Who will pay the big bill that Sandy left?

Published: Thursday, Nov. 1, 2012 9:42 a.m. CDT

(MCT) — WASHINGTON — Hurricane Sandy’s costs could run into the tens of billions of dollars, leaving state and local governments, federal agencies, utility providers and insurance companies to figure out how to split the bill.

Some responsibilities are clear: The U.S. Army Corps of Engineers sent in a team of experts who cut their teeth pumping water out of New Orleans after Hurricane Katrina to develop a plan to get the water out of New York’s flooded subways.

Utility companies from across the country are helping restore power to the millions of customers still in the dark. Insurance companies will determine how much they can help hundreds of thousands of people whose homes and businesses were damaged or destroyed.

But others responsibilities aren’t clear.

How, for instance, will New York’s Metropolitan Transportation Authority pay for major damage to aging track, stations and equipment in the flooded tunnels? What will happen to homeowners who didn’t have flood insurance? Will the Federal Emergency Management Agency have enough funding to assist Sandy’s victims?

“Infrastructure is something that I think we take for granted sometimes,” said Beth McGinn, a spokeswoman for the American Road and Transportation Builders Association, a trade group that represents highway contractors and other transportation-related companies. “It’s just part of our daily lives. And then when something like this happens, it becomes clear how important it is.”

Post-Hurricane Sandy New York dawned as a strange new world as its occupants and workers learned just how much they depend on the subway, as cars, buses and taxis jammed roads and bridges much more than usual. Many people just walked.

“This is a city that was built on public transportation,” said Joshua Schank, president of the Eno Center for Transportation, a Washington research organization. “When that goes away, the city does not function.”

While limited subway service was to resume Thursday, the city won’t get moving again normally until water is pumped out of the tunnels. To that end, the U.S. Army Corps of Engineers sent 400 people to the region Wednesday at FEMA’s request, including a team to develop a plan to pump water out of several subway and road tunnels.

Ron Fournier, a spokesman for the corps’ Rock Island, Ill., district, said the team was created several years ago to pump water out of New Orleans in the event that a major hurricane flooded the city. When the storm hit, the goal was to remove water from the city in 90 to 120 days, but it was accomplished in 40, he said.

Other challenges appear equally monumental.

New York’s transportation authority faces the potentially enormous cost of replacing damaged or destroyed track, signals and stations in a 108-year-old subway system that serves 5 million riders daily. Even before this week’s calamity, the agency already had projected deficits for three of the next four years.

“These are agencies that were not exactly flush with cash,” said Schank. “They don’t have the money to make these repairs, much less the improvements that need to be made.”

For homeowners and business operators hoping to rebuild, their insurance policies probably offer little salvation. Private insurance covers damage from wind and rain, but generally not flooding.

“Flood damage is typically excluded under standard homeowners’ policies,” said Chris Hackett, a personal insurance policy expert at the Property Casualty Insurers Association.

Homeowners and businesses will have to turn to the National Flood Insurance Program, administered by FEMA, which provides up to $250,000 for a residence and $500,000 for a business, with additional riders for the contents. But for Sandy victims not yet covered, it’s too late for this storm.

The program, like much in Sandy’s wake, is itself under water. It has a $17 billion deficit, but it also has more than $900 million in cash and $3 billion in borrowing authority to cover claims, according to both FEMA and insurers.

“A lot of people have been hurt by Hurricane Sandy who don’t have flood insurance,” said Steve Ellis, vice president of Taxpayers for Common Sense, a government watchdog group.

He predicted that claims will be greater than the available funds, and FEMA will have to ask Congress for more money.

“Sandy will bankrupt it,” Ellis said of the federal flood program.

Meanwhile, more than more than 20 percent of New York customers were still without power Wednesday. The outages were greater in neighboring New Jersey, where more than half were still living by flashlights, generators, camp stoves and other make-do appliances, and Connecticut, where a quarter had no electricity.

Newark Liberty International Airport reopened Wednesday when power was restored. But outages and flooding shut down two major refineries in New Jersey and an oil pipeline that supplies the New York region with much of its gasoline.

California utility Pacific Gas & Electric dispatched 150 employees from central and northern California this week to assist. Consolidated Edison, the power company for most of New York City, will pay for the help.

In addition, the power outage idled the Port of New York and New Jersey, which suffered storm damage. It’s the busiest East Coast port and the nation’s third largest in cargo value. The economy will feel it, said Kurt Nagle, president and chief executive of the American Association of Port Authorities.

“I think it will be noticeable because obviously that port is a major load center for goods moving in and out of the country and in and out of that region,” he said, adding that it was too early to put a financial estimate on the damage or to predict when the port might reopen.

The Port Authority of New York and New Jersey, which also operates bridges and tunnels and owns the World Trade Center site, leases many of its facilities to private terminal operators. Nagle said rebuilding funds will come from individual insurance claims.

The federal government is responsible for maintenance of the navigation channels, and the Coast Guard will assess the channels to see if they’re affected by the storm, Nagle said.

The Federal Highway Administration’s emergency relief program reimburses states 100 percent of the cost for immediate repairs to federally funded highways, bridges and tunnels for the first 180 days. After that, federal reimbursement is set at 90 percent. The full extent of the damage is not yet clear, but U.S. Transportation Secretary Ray LaHood on Tuesday announced $13 million in quick-release emergency relief funds for New York and Rhode Island to begin repairs.

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