Post Sandy Flood Insurance Choices

$20,000 a year for flood insurance? Sandy survivors face tough rebuilding choices.

TOMS RIVER, N.J. – Thousands of homeowners in New York and New Jersey impacted by Hurricane Sandy are facing a tough choice that may thwart their efforts to rebuild: Comply with costly new federal construction guidelines or prepare to pay annual flood insurance rates that could top $20,000.

New federal flood maps revealed in June added 68,000 structures in New York City and thousands more in New Jersey to flood zones. Now, affected homeowners are being forced to make drastic changes to their residences, such as elevating them on pilings, or incur punishing new insurance premiums that will take effect by mid-2015. Given the new rules, many Sandy survivors are grappling with whether they should alter their properties – or leave.

Kevin Faller and Karen Spanover, of Toms River, N.J., learned that they would have to invest tens of thousands of dollars to elevate their home or else pay higher flood insurance premiums.

“We are faced with something that we can’t overcome,” said police officer Kevin Faller, 52, a Toms River resident who has decided to give up his home rather than comply with the new requirements. Having already lost hundreds of thousands of dollars in home equity post-Sandy, Faller said he and his wife could not afford “this tsunami of expenses coming toward us.”

The Federal Emergency Management Agency began updating coastal flood maps across the country in 2009, a process it expects to complete by 2017. In New York City and New Jersey, the work began a few years before Hurricane Sandy struck on Oct. 29, 2012, damaging or destroying 365,000 homes in New Jersey and another 20,000 in New York City. After a public comment period, the region’s maps are expected to become final by mid-2015, putting into effect new insurance premiums.

The agency, which has released estimates showing that rates could range from a few hundred dollars for the most compliant residences to $1,800, $10,700 and more than $20,000, says individual premiums will vary and homeowners must consult an insurance agent to determine what they will pay.

Making matters worse for coastal homeowners, federally subsidized flood insurance for primary residences will start to phase out by late next year, eventually forcing about 1.1 million property owners to pay the substantially higher full-market rates. A law passed by Congress last summer eliminated subsidies for the National Flood Insurance Program, which is $24 billion in debt in the wake of massive storms such as Hurricane Katrina.

“Unfortunately, [Sandy survivors] are suffering through this catastrophic event and they are looking at increased insurance premiums,” said Bill McDonnell, FEMA’s mitigation branch director for New Jersey and an agency specialist for New York. “What we are hoping, though, is that [Sandy] has raised the awareness of the probability of this occurring again” and that homeowners “mitigate their properties to become more resilient.”
A new home under construction in Breezy Point, N.Y., where property owners are required to elevate their homes or incur drastic hikes to their insurance premiums.

“They may be putting out more money now,” he said. “But in the end they are going to suffer less damage to their property and the potential loss of life as well.”

With that in mind, some families are moving ahead to comply with the new requirements despite the cost. Based on an early map released by FEMA in mid-December, Marlo Lutz, 44, and her husband, Darrin, 47, decided to elevate their two-floor Toms River home to 13 feet on pillars and piers, a $65,000 investment that required cashing in a college fund and raiding savings.

“I’ll never have to worry again when there’s a storm,” Marlo said. “Everything about it is just going to be better for us.”

In Breezy Point, N.Y., a coastal enclave hard-hit by Sandy, homeowner Jim Kelly has made a similar calculation. So far, Kelly has spent $104,000 to raise his home to 8.5 feet, with more work to go. He and his wife have used savings and dipped into their 401(k) plans to help cover construction costs, which are expected to reach $220,000.

For Kelly, raising his property has been expensive, time-consuming and stressful, but he said he is just anxious to move his wife Samantha and their 5-year-old son Aiden back home, hopefully by Thanksgiving. “It’s definitely been rough, to say the least,” he said.

FEMA

FEMA’s draft schedule of preliminary flood insurance rate maps for coastal counties.

