Judge: Some Katrina Insurance Exclusions Unenforceable

GULFPORT, Mississippi (AP) -- Provisions in a State Farm Fire & Casualty Co. policy that exclude certain damage from Hurricane Katrina are unenforceable, a federal judge in Mississippi has ruled.

A couple whose Long Beach home was damaged by the August 29 storm is suing State Farm for denying their claim, arguing that the wording of their policy's "flood exclusions" are ambiguous and cannot be enforced.

U.S. District Judge L.T. Senter Jr., in a ruling released Wednesday, said State Farm cannot rely on an "ambiguous" language in a clause that is used to introduce what is excluded from coverage in its policies.

The judge agreed with State Farm that tidal surge is not covered. However, he said a policy clause that purports to deny coverage when wind acts in any sequence with an excluded event, such as tidal surge, to cause damage is ambiguous.

Senter said he found "the policy is ambiguous and its weather exclusion therefore unenforceable in the context of losses attributable to wind and rain that occur during a hurricane."

State Farm spokesman Phil Supple told The Associated Press that the insurer was pleased Senter had ruled that excluding tidal surge "is enforceable and valid." But he said Senter's decision with regard to the provision known as the anti-concurrent clause "is inconsistent with prior existing court rulings in Mississippi that held State Farm policy language to be clear and unambiguous."

On Thursday, more than 240 Gulf Coast homeowners filed a joint lawsuit against Nationwide Mutual Insurance Co. for refusing to cover property damage from Hurricane Katrina.
The federal suit, the latest in a string of similar suits that attorney Richard "Dickie" Scruggs has filed against several insurance companies, claims Nationwide routinely denied policyholders' claims without investigating whether Katrina's wind or water was responsible for damage.

Instead, the suit alleges, Nationwide denied many claims on the basis of a "one-size-fits-all" engineering report that blamed all of the damage on "storm surge," or wind-driven water. The insurer's policies cover wind damage but damage from storm surge is excluded from coverage.

Copyright 2006 The Associated Press. All rights reserved.This material may not be published, broadcast, rewritten, or redistributed.

House Passes Forest Recovery Bill

The Forest Emergency Recovery and Research Act (FERRA), H.R. 4200, was passed by the U.S. House of Representatives on May 17 with a bipartisan vote of 243-182.

The House considered four amendments offered to limit the scope of the bill or add additional analysis requirements. For example, Rep. Jay Inslee (D-WA) proposed an amendment to prohibit restoration activities in roadless areas and Rep. Tom Udall (D-NM) proposed one to require the Forest Service to prove that recovery activities would not increase fire risk or decrease forest regeneration.

All were defeated. As passed, FERRA would require the Forest Service and the Bureau of Land Management to promptly evaluate restoration needs following a catastrophic event and would create an expedited process for conducting environmental review. Sen. Gordon Smith (R-OR) has introduced a similar bill in the Senate, S. 2079. The Senate is expected to hold hearings on the issue this summer.

For more information, contact Nadine Block at 202-463-2753, nadine_block@afandpa.org

Department of Marine Resources to Begin Reef Restoration

The Mississippi Department of Marine Resources (DMR) is preparing to begin restoration efforts on oyster reefs damaged by Hurricane Katrina by distributing approximately 5,000 cubic yards of cultch material (oyster shells) in the Henderson Point Square Handkerchief area approximately 1.5 miles south of Pass Christian. Katrina damaged approximately 90%-95% of Mississippi's 12,000 acres of oyster beds.

"We are proud that Mississippi is the first 'Katrina state' to begin cultch planting operations that will help to restore our public oyster reefs and begin the process of bringing our oyster industry back to its former production," said DMR executive director William Walker.

Eventually, the DMR hopes to build most of the beds with oyster shells and the broken concrete from structures destroyed by Katrina scattered across the Coast. The concrete would be crushed and spread across the bottom of the Mississippi Sound to create new oyster beds.
Cultch plants consist of spreading oyster shell or crushed concrete rubble over the water bottom using high-pressure hoses, giving oyster larvae a clean surface on which to attach and grow.

