Anger over red tape and the slow pace of insurance payouts and permit issuance flares in remote northern city

By Nia Williams

CALGARY, Alberta, Oct 18 (Reuters) - Some five months after the wildfires that devastated Fort McMurray were extinguished, anger over red tape and the slow pace of insurance payouts and permit issuance is flaring in the remote northern Canadian city.

More than 1,900 structures were destroyed by the wildfire last May, which forced the evacuation of about 90,000 residents and shut in more than a million barrels per day of crude output from the area around Canada's oil capital in the province of Alberta.

Around 80,000 people have returned, according to Red Cross estimates, but most of those who came back to find their charred houses gutted by the fire have yet to start rebuilding as city officials and insurance companies struggle to deal with Canada's costliest disaster ever.

Making the situation worse, the region's harsh winter weather is set to raise construction costs and slow progress in rebuilding even further, residents say.

"People are mad and companies are mad, there have been lawsuits filed. Nobody trusts a word the city says," said Kevin Lewis, a local demolition company owner who was forced to leave during the fire but came back to find his house still standing.

While most of the oil sands operations have returned to normal rates, rebuilding efforts for thousands of homes in Fort McMurray, are progressing at a much slower pace. So far just 184 development permits have been issued and only around 30 houses are putting framework in place, according to city officials.

Marc Fortais, recovery team chief of staff for the Regional Municipality of Wood Buffalo (RMWB), which governs the city and local area, said the frustration of resident is understandable.

But he is quick to note that the magnitude of the work after the fire was enormous and city officials had to follow certain rules and processes to make sure the rebuilding effort proceeded properly.

"We hoped to have a ton of houses started and on the ground but we have had significant complexities," he said.

With the brutal northern Alberta winter on the way, many residents will now have to wait until spring to rebuild their homes. Daytime winter temperatures average minus 12 Celsius (10.4 Fahrenheit), but can fall as low as minus 40C.

Concrete companies add a winter heat surcharge from Oct. 1 to April 1, which boosts the cost of pouring a house's foundation by around 10 percent.

On a Facebook page dedicated to helping evacuees, a frequent complaint is about owners of burned houses having to pay for demolition, development and building permits before they can start work.

Last month, the local city council voted to waive permit fees and issue a rebate to owners of fire-destroyed homes, but many residents said it was "ridiculous" they were charged in the first place.

On average, building permits cost C$1,600 ($1,200) to C$2,000, said RMWB spokesman Robin Smith.

"Lots of people are frustrated with how it's going. The rebuild is going slower than expected, I am not sure if it's insurance issues or permits or a mixture of both," said fire captain Damian Asher, who lost his home while battling the wildfire in another part of the city.

Asher, whose own rebuilding plans were held up at one point while he waited for a demolition permit, said he has already spent C$12,000 on permits. While he is making progress on rebuilding his home, he understands the emotions people are going through as the community rebounds.

"People that are renting or living with friends are still sitting on the edge of not knowing whether they will be able to start rebuilding or not," Asher said.

($1 = 1.3290 Canadian dollars) (Editing by Alan Crosby)

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