The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government has estimated that Hurricane Sandy caused $702.8 million worth of damage when it struck the Bahamas last October, although one former finance minister said the figure seemed “extremely high”.

The figure, which is equivalent to 9 per cent of annual Bahamian gross domestic product (GDP), was contained in an Inter-American Development Bank (IDB) statement on the signing of a $200,000 Technical Cooperation Agreement between itself and the Government.

The funds are designed to strengthen the Christie administration’s ability to provide Hurricane Sandy relief, and the IDB statement said 1,030 homes in the Bahamas “sustained varying levels of damage” due to the storm.

It added that 10 per cent of those homes, around 130 properties in total, had been “rendered uninhabitable” until major repairs were made.

But James Smith, a former minister of state for finance, who is now a key Ministry of Finance consultant, expressed surprise at the $702.8 million damage figure released by the IDB.

He said it contrasted with statements given by the Bahamian property and casualty industry, which had repeatedly said Hurricane Sandy claims were much lower than those incurred in 2011 from Hurricane Irene.

Suggesting that insurance claims levels were a good benchmark for a storm’s severity, and corresponding economic damage, Mr Smith said the figures quoted by the IDB “sound a bit high”.

However, two government officials contradicted this. Simon Wilson, the Ministry of Finance’s director of economic planning, said the figures released by the IDB were “not surprising”, given the level of clean-up and repairs he had seen in Abaco.

He pointed out that hurricanes always hit the Government in two areas - public infrastructure and housing. And Captain Stephen Russell, the National Emergency Management’s (NEMA) director, confirmed to Tribune Business that the 1,030 ‘damaged houses’ figure had been supplied by his agency.

Captain Russell disclosed to this newspaper that NEMA was still in discussions with the Prime Minister’s Office to determine the level of taxpayer funding that will be directed to Sandy relief efforts.

And, given the frequently high level of flood damage in areas such as Sandypoint and Green Turtle Cay in Abaco, and Queen’s Cove in Grand Bahama, the NEMA director said the Bahamas would have to deecide whether it was “worthwhile” to keep financing repairs year after year. He suggested “other means” for a solution needed to be assessed.

The IDB released the statement after its president, Luis Alberto Moreno, and Michael Halkitis, minister of state for finance, signed the $200,000 Technical Cooperation Grant during last week’s Caribbean Governors’ Meeting in Kingston, Jamaica.

“Based on the assessments carried out by the Government of the Bahamas, Hurricane Sandy significantly affected economic activity and caused damage to public infrastructure in the affected islands. Estimates show that the damage reached around 9 per cent of GDP (or US$702.8 million),” the IDB said.

The islands most heavily impacted were Exuma, Long Island, Cat Island and Grand Bahama, the IDB added, with some 488 persons forced to seek refuge in government shelters during the storm.

“Approximately 1,030 homes sustained varying levels of damage, of which 10 per cent have been rendered uninhabitable until major repairs can be completed,” the IDB said. “Cat Island and Exuma, which took a direct hit, experienced the most extensive damage in the form of flooding, structural damage to homes, downed trees and utility poles.

“Many homes in Grand Bahama also experienced severe flooding, with roads in several areas rendered impassable due to the height of the water - as high as six feet in some areas in the aftermath of the hurricane. On Long Island, there was structural damage to homes and roofs of several buildings, while significant damage was sustained to farmers and fishermen’s crops and equipment – essential to their livelihoods.

“Excessive flooding, damage to public infrastructure and power outages were reported on Acklins Island, Ragged Island, the Abacos, Governor’s Harbour, South Eleuthera, Crooked Island and Inagua.”

The IDB added that the $200,000 was intended to help the Government provide humanitarian relief in the islands hit hardest by Sandy, helping with debris clean-up and the provision of materials for repairs.

Yet Mr Smith expressed surprise at the $702.8 million damage estimate, especially given that Hurricane Frances in 2004 - a more powerful Category Four storm that impacted virtually every island in the Bahamas archipelago - was said in previous IDB and government documents to have only caused $351 million in damage. This sum was about 50 per cent of Sandy's pegged devastation.

“It does sound on the high side,” Mr Smith said of the figure quoted by the IDB. “I don't know where that could have come from. I couldn't imagine what amount of damage you'd have seen; perhaps to the entire economy, but even with the multiplier effect I don't think it'd be that high. Just on the surface it seems extremely high.”

Apart from damage to housing and infrastructure, such as roads, flood defences, docks and bridges, the $702.8 million estimate could also include the impact of lost business for the Bahamian economy, which was effectively shut down for one weekend. Hotel bookings lost, cruise cancellations and money not spent with retailers may also be factored into the mix.

And, while Sandy was “probably smaller than any other” for the Bahamian insurance industry in terms of claims, many properties in the southern islands are not insured.

While unable to speak to the specific figures, Mr Wilson said: “Based on the cost of what we've seen as clean-up in Abaco, I would not be surprised (at a $703 million estimate). Housing, along with government infrastructure, was “typically where the damage is”.

Mr Wilson pointed Tribune Business to Captain Russell at NEMA. While unable to verify the $702.8 million number, the NEMA director confirmed that the 1,030 houses statistic had been supplied by the agency.

As for the total cost, he referred this newspaper to deputy director of public works, Craig Delancey, at the Ministry of Works. He did not return a message left for him before press time.

Still, Mr Russell disclosed that relief efforts had yet to kick into high gear due to internal discussions within the Government about how much financing would be released.

“Nothing much has occurred as yet,” he confirmed. “We're still in discussions with the Prime Minister's Office to direct funds to relief efforts.”

When it came to housing damage, Captain Russell said that in Long Island, homeowners typically required just several bunches of shingles to effect roof repairs. Flood defences that were overrun in Governor`s Harbour and San Salvador also needed to be dealt with.

Needs were more pronounced in areas such as Green Turtle Cay and Sandypoint in Abaco, and Queen`s Cove in Grand Bahama, where homes had been flooded for the second year running - water reaching as high as three-four feet inside.

Captain Russell, while stopping short of suggesting that residents in these areas should relocate, told Tribune Business that the Bahamas would have to decide whether it was “worthwhile to keep pumping funds into those communities year after year” to effect repairs, “or find some alternative”.

“These are some of the critical things the Government has to consider to prevent these things occurring over and over,” Captain Rusell added.