HARTFORD, CT — State officials say the first summer of repairs to homes with crumbling foundations has been a huge success, but the captive insurer set up to manage the issue will suspend the application process on Friday as its total liability approaches its maximum $121.6 million in funding.
The Connecticut Foundation Solutions Indemnity Company has received $40 million so far in two installments from the state Bond Commission, and quickly paid out all of that money to install new foundations for the most severe cases of failing foundations in the state.
Gov. Ned Lamont said Tuesday that he will have the next $20 million installment on the Sept. 27 State Bond Commission agenda. The CFSIC also receives funding from a $12 annual surcharge on home insurance policies.
With almost all of the potential funding already committed to approved claims, CFSIC Superintendent Michael Maglaras will leave the agency in October as the process moves into a new management phase.
Maglaras said recently that he will leave the organization after having shepherded more than 1,000 applications for repairs through the approval process. As soon as funding is supplied to the captive insurer, it pays out approved claims to begin the 8-week foundation replacement process that can cost $200,000 or more for each home.
“Homes are up off the ground in communities all over the northeast corner of our state. As of [Aug. 16], we have identified $118 million of construction that is needed to fix foundations for single-family dwellings, condos, and [multi-family dwellings],” Maglaras said in a statement. “More than 22 homeowners are back in their homes. Another 30 will be back in their homes by the end of September. This time next year, that number will be more than 150.”
Tolland Town Manager Steven Werbner, the president of the CFSIC board, said a request for proposals went out Tuesday seeking an experienced captive insurer to take over after Maglaras leaves.
“It’s really been since January a fantastic journey under our superintendent Mike Maglaras to get to the point where we are now,” Werbner said Wednesday. “Some 97 homes are under some kind of remediation, and more than 20 families are back in their homes. We have as of this week 1,088 claims for remediation, and all this has taken place in less than a year.”
The CFSIC said as soon as the next $20 million is received, 82 claims in the pipeline since June will be paid out so their repairs can begin.
“Funding continues to be a major issue, and the timing that the funding gets to us has been a major issue,” Werbner said. “We know the program works, but the longer-range future depends on the funding now that we have all the systems in place to make the repairs.”
State estimates say the number of homes in Connecticut whose foundations include the mineral pyrrhotite could be up to 35,000, largely clustered in the northeastern portion of the state. The total funding it would take to fix all of them is unknown, but the total funding approved so far of up to $125 million is expected to be just a fraction of what will eventually be needed.
“Due to our success and the need within the region, we have at this point received applications that exhaust our anticipated funding over the next five years,” Werbner said.
As total liability for replacing foundations added up very quickly, the CFSIC is set to receive its next deposit – which was supposed to be at one $20 million installment each year until 2022 – ahead of schedule.
“The bigger problem is that $20 million a year is just a drop in the bucket in terms of what we really have to do,” Lamont said. “That’s why I’m working with insurance companies, I’m working with the banks, and I’m working with the technology people starting a new fund to see what other solutions we can think of.”
He said additional funding sources will have to be identified outside of the state legislature, so paying for the repairs “is not all going to be on the backs of taxpayers.” Lamont said Connecticut’s congressional delegation has been seeking federal aid from FEMA to pay for some repairs.