Washington – On Thursday, the United States Senate in a bipartisan move passed the Homeowner Flood Insurance Affordability Act. Delaying the implementation of abrupt increases in premiums for homeowners for up to four years, the bill halts insurance increases required by the Biggert-Waters Flood Insurance Reform Act of 2012 (BI-12).
Sponsored by Senator Robert Menendez (D-NJ), and passed by a vote of 67-32, the bill that protects residents in older homes or those located in newly mapped floodplain areas, includes amendments by Senators Jack Reed and Sheldon Whitehouse.
Biggert-Waters 2012 Enacted to Stabilize Flood Insurance Program
According to FEMA, BI-12 encouraged stability in the program by eliminating artificially low rates and discounts. Grandfathered rates were phased out with adoption of updated Flood Insurance Rate Mapping. The action, designed to level the playing field, triggered an increase in policies that did not fully reflect property risk levels.
Reed in a press release on Thursday spoke of the financial concerns facing both flood plain residents and the National Flood Insurance Plan (NFIP).
“This is a positive step that will address the very real worries of Rhode Island property owners who were facing potentially abrupt and unaffordable increases in their flood insurance premiums,” said Reed. “The National Flood Insurance Program is vital to protecting Rhode Island homeowners, businesses, and property values throughout the state. Both taxpayers and flood insurance policy holders deserve financial stability in the NFIP and this legislation should help strike a better balance among risk, affordability, and solvency.”
Reed’s amendment requires the Federal Emergency Management Agency (FEMA) to conduct a study to assess voluntary community-based flood insurance options. Based on completed and required affordability studies, FEMA would develop recommendations for a policy to assist homeowners who cannot afford their premiums.
Environmental Habitat Restoration Projects Avert Excessive Fees
Whitehouse’s amendment, eliminating excessive fees and red tape, exempted natural resource agencies from fees for flood insurance rate map change requests.
“Habitat restoration projects, like the Upper Pawcatuck River restoration projects in Rhode Island, can benefit our environment and reduce flood risks. As a result, they can also reduce liabilities for the National Flood Insurance Program,” said Whitehouse in a press release on Thursday. “The projects are a win-win, but they are sometimes subjected to costly fees or needless red tape. My amendment standardizes a process for eliminating one of the fees associated with these projects, sparing project developers and government agencies from unnecessary delays and paperwork.”
According to the release, under current law, habitat restoration projects that are expected to alter flood plains must request an official flood insurance rate map revision from the Federal Emergency Management Agency (FEMA) and pay an associated fee. While the federal, state, or local government sponsoring a project may apply to have this fee waived – and the waiver is often granted – the process is not standardized and can result in delays and unnecessary paperwork for FEMA and other government agencies.
The Whitehouse amendment drew support from Rhode Island’s Wood Pawcatuck Watershed Association. Whitehouse’s release quoted an organization representative.
“As the administrator of several of Rhode Island’s most recent and valuable river restoration projects, including the State’s first permitted dam removal, I was thrilled to learn of the amendment’s passage today,” said Christopher J. Fox, Executive Director of the Wood Pawcatuck Watershed Association. “I am proud of our Senator’s efforts, through this amendment, to reaffirm for the nation that Rhode Island is a leader in protecting and restoring the environment. I am equally proud of the tremendous cost savings that the amendment will afford these types of projects, as well as the significant reduction in unnecessary government spending and red tape that will result when calculated out nationally. On behalf of the wildlife, water, and people who reside in, and depend upon the health of the Wood Pawcatuck Watershed, I thank Senator Whitehouse and all those who supported this amendment.”
Financially Burdened NFIP Already Maxed Out
Reed went on to say that to date the NFIP owes $24 billion to the U.S. Treasury for funds borrowed to pay claims from past disasters, including Hurricanes Katrina, Rita and Sandy. By law, the program may only borrow $31 billion from taxpayers in order to pay claims. Since 1978, the program has paid more than $117 million claims in Rhode Island, with approximately $70 million in the last four years as a result of Superstorm Sandy and the historic floods of 2010.
The NFIP woes were also discussed in the January meeting of the Rhode Island Bays, Rivers, & Watersheds Coordination Team . Grover Fugate, Director of the Rhode Island Coastal Resources Management Council (CRMC) noted that “currently the NFIP – if we never see another storm it would take them 100 years to pay back what they currently owe the government.”
Thursday’s Senate Bill delayed phase-out, resultant rate increases.
“This bill will provide temporary relief to many Rhode Island homeowners facing sharp rate increases in their flood insurance policies,” said Whitehouse, one of 28 cosponsors of the bill. “We must look for a path forward that puts the federal flood insurance program on solid financial footing, implements rates that reflect actual risk to properties, and does not put too much of a burden on homeowners. I’m glad we were able to pass this bipartisan bill today, and I thank my colleagues for supporting it.”
The bill moves to the House for approval.
A companion bill in the House, co-sponsored by Maxine Waters (D-CA) garnered bi-partisan support . A ranking member of the House Financial Services Committee , Waters supported the bill brought forward by Rep. Bill Cassidy (R-LA). The bill passed the House on Thursday in a vote of 281-146.
On Thursday, Speaker of the House John Boehner showed lack of support for the bi-partisan effort. In a statement issued he said “While I don’t support repealing the 2012 law, we’re listening to members and the alternative ideas they are offering on this issue. There have been ongoing discussions with members, and the House may consider changes to the law in the weeks and months ahead that both help homeowners and protect taxpayers.”
Speaker Boehner, in an earlier exchange with the Associated Press said the House wouldn’t be taking up the bill.