ST. PETERBURG — For Tampa Bay area homeowners harried by the burgeoning costs of flood insurance, the bipartisan bill passed by Congress this week offers a level of certainty about the future, if not total relief.
The legislation that’s set to be signed into law by the president will keep rates from climbing by more than 15 percent each year for primary homes in most cases, with a hard cap of 18 percent.
When a house is sold, there won’t be any more instantaneous premium hikes that have made insuring for floods more costly than paying the mortgage for some people.
Although second homes and businesses won’t get much help, Florida Realtors and insurance professionals hailed the bill passed Thursday as a political victory, hard fought for many months since the implementation of the controversial Biggert-Waters Flood Insurance Reform Act.
“If Congress didn’t pass this bill, we would have probably had places in the Tampa Bay area, for example, that were just totally shut down,” said John Sebree of the Tallahassee-based Florida Realtors organization, a major force in pushing for changes to the 2012 reforms.
But despite a mandate in the bill for the Federal Emergency Management Agency to complete an affordability study for the flood program, questions remain about how high rates will go over time in high-risk areas.
That worries Pinellas County Property Appraiser Pam Dubov.
Looking a few years down the line, how long will it take for a $2,000 policy to gradually climb to $10,000 or more?
“I don’t think Congress should think they’re finished yet, although what they did yesterday was great,” she said.
“We’re better off than we were six months ago. I by no means think everything is resolved.”
After passing the U.S. House of Representatives with overwhelming support earlier this month, the Homeowner Flood Insurance Affordability Act sailed through the Senate on Thursday with a vote of 72-22.
With real estate groups, municipal governments and state leaders pressing for action, the bill received broad support from elected officials in coastal states like Florida and Louisiana as well as many landlocked states.
The bill offers the most relief to owners of primary homes, though it does eliminate a sales trigger for second homes and business properties that causes rates to climb to their highest level when a property changes hands.
Those who recently bought homes and were slapped with an exorbitant premium hike would get refunds, though separate legislation by Sen. Mike Lee, R-Utah, would deny these rebates to buyers of second homes.
That measure passed the Senate on Thursday, but must still go to the House for a vote.
In Florida, 13 percent of the state’s 2 million flood policies are subject to rate changes under the current 2012 reform law, which removes subsidies on older homes that had been receiving insurance at rates below FEMA’s assessment of their actual flood risk.
The Tampa Bay area has an unusually large number of these homes built before the 1970s, with more than 50,000 single-family residences in Pinellas and Hillsborough.
In coastal communities such as Treasure Island, upward of 75 percent of the homes are affected by the law.
Treasure Island Mayor Bob Minning said the repeal of many parts of the Biggert-Waters Act may give a short-term boost to the community’s real estate market, but he doesn’t see it as a long-term solution.
“I’m not going to get zapped when I sell my home, the new buyer isn’t going to get zapped immediately, but those people are still going to see an increase — a gradual increase,” he said, noting that the bill orders a range of annual increases from 5 percent to 15 percent.
Coastal Realtor Cliff Roe is more pointed.
“The question is slow death versus fast death, and this is just slow death,” he said.
The real hope from the pending new law is that it buys people more time while the government revamps its flood rating procedures and also makes more room for the private market to come in with competitive policies, says St. Petersburg insurance agent Jake Holehouse.
“Essentially, what it does it gives the private market more time to react, more time to develop rates and more time to get rate competitive with FEMA,” said Holehouse.
A 30 percent drop in sales for homes in high-risk flood zones in the fourth quarter of 2013 might have been even worse had it not been for private policies that already have come onto the market, Dubov said.
A bill to create a framework for more private market flood insurance in Florida by Sen. Jeff Brandes, R-St. Petersburg, is on its way to the state Senate after approval this week by the Senate Committee on Banking and Insurance.
“I’m still holding out hope for that,” said Minning, who bought private flood insurance after his National Flood Insurance Program policy became too expensive.
Even those who want to switch back to their government policy after the bill goes into law will likely have to wait for more than a year before FEMA can implement the changes, said Evan Hecht, who offers private flood policies backed by Lloyd’s of London from his Gainesville-based insurance agency.