The superintendent of the new entity that’s expected next month to begin distributing millions of dollars to Connecticut homeowners with crumbling foundations warned state lawmakers Friday he’s within weeks of shutting down if state bond funds aren’t released soon.
Michael Maglaras said the Connecticut Foundation Solutions Indemnity Company has been awaiting more than $19 million for two-and-a-half months. He said the money has been delayed due to “onerous” and “expensive” negotiations with the state’s Department of Housing regarding grant documents that may ultimately have been unnecessary.
“We are within about two weeks of shutting down if we don’t get that money,” he said. The indemnity company plans to be operational Dec. 15. “I do not want to be inside the state of Connecticut on the day that I put up on the website that we’re out of business. So, let’s fix it and make it work.”
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Maglaras said he has become more hopeful after learning last week the matter was transferred to the State Treasurer’s Office. However, if the money isn’t released in time for the indemnity company’s Nov. 28 board meeting, a shut-down notice will likely be posted.
Maglaras stressed that future blocks of funding also need to be transferred to the indemnity company, created to oversee the distribution of $100 million in bonding — $20 million a year for the next five years— as well as the estimated $8.5 million to $9 million in annual proceeds from a new $12 annual surcharge on Connecticut homeowners’ insurance policies. That surcharge is supposed to last 10 years.
Maglaras recently told The Associated Press he will need much more money, at least $1 billion. He estimates the funds committed so far will only cover the cost of replacing foundations for 650 to 700 homes, considering the average $185,000 cost per home. He estimates 5,000 to 9,000 homes with cracked and deteriorating foundations will have to be fixed over the next few years. The problem has been linked to the presence of pyrrhotite, an iron sulfide that has reacted naturally with oxygen and water over the decades.
Some state and local officials have estimated more than 35,000 homes in the northern, eastern and central parts of Connecticut could be affected. The problem also has been identified in some homes in western Massachusetts
Lt. Gov. Nancy Wyman, who submitted a letter to the lawmakers, said some progress has been made toward encouraging banks and credit unions to offer low-cost financial products to help affected homeowners fill the gap between an approved claim and the entire cost of remediation. But she warned “much work remains to be done” to make gap financing available to homeowners whose mortgages have been sold to multiple investors in the secondary market.
Bruce Adams, Wyman’s general counsel, said the issue has gotten more attention recently from federal agencies and could eventually lead to federal financial assistance.