Flood insurance legislation awaiting final approval in the U.S. Senate would bring significant relief to storm-impacted communities throughout central New Jersey, according to some local, state and federal officials.
The Homeowner Flood Insurance Affordability Act, which was resoundingly passed by the U.S. House of Representatives March 4, would place an annual cap on local flood insurance rate increases and restore “grandfathered” rates for homeowners and businesses across the Jersey Shore.
Robert Burlew, floodplain manager and construction code official for Union Beach and Keyport, said the legislation would protect homeowners and local property values, which could plummet under the weight of five-figure insurance premiums.
“If they didn’t get that grandfathering back in there, I can’t imagine how towns would be able to function without those tax dollars,” he said in a March 7 interview.
If enacted, the House bill would effectively rewrite the Biggert-Waters Flood Insurance Reform Act, which radically changed the National Flood Insurance Program (NFIP) when it was enacted in 2012.
The NFIP, which is administered by FEMA, manages all residential and many commercial flood insurance policies throughout the country.
Biggert-Waters was passed months prior to Sandy in an effort to restore financial stability to the NFIP, which currently owes more than $24 billion to the U.S. Treasury. The law cut a number of subsidies and discounts from the program and called for “full-risk” rates to be phased in over the ensuing years.
Following Sandy, however, FEMA released new flood maps for hard-hit communities throughout central New Jersey, moving thousands of homes and businesses into higher-risk flood zones and requiring them to be elevated higher above sea level.
Prior to Biggert-Waters, those properties would have qualified for a discounted, grandfathered NFIP rate as long as they previously complied with FEMA standards. Biggert- Waters stripped away that provision.
According to Burlew, the change posed significant impacts for a large number of local homeowners and businesses that sustained little or no damage during the storm.
Despite avoiding disaster, their properties were added to a higher-risk flood zone and required elevation, often with no federal aid or insurance proceeds to help fund the work, Burlew said. If they didn’t elevate, many faced annual insurance premiums of $10,000 or more.
“When they bought these homes, they had to get flood insurance,” Burlew said. “But nobody said that if a big storm comes, they would be forced to do something they can’t afford to do.” Burlew said he was overjoyed to hear about the passage of the House bill and the restoration of grandfathered rates, which would help protect homeowners and property values in smaller, coastal communities. Biggert Waters, he said, would kill the Raritan Bayshore.
U.S. Rep. Frank Pallone Jr. (D-6), one of 238 bipartisan co-sponsors of the House bill, said the legislation would be a huge lift to local communities.
“These hardworking individuals played by the rules, purchased flood insurance responsibly, and are now facing exorbitant rates that they could not have foreseen,” he said in a statement.
“Thankfully, both sides have come together to fix this problem so that businesses can stay open, property values do not plummet, and middle class families can afford flood insurance and are able to stay in their homes.”
State Sen. Jennifer Beck (R-Monmouth) acknowledged that changes need to be made to the NFIP, but said the increases proposed under Biggert-Waters could have “bankrupted” some local homeowners.
“With the expenses incurred after Sandy, the additional cost incurred through a premium increase would have simply been too much for many to handle,” Beck said in a statement.
U.S. Sen. Robert Menendez (D-NJ), cosponsor of a similar, broader bill that passed the Senate in January, said he approves of the House legislation and hopes it can be made into law quickly.
“I’m very pleased that the bill being put forth in the House will end the most egregious problems with the flood insurance program and bring some real relief to thousands of homeowners who desperately need our help,” Menendez said in a statement.
“I’m encouraged by this progress, and hope we can bring the bill over the finish line very, very soon.”
The House bill, which passed 306-91, also sets a hard cap of 18 percent on annual flood insurance rate increases, while eliminating a Biggert-Waters provision that would have applied “full-risk” rates to homes immediately after they are sold.
FEMA will also be required to refund policyholders who have overpaid for flood insurance since fiscal year 2014, and to minimize the number of policies with annual premiums that exceed 1 percent of the total coverage amount.
According to the Congressional Budget Office, the legislation would be funded by a $25 annual surcharge on policies covering residential properties and a $250 surcharge on nonresidential properties.
As a result, the legislation would have no net financial impact on the NFIP over the next decade, the budget office said.
The House bill was also co-sponsored by Maxine Waters (D-Calif.), who originally cosponsored Biggert-Waters.