October 3, 2008 - as of 7:25pm EST

Message From the Pointe West Property Owners Associations:

A number of you have made calls and sent emails to the condo association and homeowner association board members seeking updates on insurance questions. On behalf of the association boards, I want to state that we understand your concern and your need for information, and the board members have been working diligently on this front. This is a complicated matter, and we have wanted to make sure we had answers before we put things out on this blog, as we did not want to have inaccurate or incomplete information. Also, as you can understand, it has taken time to get insurance adjusters on site to begin their work. There are still items for which we are seeking definitive answers in terms of coverage, but we did want to share with you what we have done and learned to date.

Here is where things stand as of today:

1. Hiring of Public Adjuster. Probably the most important and helpful news is that the boards of the Baywater and Villas Condominium Association have retained the services of a public adjuster, International Risk Control (IRC), to assist us in preparing and defending our insurance claim. Barry McGonigal of IRC will be our assigned public adjuster; he and IRC have extensive experience in hurricane claims on behalf of homeowners and condominium associations. We contacted a number of their former and current homeowner and condominium association clients, and Barry and his team came very highly recommended.

The boards each made this decision because of the complexity of the claims due to layered insurance policies and multiple buildings. We also felt that it was appropriate to hire Barry’s services because based on initial contact with our insurance adjusters, we expect that there may be questions and challenges to our claim for coverage, for both the flood insurance and the windstorm insurance policies.

IRC’s fee is based on a percentage of the overall claim collected, and the condo associations are not required to pay that fee until the insurance claim is paid. IRC provides technical and financial expertise to the associations, including engineering and accounting experts, to assist in preparing our claim and in challenging the insurance company’s findings. If such challenges lead to litigation, their experts are also available as expert witnesses on our behalf. Based on our discussions with other homeowner and condominium associations that have used IRC’s services, they believe that they recovered significantly more by using IRC than they would have on their own. Barry’s company can also provide coordination assistance between homeowner insurance policy coverage and the association insurance coverage (see more on this below).

The Pointe West Homeowners Association board is still assessing whether it makes sense to hire the services of IRC for their insurance claim.

2. Temporary Repairs. The condo associations have retained the services of Advantage Environmental to provide temporary repair to roof and balcony ceiling areas to protect the building against further water intrusion. They are almost completed their work. We have been informed by our windstorm insurance adjuster that this work will be covered by our association insurance.

3. Adjusters. The flood insurance adjuster and the windstorm insurance adjuster for both condominium associations have been on site. The windstorm adjuster is returning later this week with their construction experts to walk every building and every damaged unit to make their assessment of covered damage. Our homeowners association property insurance adjuster has also been on site to review the common areas of the project, and the property and wind insurance carriers for the Beach Club property have also been on site. To date, we have not received any of their initial finding reports.

4. Mold Remediation. Based on our review of individual condominium units, it is apparent that some units have an issue with respect to the presence of mold. Under Texas law, if certain threshold amounts of mold are present in a residential property, that presence is required to be reported to the State of Texas. An assessment of the property by a licensed hygienist is required and that hygienist prepares a mold remediation protocol. This remediation must be undertaken by a licensed mold remediator. Once completed, the unit must be tested and then a certificate can be issued that the mold remediation is successful. Failure to follow this process can result in the inability to sell your property or to get financing.

IRC’s services include providing a licensed hygienist to undertake the initial assessment required by Texas law. The condo association boards have authorized IRC to start the process of preparing an assessment for the common areas and every individual condominium unit in each building. That process will start tomorrow. In addition to preparing the assessment and a remediation protocol for all units that require remediation, AON will also take care of filing the necessary paperwork with the State of Texas.

Once the assessments are completed, there will be a remediation protocol prepared for every condominium unit that requires remediation. We are in the process of contracting with Advantage Environmental, a licensed mold remediation company to undertake that work in all units. We understand that a number of you have already contacted Advantage Environmental to undertake this work on your behalf; if you wish to continue with them individually, that is your option, but we can also roll that work into our overall contract with them.

Because our windstorm policy contains a mold exclusion, it is possible that some of the remediation work will not be covered by the association’s insurance policy. We believe, however, that taking immediate steps to contain and remediate the mold in each building is of common interest to all owners, and so we are taking this step on your behalf.

It is possible that a homeowner surcharge will be required for the payment of the mold remediation and other costs not covered by our insurance policies. We are working to determine what that number may be, but at this point we cannot provide it to you because we do not know yet what amounts the insurance companies will provide us, and what items will be subject to challenge.

5. Condo Association/Individual Unit Coverage. A number of you have also asked about where the condominium association coverage stops in your individual units, and where your homeowners’ insurance coverage begins. We have requested a definitive interpretation of the wind policy coverage from our insurance adjuster, and we hope to have a definitive response

6. Construction Assistance. We have retained the services of Senderro Construction Company to assist us in preparing initial construction cost estimates for the repair work, in preparation for filing our insurance claim. Each association’s windstorm policy contains a per building deductible that is 2% of the replacement cost of the areas of the building covered by the windstorm policy; this number is different than the replacement value provided in the policy itself, so it must be calculated. We have retained Senderro to assist us in preparing this number as well, which we expect to have determined within the next week. Senderro Construction is a company that has a very good reputation and is currently the general contractor at Terramesa’s project at the Waters. They are experienced in vertical condominium construction, and it is our intent to use them to undertake the repairs to the condominium buildings. The cost of the work that they have provided for us to date would be included in the price of their construction contract, which we expect to be covered in large part by our insurance claim. The costs generated by Senderro will be used as a cross check against the costs generated by IRC.

7. Electrical Service. Because the electrical equipment in the first floor areas was submerged in sea water, the equipment will need to be replaced and/or refurbished before power can be restored to the buildings; failure to do so could result in significant risk of fire damage due to shorts or equipment malfunction. At this time all electricity to the property has been shut off until we can complete a thorough evaluation of all electrical systems. Once the evaluation is completed ,we will safely move forward with the required measures to restore electricity to the community.

Thank you for your patience.

Sincerely,


Joe Castillo
President, Baywater Condominium Association, Inc.
President, Villas Condominium Association, Inc.
President, Pointe West Homeowners Association, Inc.