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Biggert-Waters Act—Build Safer and Smarter; Sticker Shock Ahead for Floodplain Homeowners

April 29, 2013 by Sue Enger
Category: Emergency Management

Biggert-Waters Act—Build Safer and Smarter; Sticker Shock Ahead for Floodplain Homeowners

In addition to April flowers and showers, floods are too often a harbinger of spring.   Recent federal legislation significantly impacts local floodplain programs and future National Flood Insurance Program (NFIP) insurance premiums. Local communities will want to communicate with affected property owners about changes so they can prepare for, or even reduce, potential sticker shock.

Biggert-Waters Act Implications

The Biggert-Waters Flood Insurance Reform Act of 2012 (BWA) reformed and reauthorized the NFIP until September 30, 2017. The reforms are intended to promote safer and smarter standards to guide building or rebuilding within floodplain areas, but they also mean dramatic increases in NFIP premiums for some properties in flood-prone areas. A major impetus for its passage was to stabilize the program and return the program to solvency. The Federal Emergency Management Agency (FEMA), the agency that administers NFIP, suffered enormous budgetary hits in the wake of Hurricanes Katrina, Rita, Wilma, and now Sandy. These storms caused flooding as well as other damage.

The solvency objective would remain elusive without a change in how local programs permit development in special flood hazard areas (SFHAs). The NFIP has reduced the sting of catastrophic losses for property owners within flood hazard areas. At the same time, subsidized insurance has enabled many to rebuild in the same place without fully meeting current standards. These properties are vulnerable to future floods and the federal government (read taxpayers) is susceptible to repeated, expensive, future claims.

The NFIP doesn’t entirely prevent floodplain development and the associated loss of storage capacity to contain the base flood within the floodplain. As such storage capacity is lost, flood waters will be displaced, and flooding may become more extensive. Additional properties on higher ground are then at increased risk of flooding as the elevation of the base flood rises.

With the passage of BWA, discounted NFIP premium rates will no longer be available for buildings in flood hazard areas that are below the base flood elevation, even if they were up to code when built. Some properties currently outside of mapped flood hazard areas may wind up in hazard areas as FEMA releases updated, more accurate Flood Insurance Rate Maps (FIRM). The new rates will reflect the real world risk of insuring such buildings, without the subsidies of the past. Even the rates for Pre-FIRM  and grandfathered buildings will be phased out over time.

Post BWA, FEMA  may not offer subsidized rates for second homes, businesses, repetitive or severe loss properties, substantially damaged or improved buildings, homes sold to new owners, and property where NFIP insurance was allowed to lapse. For more information, see the FEMA Region X Special Edition Newsletter, April 2013. The newsletter has subscription information so you can receive updates. Other helpful resources are the National Hazards Management Association NHMA summary, the Association of State Floodplain Managers ASFPM summary, and FEMA resources.

Rebuilding Smarter

The premium increases are dramatic enough that people who are rebuilding or repairing property after a flood or storm should think twice about how they rebuild, even if local codes don’t require pound-wise, sensible redevelopment. The National Hazard Mitigation Association offers its nine-step recipe to help local communities accomplish smart rebuilding; see Build Back Safe & Smarter.

Preferred Risk Policy Extension

Jerry Franklin, Department of Ecology (DOE) RiskMap Coordinator, suggests that local jurisdictions alert property owners who are newly mapped into a high-risk SFHA about an opportunity to enjoy temporarily reduced premiums. FEMA’s Preferred Risk Policy Extension (PRP) has allowed qualifying property owners to buy a lower cost policy for a two-year period after the revised maps become effective. They will now be able to pay the lower rates until FEMA completes its analysis and implementation of the new BWA-required premiums.

The PRPs are intended to give affected property owners (and communities) more time to budget for the coming premium increase, or make improvements that will reduce flood risk and lower their premiums. FEMA has prepared a Preferred Risk Policy Eligibility Extension fact sheet, Talking Points: Preferred Risk Policy Eligibility Extension, and Resources to help local communities with explanations.

New Approach to Levees and Other Flood Control Structures

FEMA must implement new policies that recognize the effect of levees or other flood protection structures that provide a lesser degree of protection than necessary for full accreditation. In the past, areas behind structures accredited as capable of containing the base (100-year) flood were assigned a low risk and premium level. Levees designed to a lower standard were not recognized on FEMA maps as having any affect on flood hazard risk. Also, structures that originally met the higher standard but have degraded can be de-accredited, thus raising risk and premium levels. A FEMA fact sheet provides more information, New Levee Analysis and Mapping Approaches Being Developed.

The National Academy of Sciences (NAS) has newly released its BWA-required study of methods for understanding the graduated risk for development behind levees, Levees and the National Flood insurance Program: Improving Policies and Practices, and has posted a summary. The report recommends approaches to assess the performance of levee systems and to estimate the risks in these areas, whether an accredited structure is in place, or some partial protection is provided. Revised FIRM maps must reflect this more accurate assessment of the flood protection level. As a result, premiums for properties in some partially-protected flood-prone areas may actually go down.

Other NFIP Changes.

See my last blog, New MRSC Web Page: Shifting National Flood Insurance Program Requirements in the Wake of NMFS Biological Opinion, March 19, 2013, for other significant changes to the NFIP.

MRSC is a private nonprofit organization serving local governments in Washington State. Eligible government agencies in Washington State may use our free, one-on-one Ask MRSC service to get answers to legal, policy, or financial questions.

About Sue Enger

Sue served as one of MRSC's Planning Consultants for many years and wrote about a variety of local government planning issues. She is now retired.



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