State leaders push for flood insurance overhaul

U.S. senators, parish presidents and business leaders teamed up Tuesday to urge the passage of legislation to delay skyrocketing flood insurance premium hikes.

A Senate procedural vote on the Homeowner Flood Insurance Affordability Act was planned for Wednesday, but the effects of the polar vortex weather front and the unexpected survival of legislation extending unemployment benefits caused the delay.

“Next week is most realistic,” said Sen. Mary Landrieu, D-La., of the beginning of votes on the legislation to stall flood insurance hikes for many policyholders in Louisiana and nationwide by about four years.

Landrieu, who was joined by Sen. David Vitter, R-La., and 11 other senators, said the legislation is about protecting the “American dream” of home ownership. Although it is a national issue, she bemoaned the “extraordinarily unique culture that is truly at risk” in south Louisiana.

The National Flood Insurance Program has been in financial distress with a loss of nearly $25 billion, largely due to payments made after hurricanes Katrina and Rita in 2005. Louisiana has nearly 500,000 NFIP policies, and there are more than 5.5 million policyholders nationwide.

Congress in 2012 passed legislation to make the program more self-sustainable in a large omnibus bill, but the flood insurance rate hikes are much more expensive and onerous than many lawmakers anticipated.

The Homeowner Flood Insurance Affordability Act would delay by about four years the insurance hikes on primary residences — excluding properties that suffered repeated flooding — that have received “grandfathered” lower premiums. The legislation also would delay the property sale “trigger” so that homes and businesses sold after July 6, 2012, do not see dramatic automatic insurance increases.

However, the legislation does not address rate hikes for businesses, secondary vacation homes and homes that repeatedly flooded that were all grandfathered into artificially lower premiums for flood insurance before flood maps were created. Such affected policyholders will see 25 percent annual premium increases over a few years.

Jefferson Parish President John Young, who was one of a few parish presidents in Washington on Tuesday, said the current law is beginning to “really attack the ability of people to own homes.” Some people are facing insurance premium hikes of more than 1,000 percent.

Unless action is taken by Congress and the Federal Emergency Management Agency, Young said, there will be a “downward spiral” hurting residents, the real estate and banking industries, and even local governments. “The property tax base is going to be decimated,” he said.

“It’ll be more devastating than all those storms put together and the BP oil spill,” Young said.

Vitter said the unintended consequences of the current law are unfair to people who have followed regulations and built their homes to code. The law will lead to people dropping out of the National Flood Insurance Program and make sure the program is never “fiscally sustainable,” he said, which was the goal of the 2012 law.

If it comes up for a procedural vote next week, then the legislation will need at least 60 votes. The supporting senators said they are confident the votes are there to pass it.

However, they would not offer any guarantees.

The lead sponsors of the legislation are Sens. Robert Menendez, D-N.J., and Johnny Isakson, R-Ga. But Landrieu and Vitter are counted among nearly 30 co-sponsors.

Isakson said he supported the 2012 “reform” law and that his current legislation is just about ensuring the “implementation” is done correctly.

The same bill in the House has nearly 170 co-sponsors, but the legislation has not yet moved. One of the key roadblocks is the opposition of Rep. Jeb Hensarling, R-Texas, who chairs the House Financial Services Committee through which the bill likely would travel.

In a funding bill, the House has passed a one-year delay of the flood insurance hikes — an amendment by Rep. Bill Cassidy, R-Baton Rouge — but the lack of a budget deal until late last year had stalled the progression of all such appropriations bills.

“I welcome any relief for Louisiana policy holders,” Cassidy said in a prepared statement. “Unfortunately, it has been 216 days since the Cassidy amendment passed the House which would have brought relief to about 400,000 people in Louisiana.”

The Senate has not yet acted on the “Cassidy amendment.”

Young said he fears a smaller delay could be “counterproductive” because it would not mean a comprehensive fix and it could lead some lawmakers to falsely believe the problem was solved.

But some organizations and lawmakers opposed any changes, especially with concerns that the legislation would cost taxpayers more.

“We’re going to pass it in the Senate,” said Sen. Bill Nelson, D-Fla. “The question is the House.”

The nonprofit SmarterSafer.org, which is a coalition of environmental groups, taxpayer advocates and more, urged the Senate to reject the bill because of the Congressional Budget Office’s estimate that the bill would add another $2.1 billion to the National Flood Insurance Program’s already sizeable $24 billion deficit.

The libertarian R Street Institute in Washington also opposes the bill. “While it is reasonable for Congress to address hardships that could make flood insurance unaffordable for lower-income homeowners, a blanket delay would mean continuing to subsidize beach homes for the wealthy, as well,” R Street Senior Fellow R.J. Lehmann said.