City commissioners agree to change from 2024 decision
In early March 2024, a three-person majority of the Sarasota City Commission voted not to include coverage of the Van Wezel Performing Arts Center as part of their approval of the city insurance policy that would be in effect from April 1 2024 through the end of March this year.
That resulted in a payment of $1,315,000, instead of $2,017,313, if the historic bayfront venue had been included.
Then-Vice Mayor Jen Ahearn-Koch and Commissioner Debbie Trice had failed to win the support of Mayor Liz Alpert, Commissioner Kyle Battie and then-Commissioner Erik Arroyo for maintaining the coverage of the Van Wezel, because of the extra expense.
However, city staff did procure Special Flood Hazard Area insurance for the performing arts hall through Wright Flood, as part of the National Flood Insurance Program (NFIP), which carried maximum limits of $500,000 each on the structure and its contents, as explained in the Backup Agenda Request for the board’s March 3 meeting. The total premium was $27,668. Nonetheless, that document pointed out, that policy did not involve any “regular property insurance coverage.”
This year, the document continued, “A claim is pending with Wright Flood for damages from Hurricane Milton at the Van Wezel. The City has applied for public assistance for damages to the Van Wezel in excess of the Wright Flood limits, under the guidance of Tetra Tech engineering consultants, as a result of Hurricane Milton. FEMA Recovery Policy (under Section 311 of the Stafford Act) stipulates that the City ‘obtain and maintain’ property insurance on the Van Wezel Performing Arts Center going forward or risk ineligibility to apply for public assistance.”
(In November 2024, Mary Bensel, executive director of the Van Wezel, told members of the city’s Purple Ribbon Committee — which was appointed in 2023 to make a recommendation to the City Commission about the future use of the structure — that damage to the building from Hurricane Milton had been put at a range of $7 million to $10 million.)
Given the FEMA situation, the commissioners voted unanimously during their regular meeting on March 3, to spend $2,446,063 on the insurance renewal for the period of April 1 through the end of March 2026.
Brown & Brown of Sarasota is the firm that handles the city’s coverage.
The additional Wright Flood insurance premium for the Van Wezel, with a 10% increase estimated, is $30,434.80, a Brown & Brown document in the agenda packet showed.
The new regular insurance coverage also will apply to the city’s One Stop Shop building, which is home to the Development Services staff, as well as the buildings standing at 1544 and 1590 First St. in downtown Sarasota, which the city had purchased since the policy through March 31 of this year was approved, as noted in the March 3 Backup Agenda Request. The First Street parcels are to be used for an affordable housing project that the city commissioners voted for unanimously in April 2024. The buildings have been covered since the city bought them, the March 3 Backup Agenda Request form pointed out.
The total premium expense for the Van Wezel, the One Stop Shop — which is located at 1572 Second St. — and the two buildings on First Street — is approximately $550,000, the document said.
“There is no change on the $25,000,000 loss limit or the 110% margin clause valuation,” the Backup Agenda Request also noted.
IRMI, which is based in Dallas, explains, “A margin clause is a nonstandard commercial property insurance provision stating that the most the insured can collect for a loss at a given location is a specified percentage of the values reported for that location on the insured’s statement of values.”
Before the March 3 vote, Vice Mayor Debbie Trice did ask John Powers, manager of the city’s Risk Management program, and Molly Grande of Brown & Brown what the net financial impact on the city was from excluding the Van Wezel from the regular policy last year.
Powers replied that, with the expectation that FEMA’s public assistance program will pay for the storm damage to the Van Wezel, it “appears to be a savings of the entire premium.”
“But, moving forward,” Trice said, “we have to fully cover [the Van Wezel]. … Just wanted a clarification.”
Commissioner Kathy Kelley Ohlrich, who noted, “There’s no point in talking about what happened last year, with insurance on the Van Wezel,” did ask Powers and Brown, “What’s the rationale for insuring the two properties on First Street, if the plan is to demolish them for workforce housing in the not-too-distant future?”
Powers told her, “I think the plan there is just to be fiscally responsible,” in the event that the buildings suffered fire damage or some other type of catastrophe. “We wouldn’t lose out completely in our investment.”
Deputy City Manager Patrick Robinson also pointed out, “We have lease agreements in those building that will actually run through mid-2026.”
In 2024, the self-insurance option
Last year, before the vote on the insurance coverage, the presentation the commissioners heard pointed to overall savings of $234,000, or 15.2%, on the city’s policy, if the Van Wezel were excluded.
That discussion focused only on city properties that were not part of the Utilities Department assets, Powers, the Risk Program manager, pointed out.
Then-Commissioner Arroyo announced that he was in favor of removing the Van Wezel from the new policy.
Trice asked whether the city would be penalized if the board members excluded the Van Wezel from the next regular policy renewal list but then chose to cover the Van Wezel again in the future.
Paul Dawson, vice president of Brown & Brown, ultimately said he thought the city probably would not be penalized, but he could not predict the expense of adding the Van Wezel back into consideration.
Then Vice Mayor Ahearn-Koch asked then-City Manager Marlon Brown whether the exclusion of the Van Wezel indicated a desire from city staff leadership to not have the structure function in any manner in the future.
Brown reminded her that the commissioners have called for repurposing the building, which the members of the Purple Ribbon Committee have been reviewing. The Van Wezel, he added, “may end up being like an open-air type facility, or it may serve some other purpose.”
Brown stressed that, regardless of what happens with the Van Wezel in the future — with the Sarasota Performing Arts Foundation promoting a new building within the Bay Park on the city’s waterfront — the Van Wezel “is a most vulnerable facility” that the city has, given the predictions for sea level rise and the building’s position right on Sarasota Bay. “We have to think really hard and fast as to what we want to do with that facility.”
Ahearn-Koch told him she understood his point. Nonetheless, she continued, “I don’t understand why we would not insure it.” She expressed the concern that the city would be “out of pocket” in covering any storm damage to the structure.
Brown noted that one of the options was for the city to self-insure the structure. In that case, if the Van Wezel were damaged he said, the city would have to absorb “whatever cost it takes to bring that building back into operations.”
No deductible would be involved with that option, Dawson of Brown & Brown clarified. “There would be no insurance to go to on the Van Wezel.”
“So we’re weighing now paying $1.5 million [for insurance for the Van Wezel in the renewal of the city’s policy],” Ahearn-Koch replied, “or a potential who-knows-what price, right?” She called that “a big roll of the dice.”
“Correct,” Brown responded.
“I’m not a huge fan of the rolling of the dice when we have committed contracts over the next couple of years for shows,” she told him.
Yet, Mayor Liz Alpert pointed out that the contracts could have clauses absolving the city of any liability if the building were destroyed. “There may be an out …”
“You’re correct,” Brown told Alpert.
Trice asked, “What are the odds of having a catastrophic named storm hit Van Wezel just this year?” On the other hand, if a major storm damaged the Van Wezel to the extent that it would be unusable “for an extended period of time,” Trice continued, regardless of who was “on the hook for paying for the repairs … it’s going to take the same length of time to get back in operation. … We’re talking about the money at this point.”
Ahearn-Koch said she understood that.
Alpert posed the question, “Would we really say we have to rebuild it?” if the Van Wezel were “flattened.” She added, “I don’t think so.”
Finally, Trice and Ahearn-Koch said they were in favor of keeping the Van Wezel fully insured for the period of April 1, 2024 through March 31, 2025.
Commissioners Arroyo and Battie chose the self-insurance option, with overall savings on the new policy of $234,699.