These plants are intended to enhance oyster productivity and increase fishing opportunities in South Mississippi through the continued development of existing reefs and the creation of additional new reefs.

Hope Center Design Work Completed

ROCKWORKS Foundation, a charitable "construction-production" organization based in Los Angeles, has unveiled the architectural design "Rejuvenation" by Daniel Libeskind for the new Boys & Girls Clubs of the Gulf Coast (BGCGC) HOPE Center. The charities are unified in their efforts to rebuild the devastated community of Forest Heights in Gulfport, which destroyed by Hurricane Katrina.

Rather than simply rebuilding a stand-alone Boys and Girls Club to replace the one destroyed, ROCKWORKS and its partners have come together to build a revolutionary new kind of community-based facility. "We want to rebuild and expand the Forest Heights facility to accommodate not only the needs of Forest Heights residents and their children, but also the surrounding community of North Gulfport," said Scott Kramer, executive producer at ROCKWORKS.

"HOPE" stands for "Home to Opportunity, Possibility and Empowerment." The HOPE Center concept is to expand its impact by combining the resources, programs and talents of several organizations into one location where people from across the community can come together. The new HOPE Center will cooperate with local community services to provide opportunities for additional community groups and organizations to augment the facility and its amenities.

Daniel Libeskind of Studio Daniel Libeskind (SDL) in New York City and local Gulfport architect Guild Hardy are providing architectural design services for the project. The concept design process has been completed by SDL. The next steps will be for Daniel Libeskind and Guild Hardy to identify materials that will allow the structure to not only serve day-to-day needs but also to investigate new materials and technologies that can provide the community shelter from future storms.

Federal Funding Approved for Coast

Federal funding totaling more than $19 million has been awarded for Hurricane Katrina recovery costs. The grants, administered by the Federal Emergency Management Agency (FEMA), will reimburse the Mississippi Emergency Management Agency (MEMA), the Hancock County Port and Harbor (HCPHC) and the Mississippi Coast Coliseum Commission for the costs associated with hurricane recovery.

Details of the federal share of the funding are as follows:

• MEMA (approximately $10.72 million) -- To reimburse MEMA for the services of an accounting firm to work with local municipalities, counties and eligible private non-profit corporations to facilitate fund-tracking, sub-grantee (applicant) internal controls, ensure state and local contracting compliance, as well as to track and reconcile project financial performance.
• HCPHC (approximately $6.66 million) -- To repair the Port Bienville Railroad located in Hancock County. The project includes replacing or relining more than 13,000 cross ties, repairing more than 10,000 lineal feet of track bed, resurfacing approximately 35,000 lineal feet of track, replacing more than 18,000 lineal feet of rail, as well as performing repairs on other essential elements of the railroad restoring the facility to its pre-disaster design, capacity and function.
• Mississippi Coast Coliseum Commission (approximately $2.07 million) -- To repair or replace damaged equipment and furnishings at the Mississippi Coast Coliseum after insurance proceeds.

MDOT Gives Update on Recovery Efforts

The Mississippi Department of Transportation has released a list of Gulf Coast Transportation Recovery efforts in which MDOT was involved during the week of May 1-5.

Technical proposals for the construction of the Biloxi Bay Bridge and approaches in Jackson and Harrison Counties are due May 26. MDOT officials plan to award the contract to the proposed project with the apparent best value June 6. The three responder firms are GC Construction of Kansas City, Mo., Granite Archer Western of Watsonville, Calif., and Yates/Hill of Philadelphia, Miss.

MDOT officials are waiting on the Jackson County Board of Supervisors to approve the memorandum of agreement to improve, expand and/or replace entrances and other infrastructure adjacent to the Jackson County Hospital. It was decided in the Mississippi Transportation Commission meeting April 25 that MDOT would enter into an agreement with Jackson County for the hospital project.

