This week the U.S. House finally approved legislation that attempts to fix the unintended and disastrous consequences of a 2012 law that brought unaffordable premium increases for federal flood insurance to many property owners.
That measure must now be reconciled with the Senate's weaker repair, a four-year delay in the Biggert-Waters Flood Insurance Reform Act of 2012 and a 20 percent cap on annual premium increases.
The House, however, balked at a temporary fix and adopted permanent changes that grant a reprieve from huge rate hikes -- giving certainty to troubled homeowners and an endangered real estate market.
But challenges remain.
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The Federal Emergency Management Agency admits updated flood hazard maps are flawed, and the agency has yet to conduct a premium affordability study as Biggert-Waters mandated. Both the House and Senate versions of reforming the act give the agency more resources to carry out that study.
Coastal communities like Manatee County were the biggest losers under Biggert-Waters. Across the nation, owners of older homes with government-subsidized policies would have lost that advantage, with some premiums reaching $20,000 a year. Potential home buyers balked, and the real estate industry brought attention to the ruinous impact.
The National Flood Insurance Program fell into a debt load of $24 billion after Hurricanes Katrina and Sandy. But the Biggert-Waters' worthy goal of shifting the deficit-plagued program into an actuarially sound plan moved too quickly -- in some cases, all at once on some properties.
The House legislation limits premium increases to 18 percent a year on primary homes. On average, however, rate hikes will range from 5 to 15 percent until reaching actuarially sound rates. Businesses and second home owners would see increases of 25 percent or more.
Plus, homeowners will be allowed to pass on subsidies instead of forcing buyers to pay full-risk rates upon purchase. The House bill also provides retroactive refunds or credits to property owners who purchased homes after the enactment of Biggert-Waters.
The House legislation, with Rep. Vern Buchanan serving as one of the leaders pushing reform, passed on a bipartisan 306-91 vote -- a major change from the chamber's usual sharp partisanship.
In an announcement heralding the House vote, Buchanan noted that FEMA has adopted an almost two-year delay for most policyholders in Manatee and Sarasota counties -- a reprieve for some 79,000 out of 109,000 policies in Florida's 16th Congressional District. Those homeowners faced premium increases as remapping put their properties below elevation and at higher risk.
We echo Buchanan's Thursday public plea alongside other House leaders of reform in urging swift Senate action on the House bill since it offer immediate rate relief and long-term certainty.
While the House bill is far preferable than the Senate's, the question remains whether the lower chamber's measure establishes fair or affordable premiums. First and foremost, FEMA must address the flawed flood maps used to assess risk and rates. And the agency must complete the affordability study.
While the House bill is intended as a permanent fix to Biggert-Waters, Congress should return to this public policy issue once more detailed and accurate information becomes available.