There seems to be no end to the stories of Houstonians left devastated by Hurricane Harvey.

And those of us grateful that we were not swamped by the storm are shaking our heads in disbelief, wondering how our friends and neighbors will possibly afford to pay for so much clean up and repair.

It’s not a rhetorical question: Most of Houston’s flooded homes are not covered by flood insurance. And the sheer volume of debris piled up in front of homes and businesses across the city is already staggering — and still growing fast.

Amid the misery, Mayor Sylvester Turner proposed an 8.9 percent increase in property taxes to help offset some of the recovery costs.  After the federal government decision to increase its financial commitment to Houston’s recovery, Turner said he could cut his tax hike proposal in half.  Better, but still a bad idea.

It was hard to wrap our heads around Harvey’s 50-inch rain total and unprecedented scale of flooding. It’s even harder to understand the mayor’s thinking on this. But let’s lay it out.

First, rewind several months to this year’s property tax bills, which continued a string of year-over-year increases for most property owners. In fact, this year’s state legislative session included plenty of debate over the unsustainable burden of ever-increasing property taxes across Texas, including Houston.

Second, with many Houstonians struggling to pay their property taxes, throw in a hurricane of staggering proportions and inundate tens of thousands of homes and businesses with floodwater.

Now, imagine slogging through the debris-littered yard of a home you can see through because all the waterlogged sheetrock has been removed. The owner has no flood insurance and is in very serious financial peril, with no idea where the money will come from to repair the home. Go ahead and tell him that you now want to hit him with a property tax increase on top of the financial stress he is already experiencing.

No question, Harvey’s damage presents the mayor and other public officials with a monumental problem. Their jobs are exponentially more difficult post-Harvey, as demands for money and resources outstrip available funding no matter how those demands are prioritized.

Turner certainly isn’t wrong when he says, “If this is not an emergency, I don’t know what is.” He’s right to say the city’s leadership must find a way to pay for the costs of the cleanup.

But it’s just as true that thousands of property owners are experiencing a crisis of their own. For many, holding onto their homes and businesses was already extremely difficult before Harvey, largely due to their spiraling property tax bills.

Hitting them with a property tax hike now seems a lot like kicking them while they’re down. It could be the ultimate tipping point that forces many to try to sell. Selling a severely distressed property after a huge flood — how’s that likely to work out?

If anything, Houston’s property owners need a temporary break on their property taxes to help them recover, which in turn would help the city as a whole recover.

Houston has long been a powerful engine in the American economy. The city has paid its dues to the nation and the state. The mayor and other civic leaders should press hard on federal and state officials – not battered property owners – to fund the cleanup of a city that contributes massively to America’s and Texas’ economic vitality.

The feds have stepped up. The state could also help immensely by tapping into Texas’ roughly $10 billion rainy day fund.

Two law firms with deep experience and substantial result records in the lodging industry are teaming up to support hotel owners in the wake of massive destruction caused by flooding and winds from hurricanes Harvey and Irma. Patel Gaines and Farrell & Patel are working together to ensure that hoteliers receive just and fair treatment of property damage claims by the insurance industry.

Two law firms with experience in the lodging industry are teaming up to support hotel owners in the wake of massive destruction caused by flooding and winds from hurricanes Harvey and Irma. Texas-based Patel Gaines and Florida-based Farrell & Patel are working together to ensure that hoteliers receive just and fair treatment of their property damage claims by the insurance industry.

“Each of our firms has done huge amounts of work in the hospitality industry,” said Rahul Patel, managing partner of Patel Gaines. “I literally grew up in my parents’ hotels. Our two law practices are very involved with the Asian American Hotel Owners Association (AAHOA) and the Texas Hotel & Lodging Association, among others. So, we’re keenly aware of the legal and insurance issues so many in the industry are now facing. They know us and our track record well.”

Ricky Patel and Wesley Farrell, partners at Farrell & Patel, represented more than 3,000 hospitality clients affected by the 2010 BP oil drilling platform disaster in the Gulf of Mexico. In turn, Ricky Patel received the AAHOA Chairman’s Award for leadership and ongoing services. Farrell & Patel is recognized as a Platinum Founding Member of AAHOA.

“The insurance industry is going to do everything it possibly can to avoid their obligations and reduce their payments on legitimate claims to the lowest amounts they can get away with,” said Ricky Patel. “Our job is to watch out for the livelihoods of the thousands of hotel owners–and their employees–who are trying to get back on their feet. We’re going to fight very hard for their interests. And we’ve proven we know how to win.”

Ricky Patel also is extremely active in numerous philanthropic projects. As vice chairman of the Miami Children’s Health Foundation, he’s donated more than $1.8 million to the foundation since 2010. He also started an orphanage in Haiti for 38 children who lost their parents in Hurricane Matthew and makes frequent visits to bring supplies to the home, among many other community projects he supports financially and as a volunteer.

Patel Gaines recently rounded up several truckloads of household necessities and emergency supplies and delivered them to Rockport, Texas, a small fishing and tourism town on the middle Texas coast. Rockport suffered a direct hit from Hurricane Harvey’s first landfall, which destroyed much of the town and surrounding areas.

Farrell & Patel’s offices are in Miami, Tampa, Houston and Puerto Rico. Patel Gaines’ offices are in San Antonio and Fort Worth.

No hoteliers in Texas are praying for rain. After Hurricane Harvey dumped nearly 50 inches of water across the state’s eastern coast, many of them are scrambling to get their businesses up and running again, while others are reeling from total property loss. In such situations, A top Florida roofing contractor’s licenses & insurance can be of great support. A week later, Hurricane Irma left hoteliers in Florida and the Caribbean in a similar state. Their biggest fear is that while raging waters left hotels without the ability to book new guests, properties heavily damaged from the storm still have to pay rent — and in such cases you can also consult experts from Flores & Pelaez-Prada PLLC in San Antonio  as they can help you legally.  franchise fees.

