WARWICK — Coastal towns on both sides of the border are welcoming the passage of a bill that will delay a sharp hike in flood insurance rates.
The Senate on Thursday passed the Homeowner Flood Insurance Affordability Act, postponing many of the insurance rate hikes scheduled to take effect under the Biggert-Waters Flood Insurance Reform Act of 2012.
The Biggert-Waters act was intended to solve the growing problems with the National Flood Insurance Program (NFIP). Passed in 1968, the NFIP required the mapping of flood-prone areas, introduced government-subsidized flood insurance for residents of floodplains, and made it possible for communities to receive disaster assistance. Decades later, with the program $24 billion in debt and deemed unsustainable, the Biggert-Waters Act was passed to phase out the subsidies and raise premiums to reflect true flood risk.
Determining risk also involved producing new coastal flooding maps. When the Federal Emergency Management Agency (FEMA) unveiled its new flood insurance maps for southern Rhode Island and Connecticut last October, they reflected increased hazards due to sea level rise and storm surge. The maps placed more neighborhoods in high-risk flood zones, making homes in those communities much more expensive to insure. The higher rates took effect in October when the FEMA maps were released.
Stonington First Selectman Edward Haberek Jr., who had warned that the Biggert-Waters Act would further harm the region’s shaky economy, said he was pleased that the Senate passed the reform act, delaying insurance hikes for four years. Haberek said he favored a more gradual phasing-in of the higher premiums.
“What’s needed is a feasibility study, which would be a phasing-in, as opposed to a huge increase,” he said. “There needs to be a better formula for how they determine the flood zones and there needs to be an examination of the digital maps.”
U.S. Senator Sheldon Whitehouse, a cosponsor of the reform act, said it would give Rhode Islanders some relief from skyrocketing flood insurance premiums.
“We must look for a path forward that puts the federal flood insurance program on solid financial footing, implements rates that reflect actual risk to properties, and does not put too much burden on homeowners,” he said.
While the Senate vote was taking place in Washington, representatives from Rhode Island’s 39 municipalities gathered Thursday in Warwick for the Rhode Island League of Cities and Towns’ annual convention.
Of particular interest to coastal towns was a workshop on flood insurance premiums. As they awaited the results of the Senate vote, representatives complained about premiums predicted to rise by up to 25 percent per year until 2017.
Workshop leader, RI Emergency Management Agency Chief of Planning Michelle Burnett, noted that some of the most vocal opponents to the reforms were home buyers, sellers and realtors, who complained that the act was making some homes impossible to sell.
“We are hearing a huge outcry from realtors, because almost all the properties that they are trying to sell in the floodplain right now, because of these changes, they cannot sell them,” she said. “Nobody wants to buy them, because they can’t afford them because the flood insurance is too high, and the reason it’s high is that as of Oct. 1, grandfathering is gone from properties. We’re talking tens of thousands of dollars for a policy. The highest number we’ve heard so far was about $61,000 for a policy.”
The reform act postpones insurance increases for home buyers, a move welcomed by realtors.
“This legislation will help homeowners nationwide who are experiencing financial hardship as a result of extreme flood insurance rates that are the unintended consequence of the Biggert-Waters reforms to the National Flood Insurance Program,” the National Association of Realtors said in a press release. “Congress needs to hit pause on the unforeseen price increases and negative market effects of the reforms while the Federal Emergency Management Agency can complete an affordability study and research the true impact of the law.”
The reform act will not postpone insurance rate increases for second homes, which are particularly prevalent in beach communities such as Westerly.
“The delay won’t impact most of our property owners because they’re secondary property owners. From what I understand, the delay is for primary residences,” said Westerly Director of Code Enforcement and Grants Administrator Amy Grzybowski.
Owners of vacation homes in flood zones will see their premiums rise by up to 25 percent per year for four years.
“Many of them aren’t seeing the increases until their policy is renewed, so until it’s in front of them, and if it’s gradual, like when they get a smaller increase, they might not notice until it continues over the next few years,” she said.
Like other coastal communities, Westerly has embraced mitigation as a way to lower flood insurance rates. Many property owners are raising their homes above the base flood level, allowing several feet of space or “freeboard” between the ground and the house. The state requires one foot of freeboard, but Westerly allows for three.
Grzybowski said the town was also taking advantage of federal “Hazard Mitigation” grants which provide funding for measures that reduce the risk of property damage and loss.
“We’ve got a rolling application process now, where folks want to elevate their structures, we use those programs. We’re trying to make sure that every effort that the town can do, we are,” she said.
The reform act still needs to pass a vote in the House of Representatives where it faces many opponents, including Speaker John Boehner, R-Ohio, other Republicans and several conservative groups. In addition, the issue of the NFIP’s long term sustainability remains unresolved.
Burnett warned that while the act would provide short term relief to homeowners, it could hamper the effort to repair the floundering NFIP, which has received numerous taxpayer bailouts.
“It could be very detrimental to what the act was trying to achieve,” Burnett said. “By putting it all to a grinding halt for maybe four years, you could be taking a lot of steps backward as opposed to approaching alternatives to just stopping it. There are other methods to delay it for a little bit longer, delay phase-in for a little bit longer, do things that wouldn’t necessarily stymie the process but ease the transition.”
Haberek said he hoped the delay would give FEMA time to reexamine its new flood maps and conduct an affordability study to evaluate insurance premium concerns.
“There needs to be a better formula of how they determine flood zones, and there needs to be an examination of the digital maps,” he said.