U.S. Congress

Garamendi: Delay flood insurance rate hikes

By From page A1 | October 11, 2013

Rep. John Garamendi this week called for postponing “absolutely unaffordable” flood insurance rate increases.

“An immediate delay is urgently needed to keep residents in my district in their homes,” Garamendi, D-Walnut Grove, said during a bipartisan congressional meeting on the subject held Wednesday.

Legislative action has stalled during the ongoing feuding over the Affordable Care Act, partial federal government shutdown and debt ceiling. Civic and business organizations are urging President Barack Obama to delay the rate hikes.

The cause of the flood insurance uproar: the 2012 Biggert-Waters Flood Insurance Reform Act.

It could see some property owners pay 4,000 percent more for flood insurance. Some new rates are already being phased in.

Passed with bipartisan support, the legislation reauthorized the National Flood Insurance Program for five years. It was intended to keep solvent a program that’s now $30 billion in debt because of a large number of claims following Hurricane Katrina in 2005 and Hurricane Sandy in October 2012.

The act sought to shift from away from federally subsidized flood insurance premiums, which had kept rates down in flood zones, toward rates that reflect flood risk. The Federal Emergency Management Agency also revised its risk maps, raising base flood elevation numbers and expanding flood zones.

Rates are scheduled to climb 25 percent per year until the full rate is reached. For a house and contents worth $280,000 built one foot below base flood elevation, the cost of insurance will increase from $2,235 per year to $5,623.

For non-primary residences, bigger bills are already due when policies are renewed.

In Knights Landing — now squarely in the flood zone — owners might choose to walk away, rather than dole out more for insurance, said Cindy Tuttle, Yolo County’s intergovernmental relations manager.

“You have the potential for creating a ghost town,” she said.

Of 5,875 floodplain policyholders in the county, 489 pay subsidized rates.

Owners who live in homes in flood hazard areas can keep their subsidized rate unless they bought their home after the act went into effect, or if they purchase a new policy or allow an existing policy to lapse.

Farmers are also up in arms because FEMA is now treating ag buildings like houses when determining rates. To build a new barn, Tuttle said, it would need to be flood-proofed or built at an accepted elevation, likely making it unaffordable, impractical or both.

Garamendi, the state’s former insurance commissioner, said a spike in rates also would lower resale potential of existing homes and stymie the recovering housing market.

In September, Craig Fugate, the director of the Federal Emergency Management Agency, told a Senate subcommittee that the 2012 law gave him no leeway to delay the rate hike. A legislative fix would be needed, he said.

Garamendi and Rep. Doris Matsui, D-Sacramento, who represents West Sacramento, are among 26 co-sponsors of a bill that would delay the risk-based rates until 2015. A Senate bill would delay rate increases for a year.

FEMA says the phase-out of subsidies will affect fewer than 20 percent of the 5.5 million flood policyholders nationwide.

About 17.4 million households in the United States live in areas where flood insurance is mandatory. Of those, 41 percent of those have low to median income levels, according to a lawsuit filed by Mississippi against FEMA.

— The Associated Press contributed to this report.

Cory Golden

Cory Golden

The Enterprise's higher-education and congressional reporter. http://about.me/cory_golden
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