A bipartisan group from the House and Senate has reached an agreement Monday on legislation to delay large flood insurance rate increases for at least four years.
The proposal, expected to be filed Tuesday in the Senate, could be a huge reprieve for many Florida property owners who stand to be particularly hard hit by the rollout of huge rate increases starting this month under the Biggert-Waters Act of 2012.
It could also bode well for homebuyers who bought properties in flood zones after July 2012 unaware they could face spiraling rates.
But critics of the flood insurance overhaul remain wary.
Im happy this announcement came out today and hopeful it bears fruit, but Im only cautiously optimistic, Pinellas County Property Appraiser Pam Dubov said.
She, and others, are calling for the Federal Emergency Management Agency to revisit the rate tables it has unveiled, which mean homeowners of modest homes could still pay upward of $20,000 a year for flood coverage be that now or several years down the road. Potential homebuyers need to know if Congress is (also) rejecting the rates that have been put out there, Dubov said, warning the specter of high flood rates will continue to put a chill on real estate sales.
Biggert-Waters was passed in July 2012 as an attempt to shore up the National Flood Insurance Program, which was forced to borrow nearly $18 billion from the U.S. Treasury to stay solvent after Hurricane Katrina.
The programs overhaul success hinges on raising rates substantially for owners of older properties in flood zones built before flood maps went into effect and that have been subsidized with lower rates. Florida has more subsidized policies than any other state; Manatee and Sarasota countie have more than 30,000 subsidized policies.
For most, subsidies are being phased out gradually with annual rate increases near 20 percent. In some cases, such as when a property changes hands, the subsidy is being eliminated immediately starting with renewals this month. That has left some local homebuyers seeing their flood insurance rates jump fivefold or more. Dubov said some owners of homes in the most vulnerable flood zones could face annual flood insurance premiums of $30,000 for a home valued at $250,000 or less. St. Petersburg insurance agent Jake Holehouse sees the latest proposal from Congress as a temporary fix.
Once this passes, we still need to get focused on a proactive solution for Florida as this is just a delay, not a long term solution, said Holehouse, vice president of Ronald F. Holehouse Insurance and Risk Management.
The agreement was spearheaded in part by Rep. Maxine Waters, D-Calif, who has sharply turned against the very law she co-sponsored last year. The proposal would delay the rate hikes for four years and require FEMA to complete an affordability study before increasing any flood insurance premiums in the future. The affordability study was mandated as part of Biggert-Waters, but never undertaken.
Along with Waters, Sens. Mary Landrieu, D-La., Robert Menendez, D-N.J., John Hoeven, R-N.D., Jeff Merkley, D-Ore., David Vitter, R-La., and Heidi Heitkamp, D-N.D., and Rep. Cedric Richmond, D-La., have slated a press conference for noon Tuesday to introduce the bill. Congressional representatives from the state have been involved in other efforts to stem the impact of Biggert-Waters, but were not taking the lead on this legislation.
A spokesman for Sen. Bill Nelson, D-Orlando, said he will be a co-sponsor of the legislation, but was in Orlando when the proposal was signed by other senators Friday. Nelson had previously introduced legislation to delay the roll-out of the rate hikes for at least a year, and he embraced the new bill.
This is great news for many Floridians whove been told their flood insurance rates were going way up, Nelson said in a statement. If people cant afford the coverage, what good is it going to do? Sen. Marco Rubio, R-Miami, did not directly address his support of the legislation, but his office reiterated his concern over high rate hikes. With all the other ways Washington is making their lives more difficult, the last thing Floridians need is a massive insurance rate hike, spokeswoman Brooke Sammon said in a statement.
St. Petersburg homeowner J. Kurt Peterson, whose flood insurance premiums stand to quadruple from $2,000 to $8,000 because of Biggert-Waters, said he has some sense of relief. But he still worries about continued uncertainty for homes in flood zones as this just delays the damage.
You cant put the genie back in the bottle, said Peterson, who was forced to take out a new flood policy and lose his subsidy because his bank failed to pay his flood insurance premiums out of escrow. I have a feeling the uncertainty will still put a damper on sales thus downward pressure on values, both in the short-term and long-term.
Times staff writer Alex Leary contributed to this report.