Some Sandy survivors are finding the hassle and cost of complying with the new guidelines to be insurmountable.

When FEMA released the early version of the flood maps, John “Jack” Thompson, a 70-year-old mechanical engineer, discovered that his small ranch home in Toms River would have to be raised from six to 14 feet and placed on pilings. If he didn’t comply, he learned, his future annual flood insurance could skyrocket to about $31,000. (FEMA has adjusted that estimate to more than $20,000.)

Though FEMA eased the rebuilding requirements for his neighborhood in June, the value of Thompson’s home has plummeted from around $400,000 to $10,000, according to a county tax assessment. He is contemplating using his flood insurance payments to pay off his mortgage, tear his home down and leave. The storm’s aftermath, Thompson said, has left him financially “dead” and his dreams of retirement postponed.

Meanwhile, half of the homes around him are empty, about ten have been demolished and many are for sale. “It’s depressing. I really hate to think about it,” he said of the changes in his once lively neighborhood situated on tiny lagoons.

Some government aid is available to homeowners trying to meet the new guidelines. New Jersey will provide grants of up to $150,000, a FEMA-funded grant will offer $30,000, and those insured by the NFIP can receive up to another $30,000. New York City said it would also give money to homeowners to elevate their properties through U.S. Department of Housing (HUD) funds.
Jack Thompson stands in his Toms River home, which would need to be elevated to comply with new FEMA rules.

But according to Marc Roy, chief of staff for FEMA’s Louisiana operations in 2006-07, such grant programs don’t always work. He criticized “The Road Home,” a HUD program administered in Louisiana after Hurricanes Katrina and Rita as having had “limited success.”

“That program was marked by all kinds of cost overruns and mismanagement and pretty much has faded from view,” said Roy, an adjunct professor at Tulane University’s Disaster Resilience Leadership Academy. (According to HUD, nearly 130,000 residents – or 99 percent of eligible applicants – had received more than $8.9 billion from the program).

When homeowners struggle to pay for repairs to their storm-damaged properties, some foreclose and leave, devastating the local housing market, said Roy, whose New Orleans neighborhood experienced about ten foreclosures post-Katrina. “Responsible people are having their whole lives ruined … as a result of both the natural catastrophe and the man-made part of the catastrophe, which is poor assistance being available to those who have really worked for it,” he said.

Faller and his wife Karen Spanover, 46, aren’t waiting for government aid. In January, the couple decided to give up their home in Toms River, believing that investing tens of thousands of dollars to comply with FEMA’s new rules would not be worth it in their struggling neighborhood. They’ve asked their bank to accept a deed in lieu of foreclosure, in which they would hand their home back to the lender.

Faller said he tried to see the tough choice as a business decision, while Spanover said it was ultimately one of “survival.”

“We’ve been fighting for so long,” Spanover said. “Every time we see light at the end of the tunnel it kind of closes. We’re definitely still hoping for the best.”

Are you facing new FEMA requirements for your area? Contact the reporter with your story at miranda.leitsinger@nbcuni.com

Source of this article: By Miranda Leitsinger, Staff Writer, NBC News

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New Flood Elevation Standard Filed

Shore Rebuild…Shore Higher

Trenton: The Christie Administration has filed with the Office of Administrative Law an adoption package supporting final rules that will make permanent new statewide elevation standards based on Federal Emergency Management Agency (FEMA) flood maps. This action, taken Monday, provides clear direction for residents as they rebuild from the devastating effects of Superstorm Sandy.

The Department of Environmental Protection’s (DEP) filing of documents supporting amendments to the state’s Flood Hazard Area Control Act keeps in place an emergency rule the Administration authorized in January. The emergency rule and its final amendments utilize FEMA’s recently released Advisory Base Flood Elevation (ABFE) maps as the statewide standard for elevation of homes in flood zones.

