Tucked away on the west side of the small town of Broad Channel in the middle of Jamiaca Bay is a narrow, dead end, street that goes by the name of West 12th Road. Those of us who live there know that the nice part about living in a small town is that when you are not quite sure what is going on, someone else always does!
[Peter J. Mahon West 12th Road, Broad Channel]
Congressman Gregory Meeks told the crowd at the Belle Harbor Property Owners Association on Tuesday that President Obama will sign the Homeowners Flood Insurance Affordability Act into law at a ceremony “next week.”
The new law comes about through bipartisan efforts in both houses of Congress. Soon after The Wave published a series of editorials calling attention to staggering flood insurance premiums that were about to fall on homeowners, Meeks joined with Republican Michael Grimm of Staten Island to fashion legislation aimed at undoing much of the Biggert Waters Act.
Biggert-Waters, designed to save the bankrupt National Flood Insurance Program, included provisions that would trigger yearly premiums costing many thousands of dollars. Even one of the bill’s co-sponsors, Maxine Waters, said there were “unintended consequences” and the law should be fixed. Craig Fugate, director of FEMA, recognized the flaws but told a Senate committee he needed congressional help.
As grassroots effort grew and homeowners across the country made clear their outrage, members of Congress decided to work together to undo much of Biggert-Waters. Within several months the Homeowners Flood Insurance Affordability Act was written and presented in the House of Representatives where it passed with a 306-91 vote; the Senate approved it with a 72-22 vote.
Grimm, in a press release, remarked on the bipartisan action. “For both houses of Congress, controlled by opposing parties, to pass an identical bill on such an important issue as flood insurance without amendments is almost unheard of in today’s political climate,” Grimm said. “That is a clear testament of the strength of this reform and just how far it will go in keeping families in their homes and businesses open at an affordable rate for generations to come.” Senator Chuck Schumer, who visited Belle Harbor last week, said, “This is darn good news. Flood insurance will now be a friend once again, and not a foe.”
Schumer’s colleague in the Senate, Robert Menendez of New Jersey, released a summary of the bill:
Prevents Skyrocketing Rate Increases - Creates a firewall on annual rate increases – Prevents FEMA from raising the average rates for a class of properties above 15 percent and from raising rates on individual policies above 18 percent per year for virtually all properties.
Repeals the property sales trigger – Repeals the provision in Biggert-Waters that required homebuyers to pay the full-risk rate for pre-FIRM properties at the time of purchase. This provision caused property values to steeply decline and made many homes unsellable, hurting the real estate market. Under the Menendez/Grimm Bill, homebuyers will receive the same treatment as the home seller.
Repeals the new policy sales trigger – Repeals the provision in Biggert-Waters that required pre-FIRM property owners to pay the full-risk rate if they voluntarily purchase a new policy. This provision disincentivizes property owners from making responsible decisions and could hurt program participation. The Menendez/Grimm Bill allows pre-FIRM property owners to voluntarily purchase a policy under pre-FIRM conditions.
Reinstates grandfathering – Repeals the provision in Biggert-Waters that would have terminated grandfathering. If grandfathering was terminated, property owners mapped into higher risk would have to either elevate their structure or have higher rates phased in over five years. The Menendez/Grimm Bill allows grandfathering to continue and sets hard caps on how high premiums can increase annually
Refunds homeowners who overpaid – Requires FEMA to refund policyholders for overpaid premiums.
Affordability goal – Requires FEMA to minimize the number of policies with annual premiums that exceed one percent of the total coverage provided by the policy.
Reimburse successful appeals – Allows FEMA to utilize the National Flood Insurance Fund to reimburse policyholders and communities that successfully appeal a map determination. FEMA currently has the authority to reimburse successful appeals of map findings, but Congress has never appropriated funding for this purpose. Making appeal reimbursement an eligible expense of the NFIF would give FEMA the incentive to “get it right the first time” and repay homeowners and communities for contributing to the body of flood risk knowledge, according to backers.
Flood insurance advocate – Establishes a Flood Insurance Advocate within FEMA to answer current and prospective policyholder questions about the flood mapping process and flood insurance rates. The advocate will be responsible for educating policyholders about their individual flood risks, their options in choosing a policy, assisting property owners through the map appeals process, and improve outreach and coordination with local officials, community leaders, and Congress.
Urban mitigation fairness – Requires FEMA to establish guidelines on alternative mitigation methods for urban structures where traditional mitigation efforts such as elevation are impractical, i.e. row houses in Hoboken. This section makes clear that such alternative forms of mitigation shall be taken into account in the calculation of risk premium rates.
Clear communication – Requires FEMA to clearly communicate full flood risk determinations to policyholders even if their premium rates are less than full risk. This helps to inform policyholders as to their true flood risk.
Fairness for small businesses, houses of worship, non-profits and low-income homes – Requires FEMA to report to Congress on the impacts of rate increases on small businesses, non-profit entities, houses of worship, and residences with a value equal to less than 25 percent of the area median home value. If FEMA determines there is an effect on affordability for these properties, it must provide recommendations to Congress within three months after making the determination.
Mapping accuracy – Requires FEMA to certify its mapping process is technologically advanced and to notify and justify to communities that the mapping model it plans to use to create the community’s new flood map is appropriate. Also requires FEMA to send communities being remapped the data being used in the mapping process.
Notification– Requires FEMA, at least six months prior to implementation of rate increases as a result of this Act to make publicly available the rate tables and underwriting guidelines that provide the basis for the change, providing consumers with greater transparency.