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Problems with Repetitive Flooding Mean Recurring Losses for Inland New Jersey

Federal lawmakers considered several solutions, including denying flood insurance coverage to any repetitive-loss property after its owner filed a certain number of claims.

The answer they finally settled on came in the form of the Biggert-Waters Flood Insurance Reform Act of 2012, a rare instance of bipartisan consensus that something needed to be done. Rather than cutting people out of the National Flood Insurance Program, Biggert-Waters enacted premium increases for homeowners who sold their homes, had a lapse in their coverage, or suffered severe or repetitive flooding. Their rates would go up 25 percent per year until the amount they were paying accurately reflected their risk.

Biggert-Waters became law, but less than two years later -- amid widespread lobbying from a small but vocal group of coastal residents and the National Association of Homebuilders -- many of the provisions were repealed this March. Though many owners of repetitive-loss properties will still see their insurance rates go up, most increases will now be capped at around 15 percent annually.

Also repealed were measures that would have done away with low, subsidized insurance rates for some older homes that have filed multiple flood claims.

“What the grandfathering was doing was allowing a lot of these repetitive-loss properties to stay in the flood-insurance program without any changes,” Knowles said. “So if your house was built before 1968 -- before the flood-insurance program went into effect -- and it floods every five years, you still get to keep your flood insurance. Biggert-Waters did away with the grandfathering. The ‘reform’ of Bigger-Waters brought back the grandfathering, so all those homes are still in the program.”

In addition, subsidies for repetitive-loss properties that would have expired when properties were sold have now been reinstated.

Knowles acknowledges that there were valid financial hardship concerns Biggert-Waters presented for some coastal residents, but he thinks legislators could have modified the law to address those concerns rather than largely abandoning it. For example, he says owners of repetitive-loss properties unable to afford increased insurance premiums could have been offered vouchers to offset the increased costs as well as grants and low-interest loans to make their homes more resilient to future flooding.

“Since World War II, Americans have been building themselves into disastrous areas at an alarming rate. And the implications of that, the bill of that, is now coming due,” he said. Though he saw Biggert-Waters as a moment of optimism, he feels its repeal and the general lack of political will to make any substantial changes to deal with repetitive-loss properties is disheartening. Until federal lawmakers take that initiative, he said, it will be up to state and local officials to confront the issue.

In Harm's Way

With more residents per square mile than any other state, New Jersey is particularly vulnerable. And at the top of the list of municipalities dealing with this problem is Wayne Township, sandwiched between the Passaic and Pompton Rivers. Wayne has over 600 repetitive-loss properties according to FEMA, the most of any municipality in the state (the state’s Hazard Mitigation Plan puts that figure at 762).

Of those 600 properties, more than 60 percent are classified as “severe repetitive loss,” which means four or more separate flood insurance claims have been paid, with the amount of each claim payment exceeding $5,000 and the cumulative amount exceeding $20,000. A property can also be classified as SRL if it’s had at least two separate claims payments that add up to more than the reported value of the property.

“There’s no simple solution to flooding, and if people think someone’s going to come up and wave a magic wand, and it’s going to stop, they’re crazy,” said Wayne Mayor Christopher Vergano. Still, over the past few years, his township has been able to make a significant dent in its flooding problem by negotiating with FEMA and the state for buyouts of about 220 homes. Plans are also in the works for the federal government to acquire an additional 113 residences.

“FEMA has found it’s more effective for us to purchase the homes than for them to pay out millions of dollars in damages during the flood. So we’re probably the most successful town in the state of New Jersey when it comes to buyouts,” he said, noting that whatever short-term blow is dealt to the township’s property tax rolls is more than earned back through eventual savings on first responders, debris removal, and damage repairs.

“We don’t apply for any funding for elevations,” he added, “because elevations don’t take people out of harm’s way. It takes their house out of harm’s way, but at 3:00 in the morning, if they’re having chest pains and their house is elevated, we still need to put people in boats to go get them. I see our volunteers that are risking their lives. Our police department’s out there. I think the best way to go is buyouts to take people out of the situation.”

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