On Tuesday, October 29, U.S. Senators Mary L. Landrieu, D-La., Johnny Isakson, R-Ga., Robert Menendez, D-N.J., Jeff Merkley, D-Ore., Thad Cochran, R-Miss., Heidi Heitkamp, D-N.D., David Vitter, R-La., and John Hoeven, R-N.D., released details of their soon-to-be-introduced legislation to fix flood insurance so that it is affordable, accessible, and self-sustainable. The legislation is the result of weeks of bipartisan collaboration and consultation with the
business community, local leaders and industry representatives.
The bill will delay certain pieces of Biggert-Waters until the Federal Emergency Management Agency (FEMA) completes the mandatory affordability study, proposes solutions, and gives Congress adequate time to review their findings. It would also give FEMA more time to complete the study, provide reimbursement to qualifying homeowners for successful map appeals, give communities fair credit for locally-funded flood protection systems, and create an ombudsman within FEMA to answer policyholder questions. The senators circulated a letter to their colleagues seeking co-sponsors, and expect to introduce their legislation shortly with strong bipartisan support from senators from across the country.
“Biggert-Waters reauthorized for five years reforms to the National Flood Insurance Program (NFIP), mandating FEMA to charge full actuarial flood insurance premiums on individual properties, resulting in sharp increases affecting millions of homeowners. Adversely affected homeowners will include senior citizens on fixed incomes who have lived in the same homes for decades, homeowners who purchased or built their homes before Flood Insurance Rate Maps (FIRMs) existed, and others who played by the rules, elevated their homes when maps were released decades ago, only to find that they need to elevate yet again when FEMA redraws their maps. For some Americans, these premium rate hikes will force them out of their homes and could even erode entire neighborhoods or communities,” the senators wrote.
“Biggert-Waters will result in dramatic rate increases at the time of sale of properties built before FIRMs were available, which is driving down property values of prospective home sellers. Biggert-Waters also calls for excessively high premiums for certain properties that purchased a new policy after the date of enactment, July 6, 2012. While we support Biggert-Waters’ intent to improve the solvency of the NFIP and deal with flooding in a fiscally responsible manner, this provision penalizes people for being responsible by creating a disincentive for property owners without federally-backed mortgages to voluntarily purchase flood insurance.”
The legislation will:
• Delay Implementation of Flood Insurance Rate Increases: Delays the implementation of rate increases until two years after FEMA completes its affordability study mandated by Biggert-Waters or until the FEMA Administrator certifies that the agency has fully adopted a modernized risk-based approach to analyzing flood risk for the following properties: Primary, non-repetitive loss residences that are currently grandfathered; all properties sold after July 6, 2012; all properties that purchased a new policy after July 6, 2012.
It also requires FEMA to promulgate regulations to address the identified affordability issues within 18 months after the completion of the study and establishes a 6-month moratorium thereafter to provide for Congressional review. Affordability measures authorized under this section may include targeted assistance to individual policyholders and factor in the impacts of rate increases on program participation. FEMA has estimated it will take an additional 2 years to complete the affordability study before regulations can be issued and reviewed by Congress meaning rate increases would be delayed for approximately 4 years in total.
• Provides adequate funding for the affordability study: Lifts the arbitrary $750,000 cap on the affordability to ensure FEMA has the funding required to complete it in two years from the date of enactment.
• Provides funds to reimburse homeowners for successful map appeals: Allows FEMA to utilize NFIP to reimburse policyholders who successfully appeal a map determination. FEMA currently has the authority to reimburse eligible expenses related to surveyors, engineers or similar services, but Congress has not appropriated funding for this account.
• Eliminates penalties on communities self-financing flood protection: FEMA’s AR and A99 flood zone categories provide more affordable flood insurance to qualifying communities in the process of levee construction, reconstruction, and improvements. Current regulations require a certain level of federal funding to qualify for either an A99 or an AR designation and prevent FEMA from giving communities fair credit for improvements made to existing flood control systems. Proactive communities that are actively investing in mitigation should not be penalized for self-financing flood protection projects.
• Protects the basement exception that allows the lowest proofed opening in a home to be used for determining flood insurance rates. This impacts 54 communities nation-wide where basements are necessary to protect homeowners and businesses from extreme weather.
• Establishes a Flood Insurance Rate Map Advocate within FEMA to answer current and prospective policyholder questions about the flood mapping process. The Rate Map Advocate will be responsible for educating policyholders about their individual flood risks, assisting property owners through the map appeals process, and improve outreach and coordination with local officials and community leaders.