Flood Insurance Bill Passes Senate 72-22 Collective Sighs of Relief Hoping President Will Soon Sign

COURT HOUSE – Media and legislators around the nation told stories March 14 about what some mistakenly thought was a local Cape May County concern: exorbitant flood insurance premiums.
When the Senate passed, 72-22, a bill March 13 that would trim those premiums to 18 percent annually and sent it to President Barack Obama to sign, there was a collective sigh of relief from homeowners.
One of the first to smile was Sen. Robert Menendez (D-NJ) who “today fulfilled his promise to flood-weary New Jersey residents that he would fight to protect them from the financial tsunami that would have resulted from soaring flood insurance rates. By a 50-vote margin, the Senate has passed a Menendez-led measure that substantially amends the looming hikes under Biggert-Waters and sends the bill to the President’s desk for his expected signature,” according to a statement from his office.
“Thanks to a strong, bipartisan effort,” stated Menendez, “we have averted the manmade perfect storm that would have crushed thousands of families under the weight of skyrocketing flood insurance rates, forced many from their homes, plummeted property values and destroyed entire communities.”
Menendez authored and first introduced the Homeowner’s Flood Insurance Affordability Act last October on the one-year anniversary of Superstorm Sandy.
It addressed the egregious problems with the Federal Emergency Management Administration’s (FEMA) National Flood Insurance Program (NFIP), bringing relief to homeowners who desperately needed help, while not significantly impacting the program’s solvency. This legislation passed overwhelmingly in the Senate in January. A companion version, modified in consultation with the senator, passed the House last week and received the Senate’s final approval today.”
The subject drew widespread attention in Cape May County from barrier island property owners who were receiving flood insurance premiums that were, in some cases, equal to or greater than mortgage payments.
U.S. Rep. Frank LoBiondo (R-2nd) held a briefing March 10 in Ocean City about the bill. Prior to that, he had addressed the Cape May County Chamber of Commerce about the impact the premiums would have if the House, then the Senate bill did not pass.
LoBiondo had told the Herald the House bill would pass the Senate quickly if there was support and no major changes. To make that happen, legislators from around the nation had to concur.
As reported by Bruce Alpert in the New Orleans The Times-Picayune March 14, “After a day full of frantic negotiations, the Senate Thursday gave final congressional approval to legislation that would limit most flood insurance premium increases resulting from a 2012 law to 18 percent a year.”
“What we all wanted was affordability and we got it,” said Sen. Mary Landrieu, D-La. Landrieu said a final deal to bring the bill up for a vote was reached just 30 minutes before debate began. “There were a few trying moments,” she said.
“Sen. David Vitter, R-La., said he worked with two Republican senators, Mike Lee of Utah and Tom Coburn of Oklahoma, who had concerns about the bill. They decided not to block a vote brought up under a process in which no amendments were allowed. Under that process, a single senator could have blocked a vote until the Senate returns from a recess on March 24.
“Sponsors wanted to pass the same bill passed by the House last week by a 306-91 so it could immediately go to President Barack Obama for his expected signature.”
The problem was not confined only to coastal states, but to every property touched by a river or bay, places like West Virginia and along the Mississippi River.
The Biggert-Waters Act was passed in order to alleviate the debt of the National Flood Insurance Program, several billion dollars in the red after hurricane claims were paid. Increases of 25 percent annually were what some homeowners received from their providers.
This new legislation is budget neutral—does not add a dime to the deficit, nor hurt the solvency of NFIP—and prevents skyrocketing rate increases by implementing the following measures:
Creates a Firewall on Annual Rate Increases – Prevents FEMA from raising the average rates for a class of properties above 15% and from raising rates on individual policies above 18% 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 5 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.
The Menendez/Grimm Homeowner Flood Insurance Affordability Act of 2014 also establishes the following requirements to enhance FEMA transparency and outreach:
Reimburse Successful Appeals – Allows FEMA to utilize the National Flood Insurance Fund to reimburse policyholders and communities who 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.
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 Flood Insurance 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 tradition 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% 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 3 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 are appropriate. Also requires FEMA to send communities being remapped the data being used in the mapping process.
Notification – Requires FEMA, at least 6 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.
Menendez stated: “This was a bipartisan, bicameral undertaking at a time when many—soured by the often-corrosive tenor in Washington—insisted that it was impossible to achieve. It was a long and tough road, but like the resilient people of New Jersey, I refused to give up and, with a commitment from President Obama to sign this measure into law, I am happy to say, ‘Relief is on the way.’”
Jeremy Wallace, political writer for the Florida-based Herald-Tribune wrote, “It took nearly six months, but Congress on Thursday finally passed a bill to undo the mess lawmakers made of the federal flood insurance program by imposing sharply higher premiums for thousands of property owners across the country and Florida, threatening the state’s tenuous housing market.
“By a 72-22 vote, the U.S. Senate passed what amounts to a do-over bill that scraps the big rate hikes many primary homeowners faced while still stabilizing the flood insurance program for future disasters, as was Congress’ original intent.
“Both U.S. Senators from Florida — Democrat Bill Nelson and Republican Marco Rubio — voted for the bill Thursday.”
Cape May County Freeholder Director Gerald Thornton had also done his part to convince officials throughout the region that the flood insurance bills residents were receiving would have devastating impacts on communities near and far. He often warned at freeholder meetings that the economic impact of the bill could seriously impact the tourism-based economy of the county still reeling from the effects of Superstorm Sandy.
Oregon’s Sen. Jeff Merkley also addressed the bill to delay flood insurance rate hikes threatening Oregon homes and businesses.
In September, Merkley held a hearing in his Economic Policy Subcommittee on the extreme rate hikes that were being proposed as a result of the 2012 Biggert-Waters Act. He then convened a bipartisan group of Senators to work on legislation delaying these rate hikes, and in October they introduced the Homeowner Flood Insurance Affordability Act. That bill passed the Senate in January and last week, the House debated and approved the bill. With today’s vote to approve the House’s changes to the legislation, the Senate acted to provide immediate relief to homeowners who are facing unaffordable flood insurance premiums.
“Something is very wrong when homeowners are more worried about raging flood insurance premiums than raging flood waters,” stated Merkley. “Working Oregonians are squeezed from every direction, and the last thing they needed was another huge expense in their monthly budgets. I’m glad Congress has been able to put aside the partisan gridlock and work to find a real solution that makes a big difference for middle class families.”
For the Herald’s previous coverage, go to:
-http://goo.gl/O1dIxF