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Friday, Apr 18, 2014

Flood insurance bill heads to House


The U.S. House of Representatives is expected to consider legislation this week that would permanently curtail many of the flood insurance rate increases that a Senate bill has sought to delay.

Revisions to the Homeowners Flood Insurance Affordability Act released over the weekend by House GOP leadership would maintain lower, "grandfathered" rates for homes in flood zones that otherwise would see premiums jump because of updated government flood maps. Instead, more gradual increases would begin in coming years.

Another provision that immediately drives insurance premiums to their highest flood risk rate when a home is sold also would be repealed. That provision is blamed for damaging the real estate market in Florida and other coastal states.

Anyone who bought a home since the 2012 Biggert-Waters Flood Insurance Reform Act passed, and without knowing their premiums would jump dramatically, would be refunded and their rate returned to the level paid by the previous owner.

Legislators have suggested a surcharge on each of the National Flood Insurance Program's 5.6 million policies to address a $24 billion deficit. That money would go into a trust fund.

Meanwhile, a Senate bill has called for a four-year delay for many of the premium increases, which homeowners have said makes coverage required for government-backed loans unaffordable.

That bill passed 67-32 in January, but House Republicans have blocked several attempts to bring companion legislation to the floor. Republican leaders, including House Speaker John Boehner, say the delay would make the government flood program insolvent.

The original House bill, introduced in October by Rep. Michael Grimm, R-N.Y., has garnered more than 230 co-sponsors from both parties, yet a majority of Republican conservatives refused to allow it to go to a vote.

A notable exception was Rep. Gus Bilirakis, of Palm Harbor, who lost a spot on the House whip leadership team for joining three other Republicans in support of voting for the bill.

Conservative governors such as Rick Scott of Florida and Bobby Jindal of Louisiana also have pushed for a bill to be expedited, as Realtors, insurance agents and thousands of homeowners have reported horror stories of flood premiums doubling, tripling and even rising tenfold in extreme cases.

Tampa Democrat Rep. Kathy Castor said last week that the GOP leadership's refusal to take up a bill was prolonging the uncertainty for many people, some of whom face walking away from homes.

Supporters of Biggert-Waters, though, raised worries that a delay or repeal of the 2012 reforms would lead to the collapse of the government flood program.

Those reforms removed long-standing subsidies on older properties in flood prone areas that had been assessed rates far below their true risk based on updated Federal Emergency Management Agency flood maps.

About 20 percent of program's policyholders receive lower-rate policies for older homes built before communities joined the flood insurance program.

In aging coastal areas such as Tampa Bay, the burden of the reforms has been significant, with an estimated 30,000 single-family homes in Pinellas County alone subject to rate changes.

The revised House legislation would go far in relieving primary homeowners, though it appears second homes, commercial properties and those with repeated flood losses would continue to see rates go up by 25 percent each year. Premiums on primary homes would rise gradually.

Those increased premiums, combined with a $25 annual assessment on primary home policies and $250 for second homes and commercial properties, are intended to keep the program on budget.

Analysts with the R Street Institute think tank, which has offices in Washington, D.C., and Tallahassee, said the House bill would undermine the government flood program in the long run, causing taxpayers to permanently subsidize 700,000 older homes.

Besides being fiscally irresponsible, the change in policy will continue to encourage people to live in hazardous coastal areas, said R Street senior fellow R.J. Lehmann.

"Against the backdrop of rising sea levels, it [Biggert-Waters] represented a step in the direction of environmental responsibility to stop subsidizing development in risk-prone flood zones," Lehmann said in a written statement.

"What Congress is clearly demonstrating now is that neither party is ready to be quite that responsible," he said.

Groups such as Stop FEMA Now, which has rallied congressional members in Florida, New York and other coastal states, welcomed the House bill, but said it doesn't do enough to reform the government's skewed flood mapping system, nor does it clearly define future rate caps.

"Since we have momentum, let's keep pushing," group leader George Kasimos said.

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