WASHINGTON — The congressional fight to delay increasing flood insurance premiums is mired in the federal budget stalemate.
Meanwhile, new insurance “rating guidelines” released this week confirmed the fears of dramatic insurance hikes for many southern Louisiana residents.
Greater New Orleans Inc. President and CEO Michael Hecht said the regional real estate market is becoming “sluggish” as a result and, in St. Charles Parish, property values are already being devalued by about 30 percent.
Although flood maps for many areas are still being finalized and much remains unknown, some changes are beginning to be implemented Oct. 1. Hecht said that worst-case scenarios show insurance hikes of 2,000 percent from about $600 a year to $15,000 for some “grandfathered” properties losing their subsidies.
The National Flood Insurance Program was changed last year by Congress to make the program more financially self-sustainable. But much of that involves phasing out the grandfathered statuses on many properties built decades ago.
“You can’t change the rules midway on people who have been doing everything that was asked of them,” Hecht said. “It’s difficult to plan and the only prudent thing to do is to assume the worst.”
Jefferson Parish President John Young said he believes the rate hikes will be “devastating to communities,” at least in the short term until the problems are fixed legislatively and administratively.
“This is coming down the pipe, ladies and gentlemen. Wake up,” Young said. “I don’t think a lot of people realize what’s coming down the pipe.”
A reason for optimism is that the House has approved a Homeland Security appropriations bill that delays for one year the hikes on grandfathered properties. The U.S. Senate is awaiting consideration of another Homeland Security spending bill that includes a similar bill.
The problem is that the Democratic-controlled Senate and the GOP-led House are far apart on agreeing to overall spending levels for the federal government, so all appropriations bills are being caught up in the debate.
“That’s a legitimate concern,” Hecht said. “There’s not much movement on any bills, particularly spending ones.”
But Hecht said he is optimistic Congress will take action on more fundamental legislative fixes in the next 12 to 18 months once a groundswell of concerns grows enough in other states like New York, New Jersey and ranging from Illinois to South Carolina as their flood maps are finalized. The Federal Emergency Management Agency also can make more administrative fixes to the flood insurance program.
“The lingering question is how long with this take and what will be the damage in the interim,” he said.
FEMA also is working on new “levee analysis mapping procedures,” called LAMP, that for the first time include structures such as locally funded levees and railroad tracks as flood protection structures in their pending flood maps. The new LAMP pilot program will include St. Charles, St. Tammany, Terrebonne, Lafourche and Plaquemines parishes, but it excludes Jefferson, Orleans and St. Bernard parishes.
Much, but not all, of those excluded parishes are already in the upgraded flood protection system for the New Orleans area.
Hecht called it good news that FEMA released its new “specific rating guidelines” for the first time. But he said the guidelines confirmed their fears. Although some of the worst-case scenarios are not quite as bad as expected, the cost hikes are still bad enough to price thousands of people out of their homes.
U.S. Rep. Bill Cassidy, R-Baton Rouge, said he is pleased FEMA released its guidelines after he asked the agency to do so. But Cassidy said the overall concerns remain.
“FEMA, through LAMP, needs to ensure appropriate credit is given to community flood protection standards and features that offset flood risk and therefore reduce the cost of flood insurance for Louisiana homes and businesses,” Cassidy said in a prepared statement.
U.S. Sen. Mary Landrieu, D-La., expressed similar sentiments.
”It took FEMA far too long to make this critical information available to communities in Louisiana and across the nation trying to prepare for the steep rate increases that are scheduled to take effect on Oct. 1, 2013,” Landrieu stated.
For more details, visit online at www.fema.gov/media-library/assets/documents/34620.