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President’s Report: May 2023

 Dear Members, 

This is going to be a long report but is important for everyone to read. I am writing to you concerning the ongoing reconstruction process at SHYC, following the extensive damages caused by Hurricane Ian. We have almost completed repairs worth over $9 million. However, we have encountered a complicated and challenging situation with our wind insurance carrier, Velocity Risk Insurance Company. Velocity Risk is our wind insurance carrier and holds the most significant insurance claim that the club has. This has been incredibly difficult to deal with. We hired a Public Adjuster firm early in the process. After the hurricane we had many gaping holes in our roof. If was leaking life a waterfall every time we had a heavy rain. Velocity states that we did not need a new roof and we could have had it fixed. The siding on our buildings was badly damaged and Velocity said we should have “repositioned” the tiles. These are the same long metal pieces of aluminum that multiple times since the storm heavy winds have caused them to break away from the building and become dangerous missiles. Velocity has just delayed responding to either the club or our Public Adjuster regarding settling our claim in a just and fair amount of money and has thus far denied all compensation claims and offered us an astounding offer of $32,000! They are not even returning calls from our adjusters at this point! 

As you are aware, the hurricane virtually destroyed the club. The long grueling task to repair the club has been well documented over the last 7 months. To ensure the completion of all necessary repairs, we secured a line of credit amounting to $4 million from Sanibel Captiva Bank. That was the only way to begin our repairs. We fully expected to pay the credit line off with the insurance proceeds from Velocity Risk. Thus far Velocity Risk has refused to honor their commitments under our policy and denied almost everything in the claim. 

Unfortunately, this credit line is currently imposing a significant financial burden on the Association, with monthly interest payments exceeding $20,000. 

As we await the resolution of our insurance litigation against Velocity, it has become imperative for us to settle this line of credit to circumvent these hefty monthly charges. It is with regret that to this end, the Board of Directors has approved a special assessment of $10,000 per unit. 

In trying to make this as easy as possible, you have the option to pay this assessment in full, or you can divide it into two installments: $5,000 due by July 1st and the remaining $5,000 due by October 1st. Should we emerge victorious from the litigation, any surplus funds, after covering all repair expenses, will be equitably distributed back to the unit owners of record as of the date of assessment. I have been advised that this assessment is a deductible expense on your 2022 taxes. If you have filed your taxes you may have to refile. 

The Board has retained Fort Myers attorney Michael Mc MCQUAGGE, to represent us. Mike is a Board Certified litigation attorney and is also a slip owner at the club. We have had several meetings with him in our vetting process to discuss our legal options and strategies moving forward. We feel that Mike is very competent and qualified to represent us in what likely to be a very long and grueling process. A copy of Mike’s CV is attached for your review. 

As recommended by Mr. McQuagge, the Board is interviewing Team Complete from Pensacola to serve as our expert to battle with Velocity and their experts. This will be a multimillion-dollar lawsuit and we need to best represent our interests. Please review their impressive credentials on their website, at 

The club fared much better with our other insurance carriers. We had an insurance claim on our policy with Chubb Insurance. They promptly paid us $2.2 million dollars, the full amount of our policy coverage. That money was used to replace major equipment that was destroyed by the storm (forklifts, manlifts, and other equipment). 

We are in the process of settling our FEMA flood insurance claim. It has been a long process, but we feel that we are getting close to settling the claim which has a maximum of $750,000 

SHYC has always been very diligent in its insurance coverage. In 2022 our insurance expense was $218,000. We were always confident that if we ever needed our insurance, it would be there for us. Then along comes a historic and catastrophic killer storm which wrought an unimaginable horror into our lives. Then an insurance company decides that they are not going to pay our rightful claims under the policy. Our yacht club is by no means alone with the insurance problems. Across Southwest Florida insurance companies are lowballing insurance claims, delaying payment or not paying them at all. My own homeowner’s insurance company declared bankruptcy and I have received nothing in my rebuild and a new insurance bill from Citizens Insurance (the only company that would insure me) of more than double what I was paying. It has been reported that our neighbors at Punta Rassa have a $40 million insurance claim and were offered a settlement of $1.2 million from their insurance company. They estimate that they may not be back in their homes until sometime next year and could be facing a special assessment of at least 50k and maybe even as high as 100k on each unit. 

