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Sunday, Nov 23, 2014
Editorials

Homeowners need relief from massive flood insurance rate hikes

Published:

Congress needs to hit the pause button on the federal flood insurance reforms that are threatening the financial well-being of thousands of homeowners in the Tampa Bay area.

Calls by tea party soldiers for Congress to resist any delays ignore the stark realities many homeowners are facing, some of them in modest homes miles from the state’s shorelines.

Congress should act quickly to adopt proposals by members of the Florida delegation — Democrat and Republican — to delay the reform’s implementation for a year. That’s an adequate amount of time to study the flaws and offer a fix that eases the burden on homeowners facing rate hikes many are unable to pay.

As we said a month ago, the 45-year-old National Flood Insurance program unquestionably needs reform.

But testimony this past week from county property appraisers, Realtor groups, mayors, and homeowners makes it abundantly clear that the reforms under the Biggert-Waters Act are flawed and threaten the Tampa Bay area’s fragile housing recovery.

Consider the case of Colin Elston, a retiree who bought a house in Treasure Island in June. He was unaware of the reforms on the horizon and budgeted $2,000 for flood insurance. He now faces a $12,000 bill that could drive him into foreclosure.

In Pinellas and Hillsborough counties, many of the homes being hit with huge increases are valued at under $130,000, not exactly luxury waterfront mansions. In Pinellas, about 1,000 of the affected owners are low-income seniors.

In Hillsborough, 80 percent of the affected homes are not on the water.

The federal flood insurance program was created to help homeowners deal with natural disasters but has encouraged construction in flood-prone areas.

Congress passed Biggert-Waters in 2012 to address a $20 billion deficit in the program, which is supposed to be supported entirely by premiums but has been borrowing money to cover losses.

The reforms are meant to strip the government subsidies that have kept rates artificially low for homes in flood zones. Many of the increases are being phased in over years. But even those annual increases are too steep for many to afford, in some cases jumping from $2,500 to $15,000 a year.

When older homes are sold, the subsidies are dropped entirely and the new rate is immediately assessed at the full flood risk. Some homeowners feel trapped in homes they can’t afford and can’t sell because of the flood insurance rate.

Realtors fear the sudden change in rates will depress a recovering housing market.

Florida’s congressional delegation is trying to bring some relief, but is up against the political dysfunction that has deadlocked Washington.

U.S. Reps. Bill Young, Kathy Castor and Gus Bilirakis have voted for legislation delaying the rate hikes for a year. U.S. Sen. Bill Nelson has sponsored a bill delaying the hikes for a year while a Federal Emergency Management Agency affordability study is completed. But the Senate has not acted on the bill.

The measures are not meant to continue unsustainable subsidies. The lawmakers want to find a way to help owners stay in their homes while paying a reasonable rate for the flood risk. Alarmed by the scope of the problem and the effect it might have on communities, state and local officials are also considering ways to mitigate the steep increases. Florida has been a donor state to the program over the years, paying billions of dollars more in premiums than the state has received to cover claims. The homeowners who paid into the program deserve some relief.

Lawmakers need to delay the reforms for a year, and then spend that time creating an affordable program that pays off the debt without bankrupting the homeowners.

This is not about benefiting wealthy homeowners in waterfront mansions. It’s about helping thousands of middle-class families who played by the rules but now find themselves faced with insurance bills they can’t afford.

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