On the one year anniversary of Superstorm Sandy, U.S. Senators Robert Menendez (D-NJ) and Johnny Isakson (R-GA) today led a bipartisan coalition of members to overwhelmingly approve the Homeowner Flood Insurance Affordability Act which would protect millions of homeowners from facing flood insurance premium rate hikes that could drive millions of Americans from their homes. Under the Senate legislation, before any premium revision is authorized to National Flood Insurance rates, FEMA will have to complete an affordability study, propose real solutions to address affordability issues, and certify that their mapping process is accurate.
Oregon Senators Wyden and Merkley voted with the majority to postpone the enactment of the Biggert-Waters bill that has severely spooked the country’s real estate markets and threatened the tax base of many riverside and coastal community governments – not the least of which is Lincoln County where coastal homes, some in flood prone areas, account for a very substantial part of the overall county budget, with Lincoln City and Newport thrown in as well when it comes to police and fire protection services.
The bill to stop the higher premiums now goes to the U.S. House where it faces an uncertain future. The same arguments for passage are the same as they were in the Senate but the House has become a hotbed of fierce anti-government fervor which could boil over with unanticipated reactions – like whether to even have a National Flood Insurance program; calling it an overreach of government power. Of course without such insurance it could produce a collapse of many communities because unprotected properties would plunge in value, and therewith taxes would drop radically, and those wanting to buy homes would not likely get affordable mortgage rates due to flood risk.
People living in high flood risk areas cannot get private insurance because it’s largely not available. The private sector bailed out of the program after repeated high losses leaving the burden to the federal government to subsidize the losses. Unfortunately, over the years, the National Flood Insurance arm of FEMA is now 25 Billion dollars in the red. And the Congress told FEMA to make the program self sufficient – premiums to cover actually damages, but only up to $250,000 – a paltry amount in some coastal and river communities.
Based on climate change/global warming predictions, more and more of the country will find residents facing future flooding with no recourse on rebuilding unless they can pay cash for a new home – a group that is in the distinct minority to be sure.
The National Flood Insurance premium hikes are being felt all over the country, including right here in Lincoln County. One realtor said an expensive beach home for sale here on the coast suddenly carried with it a $64,000 ANNUAL flood insurance premium as a result of the new NFI premiums. Over five thousand a month just for flood insurance and, again, with a $250,000 liability cap.
The market value of such homes will of course fall like a rock, thereby reducing their taxable values which means much lower tax revenues for cities and counties that provide vital services.
If the U.S. House somehow finds its way to approving the moratorium legislation on raising flood insurance premiums, and if President Obama signs it, which he likely would, FEMA and NFI will have to go back to the drawing board on how they justify the flood maps they’ve already drawn and to come up with ways to make the rates more affordable. Failing that, lawmakers fear that the country will take a huge economic hit as massive numbers of property owners simply declare bankruptcy, load up their trucks and head for higher ground. Any move to make those living in non-flood areas, subsidize those who do, would likely produce a severe political firestorm.
Mother Nature prevails. She always does.