Alabaster considering “catastrophic loss” insurance
By NEAL WAGNER / City Editor
Alabaster officials are considering purchasing insurance designed to help the city retain steady revenues from sales tax and other business-related fees in case a natural disaster or other unexpected event hits the city’s business centers.
About half of Alabaster’s general fund revenues come from sales tax and other business sources, and losing those revenues for an extended period of time could be detrimental to the city’s budgets, said City Administrator George Henry.
“Because of the way the tax base of Alabaster is, sales tax makes up about half of our revenues,” Henry said. “If, say, a tornado came through and hit the (Colonial) Promenade, the city would experience a substantial loss of income.
“And that income would not come back immediately,” Henry said.
The city’s finance committee is set to discuss the insurance during its April 13 meeting at 5:30 p.m. at the Alabaster Senior Center.
During the meeting, the committee will decide if it will recommend the catastrophic loss insurance to the Alabaster City Council. The committee will also decide what type of coverage it will recommend to the council.
If the policy is approved by the City Council, the insurance company would ensure the city will maintain steady sales tax, business license, business property tax and business inspection revenue streams if Alabaster experiences a set level of losses as a result of a disaster.
The amount of city revenue losses would be determined based on the amount of sales tax revenue the city was receiving before the damage occurred and the “likely sales tax revenue of the business if no loss or damage had occurred,” read the insurance form.
The insurance policy, which would be through the Alabama Municipal Insurance Corporation, would cover fires, tornadoes, acts of God and possibly earthquakes.
The plan likely would cost the city about $1,000 per year for $1 million in coverage.
“At (the finance committee’s) last meeting, they saw some of the details of this type of insurance. On Wednesday, they will determine if they want to recommend it and how much coverage they want,” Henry said.
“Hoover has had this for a while at Patton Creek,” Henry added.
Even though many of Alabaster’s businesses are in and around the Colonial Promenade, Henry said the city’s insurance plan likely will not be location-specific.
“You can’t really determine where a tornado is going to touch down. I imagine we will have a policy that will kick in when the city experiences a certain amount of lost revenue,” Henry said.
City Council President Jim McClain, who is also the chairman of the finance committee, said he is in support of the city purchasing the insurance policy.
“I think it’s a good business decision for the city,” McClain said. “And it’s not cost prohibitive for the city to purchase said insurance.
“We are probably going to implement that. I think it’s a good insurance policy to have,” McClain added. “It gives us something to fall back on.”
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