Up to $1B needed to fix house foundations

The superintendent of a new insurance company charged with distributing millions of dollars to Connecticut homeowners with crumbling foundations is warning he doesn’t have nearly enough money to address the problem.

Michael Marglaras said he hopes to secure more funding and assistance to help the thousands of affected homeowners from various sources, including the insurance industry, banks, the U.S. Department of Housing and Urban Development, the Federal Emergency Management Agency and the state of Connecticut.

“By any calculation, I don’t care who’s calculation it is, there’s not enough money,” Marglaras, a 42-veteran of the insurance industry, said in an interview.

Besides Connecticut, the crumbling foundation problem also has been identified in some homes in western Massachusetts.

Marglaras is heading the new Connecticut Foundation Solutions Indemnity Co., created by state lawmakers, which will oversee the distribution of $100 million in state 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.

The new indemnity company is expected to be up and running Nov. 15 at the earliest, or possibly around Dec. 1, to begin cutting checks. But Marglaras estimates the roughly $133.5 million committed over five years will cover the cost of replacing foundations for only 650 to 700 homes, considering the average $185,000 cost per home, saying much more is needed.

“I have at least a $1 billion problem,” he said.

Marglaras estimates 5,000 to 9,000 homes will have to be fixed over the next few years. That includes homes with the most severe cracking and deterioration, as well as those just beginning to show signs of the problem, which has been linked to the presence of pyrrhotite, an iron sulfide that has reacted naturally with oxygen and water over the decades.

Described as a slow-moving disaster, pyrrhotite causes the concrete to crack and crumble, making some homes unsellable and unlivable. Some state and local officials have estimated more than 35,000 homes in the northern, eastern and central parts of Connecticut could be affected because the foundations were built with concrete that originated from the same quarry in Willington.