WASHINGTON -- Republican and Democratic members of the House of Representatives and the Senate unveiled a bill Tuesday, the anniversary of Superstorm Sandy, that would delay the flood insurance rate increases that are starting to go into effect under a law passed last year.
The law phases out some federal subsidies for flood insurance. The intent was to stop the flow of taxpayer dollars into the National Flood Insurance Program, which is about $25 billion in debt. Supporters of the delay said millions of property owners faced much higher flood insurance rates.
“Forty percent of flood policies are in my state, and it has dried up the real estate market,” Sen. Bill Nelson, D-Fla., said at a news conference at which he and more than a dozen other senators and House members announced the bill aimed at postponing the increases, which began Oct. 1.
The legislation would require the Federal Emergency Management Agency to conduct an affordability study and give Congress time to review it. FEMA, which manages the flood program, would have to show that it had developed a flood-risk assessment program that Congress could accept. The time frame would effectively put off the rate hikes for four years.
Some lawmakers noted that more than a dozen members of Congress from coastal and inland states – liberals and conservatives – supported the delay, an unusual show of unity across party and geography. The real estate and home-building trade groups also favor the delay. Still, it was too early to say what the bill’s prospects are.
Nelson said the measure would be retroactive if it became law. Even so, “a lot of folks have lost a lot of sales,” he said.
In some cases, a homebuyer will face higher flood insurance rates than the previous owner paid. The higher insurance costs result in lower property values.
Pam Lazaroff of Holmes Beach, Fla., said she was relieved to hear that Congress might delay the flood insurance increases. Lazaroff and her boyfriend, Mike Martell, said in September that their 1959 two-bedroom home’s flood insurance would jump from $914 a year to $6,500.
“If, after a meaningful financial review of the program and its insured properties, increases may be warranted, then let’s proceed in a manner that will not put Florida back on top of the foreclosure list,” she said Tuesday.
“I didn’t buy the oldest or the smallest house in Holmes Beach, Fla., but close to it,” Lazaroff wrote in letters to members of Florida’s congressional delegation. “And I work hard to be able to own and maintain my piece of paradise.”
Opponents of the delay said it would gut a law intended to save the federal flood insurance program from insolvency and that artificially low rates allowed for risky development in coastal areas.
Supporters, however, spoke of the problems of people who wouldn’t be able to afford the higher rates.
“It’s a timeout to do an affordability study,” Sen. Johnny Isakson of Georgia, the leading Republican sponsor of the bill, said at the news conference. He said the delay would stop the unintended consequences of the 2012 law and allow time to find a way to phase in its intent of making the flood insurance program sustainable.
“We have priced middle-class people and retirees out of the market,” said Sen. Mary Landrieu, D-La.