If you live in an area at risk of flooding, you are likely familiar with the National Flood Insurance Program, the federal program that provides the vast majority of flood insurance in the U.S. This year, the NFIP is up for renewal, which means that Congress will need to pass a law to sustain it.
As in previous years, Congress will also seek to make reforms to how the program operates. As we’ve seen in previous renewals, these changes can result in dramatic rate increases for homeowners in the New York City area with reforms such as mandatory surcharges, and the phasing out of subsidized flood insurance rates for older homes. To learn more about flood insurance, go to FloodHelpNY.org or read our report “Rising Tides, Rising Costs.”
The following letter has been signed by local advocates and was sent this week to the offices of New York’s congressional delegation, calling on members to support reforms that will maintain affordability for homeowners.
As organizations that work directly with homeowners who live in flood-prone areas in New York and New Jersey, we thank the leadership and members of the Financial Services Committee for proposing a package of bills reauthorizing the National Flood Insurance Program.
While we support several provisions of the legislation, we are writing to express our concern with several proposals that will negatively affect flood insurance affordability for working- and middle-class families and their communities.
Specifically, we are opposed to the following provisions:
The elimination of grandfathering
The Program Integrity Improvement Act would eliminate grandfathering for properties that have been remapped into higher risk flood zones beginning in 2021. This would cause severe hardship for homeowners who built their structures according to the rules in place at the time, and would result in rapid premium increases for many families in flood-prone neighborhoods.
Increasing annual rate increases from five to eight percent
The National Flood Insurance Program Policyholder Protection and Information Act would require eight percent annual rate increases for pre-FIRM homeowners paying subsidized rates. In New York City, the vast majority of homes (approximately 80 percent) in the Special Flood Hazard Area are pre-FIRM. Many of these homeowners are seniors and low- and moderate-income families who will struggle to afford such steep rate increases. Instead, the current schedule for rate increases set by the Homeowner Flood Insurance Affordability Act should be maintained.
Ban on NFIP policies for new structures
The Program Integrity Improvement Act would prohibit the NFIP from offering coverage to any new structures in the Special Flood Hazard Area beginning in 2021. We strongly support efforts to ensure that new construction is resilient and meets the highest floodplain management standards. However, a blanket prohibition would be overly punitive and harm communities that seek to responsibly meet their housing and community development needs.
Ban on NFIP policies for properties with high replacement costs
The Program Integrity Improvement Act also prohibits the NFIP from offering coverage to any one-to-four family homes with a replacement cost of $1 million or more. A million dollar replacement cost may sound like a luxury home, but in high-cost markets and particularly for 2-4 family buildings, this provision will cause many lower income owner-residents to lose important coverage.
Increase in NFIP surcharges
The Program Integrity Improvement Act would also nearly double surcharges to homeowners with NFIP policies, from $25 to $40 annually. While the surcharge amount is relatively small compared to the annual premiums paid by homeowners each year, these increased costs add up, especially for seniors on a fixed income or low- and moderate-income families.
Sanctioning communities with flood losses
The Flood Risk Mitigation Act would require communities with more than five severe repetitive loss properties or 50 repetitive loss properties to produce and implement mitigation plans, and allows for sanctions for communities that fail to implement these plans, including removal from the National Flood Insurance Program. While we strongly support flood mitigation efforts, this legislation would not provide any resources for communities to invest in such mitigation efforts. Additionally, this measure disproportionately affects larger communities, which are numerically more likely to reach the prescribed thresholds. A fairer measure would take into account a percentage of properties rather than a set number.
Tying premium rates to replacement cost value
The National Flood Insurance Program Policyholder Protection and Information Act would require FEMA to factor replacement costs into the premium charged on a residential policy. This provision could increase the already high cost burden of flood insurance for lower income homeowners in urban markets where construction costs are higher.
We thank you for your dedication to our flood-prone communities, and welcome the opportunity to discuss the NFIP and NFIP renewal legislation in greater detail. Please contact Caroline Nagy of the Center for NYC Neighborhoods at firstname.lastname@example.org or 646-237-5921 with any questions or concerns.
Adopt A House, Long Island
Brooklyn Long Term Recovery Group
Center for NYC Neighborhoods
The Elevated Studio
Episcopal Diocese of New Jersey
Fifth Avenue Committee
Gowanus Canal Conservancy
National Disaster Interfaiths Network
Neighbors Helping Neighbors
New Jersey Voluntary Organizations Active in Disaster
New York Disaster Interfaith Services
New York Voluntary Organizations Active in Disaster
New York Legal Assistance Group
NHS of Brooklyn
Resilient Red Hook
South Shore Recovery Coalition