Boom Times for Florida’s Sinkhole Fixer-Uppers
Nothing serves as a metaphor for Florida randomness quite like a sinkhole. One minute you’re sitting in your air-conditioned condo in a gated community. The next minute, the earth opens up and swallows the building. That just happened in Clermont, Florida, at a Disney-area resort.
To some extent, sinkholes are to Florida what wildfires, earthquakes, and mudslides are to Los Angeles. They’re common occurrences, due to circumstances of geography, geology, and human intent on building. And every time they open, somebody has to fill them.
“I would say Florida is probably the sinkhole capital of the world,” said Frank Vitale, vice president and general manager of LRE Ground Services Repair. “And the majority of the sinkholes usually happen in the Central Florida area. That’s considered Sinkhole Alley.”
I caught Vitale on the phone as he was leaving the site of the Clermont sinkhole, where he had just done a hit for CNBC. LRE, founded in 1989, is the state’s largest sinkhole remediation firm. ”It’s definitely grown over the last 10 years, but in the last five years it has kind of exploded,” Vitale said. In the past several years, the firm has added about 80 workers—its labor force now numbers 130—and it fills about 300 sinkholes per year. “We’ve completed over 4,500 jobs, with 1,500-2,000 of them in the last five years.”
Most are far more mundane than the dramatic scene at Clermont. Such catastrophic sinkholes, which involve the wholesale destruction of property, account for about 1 percent of all sinkholes. Garden-variety sinkholes typically involve cracks in the drywall, doors, and windows that don’t close the same way they used to, foundations that seem to settle in strange ways. The sinkhole remediation specialist’s job is relatively simple, though logistically complex. The main technique is pressure grouting, in which they pump concrete into the ground at a high pressure to put a solid cap on the limestone. In effect, they try to give the house the solid sub-foundation that Mother Nature failed to provide. More-complex jobs might involve chemical grouts that bind the soil, and “underpins,” which involves putting structures resembling stilts underneath homes.
The market is clearly growing. The data show (PDF) the number of sinkhole-related insurance claims in Florida soared to 7,244 in 2009 from 2,360 in 2006, before falling a bit to 6,694 in 2010.
Why Florida? Well, it has to do with the unique interplay between rock, water, and people aggressively seeking insurance claims. The limerock lying underneath Florida’s soil is both porous and brittle, said Vitale. “When it deteriorates it creates a hole, and everything above it sifts into that hole,” he said. “Like an hourglass.” Building, development, extreme weather, and a ravenous agricultural industry have also played havoc with the area’s natural water management system. In 2010, when farmers in Plant City desperately pumped water out of the ground in an effort to protect strawberry crops, they lowered the water table in the area by 60 feet. The result: up to 80 sinkholes in the area.
Sinkholes are “one symptom of the way Florida has completely denaturalized its nature,” said Michael Grunwald, a longtime Time correspondent and author of The Swamp: The Everglades, Florida, and the Politics of Paradise “They carved up this natural water management system that worked really well—the Everglades—and turned it into this cockamamie, FUBAR system.”
Of course, the surge in sinkhole claims may not be purely natural. Insurance firms typically pick up the hefty bills for sinkhole remediation. And that may have led people to file claims for damages—even if, say, shoddy workmanship rather than sinkholes was the cause of a cracked driveway. A Florida State Senate Report in 2011, which can be seen here (PDF), documented the dramatic rise in the volume and cost of the claims. Had they all been paid, the 25,000 sinkhole claims filed between 2006 and 2010 would have cost $1.4 billion. The state legislature responded by passing a law in 2011 to limit insurers’ losses on sinkholes. The state insurance regulator does not have claims data for 2011 and 2012.
The industry has organized to combat fraud and promulgate standards among the state’s 70-odd licensed sinkhole-remediation firms. LRE is a founding member of the Florida Association of Sinkhole Stabilization Specialists.
Sinkhole-related insurance claims fell in 2010, and it’s likely they have declined in the past couple of years in response to the legislation. But sinkholes are still popping up with great frequency. “In the Tampa Bay area, the only place left to build is north of the city, in Pasco and Hernando Counties, and I don’t think it’s any coincidence that a lot of the sinkholes are showing up there,” said Jim Flynn, marketing manager at LRE.
LRE remains as busy as ever. The company expects to handle 300 jobs this year, about one per day, and it has 20 crews working at any given time. “No two sinkholes are alike,” said Vitale. “Usually, a standard pressure-grouting job takes seven to 10 days. But there are jobs that have taken a month and a half.” The average job costs about $65,000. LRE doesn’t give out annual revenues. But 300 jobs at an average of $65,000 per job comes out to about $20 million in annual revenues. LRE is ranked 15th on the Tampa Bay Times list of best small businesses to work for. “A lot of our employees have been with us for over 10 years,” notes Vitale.
The company’s business, for now, seems to be on steady ground. And so are its offices, located in Brooksville, a town about an hour north of Tampa. I asked if sinkholes had ever opened near its own building. “No, we haven’t had any,” said Vitale. “Knock on wood.”