To date, MDOT has issued more than $8 million in emergency Relief Funds to State Aid to reimburse coastal counties for debris removal.

Construction is under way on a seawall for barge access on the U.S. 90 Bridge. The assembly of a pile driving barge and crane is ongoing, as well. Dredging and existing bridge removal is continuing with the first indicator pile scheduled to be set May 5.

MDOT Extends Log Truck Weight Permit to June 6 in Selected South MS Counties

The MS Dept. of Transportation has extended the Temporary Order of Authority for higher log truck weights from May 6 to June 6 in south Mississippi. The Order now applies only to counties east of Pike and south of U.S. Highway 84. The existing permits that wood fiber suppliers – loggers and log truckers – currently have will be honored so there is no need to reapply for another permit with MS DOT.

After May 6, the applicable counties are: Covington, Forrest, George, Greene, Hancock, Harrison, Jackson, Jefferson Davis, Lamar, Marion, Pearl River, Perry, Stone, Walthall, Wayne, and Jones.

Remember, this Temporary Order of Authority allows the transport of unprocessed timber from the hurricane damaged forest to the first point of storage or processing under the guidelines posted here.
The higher weights for log trucks allowed under this Temporary Order DO NOT APPLY TO INTERSTATE HIGHWAYS.

Complete information is available on the MS DOT website: http://www.mdot.state.ms.us/default.asp

NOTE: This Temporary Order may not be extended beyond June 6, 2006. Wood fiber suppliers should NOT PLAN TO HAUL these higher weights after June 6.

Bond Issue to Assist Storm Victims

Mississippi Home Corporation (MHC) has announced a $40-million mortgage revenue bond (MRB) issue, which will provide low-cost mortgage financing to families affected by the hurricanes of 2005. This bond issue incorporates the incentives contained in the Gulf Opportunity Zone Act, also known as the GO Zone Act.

Out of the $40 million, $36 million will be available for potential home buyers in the Go Zone areas of the state, whereas $4 million will be available for potential home buyers in North Mississippi. MHC began taking reservations for these MRB funds May 3, 2006.

The MRB loans authorized under the GO Zone will carry an interest rate of 5.59% and will provide Mississippi working families with a 3% cash advance to assist with loan down payment and closing costs. MRB loans made in other areas of the state will carry an interest rate of 5.79% and will also provide Mississippi working families with a 3% cash advance.

"This bond issue is the second under the Go Zone Act that MHC has issued," said Dianne Bolen, MHC's executive director. "It is our goal to energizing Mississippi's housing market, more so now than ever."

Since September 2005, the MRB loan volume has increased 87% in the six months ended February 2006. The MRB program is a federal program utilizing tax-exempt private activity bonds, which are limited obligations of MHC, payable solely from the revenues generated by the mortgages. Bonds are not a debt of the state.

Butler Snow Launches GO Zone Site

Information on federal and state programs to help rebuild the Gulf Coast in the wake of Hurricanes Katrina and Rita is now available in one online location, http://www.gozonelaw.com/. Attorneys from the law firm of Butler, Snow, O'Mara, Stevens and Cannada, PLLC, who were actively involved in recovery efforts, created the Web site.

Portions of Mississippi, Louisiana and Alabama compose the Gulf Opportunity Zone (GO Zone) and are eligible for federal benefits under the GO Zone Act of 2005, such as bonus depreciation, tax-exempt financing and five-year net operating loss carryback. The State of Mississippi also offers additional incentives to encourage capital investment if bond financing is utilized.

Gozonelaw.com provides an outline of these incentives plus news affecting investments in the zone, such as recent announcements by the governors of Mississippi and Alabama on guidelines for allocations of GO Zone bonds.

