Changes to National Flood Insurance Program Affect More Than Coastal Cities

Even if your city isn't on the coast, you still may have reason to be concerned about recent changes in the National Flood Insurance Program. There is growing concern among municipalities that property values, along with historic preservation and infill projects, could be negatively impacted after Congress made changes this year to its federal flood insurance program in an effort to keep the program afloat.

The federal government has offered flood insurance to property owners since the late 1960s through the National Flood Insurance Program. The program, which currently has 5.6 million policies in place, was created to provide flood insurance to places not covered by private insurance because of elevated risks.

While the program largely seeks to keep new construction dry during floods, it also made policies available at discounted rates for structures built in flood hazard zones before 1975, when the rules were different and fewer flood maps were available. The program provided subsidized rates for these high-risk areas to avoid pricing the owners out of their properties.

The program began struggling financially following the catastrophic losses from Hurricanes Katrina and Sandy. In 2012, Congress passed the Biggert-Waters FloodInsurance Reform Act in an attempt to restore solvency to the program. The act made changes to all major components of the program, including flood insurance, flood hazard mapping, grants, and floodplain management. The changes increased rates to ensure that flood insurance rates more accurately reflected the real risk of flooding.

After scores of property owners complained of skyrocketing rates that threatened the loss of their homes, Congress passed additional reforms. In March, President Obama signed into law the Homeowner Flood Insurance Affordability Act of 2014. This law repeals and modifies certain provisions of Biggert-Waters. 

Lisa Jones, owner of Carolina Flood Solutions LLC and an expert on Biggert-Waters, will present a session on this topic at the Annual Meeting in Charleston on Friday, July 11. It's a session that will be of interest to any city that has property, particularly historic or infill property, in flood-prone areas.