Veiner Centre’s insurance process explained by city staff

Council recently voted in favour of moving the arts groups from the Cultural Centre into the Veiner Centre before an agreement is reached for compensation from Medicine Hat College.

There was the potential loss of $300,000 on the insurance flood claim for the Veiner Centre that has been unusable since the flood in 2013.

Last week both Coun. Robert Dumanowski and Coun. Brian Varga spoke of concerns taxpayers would have if the lack of a decision by council meant the loss of the $300,000.

At city council on June 15, CAO Merete Heggelund said the city had already taken a cash payout in April on the Veiner Centre’s insurance policy.

“I believe that internally we would have been seeking a decision by April to be able to finalize the claim before the original deadline of June 20, 2015,” said Heggelund. “This is likely where the reference to an April deadline came from.”

This date was referred to when the city asked for a decision from council (October 2014) on whether the Veiner Centre would be used as a seniors’ centre again or not.

“There is a two-year deadline for finalizing the June 24, 2013 Flood Property Damage claim which was due to expire on June 20, 2015. However, as there were still a few outstanding issues, we were able to get our insurers to agree to an extension to August 21, 2015,” said Heggelund.

It generally takes about two to three months to finalize a Property Proof of Loss on a claim such as the Veiner Centre one, said Heggelund.

The cash value on the Veiner Centre to rebuild at another site is $1,118,683. The cost to repair the damage and restore it to its preflood condition was estimated by MKK Construction Consultants to be $1,462,260. The difference between the two figures is $343,577.

Heggelund says when the city decided to repair the Veiner Centre, they began working with the insurance adjuster to request the full repair cost of $1,462,260.90 even though it was unlikely that repairs would begin before the 2013 Flood Claim needed to be finalized.

“In order to recommend payment of the repair estimate ($1.4M), our insurance adjuster requested substantial confirmation that the funds would be incurred for the Veiner Centre. This has been done with the documentation from the recent council decision to restore for use by the cultural groups,” said Heggelund.

Initially the city had the right to 20,000 square feet at the Cultural Centre without having to pay costs. The city contributed $2.7 million toward construction of the building. MHC however, owns the land and building.

Amendments to the agreement have resulted in space being reduced to less than 9,000 square feet currently and the city paying the college $70,000 a year.

If the city is not able to reach a satisfactory agreement with MHC to “sell” the space currently occupied by arts groups it would still have to pay $70,000 a year to cover operating costs.