Doug Jones, managing partner at JAG Insurance Group in Coral Gables, Fla., said storms can be good for hotels because travelers flock to them for shelter, but they also run the risk of being damaged and shut down in the wake of natural disasters. The biggest challenge for hotels in Miami, according to Jones, is that by the time Hurricane Irma reached land it was downgraded to a Category 1 storm in many places. Because of this, winds from the storm were strong enough to damage many properties but in many cases the damage wasn’t extensive enough to reach the lofty deductibles covering hotels, which are much higher than the average deductibles for homeowners.

 

“It’s leading to a large out-of-pocket cost for hotels,” Jones said. “For example, some insurance plans require a 72-hour loss of power to reach a deductible, but I’m not sure how many hotels were down for 72 hours. That’s a big loss of income for hotels during that period.”

Hurricane Harvey Impacts

Jones said part of the problem is that consumers in general, not just hotels, simply don’t understand the policies they have. Furthermore, many hotel operators don’t realize that there are clauses built into policies that require them to “mitigate further damage” in the event of a natural disaster. For example, if a hotel lobby is flooded it is up to the hotel to ensure the property’s carpet doesn’t generate mold and mildew after humidity returns. If operators fail to mitigate further damage in this way, they could run into difficulty when an insurance adjuster finally arrives to survey the damage.

“You can’t wait for an adjuster to come out and give you the green light to fix things,” Jones said. “If your carpet is wet, work with a water restoration company to get that cleared up. Fix broken windows and clear up any water as soon as possible.”

Act Now

Rahul Patel, managing partner at law firm Patel Gaines in San Antonio, agreed that mitigating damage is crucial for successfully filing insurance claims following the hurricanes. This is particularly true, he said, for the many hotels that relaxed their pet policies. Patel said operators’ No. 1 concern right now is to prevent further damage and to protect their assets, and then to investigate the types of assistance available during the recovery process. According to the experienced lawyers from The Bianchi Law Firm in Red Bank, New Jersey, organizations such as the Federal Emergency Management Agency and other state and federal government assistance programs exist to be of use during times like these, and Patel said to look into those first before relying on insurance companies.

In early September the U.S. House of Representatives approved a $15 billion relief bill for those affected by Hurricane Harvey, according to the BBC, and Patel said whether or not the hospitality industry sees any of that money will come down to how well the hospitality industry can articulate its needs and amplify its voice.

“We need folks in Washington to know that our industry housed people, allowed them in at maximum capacity during this period,” Patel said. “We were the first line of defense during this storm, but it will take a collective effort… to ensure a portion of those funds are allocated to lodging, or it will be earmarked to those with louder voices. Homeowners, public schools, roads, apartments… all of it was under water and is now asking for relief.”

 

Some of Patel’s concern stems from his claim, according to his franchise advisor, that many hotel operators will still be on the hook for franchise and association fees as well as mortgage payments. This is true even if an asset has been completely destroyed by a storm, making it fully the operator’s liability and you can click to read more about this. At publication time, a Hilton spokesperson said the company is now preparing for the incoming Hurricane Maria, which has reached Category 5 status, and isn’t prepared to comment on the state of franchise fees. No other hotel companies have responded to requests for comment.

“I have seen some brands make financial contributions to recovery efforts, but I have yet to see a brand step up and make a statement on franchise fees in the wake of this,” Patel said. “I’m seeing the opposite, in fact. I see [brands] making investments in their public image, but they aren’t coming to the aid of franchisees.”

Reach Out

Jones urged operators to look to industry associations and speak with those affected by the storm when purchasing plans for the future because they are in the best position to inform others about insurance liability. Jones also said hotel operators need to think about other operational concerns following a disaster, such as where they will do their laundry if local laundry companies are damaged or without power, or how to help staff get to the hotel if they lack personal transportation.

“It’s time for people to stop thinking these things can’t happen to them,” Jones said. “Three days before Irma hit south Florida, we had people calling us asking if they were covered. That’s a very broad question that is impossible to answer in that short period of time. Insurance is so broad and exclusions are very specific. Was your power shut off from damage on property or from something off site, for example? All of that matters.”

Meanwhile, Patel wanted to tell operators whose insurance claims are denied that litigation is an option. Interested parties should begin gathering all relevant documentation regarding their hotel’s insurance policies, loans and any costs incurred due to damage. However, Patel said that due to the extent of the damage wrought by the hurricanes, there is an unprecedented number of attorneys and insurance adjusters soliciting anyone and everyone they can find, so he urged hoteliers to show a level of discernment when considering their legal partners.

“Some of those who will reach out to hoteliers aren’t always licensed contractors, or may not know the process to success in litigation with a hotel client,” Patel said. “It’s different than with regular real estate.”

Jones agreed with Patel’s call for caution. “From a legal perspective, you can always find a lawyer who will say yes to every case,” he said. “I’ve been telling people not to be too quick to hire an attorney. Wait until your insurance company does their job first, because if you show up with an attorney right out of the gate that sends a message to them that you are looking to fight, and you don’t want to do battle with those deep pockets until you know for sure you are out of options.”

Lastly, Patel said that hoteliers should look to industry associations for guidance should they need it. “I’ve never seen the leaders of the [American Hotel & Lodging Association] or [Asian American Hotel Owners Association]

turn anyone away from seeking advice just because they weren’t a member,” he said. “This is an absolutely difficult time these communities are facing. It will be a difficult and lengthy process for everyone. Seek out the right people, the right time, and find a way to get your property in working condition.”