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Who Will Pay to Fix Northeastern Connecticut’s Crumbling Basements?

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Concrete

The cracked foundation of a home in Stafford. 

Tim Heim is angry. Most would say he, and an untold number of other homeowners in northeastern Connecticut, has a right to be. He is stuck with a crumbling basement with no relief for his Willington home that has effectively been declared worthless. The scope of the problem in the concrete foundations has grown and grown over the years, and so has Heim’s frustrations with inaction on the part of state and federal governments. The problem extends well beyond the concerns of individual homeowners, with potentially disastrous effects for the real estate market, municipal grand lists and thus property taxes, and the emotional wellbeing of affected communities.

Pyrrhotite is a naturally occurring mineral that, when it interacts with oxygen over a number of years, expands and causes cracks in the concrete it is mixed into. Once the large, spiderweb-like cracks that are the hallmark of a pyrrhotite-affected basement appear, there is only one solution: raise the home on stilts and pour an entirely new concrete foundation. The process costs about $200,000, and so far insurance companies have said they won’t pay up, as most policies only cover against “sudden collapse,” rather than the slow, agonizing collapse associated with pyrrhotite. Already, 400 homeowners have registered on the state Department of Consumer Protection’s website. Estimates for the number of homes affected are as high as 30,000, creating a problem with a price tag that goes well into the billions. The company responsible for the crumbling concrete has attributed the cracking to faulty installation.

So where do homeowners stand? Who is going to pay for these homes? Here’s a rundown of the various funding options that have been proposed.

FEMA

The Federal Emergency Management Agency has twice said it will not involve itself in the problems of northeastern Connecticut homeowners, first in April, and then again in November. In its latest letter, dated Nov. 7, FEMA Administrator Craig Fugate writes that, though the mineral and chemical reactions in the mixture of pyrrhotite, oxygen and water is a natural phenomenon, the “mixing of the concrete and the placing of these foundations are man-made events and do not constitute a natural catastrophe,” as determined by the Stafford Act that established FEMA. Case closed, right? U.S. Rep. Joe Courtney says not quite.

Gov. Dannel P. Malloy’s original Oct. 19 letter to FEMA did not request a full disaster declaration, but rather that FEMA establish a field office to “conduct a preliminary damage assessment for the purpose of determining the extent and impact” of the pyrrhotite problem. It was only the request for a “preliminary damage assessment” that FEMA denied. According to Courtney, this leaves the door open with FEMA. “To the extent that they have not submitted a full request for disaster declaration, with all the supporting data, you know, that avenue is certainly theoretically a possibility,” he says. Asked if Malloy’s office would be submitting a full request for disaster declaration, spokeswoman Meg Green offered the following statement: “Governor Malloy appreciates FEMA’s consideration of Connecticut’s request and their willingness to assist our state in contacting other federal partners who may be able to provide guidance. We take very seriously the distress this has caused impacted homeowners and we will continue to explore options as we work to address this very complex issue.”

State Sen. Tony Guglielmo, R-Stafford, thinks FEMA funding is the best option for affected homeowners. “FEMA would be big, if we could get them to come in,” he says, citing the fact that the federal agency provides housing to those affected by disaster.

Courtney says that until a comprehensive and authoritative testing system is developed, the state can only approach FEMA with speculative data. (Better data, Courtney says, would allow the state to press further on home insurance companies, “who, in my opinion, should not be allowed to get off scot-free here.” To that effect, the Capitol Region Council of Governments has put out a call for “qualified materials-testing laboratories which have expertise in testing concrete foundations for pyrrhotite and structural integrity,” a possible first step toward establishing the scope of the problem.

HUD

There is one federal agency that has said its money could be used for pyrrhotite-affected homeowners: the Department of Housing and Urban Development. The program, however, would come with significant red tape and bureaucratic hurdles. Through HUD’s Community Development Block Grant program, the department makes money available to the state’s Department of Housing, some of which could be diverted toward those impacted by pyrrhotite. In October, the Congressional Research Service (CRS) published a report in response to a request from Courtney’s office, laying out just how HUD money could be distributed through the block grant program.

