Many residents of the city's waterfront neighborhoods are struggling with a federal mandate that they elevate their homes or face increases in coastal flood-insurance premiums that eventually could exceed 500%, city officials and advocates say.
In New York City, owners of 1,553 structures insured by the National Flood Insurance Program face higher rates because they have lost federal subsidies, according to maps from the Federal Emergency Management Agency. Another 30,000 structures in areas such as the Rockaways and Staten Island could face higher rates within two years, as the agency revises flood-zone maps.
While the insurance program historically has attracted criticism because it uses taxpayer support to rebuild vacation homes in vulnerable areas, city officials say most of the covered New York City structures are modest primary homes owned by middle-class residents.
The rates are surging under the federal Biggert-Waters Act, a 2012 law that phased out subsidies for homeowners in flood-prone areas to reflect the true risk of living on the coast. The law could deal another blow to middle-class communities still reeling from superstorm Sandy, said Dan Zarrilli, the city's director of resiliency measures.
"If you live on fixed income in the Rockaways, this is going to be devastating to you," Mr. Zarrilli said. "This is just a huge challenge to the city, and I'm not sure what we're going to do about it."
That sense of uncertainty was shared by people such as Jean Sabbatino, who said she depleted her savings and took on more credit-card debt to repair her Staten Island duplex after Sandy. Ms. Sabbatino, 76 years old, said she expected her flood insurance to soon cost $5,000 a year. Her rates are among those likely to jump in 2015.
"If something doesn't change, I won't be able to afford to live here," said Ms. Sabbatino, a retired communications worker. "There's just no way."
The Biggert-Waters Act reauthorized the flood-insurance program but with significant changes, and it had bipartisan backing in the House and Senate. Among its supporters were New York's Democratic senators, Charles Schumer and Kirsten Gillibrand, along with New Jersey Democratic Sen. Robert Menendez. All have now called for delays or changes in the insurance-rate increases. The senators' offices said they became concerned about the increases after hearing from homeowners and businesses affected by the legislation.
The impact of the rate increases this year was felt across the region: They applied to 3,450 structures in Suffolk County, 1,596 in Nassau County, 1,324 in Monmouth County, N.J., and 8,285 in Ocean County, N.J.
"People aren't going to pay $10,000 or $20,000 a year. They just can't," said Toms River resident George Kasimos, who has organized demonstrations in New Jersey against the increase.
Many people interviewed said they pay less than $1,000 a year now for flood insurance, thanks to government subsidies that reduced their costs. Under the new legislation, rates are set to rise 25% a year until policyholders assume the entire risk of living where they do. FEMA's website cites an agency estimate that policies could cost $20,000 or more "in rare cases."
Mr. Zarrilli said New York's dense waterfront neighborhoods, populated by middle- and low-income families, stand in contrast to many high-income coastal areas also covered by the FEMA insurance programs.
FEMA said it would conduct an affordability study of the rate increases. The agency estimated the study could take more than two years to conduct and cost more than $1.5 million.
In an appearance before the Senate last month, FEMA Administrator W. Craig Fugate said the U.S. should stop subsidizing risk for new construction, businesses and secondary homes. "But I think we need to look at affordability people for who live there, look at how we can mitigate their risk," he said.
Democratic Rep. Maxine Waters, the Californian who co-sponsored the Biggert-Waters Act, was seeking to delay its implementation, saying in a news release that she didn't intend for homeowners to face "outrageous" premiums.
Although FEMA says some property owners who lift structures above flood plains could see their insurance rates drop, the Biggert-Waters Act has sparked protests in at least nine states.
Palmer Doyle, 58, said he has spent $170,000 out-of-pocket on his Rockaways home, sapping money from family members, savings accounts and racking up debt. He now is looking at insurance premiums that could jump to $9,000 year—from $458.
"If you want to raise it to $1,000, that hurts a little but I can handle it," he said. "If you want to raise it to $9,000, are you out of your mind? This particular issue is really going to kill communities."