Dealing With Natural Disasters and Catastrophes
by Brom Hoban, TSSA Staff

Fire Happens | The Tornado | The Blaze | The Flood

From fires to flooding to tornados, unexpected catastrophes have a way of just "happening," ignoring all your plans and goals. In fact Mansfield, Texas, about 35 miles southeast of Fort Worth, saw three separate incidents affecting self-storage facilities from 2002 to 2004.

In the self-storage industry, these disasters can have far-reaching impact for those not adequately prepared. Fortunately, most storage owners realize the importance of good insurance coverage and a well-thought-out plan of action. Here are a few real-life stories about how self-storage owners and operators rose to the challenge and dealt with adverse situations.

Fire Happens
Mansfield Boat and RV opened in June of 2002, and quickly became known as a reliable local business. But that reliability was threatened a year later, in September of 2003, when a customer’s boat caught on fire.
At about 1:30 a.m. on a Sunday morning, the police department spotted smoke and called owner/manager Martha Reynolds. Apparently, a "smart battery charger" that was built into the boat shorted out. (The product was later recalled). The brand new boat, without even a single payment on it yet, was demolished (see picture at right). The customer was eventually compensated by his insurance company.
"It was more of a shock than anything," said Reynolds. "By the time I got there, the fire department had all of the units open. They had a lock box master code that allows them to bypass the gate code."
All of Mansfield Boat and RV’s 242 units are locked and enclosed and range up to drive-thrus at 13’ wide, and 58’ long. The facility has six buildings, so it was important for the fire department to locate where the worst part of the blaze was quickly. Fortunately, they had a new heat sensor that showed which units were the hottest. They used it to determine the source of the fire.

Steps Taken
"I called all of the tenants immediately to alert them so they could look at their boats," said Reynolds. "I was not concerned about blame at that point—I have a great group of tenants. I only had one angry tenant out of the 28 that were affected.
The building where the blaze started was a large one with 28 units. The boats on ether side of the main blaze were totaled, and we had to replace the roof, clean the back, seal the stone and replace the seals on the building. That was all contracted out to Blackmon & Mooring.
We moved all (but one) of the tenants to other units; in some cases, we had to alter the size of existing units to accommodate them," said Reynolds.
"We have the ability to change out walls to expand units in our buildings for big motor homes, so that was a plus. I did not charge the tenants during the four-month period it took to clean up. (The insurance company, SafeCo, covered that).
"I did not lose a single tenant," said Reynolds. "I think we went way above and beyond what we had to do. Realistically, we could have just told the tenants: ‘Hey it’s your problem.’ But that would not have been very good business. Everything was spic and span when they moved back in. It was very stressful, but the tenants were very appreciative.
In other words, everyone came together in a time of need. I’m very pleased with the way things worked out."

Lessons Learned
"The lesson is to always maintain great customer service—always go above and beyond. We’re still on good terms with the guy who owned the boat with the faulty battery charger. He was so upset about what had happened. He had followed the warnings on the TMSA (now TSSA) Boat Addendum, and kept his gas tank full; if not, there might have been a large explosion. Overall, I feel we grew from the experience.
"I recommend that all facility owners work closely with their insurance companies to make sure their coverage is comprehensive and covers everything they need."

The Flood
During July of 2004, parts of northeast Texas experienced a torrential downpour. Actually it was two storms, two days apart. Fifteen and a half inches of rain fell in less than eight hours, hitting ground that was already saturated— Granbury, and yes, Mansfield and other surrounding areas were declared federal disaster areas.
The 5 Star Storage facility in Mansfield was hard hit, but quick action and teamwork saved the day. The facility was built two feet above the 100-year storm elevation, although city requirements only called for one foot above to comply. That turned out to be a good thing when the rain came.
"There really were not any engineering problems. What happened was that the city had storm drains on adjacent property that backed up and that’s what caused the problem," said Kurt Hudspeth, vice president of marketing & operations for MDK Solutions, which runs the facility. Ultimately Mansfield’s storm sewer system backed up; there was no place for drainage to go. The city acknowledged that their storm sewer system backed up, and litigation is still going on.
5 Star Storage did not have resident managers on the property at the time. When Hudspeth went there to open up, it was a disaster. First off, he saw some minimal damage to the office. Then, when he took a run around the property, he saw that the water had left a two to three foot high water mark along the fence line. Further inspection revealed that about three quarters of the 125 climate control units were flooded.

"The very first thing you’re concerned about is the safety of the tenant’s goods," said Hudspeth. "Our staff mobilized and began calling out to the tenants and asking them to come in immediately to assess any damage. The worst thing I saw was some valuable artwork that had been damaged. And of course there were soaked mattress sets and a lot of soggy boxes. In some areas, two to three inches of water had flowed in. But most of the water had receded when I saw it. "