On a positive note, we are pleased to inform you that our new forklift has passed all its final tests and is ready to be dispatched from California. We had been told that it would be arriving this week but were informed yesterday that one of the trucks transporting the equipment to us had mechanical difficulty so anticipate its arrival on the property after Memorial weekend. The forklift cost $975,000 

and has been paid in full. We have a second lift being built and that should arrive after January 1st. We will continue to perform preventive maintenance on the lone surviving lift and keep it operating as much as possible. 

The final phase of the boat storage building repairs will commence on the week of May 22nd. Due to supply chain issues, production delays and the incredible amount of time it took to get a siding permit from Lee County this project was delayed for months. All of the siding on the barns will be replaced in new modern colors and patterns. The side of the building adjacent to the parking lot will be the first one to be done followed by the north side of the barn, then the rear of the building. The front of the building will be done last. The completion of these repairs, expected to take approximately 12 weeks, has been structured to allow the club to remain open while the reconstruction is being done. Upon completion this will mark a significant milestone in our recovery efforts. 

Another goal is to have our fuel system installed within this time frame, which will bring us closer to a complete restoration of our facilities. There are still projects to be done but every day brings us closer to our goal. 

My first President’s report to you after the hurricane contained a promise from the Board of Directors that we would return SHYC Yacht Club to a 5 Star facility that we all know and love. We strove every day to make the club better than ever. And we are getting there. 

In the immediate days after the hurricane, we were faced with going to the club every day and viewing unimaginable destruction. Cars were in the yacht basin along with tons of sand and other objects in the water blocking any thought of passing with your boat. Our roof and siding were destroyed and boats on the first floor were stacked in piles. Our three forklifts were down and our two newest lifts were damaged beyond repair. We tried for weeks to get the lifts operation and failed to do so. We quickly discovered that the cost of two new lifts cost two and a half times what they cost us less than 4 years ago. Virtually everything in the building and property was either destroyed or in need of extensive repairs. No dock, no utilities, no elevator, no computers, no phones, electrical and plumbing systems destroyed, water system in ruins, no gates or fences, no fuel dispensers, underground fuel tanks leaking gasoline into our marina basin and so much more. It was an experience that to this day I cannot unsee. The monumental task to repair and replace plus the cost of doing so kept us awake at night. 

Adding to that was a shortage of labor or skilled craftsman and even companies willing to do the repairs in a timely basis, supply chain issues, long delays in getting materials, skyrocketing prices and the arrogance of insurance companies that we were dealing with. We even had one insurance adjuster who stated that our docks were destroyed not by flood but by wind and therefore were not covered by our flood policy. Fortunately, that was corrected quickly. 

The biggest questions were: how can we get this job done properly, reopen the club as soon as possible and of course, how do we pay for it? We knew that amount of insurance that we had was enough to get us back in business. We were informed by one of our members that Sanibel Captiva Bank was lending money to assist with the urgent financial needs of businesses and customers that were pounded by Hurricane Ian. I immediately reached out to Sanibel Captive Bank CEO and President Kyle DeCicco. Mr. DeCicco and his Board approved two lines of credit to the club totaling $4 million. They were one year term loans with interest only payments at 6%. Of course, we fully intended to pay the loan balance in full as soon as we received the insurance proceeds. However, we were informed by our insurance adjuster early on but after we obtained the loans that he anticipated insurance companies to offer considerably less than policy coverages and to deny as many claims as they could. 

The bank has offered to convert the lines into longer term loans if we need to do so but we cannot afford to do that as the large payments it would require. The assessment will be used to pay the debt off. 

Days after the storm Board Director Randy Manning visited a SBA disaster office and applied for an emergency SBA disaster loan in the amount of $2 million dollars. Prior to my retirement I owned business broker companies for 40 years. Throughout my career, I helped clients get SBA loans to purchase businesses. I know that these loans can be difficult to obtain and take time but I was very successful in obtaining them. However, these loans were obtained through banks an SBA guarantee up to $5million dollars. 

