Following a state Supreme Court decision this week exempting homeowners policies from financial relief for crumbling foundations, the Crumbling Foundation Solutions Indemnity Co. remains the primary source of monetary assistance to fix residential properties.
But the captive insurance group’s superintendent warned legislators Wednesday the crumbling concrete crisis is affecting several non-residential structures, including bridges, and his organization is not set up to fund these repair projects.
Michael Maglaras, who heads the captive, spoke before a joint legislative committee Wednesday, saying municipal officials have told him they know of schools, libraries, and bridges that contain the same defective concrete that’s causing residential foundations to deteriorate.
At least two dozen non-residential structures are affected, he said.
Birch Grove Primary School in Tolland is being torn down and a new school built thanks to crumbling concrete and the bridge on Jones Crossing Road in Coventry is suspected to contain the mineral that’s causing concrete to deteriorate.
“You have a major infrastructure problem on your hands,” he told lawmakers.
Maglaras also warned of the potential for affected homes to be found well outside the area previously assumed, saying that concrete from the quarry at the center of the issue could have been transported and mixed far outside its immediate radius.
“We have specific evidence that indicates the transportation of aggregate mixed dry on the site,” he said.
The captive has been a resounding success since its inception, putting 55 families back in their homes, with 90 expected by Christmas, and 225 by this time next year, Maglaras said.
Since January, he said, 64 new construction jobs have been added to the affected region in the state, as well as increased sales of construction equipment.
Municipalities also are seeing their grand lists creep back up as homes are fixed and their property values are revalued and properly represented through tax collections.
“You have sparked, through this legislative effort, a rebirth of the economy in the northeast corner” of the state, Maglaras said.
Through competition, the average cost of replacing a foundation has decreased from more than $170,000 to about $143,000, he said.
As a result of the Supreme Court ruling that was issued Tuesday, Maglaras said he expects more than 70 claimants with pending litigation likely will move to active claims.
“I knew at some point there would be a day of reckoning,” he said. “I suspect we’re going to be putting a lot of people in line based on the news that we’ve heard in the last day or two.”
Legislators praised Maglaras and the captive’s volunteer board of directors for the success the company has found.
Sen. M. Saud Anwar, D-South Windsor, said people have been given “a new life.”
“I don’t think in all my government years I’ve ever seen something work this fast, and quite frankly, efficient,” Sen. Daniel A. Champagne, R-Vernon, said.
“Together, we have done unbelievable things in two years to get to this point,” captive President Steven R. Werbner, Tolland’s retired town manager, said.
Rep. Patricia Wilson Pheanious, D-Ashford, said people in her district “have had their lives saved.”
Maglaras assured legislators that the concrete being removed from homes is not being reused, explaining that it’s not only defective material, but also wouldn’t be cost-effective to sort and grind the material.
However, the “greatest mystery,” he said, is why the moratorium preventing the affected quarry from supplying aggregate for concrete applies only to residential construction in Connecticut.
“Putting it on a rocket ship and sending it to Mars is the only appropriate use of that material,” Maglaras said, adding that the state could face a legal liability if the aggregate is being used out of state.
The owner of the quarry has said that his company is out of the concrete business.
Werbner, who recently learned his own home is affected after an inspection when he was trying to sell his house, lamented that the state didn’t stop the sale of the tainted aggregate sooner, saying state taxpayers could have saved millions of dollars if it had.
Despite the captive’s success, Maglaras is urging lawmakers to extend the company’s expiration date past June 30, 2022, particularly considering that a portion of a $12 annual surcharge on homeowners insurance policies will be collected for years after that point.
The uncertainty of exactly how much will come from the surcharge and when the captive will receive its next $20 million allocation of state bonding has led to the suspension of new applications.
Last week, however, the company removed the bank- and investor-owned provision regarding condominiums in its policy, leading to 602 units from seven condo associations being allowed to file claims.
The first condominiums are expected to be fixed in the spring, Maglaras said.
Maglaras is hopeful that the data collected through the captive, combined with some Massachusetts properties also being affected, will lead to financial assistance from the federal government.