Officials from the Federal Emergency Management Agency’s National Flood Insurance Program came to Aberdeen Tuesday to explain how a new law passed in March could reform the 2012 act that unleashed a tsunami of anger nationwide when rates for many policyholders skyrocketed.
Whether they succeeded is the question.
Flood insurance is required for many home and business owners in Grays Harbor County, particularly in coastal areas and areas zoned in the floodplain in Hoquiam and Aberdeen.
The storm of anger was unleashed by the Biggert-Waters Act of 2012, so Congress scurried back to the drawing board and amended it with the Homeowner Flood Insurance Affordability Act of 2014.
Tuesday, FEMA officials gave presentations on changes at three meetings in Aberdeen: for government officials, for those connected to the real estate business and for the public.
The explanations seemed to do little to resolve many outstanding questions about who is affected and how. Several of those who attended expressed confusion after the meetings. Some doubts surfaced at the Aberdeen City Council meeting on Wednesday, as well.
The FEMA presentation confused everybody, according to Aberdeen Mayor Bill Simpson.
FEMA officials were “no help for businesses” in the flood zones, either, remarked Council President Peter Schave.
Though many reported learning new information, many were hazy on the specifics.
Even FEMA is still working out the details. More information on the new law and its impacts on the flood insurance program will be forthcoming, states one of their documents.
Councilmember Tim Alstrom and Aberdeen Public Works Director Malcolm Bowie heard contradictions in the FEMA presentation about whether those grandfathered into flood insurance will still receive subsidies at the previous lower rates and stay there, or whether their rates will be hiked to full risk rates, albeit more slowly.
FEMA insurance specialist Deborah Farmer first said they would return to grandfathered rates and later said all policyholders would eventually have to come into compliance paying the full risk, or non-subsidized and higher, rates.
The properties were grandfathered after FEMA rules were adopted in 1968 in the wake of hurricanes that led to the creation of the federally backed flood insurance when private insurers left the market.
The issue is key on the Harbor because many property owners have benefitted from the subsidized premiums. FEMA, however, is $28 billion in the red and wants to be solvent.
Lenders, city officials and real estate agents are concerned that many property owners will walk away rather than pay what they deem to be exorbitant flood insurance rates.
They also worry that the soaring cost of insurance will prevent people from buying or selling homes. In some cases, insurance skyrocketed to thousands of dollars, Farmer said, using an example of a $300,000 property where the insurance premium jumped to $26,000 per year.
Frustrated, Hoquaim City Councilmember Richard Pennant interrupted the lengthy slide show Tuesday morning. “… You keep showing pictures from all over the country,” he complained. As a businessman who leases properties on the Harbor “I am here to (find out) why FEMA is trying to put me out of business,” he said.
Farmer spoke to Pennant privately later and said she welcomes calls and emails from anyone with questions. Her email is firstname.lastname@example.org and her telephone number is (425) 487-2023.
The new act does seem to somewhat soften severe rate hikes. It even repeals some of the increases that have already been paid. A very few will receive refunds between October and December of this year, according to FEMA documents and the presentation.
Some annual rates, particularly for owner-occupied homes, will drop from 25 to 18 percent. Increases still range from 18-25 percent per year until the full risk rate is reached.
There is also less sticker shock for those buying homes from those selling older homes that qualified for subsidized rates.
The insurance still has to be paid up front. FEMA is working on a payment plan system.
While the new 2014 law reduces rate increases on some policies, it implements a surcharge on all policyholders to make up for easing up on those increases. The annual surcharges range from $25 to $250. The surcharges will likely go away as more flood insurance policyholders pay the full risk rate, Farmer said.
One way to beat higher rates is to make sure the buildings, particularly newly constructed ones, are above the base flood elevation, FEMA officials said. The higher it is, the lower the rate, Farmer said.
Elevating or raising older properties, such as the ones downtown, can be expensive and difficult and many are hard to flood proof with vents and new materials, FEMA and building officials said.
FEMA is still working on releasing new, digital maps, so determination of flood levels are not yet final.
Chuck Wallace, the county’s deputy director of Emergency Management, did see hope in all the turmoil. He is glad bankers and insurance companies are at the table trying to help the government find a workable solution.
That might mean doing away with maps and going to a more widely-held flood (and disaster) insurance that more closely resembles auto insurance where the risk is spread out among all drivers and vehicle owners, he said.
Either way, the law is due to be updated again, possibly in 2017, officials said.
In the meantime, property owners can consult FEMA officials, insurance agents and local officials with questions about new rates and refunds, among other issues.