This past week was busy for many elected Florida officials from coast to coast. Many of us (including myself and Mayors Alan Mandel, Ben Nelson, Marni Sawicki and Kevin Ruane) converged on Washington, D.C., to convince your Congress to delay flood insurance rate increases resulting from the Biggert-Waters Flood Insurance Reform Act (BW-12). National Flood Insurance Program (NFIP) regulations, new FEMA elevation mapping and federally insured mortgage requirements are causing increases that boggle the imagination and the pocket book.
Don't think it can't happen to you, whether you live on the water or not. Reality sets in when the new rates arrive in your new insurance bill. Many of your families, friends and neighbors are getting them now with the worst examples ranging from $1,800 increasing to $24,000 and $3,800 increasing to $44,000.
And there is more to come! These do not include more properties that could be charged higher rates when the new FEMA elevation maps come out ($1.2 billion FEMA project due to complete in 2018); some initial estimates predict more than double those that qualify now for the new rate. Even if your home or business was built in compliance with the building requirements, they will no longer be "grandfathered". There are some homes that were built 45 years ago, that never had a flood claim and are now being required to pay this exorbitant amount. No, they do not have to be on the water.
Without making it complicated, the Federal Government has claimed that the $25 billion deficit for the National Flood Insurance Program (NFIP) must be settled. This is not an on-going expense, but a result of catastrophic storms in the United States including Sandy and Katrina that included preventable damage from breeches in levies that were not maintained. While no one is objecting to fair and reasonable rate increases, this is extreme.
Think of it as a car that is going in the wrong direction. Well, our Washington leaders have it headed down the correct road now, but the car has a flat tire. If you want to really fix the problem, pull over and fix it; you don't have to delay the trip forever. By the way, you can't fix a flat while you're driving.
The Senate passed a bill that would delay implementation of BW-12 while an affordability study is completed. Washington insiders are stating that the House will fail to follow suit, and unfortunately it seems to be based on partisan voting rather than common sense.
The impact of BW-12 could be a game changer. The obvious is the hit on our recovering real estate market. Properties that require flood insurance will not be easily sold; buyers in flood zones will have a harder time qualifying to finance a home or business loan. Once the devaluation of properties sets in, neighboring communities will suffer and again the market may spiral. Banks will be forced to accept the keys to the house rather than the payment, again due to Federal Government regulations. As property values and taxes fall, the rest of the County's tax rate will increase. This may signal the beginning of another hit for Southwest Florida if the House does not take some actions.
This new law does much more than pay off an inordinate national debt or target second-homes, it is taking direct aim at housing in neighborhoods that have been around for decades. It can eliminate life savings and retirement homes for hard-working people who never saw this coming. For those, it changes lives for generations to come.
We believe the message was heard by those we spoke with last week. Two versions of Senate and House bills cap increases ranging from 15 to 20 percent per year, no matter what disposition the property is in, and whether it is has been sold or not. Good news for many in Florida, which should help continue the housing market increase that we have experienced this past year. The vote is proposed for Feb. 24. You have time to make a call, email or write.
If you live here, own property here, or are visiting, we need your help. Let your Florida congress person and/or your out-of-state representatives know that a practical application is required with some time to figure out how to do this right. It is not too late to let them know, but time is running out.
Special thanks go to Chris Heidrick, Heidrick and Company Insurance and Risk Management Services, LLC who has been a watchdog and subject expert as well as Glen Salyer and Lee County staff.
- Larry Kiker is Lee County Commission Chairman and represents District 3.