A bipartisan deal has been struck in Congress that aims to avoid the hikes in flood insurance rates under a 2012 law that could lead to some residents paying thousands of dollars a year in flood insurance premiums.
The bill, the Homeowner Flood Insurance Affordability Act, was introduced this week by Rep. Maxine Waters (D-Calif.) and Rep. Michael Grimm (R-Staten Island) in the House of Representatives and Sens. Bob Menendez (D-NJ) and Johnny Isakson (R-Ga.) in the Senate. Waters is the ranking member of the House Financial Services Committee and co-sponsor of the 2012 Biggert-Waters Act, the law the new bill seeks to change.
That law, passed only a few months before Hurricane Sandy, aimed to put the National Flood Insurance Program on better financial footing, but in order to do that, it would end some of the government subsidies that have made flood insurance affordable for many residents living on the shore.
The NFIP, administered by the Federal Emergency Management Agency, was more than $25 billion in debt when the law was passed in the summer of 2012.
In some cases, premiums could rise from $400 a year to as high as $12,000 a year.
If Congress approves the deal and it gets President Obama’s signature, any flood insurance rate hikes would be delayed for four years and FEMA would have to complete an affordability study and propose regulations that address the issue. The study would then have to be reviewed by Congress.
On Thursday, Rep. Hakeem Jeffries (D-Brooklyn) was to hold a press conference in Howard Beach detailing the plan to constituents in the neighborhood, where many have warned the effect of the rate hikes could be catastrophic. Most residents in Howard Beach did not have flood insurance prior to Sandy — most didn’t need to. Flood insurance was only required for homeowners who had mortgages or who had previously suffered significant damage in a past storm.
But Sandy meant that many of those people would now be forced to obtain flood insurance and as FEMA remapped the shoreline — a requirement under Biggert-Waters — it added most of Howard Beach and all of the Rockaway Peninsula into a flood zone, forcing residents to buy flood insurance. Now they face the reality that the 2012 law could remove subsidies that make the flood insurance affordable. The end result would be a significant cost increase for many residents, who may already be struggling financially due to lost wages or debt incurred from Sandy.
The issue goes beyond New York to other parts of the country where flood-prone communities feared Biggert-Waters would destroy their neighborhoods. On Sept. 28, rallies were held simultaneously around the country, including in Broad Channel, where residents of the Rockaways, Howard Beach and other coastal communities pleaded with Congress to change the law and delay any rate hikes.
To the organizers of the Broad Channel rally, news of a deal was met with optimism.
“What they’re proposing is very encouraging,” said Dan Mundy Jr., president of the Broad Channel Civic Association, who led the rally last month. “It’s a great start. We hope that it gets a vote and that there’s enough votes there.”
The increased flood insurance rates took effect this month, but they would be halted if the proposal becomes law.
Assemblyman Phil Goldfeder (D-Rockaway Park) said the deal is good news, but he said there needs to be a more permanent solution so when the four-year delay is up, residents are not stuck with astronomical flood insurance premiums again.
“I commend Congress on reaching a deal, but we need a long-term solution,” he said.
Goldfeder has proposed legislation that would put flood insurance under the domain of the state rather than the federal government, similar to the New York Property Insurance Underwriting Association, which was created after discussions between insurance companies and elected officials in 1968 when city residents had trouble obtaining fire insurance during a period of urban decline.
Goldfeder’s idea is to “spread the risk” between the NFIP and private insurers who would take part in the state-run program.
He acknowledged the difficulty in getting a plan like that enacted because of the likely opposition from the insurance industry, but believes it is possible.
“This is a very ambitious plan, but I think if all the right people come to the table, it can get done,” he said.