Business battles aftermath of flood

Flood insurance rare for local companies

FORT COLLINS – BW-3 Pub & Grill reopened three days after the great flood of ’97. The basement offices of the popular Campus West hangout were destroyed along with tens of thousands of dollars worth of stereo and computer equipment, but the kitchen and upstairs bar area were relatively unscathed.
Once the mess was cleaned up and the health department gave the OK, BW-3 was back on its feet.
The day after the flood, Shawn Sanborn, president of the company that operates three BW-3 restaurants in Colorado, along with employees and volunteers, pumped water out of the basement for 11 hours at the rate of 590 gallons a minute. Sanborn estimated damages at almost $50,000.
“The timing’s terrible,” he said. “Our Steamboat location is closed for remodeling, and we were just getting ready to open a fourth location in Aurora. On top of all that, it doesn’t look like any of this will be covered by insurance.”
The insurance agent who dropped by that afternoon had more bad news. Just as Sanborn thought, without flood insurance, no provision in the company’s policy would cover the damage. The basement wasn’t covered, period, and loss of income wouldn’t apply in this case. Still, Sanborn said the damages were manageable, and the company would survive the hit.
Next door, Marshak’s House of Fantasy wasn’t so lucky. Friends helped owner Don Krause haul soggy comic books, T-shirts and pieces of ceiling tile out of the basement shop until all that was left was a dark, damp hole.
A flow of water well above ceiling level caused between $200,000 and $250,000 worth of damage and destroyed Krause’s business. Though Krause said he plans eventually to reopen at the same location, he’ll find a temporary place for now even if that means selling an expected shipment of comic books out on the sidewalk.
Krause said he hopes for some sort of federal relief, but he’s not counting on it. Still, he said, things will work out.
“I’m a Christian,” he said. “I don’t know why this happened, but I believe everything happens for a purpose.”
Across the street, in the Campus West shopping center, Lakota Travel and The Flower Company were drying out after the deluge. Both expect to reopen soon, but the flood dampened spirits as well as carpets.
“We’re out 15 or 20 thousand dollars,´ said Flower Company owner Steve Carlyle. “And we don’t have flood insurance – nobody I know did.”
On a more positive note, Carlyle said his store’s other location in the Lory Student Center, on the Colorado State University campus, stayed dry.
Lakota Travel co-owner Cindy McGrery said she and her partner don’t expect to recoup any of their losses.
“Our insurance agent was kind enough to stop by and chat with us and see how we were doing,” McGrery said. “But basically all we heard was, ‘sorry and good luck.'”
McGrery said the travel agency suffered moderate damage – water-soaked carpet, ruined brochures and records and downed computers, but getting back up to speed will take time and money. “It’s not going to do us any good,” she said.
In the center of town, in the rubble-strewn parking lot of the Prospector Shops at Prospect Road and College Avenue, a lone moving truck received the contents of Vinni’s Pizza. The restaurant, along with several neighboring businesses, was wiped out and will have to relocate.
As Sara Hamm supervised the cleanup of her mother’s shop, hopes that any of the damage would be covered by the property owner’s insurance faded.
“We thought there might be coverage because of the explosion,” Hamm said, referring to the gas-main explosion caused when a train derailed behind the building the night of the flood. “But they’re looking at the structure now, and it doesn’t look like we’ll be covered.”
Hamm said the family’s plan was to relocate the business as quickly as possible before too many customers were lost and rehire their 25 employees who are now without work.
“The employees have been terrific,” Hamm said. “They’ve helped in every way they could, even holding off on filing for unemployment.”
Hamm couldn’t place a dollar estimate on the damage, though she said thousands of dollars were lost in food alone, and they had just completed and furnished an additional dining area.
“It’s so stressful,” she said. “We feel emotionally used up.”
Nearby, the employees at Wild Oats grocery counted their blessings. Located a stone’s throw from Spring Creek and what is now a tangle of destroyed mobile homes, the store suffered no water damage.
“The power was out for 48 hours, so all our perishables were lost, but that was it,´ said General Manager Donna Harmon. “There’s no reason we didn’t get hit – just good karma.”
The store was closed for three days and won’t be fully restocked until later this week, but no one is complaining.
Farther east, Heska Corp., which develops and manufactures veterinary health products, announced that there was only minor damage to its diagnostic laboratories, process improvement laboratories, some offices, its service call center and research facilities, and normal operations continued the day after the flood.
Chief Executive Officer Fred Schwarzer said the fact that Heska’s customer-service call center and diagnostic labs were virtually uninterrupted is a direct result of the extraordinary efforts of company employees, who worked from 1:30 a.m. to complete the necessary cleanup.
Though degrees of damage vary among businesses, most face the same challenge – to recover and rebuild without help from their insurers. Flood insurance is generally sold as a separate policy, and most Fort Collins business owners, as well as most homeowners for that matter, don’t have flood insurance, said David Stansfield, an agent with Farmers Insurance Group.
“Adjusting for flood is your worst nightmare,” he said. “Flood insurance is expensive, and most people don’t have it. Often, those who do, get it because their lenders require it.”
Stansfield said that out of more than 25 cases he looked at the day after the flood, only two had flood insurance.
“We try to work with the customer,” he said. “Sometimes the back-up-of-sewer category can be applied, but it’s tough. Most people are just out of luck.”
John Wilcox, regional underwriting manager at Allstate Insurance Co., said flood insurance, though expensive, is available to everyone through the Federal National Flood Insurance program.
A flood policy for a business located in a flood plain such as the one that exists in Fort Collins may cost as much as $1,000 to $2,000 a year – more if the insurer writes a surplus policy – but Wilcox recommends it.
“I’d get it not so much because of the likelihood of a flood but because a flood causes such devastation,” he said. “Two thousand dollars is not a bad expense to protect your livelihood.”
Because Larimer County has been declared a disaster area by the federal government, business owners without flood insurance now have other options available.
“Business owners need to contact FEMA and start the claims process,´ said Fort Collins city manager John Fischbach. “My understanding is that it’s a user-friendly process, and through the program, businesses may qualify for grants or low-interest SBA loans.”
To apply for federal disaster aid, business owners should call the Federal Emergency Management Agency at (800) 462-9029.