After clearing Senate, Flood Bill sent to Obama's desk

Moments after the vote Thursday, homeowner Richard Charleville said “a tremendous weight” was lifted off his shoulders because the U.S. Senate approved and sent to the president legislation that sidetracks dramatic increases in the cost of flood insurance.

Three bedrooms, two baths and no documented history of flooding, but near Beaver Bayou, his $160,000 house in Central had cost $1,140 annually to insure against flooding. That rate abruptly increased to $16,000 a year because of changes Congress made two years ago to stabilize the finances of the National Flood Insurance Program.

“I couldn’t afford the insurance. I couldn’t refinance my mortgage and take advantage of the lower rates. And nobody would buy my house with the insurance costing that much. I was stuck,” said Charleville, the manager of equipment rental firm. “As soon as President Obama signs it (the bill) and it goes into effect, I’m going to the bank to refinance my mortgage.”

On a vote of 72-22, the U.S. Senate approved legislation already backed by the U.S. House of Representatives that would limit rate increases for federal flood insurance policies to 18 percent per year. The legislation also restores grandfathering, which kept the rates below market prices on older properties and allows home buyers to keep the same taxpayer-subsidized policies that sellers had.

Faced with huge debts for the flood insurance program, Congress almost unanimously passed legislation in 2012 aimed at shoring up shaky finances by moving millions of property owners off the subsidized policies and linking premiums to updated maps that showed areas likely to flood.

Sens. Bob Menendez, D-New Jersey, and Johnny Isakson, R-Georgia, the chief sponsors in the Senate, overcame efforts to amend the legislation, which would have sent the bill back to the House for further consideration. Because senators approved the measure without changes, it now goes to President Barack Obama for his signature into law.

Both of Louisiana’s senators, Mary Landrieu, a Democrat, and David Vitter, a Republican, voted in favor of House Resolution 3370, “The Homeowner Flood Insurance Affordability Act.”

Louisiana has nearly 500,000 flood insurance policyholders, and there are more than 5.5 million policyholders nationwide.

Menendez, Isakson and other senators praised Landrieu for her work in overcoming opposition and cobbling together a coalition to pass the legislation.

Sen. Charles Schumer, D-New York, called Landrieu a dynamo. “She did not quit.”

Landrieu said from the Senate floor that the legislation is not perfect. “This place is not about perfection. It’s about the art of the possible,” she said.

Vitter worked to get fellow Republican senators to agree to a vote without amendments.

“It’s a long overdue, permanent fix that is also entirely paid for, so the program will be able to sustain itself in the future,” Vitter said in a prepared statement. He complimented Reps. Bill Cassidy, R-Baton Rouge, and Steve Scalise, R-Jefferson, for their work on the legislation in the House.

Cassidy pushed in the House for language that would rid the Biggert-Waters Flood Insurance Reform Act of 2012 of provisions designed to make the program more financially sustainable, but which also caused some property owners to have to pay huge premium increases.

House Majority Leader Eric Cantor, R-Va., and Rep. Michael Grimm, R-N.Y., both praised Cassidy for helping to draft the rewrites of the legislation that was passed by the Senate Thursday.

Landrieu is seeking re-election in November, and her most prominent opponent is Cassidy.

“This legislation protects homeowners who played by the rules and keeps real estate markets alive while putting the NFIP on a more realistic path to solvency,” said Michael Hecht, president and chief executive officer of Greater New Orleans Inc., a business-related government policy organization that lobbied on behalf of changing the wording that increased flood insurance premiums.

Jefferson Parish President John Young said in a prepared statement: “Without the leadership of the entire Louisiana federal delegation, relief for homeowners would not be in sight. The action taken today not only protects those policyholders who played by the rules, but also is a major step towards a responsible and solvent National Flood Insurance Program.”

Rep. Cedric Richmond, D-New Orleans, worked with Rep. Maxine Waters, D-Calif. — the Waters in Biggert-Waters — to develop protocols for limiting annual premium increases to no more than 18 percent. He said, “Rising premium costs have put them under undue strain, and when the president signs this bill into law, they will finally see some much-needed relief.

The proposal also includes a $25 surcharge on all flood insurance policies for primary residents and about $250 for business properties and vacation homes. The money would go into a fund that would help pay claims. It would produce about $1 billion in five years and $2.3 billion in ten years.

Congress has been subsidizing flood insurance policies for homeowners since the late 1960s. The subsidies made it more affordable for people to move into coastal areas and build homes near large bodies of water without having to pay the full — and often prohibitive — cost of flood insurance premiums.

The problem was that as the program grew, eventually subsidizing premiums for more than 5 million policies, the National Flood Insurance Program deficit grew to more than $25 billion.

To get a handle on that deficit, the Biggert-Waters Flood Insurance Reform Act of 2012 installed many provisions aimed at financially stabilizing the federal flood insurance program.