The Mexico Beach City Council held a special meeting on Monday to publicly discuss the Parker House situation and unveil to the public cost estimates on the planned city hall.
Since the historic Parker House was purchased by the city in 2011 and caught fire shortly thereafter, the city has been in a battle with the insurance company.
After receiving $660,000 for damages the city went back to claim more monies to cover the foundation of the building, which structural analysts said couldn’t be rebuilt on.
After several months of back and forth, an additional $174,000 was offered to the city to close the claim.
Councilman Gary Woodham, though, suggested consulting with an attorney to see if additional monies were available and met with Dion Moniz of Panama City.
Though a chunk of the $660,000 was used for upkeep and rent on the bank building, currently being utilized as city hall, more than $400,000 remained to pay for a new 3,200 square foot building to be constructed elsewhere on the Parker House property.
Citizens were unsure why this wasn’t enough, but the cost of the estimates had yet to be revealed publicly.
At Monday’s meeting, those numbers came out.
Cathey Construction of Mexico Beach estimated a new building constructed would total more than $1.1 million.
Monday’s meeting brought together the council with Brian Cathey, owner of Cathey Construction and Moniz to look over the insurance policy and identify additional money that might be brought into the pot.
“We need to decide what to do about the offer,” said Councilman and Mayor Pro Tempore Jack Mullen. “Do we take the offer to go to appraisal because we think there’s more money that the insurance company isn’t compensating us?”
Meanwhile, the city has received a letter from the insurance company to inquire why it had not responded to the settlement offer and asked city officials to accept or explain why they wouldn’t be accepting.
If the city decided to negotiate they could go to an appraisal stage where two court-appointed appraisers would determine a value on the property to be compared with the appraisal of the insurance company. The two appraisals that were the closest would be the final settlement offer.
Moniz said that after looking over the policy, the settlement should have totaled at least $1.5 million which would have been covered under replacement costs.
The attorney said that the insurance company valued the Parker House at $750,000 but he couldn’t figure out how they had come to the conclusion. He said that he feared that they viewed the property as a residential structure rather than a commercial one.
“They’re not comparing apples to apples,” said Moniz.
He viewed the settlement offers as a means to rebuild the Parker House as a residential structure, but not a commercial structure that would require upgrades to be brought up to code.
Because of the unanswered questions he had, Moniz said not to go to litigation just yet and rather approach the insurance company and attempt to have additional negotiations and clarify the policy.
Moniz offered to be a behind the scenes consultant throughout the rest of the process.
Moniz said there was a possibility that the money paid in rent on the current city hall could be covered by the claim along with design costs incurred when the insurance company changed its mind on rebuilding the Parker House in the existing location.
“I don’t have a crystal ball to tell me what’s going to happen,” said Moniz. “It’s a roll of the dice.
“The city is leaving too much money on the table to accept the current offer.”
To figure out if the insurance company’s assessment was based on rebuilding a two-story Parker House, the council asked if Brian Cathey had completed an estimate for that scenario, which he said he had not.
“A two-story commercial building of the Parker House would be more expensive than the one-story city hall we have planned,” said Cathey. “There’s never been a commercial estimate provided by the insurance company.”
“What we lost was not a house, it was a city hall.”
Cathey said that his contract with the city does not currently have a final number attached to it and there’s nothing to prevent the city from building a smaller structure. The city could also rebid the project if Cathey Construction wouldn’t do the work for the amount paid by the insurance company.
“We have not been instructed to build anything,” said Cathey. “We cannot get a definitive decision on anything.
“We prepared a cost estimate of the building that was designed.”
Cathey said that he has yet to receive the entire scope of work on the project and city administrator Chris Hubbard said that when hired under an RFQ, a final dollar amount is not required to be given.
Once Cathey Construction is told what to build, Brian Cathey will provide a final hard number to the city. Cathey said that his estimate is simply a negotiation tool to reach a settlement with the insurance company.
With the statute of limitations for litigation coming up in July, Moniz recommended requesting an extension as a way of reopening communication with the insurance company.
One citizen voiced concern at spending $1.1 million on a city hall for a town the size of Mexico Beach. Mullen told the crowd that when they showed off the designs of city hall, the citizens seemed happy with it.
Another citizen asked if the city could use the insurance money to build something smaller and have money left over, but Moniz said that at this point, that could be considered insurance fraud.
Woodham passed a motion to keep Moniz as a consultant, but not hire him as an attorney. The council will attempt to negotiate for 90 days with the insurance company before going into the appraisal stage. Woodham suggested taking Moniz along to any future meetings with the insurers.
“Once you’ve lawyered up, they’ll lawyer up,” said Moniz.
The attorney cited this as a good thing and said that two attorneys speaking may make negotiations go faster.
“Let’s move forward in a positive manner,” said Woodham.