Many ways we'll end up paying for Hurricane Irma

Article Courtesy of Florida Today 

By Christina LaFortune, Dave Berman, Wayne T. Price

and Tim Walters.

Published September 17, 2017


Hurricane Irma is long gone, and the sounds of wind whipping through the trees and waves crashing into shorelines have been replaced by the roar of chain saws and the hammering of nails on roofs.

Something not as loud — but very noticeable — is the tapping sound on calculators, as residents and communities start tallying Irma's costs.

There will be short-term expenses, paying for new screens enclosures and replacing soffit. There will be the cost of cutting down and hauling away tree limbs and vegetation.

And then there will be the longer-term economic impact that likely will hit is subtler ways in the months ahead, ranging from potentially higher utility costs to insurance premium hikes to homeowners' association fee increases.

The hidden costs of the monster storm are many, and will be revealed in the months ahead. Here are but some of the way's Irma's impacts could hit consumers down the line:


Condo, homeowners association fees

Hurricane Irma is going to make condo and homeowners' associations grapple with how to pay for common area damages and also make some tough decisions on any storm reserve funds.

That could add several hundred dollars to what they're currently paying each year.

"In my opinion, the financial impact that this storm has on individual unit owners may significantly change how associations deal with their reserves," said Ryan Poliakoff, a South Florida lawyer specializing in condo issues.

Poliakoff, who also is a FLORIDA TODAY columnist, said that, in Florida, condominiums are statutorily obligated to collect reserves for deferred maintenance and large capital projects — but unit owners are allowed to vote each year to waive these reserves.


"Waiving reserves is extremely common, and it means that, when it is time for large repair projects — for example, a roof replacement — the association must fund the repair with a special assessment or a bank loan, sometimes both," Poliakoff said.

"Financial responsibility for storm damage is a little-considered, but significant, consequence of waiving reserves on an annual basis."

FPL surcharge

After Hurricane Matthew, Florida's Public Service Commission approved — with nary a comment — a $318.5 million request by FPL to cover the costs of restoring power after Hurricane Matthew in September 2016. Residential customers are paying $3.36 month per 1,000 kilowatt-hour for one year.

Irma had a much greater impact, and Florida Public Counsel J.R. Kelly said there's little doubt there will be another surcharge for consumers from utilities like FPL.

"I would believe that Irma is going to be a lot more than Matthew," Kelly said, referring to FPL's storm costs. "It's across the state. I don't care if you're on a municipal utility or a cooperative or an investor-owned utility like FPL. I don't know of anyone that's going to be spared."

Repair costs not covered by insurance

Storm clean up costs are expected to be huge.

Homeowners socked by Hurricane Irma are quickly discovering that they are on the hook for extra payments under their insurance policies' hurricane deductible. The deductible has little-known provisions allowing insurers to shift thousands of dollars of damage costs per home onto consumers.

To limit their exposure to catastrophic losses from natural disasters, insurers in Florida sell homeowners' insurance policies with percentage deductibles for storm damage, instead of the traditional dollar deductibles, which are used for other types of losses, such as fire damage and theft, according to the Insurance Information Institute.

With a policy that has a $500 standard deductible, for example, the policyholder must pay the first $500 of the claim out of pocket.

But percentage deductibles are based on the home's insured value. So if a house is insured for $300,000 and has a 5 percent deductible, the first $15,000 of a claim must be paid out of the policyholder’s pocket. The details of hurricane deductibles are spelled out on the declarations page of homeowners' policies.

Repair costs following Hurricane Irma

If they haven't jumped already, you probably will be paying more for roofs, screen repair and other projects.

Contractors have more than enough work because of Irma damage, not to mention the rebuilding of the Houston area after Hurricane Harvey.

It comes at a time when the construction labor market already was tight in the Sunshine States. Some estimates are that Florida lost 20 percent of its construction workforce following the "Great Recession."

"And they haven't come back," said Conrad J. Lazo, a Tampa-based, Florida Bar board-certified construction attorney.

The end result: The roof estimate you had before Hurricane Irma, may be anywhere from 1 percent to 5 percent more.

Because contractors will have to pay more for labor and materials, "I could see the justification for increasing the price of construction work right now," Lazo said.

"The reality is contractors are passing their costs onto the consumer," he said.

Florida orange juice prices could rise

As agriculture officials survey the damages to Florida's oranges, grapefruit and tangerines crops, consumers could prices rise, along with juices made from them.

What's being looked at is if wind knocked fruit off branches or uprooted trees. Standing water in orchards can take a toll. Harvest season is 30 to 60 days away.

Growers can't pick the fruits now, because they're not mature, said Andrew Meadows, a spokesman for Florida Citrus Mutual, a growers' trade organization with about 3,000 members.

Frozen concentrated orange juice futures are rising in anticipation of Irma. September contracts were up 3.6 percent to $150.95, according to the ICE futures exchange.

Losses in agriculture, the state’s second-largest industry after tourism, are expected to be in the billions of dollars, according to the Florida Farm Bureau.

Stretched social services

The social services community, including food pantries, are likely to be stretched, as more people seek assistance.

“A lot of people are living from paycheck to paycheck,” Brevard County Housing and Human Services Director Ian Golden said. “Those are the people I am most concerned about.”

United Way of Brevard president Rob Rains says many people work for companies that had to close down for days, and some will be closed for much longer, as a result of Hurricane Irma and its aftermath, including a lack of power and water. Some of those companies won't pay their workers for the days the company was closed.

He used the acronym ALICE to describe their situation. It stands for asset-limited, income-constrained employed.

"For many of these people, one setback is enough to really push them into poverty,” Rains said. “There are people who fall through the cracks. A week or a week-plus without a paycheck can be devastating. Right now, we’re just beginning to see the effects, but they will be more pronounced” in the weeks ahead.

Reprioritizing government budgets

With county and local governments now facing added expenses related to the aftermath of Hurricane Irma, there could be a need to reset spending priorities.

Brevard County Manager Frank Abbate said he believes that the county has enough reserves in place draw from, so the county can get by while it awaits reimbursement from the Federal Emergency Management Agency and the state.

"We're fiscally prepared for this," County Commissioner John Tobia said.

FEMA and state reimbursements combined generally cover 75 percent to 90 percent of hurricane-related expenses, depending on the category of expense. But getting reimbursed typically is a time-consuming process.

"I think, for the most part, from a budget perspective, we'll be able to move forward," Abbate said.

He added, though, that it's too early to tell specifically how budgeting and spending priorities might need to be changed because of Irma.

Tobia said one area that may be affected is the county's initiative for road reconstruction and resurfacing. The county had been hoping to use some of its reserves to boost its road program even more than initially proposed in the county budget for the fiscal year that begins Oct. 1. But the amount available for that might not be as much as county officials had hoped for.

After Hurricane Matthew, county commissioners increased the amount it will bill residents of unincorporated Brevard for trash pickup in the coming budget year, as a way to help maintain its emergency reserves related to hurricane debris pickup.