SPRING HILL — Neil Rasmussen, enjoying a pool-side cigar on a recent balmy evening, said so many of his neighbors in the Pristine Place subdivision had collected insurance settlements for sinkhole damage, he thought he would give it a try, too.
He and his wife, Pamela Beacham — the homeowner and policyholder of record — filed a claim with state-run Citizens Property Insurance Corp. about two years ago. It took only a few weeks for the company to investigate and come back with an offer of $186,000.
"I said, 'Hey, send me the check,' " Rasmussen said.
Beacham paid off a $136,500 mortgage in August 2010, according to county records. The couple did not fix the sinkhole damage, said Rasmussen, 62, a retired truck driver, because other than minor cracking, there wasn't much to fix.
"I actually think I have a very solid house."
The decision to file a sinkhole claim might seem to be a simple case of applied science. But for the residents of Pristine Place, already stressed by a collapsing economy, that decision is often about psychology as much as it is geology.
Epicenter of claims
The sinkholes in this gated community near the Suncoast Parkway are not headline-making monsters that swallow houses, but subtle "subsidences" that crack walls and pool decks. Pristine Place's stucco homes — all less than 20 years old — are clean and spacious, the lawns closely cropped. From the street, the only signs of damage are the many crews pumping grout under the foundations of houses.
But according to the Hernando County Property Appraiser's Office, nearly one-third of the 673 homes in Pristine Place have documented sinkhole damage — the highest concentration in Hernando, which has the highest concentration of sinkhole-damaged homes in the state.
Talking to homeowners here and examining public records starts to explain the biggest puzzle about sinkhole claims: Why their numbers have exploded in the last half-dozen years.
Certainly nothing has changed about the basic underground formation of the state, said Jonathan Arthur, director of the Florida Geological Survey.
Frequent drought followed by heavy rain increases sinkhole activity, and cracking can be caused by loose fill dirt or other shoddy building practices, he said.
But "probably most importantly, there has been a change in perception by the population. People notice it more and are more aware of it, which is obviously not a geological aspect," he said. "I think it would be a marvelous dissertation topic for a sociology student."
'Cement truck city'
Like most people in Hernando, Pristine Place residents are made aware of sinkholes through billboards and cable television ads. The subdivision is also the target of solicitation letters and full-page spreads in its community newsletter, including a recent one from Fort Lauderdale-based Five Star Claims Adjusting that boasted the company had been "successful in recovering large checks for several of your neighbors."
But, really, all you have to do is keep your eyes open, Neil Rasmussen said.
"I see the flashing light of the school bus going by first thing in the morning and after that it's cement truck city all day long," he said.
Pristine Place is built around a main road, St. Ives Boulevard, that on the map looks a little like an upside-down and backward "L." Rasmussen lives near the big left-hand turn, on a block where owners of 13 of the 17 homes have reported sinkhole damage. Naturally, word spreads, said the owner of one of these houses, Paul Holmes, 69.
A friend in Pristine Place "had a 2-inch crack in his house and that starts you thinking," said Holmes, a retired lieutenant with the Nassau County (N.Y.) Sheriff's Department.
The tiles in his kitchen buckled, the pool deck cracked, and "sometimes when I was lying awake, I'd hear popping sounds," he said. "I started to realize, this isn't normal."
The engineering company that inspected the property, Geohazards Inc. of Gainesville, found underground voids, but stopped short of stating definitively that sinkholes rather than settling had caused the damage.
That uncertainty is typical and makes it hard to go after, for example, builders who bring in bad fill, said Ron Weaver, a land use lawyer from Tampa. Insurance companies are an easier target for homeowners who see cracks because a policy is an "explicit, paid-for right to compensation," he said.
Ernie Bohne, a retired construction company administrator from Westchester County, N.Y., said he saw many cracks, big ones, in his house two blocks south of Holmes' on Cedar Crest Loop, another hotbed of sinkhole claims.
The longest of these fissures ran from just inside his front door "20-25 feet, down to my kitchen. I had one in the guest bathroom between the toilet and the tub that ran right into the laundry room," said Bohne, 75.
His insurance company, Hartford, paid $130,000 to shore up the foundation with grout and, so far, about $90,000 more on cosmetic repairs: new tile floors, new sections of drywall, a new master bathroom, new paint inside and out, and new pavers covering his lanai and driveway. Still to come, for additional cost, is new landscaping.
"It's a lot of money. A lot," Bohne said last month as workers finished up his driveway.
"For the amount the insurance company has paid to fix this house, I could probably build another one."
On the bandwagon
If claims work out well for homeowners who fix sinkhole damage, they can work out even better for those who don't.
Residents who collect the maximum allowed by their policies can continue to live in their houses or resell them. Also, the Hernando property appraiser offers an unintentional tax incentive not to fix sinkholes, cutting the assessed value of repaired homes by 10 percent compared with 50 percent for unrepaired ones.