Steps Taken
"Of course we wanted to help all of our folks, so we brought in a team of about 25 people to move all of our tenants to our upstairs climate control units, even if it meant spreading them out, " said Hudspeth. "We went out of our way to accommodate them. Some of our management people were running wet vacs. Some were making and tracking phone calls to tenants. Others were mixing with the customers, boosting morale and helping however needed. We brought in trucks and trailers to help with disposal. We ordered dumpster changes every day or twice a day. We trucked larger items to City Hall where public dumpsters were provided for disaster relief. In addition, we gave away hundreds of boxes and tape to customers who needed to re-package their belongings in a dry container. Some customers helped—they realized it was a natural disaster."
"Obviously it was very important for us to begin a massive clean-up and scrub down units. We took the additional step of dropping the temperature from 79 to 68 in the upstairs (non-flooded) climate control units to help control the possible spread of any bacteria or mold, and to facilitate drying out their stuff. Ultimately, we did not have any mold."
"The entire management team literally did not sleep for two or three days. It was full crisis mode," said Hudspeth. "Of course many customers were upset—their first thought was that it was our fault. But we pointed out on the TMSA lease that we are not responsible for rising water. In the end, we lost some renters, but saved most, due to the efforts we took to make sure that this was handled responsibly. I’d say that 99% of our customers were very grateful for the efforts we made to help them. In many ways it was a real success story. We worked 24 hours around the clock for about a week to get it under control."

Lessons Learned
In this case, insurance coverage was not an issue, as the flood was considered an "act of God." "The key to the success was the decision to get a hold of all of the tenants as soon as possible," said Hudspeth. "One lesson we learned is that it helps to build a superior building. If we had gone with the engineer’s plans and built a foot over the flood plain, we’d have been a foot underwater. Things are going to happen. When they do, all you can do is react, and be responsible to customers."
 
The Tornado
Late in the summer of 2002, Rusty Kennedy of Kennedy RV & Boat Storage in Mansfield was at home talking to his wife about how bad the weather was. There was a terrific storm going—lightening, thunder and bad winds. They were interrupted by a call from the alarm company informing them that there was glass breakage at their facility, so they went to check it out. When Kennedy got there it was a mess—a class 1 tornado had blown through.
We had four rows of covered storage," he said. "All four were damaged—one was completely gone."

Steps Taken
"My first thought was a terrible sinking feeling—how am I going to deal with this?" said Kennedy.
"The next thought was my to call my insurance agent. My first question was ‘did we have coverage?’ Luckily we did, and the amount was adequate. The coverage was great. We had some open acreage at our site, so I let everybody move their RVs out there, and did not charge them during that time. It took a number of months to clean up and re-build.
The fences were down, the gate had collapsed. Kennedy spent the first night at the site to make sure there was no looting. The next day, he repaired the fence and the gate, but had to wait three days to have a live wire on the grounds repaired.
"A lot of tenants wanted to come in right away, but we needed to take pictures of everything we could. The main thing is we wanted to provide security for everyone’s items."
"A lot of the people lost their vehicles. Of course, their losses were covered by their own insurance," he said.

Lessons Learned
"I learned that nature can be fickle, and can wreak havoc anywhere. But also, that there are a lot of good people—a number of my tenants actually pitched in to help. I’d say 75-80% stayed with us. You need to make sure that you have the right coverage. Luckily our office was not damaged and our records were intact. One guy did sue us—-he had a new RV. His insurance company said it could be fixed, but he really just wanted a brand new one. Fortunately we were able to settle that out of court with minimal damage. In some ways, I feel like we dodged a bullet. All new buildings were put up, and the insurance paid us for whatever business we had lost during the interim under the ‘business interruption clause’."
With 116 units, all boat and RV, Kennedy’s current occupancy is almost 100%, and he has a new motto: "be prepared."
"Document everything. It was a nightmare, but it all worked out," said Kennedy.

The Blaze
On January 3, 1998, around midnight on a Saturday, a police officer happened to be driving by the Price Company office in San Antonio, and saw smoke and flames. He quickly reported the fire, and called the Prices as well.
"We were in a 30,000 square foot office building, next to a hotel that was being built," said Chris Price, one of the owners. "Apparently a subcontractor was upset with the hotel’s main contractor, and torched the building right before sprinklers were going to be installed. It was a huge fire, and our building caught as well. We were on the second floor, and you could see flames coming 20 feet out of our window. You could see in my window, and my desk was on fire. I was kind of in shock— there’s nothing you can do."

Besides a number of sentimental things that were lost, the Price Company lost a large amount of valuable business records.
"Our building was ultimately torn down and never replaced," said Price. "All of our records concerning 12-13 self-storage facilities and 25 employees were in that building. Although each facility is managed on site, everything is run out of the main office."

Steps Taken
Once the Prices determined that no one was hurt, the first thing they did was contact their insurance company, Eichlitz, Dennis, Wray and Westheimer in San Antonio, and created an itemized list of what they had lost. The next step was finding a place to operate, which ended up being a living room for several months.

The Price Company went through and tried to salvage what they could—the water damage was actually the worst. Then they went to their lenders and tried to get copies of their bank records. It took a lot of time and money.
"We had to get everything running again: new computer equipment, management software, the works," said Price.
Of course all of the on-site computer back-ups had melted. The real problem was with finances—cancelled checks, tax returns. Even now, six years later, Price says he still comes across missing records.

Lessons Learned
The big lesson out of the fire is that you are never really adequately insured, says Price. "You’re not compensated for the downtime or lost opportunities. We had just signed contracts to build new facilities on two other properties. It took us about a year to build back," he explained.

"We also now back up our data and bring it to a remote site. The real financial cost comes from the time it takes to build back, and the delay.
"Take all safety precautions to avoid a fire if at all possible. You should always have a plan of action in place, and a list of contact numbers. Keeping sensitive records in a safe deposit box is also a good idea," said Price.