Funding for crumbling foundations suspended for now
After helping more than 230 families replace the crumbling foundations of their homes, the captive insurance company that manages the Homeowners Assistance Fund is strapped for cash and has “turned off the tap” until next summer.
The Connecticut Foundation Solutions Indemnity Company has suspended the new application process for homeowners seeking financial assistance to replace their failing foundations. This is the fourth time that applications have been suspended due to funding shortfalls since the inception of the program in January 2019.
The program is funded by a combination of a $ 12 healthy homes supplement on homeowners’ insurance policies and a $ 100 million state bond. To date, the company has received $ 80 million from bond funds and $ 10.6 million from annual surcharges.
CFSIC Superintendent Michael Maglaras said the company used the money by pledging to secure loans for 548 repair projects that have already successfully helped 233 families replace their foundations. At the moment, the money is exhausted, he said.
“I can’t spend more money than I have. So we stopped the process again. When will I open it? I will be opening it again next June when we have the next money transfer from Healthy Homes. We’re hoping it will be an additional $ 10.6 million and when in July we get the last $ 20 million of that $ 100 million bond financing, we’ll open our doors again, ”said Maglaras in a telephone interview Monday.
After a previous suspension, the company resumed receiving requests at the end of June. Maglaras said it took about nine weeks to make deals to participate in enough crumbling foundation projects to use up the available funds.
During that time, the company lowered a waiting list that dated back to September of last year. They got as far as the people who signed up in February. This is where they will resume next year when more funding becomes available.
“We’ve spent every $ 10.6 million we can spend, leaving enough to keep the business going so that I don’t have to fire everyone,” he said. “We are spending this money down. This means that dozens and dozens of owners have equity agreements. Their entrepreneurs have deposits. Construction can begin now.
Lawmakers made a small but important change to the agenda in a special legislative session earlier this month. The new law expands access to the program for condominium associations, which were previously capped at $ 75,000. Now they are allowed to borrow $ 75,000 per building. Maglaras said CFSIC has signed participation agreements with six condominium associations. The agreements cover repairs to 91 condo units, he said.
“It made a real difference for the condos. This allows our money to go further and it allows condos to obtain loans at low interest rates by building rather than by association, ”he declared.
Although access to the program has widened, there are no immediate plans to expand state funding. Maglaras said the annual surcharge, which this year provided $ 10.6 million, is expected to continue for the next 10 years.
Maglaras said he has yet to approach Gov. Ned Lamont’s administration to solicit more borrowing for the program with the $ 100 million bond nearly gone, but he intends to do so. He sees the federal government as another potential source of funding.
However, President Donald Trump’s administration has been unwilling to back the program and Maglaras has said he is waiting to see the results of the next presidential election before going any further. Under a different administration, there might be an opportunity to lobby for funding from the Federal Emergency Management Agency, he said.
“It’s a natural disaster,” he said. Over the next 15 years, as many as 6,000 Connecticut foundations may need to be replaced, he said.
“You don’t make pyrrhotite,” the mineral responsible for foundation problems, “in an oven like you bake cookies. Pyrrhotite comes out of the ground. And the loss of equity in your home, the great emotional distress you are going through, the fact that commercial insurance companies will not honor your claims for foundation damage related to pyrrhotite, that makes it a natural disaster. “, did he declare.