Unfortunately, this time I had to work directly with the SBA. It turned out to be the most difficult loan that I ever obtained thru the SBA. It took 8 months to close. We were turned down once because they made an error and thought that we had committed a fraudulent act to obtain a PPP Covid loan. That never happened. We got that corrected and then the circus began. We submitted the mountain of the required documents that we were asked to resubmit on multiple occasions because they had been misplaced or lost. The file was transferred to another agent at least six times, each time the processes basically were restarted. The application was held up for months as the lender wanted a copy of the master deed to our property, which does not exist. Every SHYC owner has an individual deed to their unit. Two lawyers were not aware of this and just repeatedly asked for the master deed to the property. Once they finally understood about the deed situation the loan was sent back to legal for the closing to proceed. This took another two months and nothing was happening. Most of our phone calls and emails were met with “the loan process is in progress but we cannot give you a closing date”. 

After 7 months of seeing how incompetent the Federal Government can be I reached out to Congressman Byron Donalds for help. I explained how urgently we needed the loan and the frustration we have with the almost daily and confusion by the government in the loan process. Within 2 days of my inquiry, I heard back from the Congressman’s office. They made a Congressional inquiry into the matter and immediate action was taken. The matter was investigated and within 2 weeks we closed on our loan. The loan is for $2 million dollars for a term of 30 years at a fixed interest rate of 1.75 percent. Payments do not begin for 12 months. I cannot tell you enough how much we all must appreciate the efforts of Congressman Donalds. I sent a letter to the Congressman telling him how much we appreciated his efforts. 

I have attached to this email a list of the cost of the major repairs and replacement items that it took to reopen the marina. Although most of the cost that we had in the rebuild are listed but we still have some significant ones that need to be made. 

The last thing that the Board and I wanted was a special assessment to cover the cost of repairing our beautiful facility. As stated earlier, had an insurance company that we have paid a significant premium to for years lived up to its obligations and commitments under our policy we would not have needed a special assessment. When I became association President in 2011 our monthly condominium fees were $429. They were immediately reduced by $40 per month saving members several thousand dollars over the next several years and helped restore the value to our slips. Now 12 years later the condo feels are only $16 per month more than they were 12 years ago. 

In closing, I want to recognize the incredible performance of our Board of Directors, club management and our wonderful employees. 

We are fortunate to have a Board of Directors that is composed of retired men who were successful business owners. We all live locally on a full-time basis and have been critical in the rebuild process that we have dealt with for 8 months. They did everything that they were asked to do, offered invaluable advice, spent hour after hour in Board meetings, telephone conferences, vetting workers and companies and so much more. All of the Board members suffered severe damage to their homes from the storm. Three of us had our homes totally destroyed by the storm. We do this job with no compensation of any kind because we love SHYC. We would not 

be close to the place we are now without this talented group of selfless individuals working so hard for 8 months. 

If there is one superstar to be recognized it is General Manager Chad Edmonds. The man’s performance has been great from day one. A lesser man would have turned in his keys and walked away but not Chad. He is a loyal man of strong faith who worked his job magnificently 10 hours a day, 6 days a week for months. 

Our management team of Javier Rodriquez, Kristi Kransel, Kyle Wrenn, Carol Carrotta and Adrian Bonetta excelled in their efforts every day and last but certainly not least are our dockhands, repair crew, valets, chefs (we served lunches to our employees during the reconstruction) made us so very proud. 

The journey to recovery from Hurricane Ian’s devastation has been arduous, and the effort required has exceeded our initial estimations. However, every passing day brings us a step closer to putting this ordeal behind us. Your unwavering support and understanding during these challenging times have been instrumental in this journey, and we cannot express our gratitude enough. 

We will update you promptly as this process continues. I assure you 


Peter Mazzagatti, President 

Sanibel Harbour Yacht Club 

239-470-9577 Cell 

2 attachments:

List of damage repair items

Mike McQuagge, Esq.