Chairman feels 'duped' by the LGC

Last modified: 9/15/2012 12:00:00 AM
As Hopkinton tries to replace a highway garage that burned down in June, its insurer, the Local Government Center, is now claiming to have overvalued the building by $330,000, according to selectmen.

Chairman Jim O'Brien said he feels 'duped,' and stressed that the newly proposed value of $670,000 on a building that was appraised at more than $1 million won't cut it.

'We've played by the rules. We've used their appraised value. We've been paying premiums based on that,' O'Brien said. 'And it seems once we suffer a total loss of the building we've been told, 'The building wasn't valued as high as we told you it was.' '

Wendy Parker, a deputy director with the LGC, acknowledged the discrepancy yesterday and said her office is trying to distinguish if some features in the initial appraisal were misreported. She said the value could also be lower now due to changes in construction and material costs since the garage was last appraised in May 2010.

'We have offered to replace the building in Hopkinton building-for-building, so with all the same features,' Parker said. 'We have made that presentation to the town, and we are waiting for the town to respond back whether they're going to accept that.'

O'Brien, though, said that lacking a logical explanation for the drop in value, he hadn't considered the LGC's presentation to be a formal offer. Selectman George Langwasser said yesterday he doesn't think $670,000 would be enough to do an equal replacement, and that even if it was sufficient, the former garage wasn't up to code and couldn't legally be duplicated.

He and O'Brien stressed that the town is not looking to make money off the claim, just to replace the building with one that is safe and up to code.

Langwasser said he was in 'disbelief' when the LGC proposed the reduced value.

'You just say, 'Wait a minute what's going on here?' Are they playing a finesse game and saying, 'Well, we'll talk this amount, and if the town will accept that, we'll save an awful lot of money.' '

The selectmen have hired an independent adjuster to appraise the building, which was deemed a total loss in the June 27 fire and has been demolished. The adjuster will also represent the town in negotiations with the LGC. O'Brien declined to say how much that will cost taxpayers.

O'Brien called the talks 'adversarial' and said it's been disappointing because the LGC is a nonprofit entity meant to assist member towns through difficult situations.

Because the insurance claim has stalled, officials are starting preparations for a special town meeting where voters could be asked to approve a bond for a new building. State law requires a public hearing before that can take place, meaning the meeting could be held Nov. 10 at the earliest.

Constructing the garage would take about six months, according to Langwasser, who said getting a new structure up by winter now seems impossible. He said having a loan, though, would keep the LGC from using the town's tight timeline as 'leverage' and would take pressure off the selectmen to accept a low offer.

'We believe that we stand up for what we originally thought and accepted, and that's where we're going to end up,' Langwasser said.

Officials say the special meeting could be canceled if a settlement is reached with the LGC first.

Despite having no funding, the town has continued to move forward with construction plans, putting the project out to bid and recently hiring Jewett Construction of Raymond and PortOne Architects of Portsmouth. Town Administrator Neal Cass said final prices for the project will be negotiated at a later date.

A state highway garage in Warner is being used by the town for maintenance, but officials say the space is too far away to house its entire fleet. That means the town's vehicles - many of which were replaced or repaired after the fire, using insurance payments that came quickly from the LGC - will probably be parked out in the snow.

'It won't be the end of the world, okay. But it won't be the best either,' Langwasser said. 'But that's what we're dealing with right now and trying to figure out.'

The LGC insures 34 buildings for the town, and O'Brien said he wouldn't be surprised if finding a new insurance company was discussed in the upcoming budget season.

The LGC has recently been reprimanded by the state for how it handles its insurance risk pools. Last month, the nonprofit was ordered to refund $50 million to towns and school boards across the state after the Bureau of Securities Regulation accused it of failing to return surplus funds to those for whom it supplies health and property insurance. It is appealing that decision.

(Tricia L. Nadolny can be reached at 369-3306 or tnadolny@cmonitor.com or on Twitter at @tricia_nadolny.)




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