Butler Snow's GO Zone team has been involved in recovery efforts since the weather cleared. For example, attorney John England, with a practice in municipal finance, helped communities reconstitute their financial records and apply for bond money available from the Mississippi Development Bank. England's work was recognized by The American Lawyer magazine, which named him one of only 12 "Dealmakers of the Year" in the country.

"We're happy to share what we've learned," England said. "We want to see the Gulf Coast come back stronger than ever."

Butler Snow attorneys also created "The Gulf Opportunity Zone Act of 2005: Benefits Available to Businesses," a guidebook that explains the financial incentives for rebuilding, expanding or moving business operations into GO Zone. Gozonelaw.com includes information from this booklet. Businesses may obtain a copy of the booklet by calling (601) 985- 4104, or by e-mailing to gozonebook@butlersnow.com/.

Salvation Army Initiates Phase Two of Plan

On May 3, the Salvation Army unveiled a $155-million community recovery and rebuilding plan to meet the long-term needs of those affected by Hurricane Katrina.

The plan, the second phase of the Salvation Army's overall $362-million recovery effort, will use donated funds for reconstruction, housing development, volunteer programs and job-readiness training, among other services, to assist storm survivors living in Mississippi and Louisiana. All services offered will be distributed to people who are in the most need, without discrimination, but based on specific eligibility criteria developed by the Salvation Army.

To date, 68% of the $142 million spent in the first stage of recovery has gone toward direct financial assistance to survivors, including gift cards, accommodations assistance and utilities assistance. The other 32% was used for meals, cleaning and personal hygiene supplies, equipment and transportation and lodging for Salvation Army disaster personnel. The balance of the $362 million in public donations received, and any new donations, will support resettled survivors outside the immediate recovery zone.

In the ongoing response to Katrina, the Salvation Army has served more than 5.6 million hot meals and assisted nearly one million people in at least 30 states through April 2006.

Dry Weather Drives Down Southern Tree Prices

ALBANY, Ga., April 28—The spread of drought and abnormally dry conditions across much of the South helped drive down prices paid tree growers for standing timber in the first quarter of the year, a leading forestry consulting firm reports.

F&W Forestry Services, Inc., an Albany-based firm that provides consulting and management services—including tree sales—to private timberland owners throughout the Southern region, said prices of standing timber of all species and categories were down during the period.

“An early start to the dry weather usually associated with the beginning of summer was the probable cause for timber price declines,” F&W President Marshall Thomas wrote in the spring edition of his firm’s forestry newsletter. The publication reports timber prices and market conditions gathered by its network of 13 branch offices based on timber sales and other data.

Extended dry weather usually means a drop in tree prices at the grower level because conditions are ideal for logging, often resulting in excess supplies.

F&W said hardwood species of pulpwood-class trees, those going to pulp and paper mills, took the biggest price hit during the first quarter—down 13 percent from the last quarter of 2005. Pine pulpwood and sawtimber, larger trees used for making lumber, also declined but less sharply—down by two to seven percent.

Thomas noted that Southern pine lumber prices have risen 26 percent since 2003 while prices received by tree growers for pine sawtimber have remained relatively stable.

“I think we need a long period of very wet weather to find out just how much of the lumber price increases can be passed along to the landowner without forcing the mills into the red,” he said. “I certainly am not hoping for any more hurricanes, but three or four strong and wet tropical storms over the summer and into the fall might bring some cooler weather and a hotter market for Southern landowners later this year and in early 2007.”

F&W Forestry Services, Inc., provides marketing and other forest management services to private timberland owners across the South. F&W timber prices are based on its own timber sales in behalf of landowner clients and other marketing data drawn from its 13 regional offices in eight states from Virginia to Texas, encompassing the region’s main commercial forested areas. F&W reports the price information quarterly through its newsletter distributed to clients, subscribers, and the news media.

Mr. Thomas welcomes any questions you may have and may be contacted at:229-883-0505 or mthomas@fwforestry.com. For other information contact: Bates Associates at
bbates@batesassociates.net or (770) 451-0370.