John Backer, 61, a retired municipal worker from the New York City area, said he never saw anything other than "normal cracks" in the brick-and-stucco house he built on Cedar Crest for $285,000 in 2001. He filed a claim only after his insurer, Liberty Mutual, notified him it planned to drop his sinkhole coverage.
"I said, 'Fine. If you're going to drop me, I'll jump on the bandwagon like everybody else around here.' "
He received a payment of $260,000 in 2010 and, according to property records, in August of that year satisfied two mortgages totaling $55,000.
Cindie Chiparo, 60, who lives down the street from Backer, said the $200,000 settlement she and her husband, Frank, received was at least $25,000 short of the amount needed to fill their sinkhole. Instead, they paid off their mortgage and her husband, a semiretired contractor from Chicago, repaired the interior cracks in their home.
Chiparo sees nothing wrong with keeping the insurance check. Because the county didn't do enough to ensure Pristine Place was built on solid ground, she said, "I still feel like I was ripped off."
Tracy Ward, 49, a telecommunications worker who lives on the same, claim-prone block as Rasmussen and Holmes, said he started seeing cracks, including a wide one in his home's concrete slab, about five years ago. After talking to neighbors, he realized it might be caused by a sinkhole and filed a claim in 2009.
On the strength of an engineering report that found "sinkhole activity cannot be eliminated as a contributing cause of the observed distress," he and his wife, LeAnn, received a settlement of $206,000 — $78,500 more than they paid for the house in 1997.
Now, Tracy Ward said, "even if we sold it for $40,000 we'd come out ahead. We wouldn't have got that much out of it even if we sold it in the high market."
Don't blame the homeowners, said Frank Kennedy, who lives a block north of Ward. The real villains are the contractors who have gouged Citizens for shoddy construction work.
He watched it happen at the home of his next-door neighbor and father-in-law, George Cataldo. Citizens paid at least $137,000 to fill a sinkhole beneath Cataldo's house and fix wall and ceiling cracks — which reappeared almost immediately. Cataldo sued and collected an additional $100,000 from Citizens.
"I'm not the bad guy here. . . . The guys who are orchestrating this, the ones who are associated with Citizens, they are the ones making the money," said Kennedy, 67, a retired plumber from suburban Boston. Lawyers, who take large percentages of every court settlement, also make out well, he said.
But so have Kennedy and his family members.
In 2009, after a long legal fight, State Farm paid $211,000 to Kennedy and $96,000 to his lawyers for a sinkhole claim he filed on a home a few miles from Pristine Place he owned with his late wife, Rosanne. The cracks were so bad, he said, the bedroom flooded after heavy rains.
He sold that house — with the damage disclosed — for $151,000 in 2006.
In 2007, his second wife, Cataldo's daughter Alicemarie, collected $210,000 from Travelers Insurance for the house where they now live in Pristine Place.
Altogether, their claims on three houses have cost insurance companies at least $754,000.
Kennedy is repairing the damage to his current residence "little by little," he said. "Most of the (sinkhole) damage you get around here, you can live with."
All these homeowners point out that pocketing sinkhole claims was legal before the law changed last year. But one of Ward and Rasmussen's neighbors, Carl Stopp, 75, said the practice is dishonest because other homeowners ultimately pick up the tab.
"If you receive money for a sinkhole and don't have anything done, to me that's fraud," said Stopp, a retired autoworker who lives in a house owned by the family of his recently deceased wife. "I couldn't do that as a Christian."
Pristine Place, with slightly more than 1 percent of the single family homes in Hernando, accounted for a loss of $9.9 million in taxable value due to sinkhole damage last year, about 9 percent of the county total.
The lousy housing market that owners of unrepaired homes complained about wouldn't be so lousy if not for the traffic in cut-rate sinkhole homes, said Anthony Kanaris, a property appraiser who lives in Pristine Place.
These unrepaired houses drove down the median sale price in Pristine Place in the 12 months prior to Dec. 1 to $131,000. That is nearly $48,000 less than in a nearby, older subdivision with homes about the same size as those in Pristine Place. It lacks Pristine Place's gates and community center, Kanaris said, but also its high concentration of sinkhole claims.
"For an upscale community like this, with mostly new homes and high quality construction, that's a scary number," he said of the median sale price.
The buyers of the unrepaired homes are not just investors but people who plan to live in them — which may be the surest sign that opportunism is driving the binge of sinkhole claims in Pristine Place.
Walter Crocker, a Methodist minister from Delaware who plans to retire to Pristine Place, recently paid $104,000 for the unrepaired home next to Rasmussen's. The previous owner, who filed the sinkhole claim, bought it in 2005 for $245,000.
After examining the house and an engineer's report on the sinkhole, neither Crocker nor his building inspector found any serious problems.
"It seemed to me that . . . it's not much more settlement than you could expect when you have a new home built," he said. "We got the idea that some people were just sort of cashing in without any major problem, and it surprised me they weren't talking about $20,000 or $30,000, but several hundred thousand dollars."
Times news researcher Carolyn Edds contributed to this report.