 7 City Council meeting, resident Charles Hendricks told City Manager Bruce MacLeod he had heard a rumor that the city was denied flood insurance for the new Convention Hall because it did not meet proper base elevation levels. He said he wrote to MacLeod and did not receive an answer and had subsequently filed an Open Public Records Act (OPRA) request.
MacLeod said the city did not have flood insurance on Convention Hall but made application for flood insurance which would provide $500,000 of maximum coverage for the hall.
“If you have a property that’s valued greater than that then you would need to procure an excess coverage,” he said.
MacLeod said the city has a risk management consultant, Marsh and McLennan/National Insurance Associates, to manage all its insurance needs. He said when the city was getting near the end phase of construction of Convention Hall in May, the risk management consultant worked with the Atlantic County Municipal Joint Insurance Fund (JIF) to cover the hall with liability and fire insurance. He said the JIF did not cover floods.
In July, the risk management consultant reached out to the city to initiate a flood insurance application which required a certificate of elevation, said MacLeod.
“We then went for price quotes to the civil engineer that had been engaged on the Convention Hall project, Fralinger Engineers, and received that quote, it caused a purchase order to be issued on Aug. 2,” he said.
The city received a certification of elevation on Aug. 17. MacLeod said the certificate was packaged with the application and sent to FEMA which would review it and make a determination. He said FEMA had questions about the application on two occasions.
MacLeod said that continued through the month of September.
“We have continually stayed in touch with our risk management person to keep inquiring about progress being made on our application,” he said. “Unfortunately, as the most recent storm event came along, we still did not have an answer from FEMA on that.”
“We have not been denied coverage at this particular point, however, we have not been approved for coverage either,” MacLeod continued.
He said once coverage was obtained, there would be a 30-day waiting period before it would take effect. MacLeod said the city has been “constantly pursuing” flood insurance since mid-July.
“I guess in a sense, we’re self-insured unfortunately if something were to occur,” he said.
Hendricks asked if pilings for Convention Hall were “set too low.”
MacLeod said if there was issue with pilings, he did not know if that would cause the city to be denied flood insurance but it could have an impact on the insurance premium. He said the city’s application to FEMA “ended up on a desk somewhere in Montana.”
At one point, FEMA told the city they did not have an application for Convention Hall, said MacLeod.
He said he believed the city would have a premium analysis and submission for consideration.
Hendricks asked if it would have been wise to inform taxpayers that Convention Hall had no flood insurance before or after Hurricane Sandy.
“I think this is unfortunate for you Mr. Mayor that people genuinely believe this was being covered up until after the election,” he said. “That is perhaps wrong but this is what happens when things like this occur.”
Mayor Edward J. Mahaney Jr. said he did not know there was no flood insurance on Convention Hall “until the storm hit.”
Resident Kevin Soler, who said he had formerly owned an insurance agency, asked what was the elevation of Convention Hall in the certificate. MacLeod said the primary structure was at 15 feet, 2 inches but a sump pump facility was at an elevation of 8.5 feet.
Soler said there was no reason from the time the building was completed until now that coverage should not have been in force.
“It’s absurd to have this type of risk on the community,” he said.
Resident Patricia Hendricks asked if Convention Hall had a certificate of occupancy. MacLeod said Convention Hall had a temporary certificate of occupancy.
“Shame on you, shame on you for not knowing or you or you or you,” she said looking at the mayor and council. “Sometimes you have to ask questions, sometimes you get questions where you don’t like the answers.”