The money HUD allocates through the block grant program is split up into so-called “entitlement” and “non-entitlement” communities. Entitlement communities receive money automatically from the HUD program without having to compete for it, while non-entitlement communities must apply through the state’s Department of Housing. Of the 21 pyrrhotite communities identified in Courtney’s request to the CRS, only two — Manchester and East Hartford — are entitlement communities. While the numbers change every year based on a number of economic and demographic parameters, Manchester and East Hartford receive about $500,000 apiece from the program each year. The 19 non-entitlement communities identified by Courtney’s office would then have to compete for the remaining chunk of the funding, which in recent years has hovered around $12 million. Officials at the state’s Department of Housing are still in the dark about what the grant’s funding levels will be this upcoming year, as they await a federal budget from Congress.

In order to qualify for the money, municipalities would have to establish a distribution program and then apply to the state’s Department of Housing, either individually or as a group, by April 13.

The state Department of Housing already uses the block grant money for a host of other projects throughout the state. In an emailed statement, agency spokesman Dan Arsenault stressed that other sources of funding will be needed. “While we do not yet know the true scope and cost, this program would not be able to address the crumbling-foundations issue in its totality. The Department of Housing will continue to work with our partners, which includes community stakeholders and government leaders, toward providing relief for homeowners adversely impacted by this matter.”

BONDING

In November, state Sens. Cathy Osten, D-Sprague, and Tim Larson, D-East Hartford, put forward legislation that would allow individual municipalities to issue bonds to establish a loan or grant program for homeowners. The program has drawn criticism in some of the smaller affected towns. Christina Mailhos, Willington’s first selectwoman with a crumbling basement of her own, says bonding is not a viable solution for a town like Willington, which doesn’t often bond out, and rarely in amounts that would be needed to address the pyrrhotite problem in the community. “Ten years ago, we bonded to build our library. That was a $3 million project. And every year when it comes time to plan for paying down that bond payment, it’s a big deal,” she says. “That cost would have to be distributed back onto everyone’s home that isn’t affected.”

Larson maintains that the legislation he and Osten have drafted is meant to provide municipalities with an opportunity, and that the possibility of bonding doesn’t preclude other funding streams. “Under current law, a municipality can’t pass a bond referendum to help out in this situation. So all we’re doing is giving municipalities the option and opportunity to do just that,” Larson says.

Compounding the problem, the grand list in towns like Willington is beginning to take a hit from the reassessment of pyrrhotite-affected homes. This past fiscal year, four homes with pyrrhotite in the foundation were re-assessed as essentially worthless, cutting $12,000 from the town’s property tax revenue. In the next fiscal year, says Mailhos, a further 12 homes will likely come off the grand list, for a loss of $36,000. The problem is worse for many other towns the region.

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Any solution to the crisis will likely be a patchwork of various funding schemes, as no one source is likely to furnish the massive amount of money needed to fix the crisis. For an example of what can happen, look north to the Canadian community of Trois-Rivières, Quebec, which has struggled with the pyrrhotite problem for years.

Alain Gélinas, leader of the Coalition to Help Victims of Pyrrhotite, which in October sent a delegation to Connecticut to offer advice to homeowners, tells a cautionary tale. The Quebec residents received $35 million from the province of Quebec, as well as $30 million staggered across three years from the federal government. According to Gélinas, when money started to flow from the province of Quebec and the Canadian federal government, the cost of raising the homes on stilts and pouring new foundations ballooned as contractors sought to cash in.

His advice? Establish effective cost controls if any money does become available.

Right now, homeowners and local leaders are still trying to communicate just how devastating the problem can be for northeastern Connecticut.

If nothing is done to fix the problem, “this whole part of Connecticut will be destroyed,” says Sen. Guglielmo. “And I think it does take a while for this to sink in for people.”