Posted on: Saturday, March 5, 2005

UH-Manoa still reeling, 4 months after flood

By Beverly Creamer
Advertiser Education Writer

The Manoa campus is struggling with cash flow because of the Oct. 30 Manoa flood, and Chancellor Peter Englert said that since the first of February things have been tight.

"We're not bankrupt," Englert said this week during an editorial board meeting with Advertiser editors and reporters, "but we're fiscally very conservative right now."

The chancellor has been using discretionary money from a revolving research and training fund to carry researchers who lost major portions of their work when Manoa Stream flooded its banks and a 4-foot wall of water washed through campus, destroying one wing of laboratories in the Biomedical Sciences building, flooding the basement of Hamilton Library, affecting three other buildings severely and about 30 others in lesser ways.

Gary Ostrander, the newly appointed vice chancellor for research and graduate education, said that researchers dependent on being paid through their research grants "can't be paid because they're not doing the research."

Englert said he has used at least $1.5 million to sustain such research operations.

"It's a tricky situation," he said. "I have to handle the cash flow in such a way that we'll get the reimbursement from insurance before we have to declare bankruptcy," he said, adding that the campus will not declare bankruptcy. He has five months before the end of the fiscal year to balance the budget.

"I think we're going to be OK," he said.

But Englert also made a point that the price tag for the total damage to the campus — and full recovery — may have been radically underestimated because of the tremendous loss of research work and the need to catch up, as well as the necessity of safeguarding buildings for the future.

The total cost could go as high as $120 million, said Englert, including an estimated $25 million in recovery of lost intellectual property.

"We still don't know all those numbers," said Ostrander. "It would be a real mistake to say the cost of recovery is 'X.' There are many who don't know the cost of going back to repeat those experiments or shift to other areas of research. Some have said, 'I lost 25 years of work. I can't go back and get these samples. They're gone. So now what am I going to do?' Some of these things I don't know how to put a value on."

Meanwhile UH system administrators are recommending to the state that they accept federal aid for the flood from the Federal Emergency Management Agency.

Interim UH President David McClain said it appears that FEMA would pay between $15 million and $25 million toward the cost of repairing buildings damaged by the flood.

UH also has been allotted the entire $25 million from a state flood insurance policy to begin paying for the damage, he said.

McClain's staff puts the total damage estimates to property, including cleanup costs, at $75 million. Adding another $25 million for lost intellectual property, he puts total losses at $100 million, well below Englert's estimate that includes methods to prevent future flooding.

Even with insurance money, and FEMA money, that leaves a major gap to be paid by the state.

"There's no law that provides relief for a research institution from an act of God or a terrorist act," said McClain. That includes intellectual property losses.

As FEMA personnel continue to assess what exactly federal money will cover, it appears that most of the $20 million in losses to library contents at Hamilton Library will not be eligible for federal help because of the way contents are categorized.

However, concerns have been allayed that accepting FEMA money would push new insurance premiums sky high to cover damaged buildings in perpetuity, as required under FEMA guidelines. UH vice president for administration Sam Callejo said additional insurance premiums will be in the range of about $400,000.

There had been concerns that new insurance costs required under the terms of accepting federal aid would be too high to make it feasible to accept.

Reach Beverly Creamer at bcreamer@honoluluadvertiser.com or 525-8013.