Those maps, updated in New Jersey’s coastal counties for the first time in more than two decades, are based on the best available data to best protect lives and property from the most severe storm surges. The elevations are on average two to four feet higher than standards that had been in effect under the significantly outdated FEMA flood maps.

DEP Commissioner Bob Martin stressed that setting new elevation standards now will protect property and lives in future storms and help residents avoid the shock of significant flood insurance premiums when FEMA formally adopts new federal guidance for flood insurance.

“We must never allow ourselves to forget the scope of destruction from Sandy,” Commissioner Martin said. “It is absolutely critical that we rebuild stronger and more resilient in the aftermath of this historic storm.

“By basing our new flood elevation standard on the best available data – remember, these are FEMA’s maps – we are providing our residents with a clear path that will help them get back on their feet more quickly, make their lives much safer, and help protect them from significant increases in flood insurance premiums in the long run,” Commissioner Martin said.

It is important to note that these are advisory FEMA maps. The state and FEMA anticipate changes to these maps – and possible reductions to the numbers of properties that will be required to elevate to new heights – as the federal mapping process is finalized.

At the same time, the Administration is working to help property owners offset the cost of elevating to these new standards, allocating money from the state’s initial federal Community Development Block Grant to help property owners reconstruct, mitigate and elevate.

The Rehabilitation, Reconstruction, Elevation and Mitigation (RREM) Program will provide eligible homeowners up to $150,000 for reconstruction, rehabilitation, elevation and/or mitigation of damaged homes.

Priority will be given to homes in the nine most impacted counties that are deemed by a municipality’s floodplain manager to be substantially damaged (damages equal or exceed 50 percent of a structure’s market value.)

Commissioner Martin reminded residents and local officials of the following:

•           If and when to rebuild and elevate is entirely up to each homeowner.  They can wait for the FEMA maps to be finalized. If they want to rebuild, they can start now. The DEP will continue to adjust state elevation requirements for each municipality as FEMA moves through the process of finalizing its maps as part of its formal adoption process.

•           Homeowners can start by going to their local construction office and securing local building permits. They do not need a DEP permit if they build to the state elevation standard and build on the same footprint. (Some exceptions will be granted for adjusting the footprint, particularly if this puts a structure in a safer position.)

•           If a home did not sustain 50 percent damage, the owner does not have to do anything now but is likely to face significantly higher flood insurance costs when FEMA adopts the final flood maps and if the homeowner does not elevate.

•           If a home sustained 50 percent or more damage, the owner must elevate to the ABFE plus one foot. The additional foot is required under an existing requirement in the Flood Hazard Area Control Act rule.

In many cases, FEMA flood maps for coastal areas of New Jersey were more than two decades old and did not reflect real hazards. FEMA was in the process of updating the flood insurance maps, upon which the ABFEs are based, when Sandy struck.

The agency released the ABFEs December 15, 2012 for some 200 communities affected by tidal waters to help the state plan its recovery from Sandy.  For online maps and more information, visit:http://www.region2coastal.com/sandy/abfe

Congressional reforms to the National Flood Insurance Program require flood insurance rates to reflect actual risk. Those who rebuild in a manner that does not conform to updated base flood elevations will likely see significant premium increases.

Under the rule amendments, property owners who rebuild to the ABFEs (plus one additional foot) will be able to do so by a permit by rule. This eliminates the need to apply for DEP’s Flood Hazard Area permits, resulting in savings in permit fees and design and engineering costs, and allowing reconstruction to begin without waiting for DEP review.

The rule also allows “wet flood-proofing” for non-residential buildings. Wet flood-proofing means that a building may flood but will structurally withstand the water. This enables reconstruction in urban areas in a safe and less costly manner than requiring elevations or dry flood-proofing.

This is especially important in highly developed areas like Hoboken or Jersey City. Without this change, residents and small businesses would have to comply with the existing rules, which could significantly drive up costs and make some redevelopment impossible.

The rule also eliminates requirements that currently allow certain building foundations to have only three walls – a potentially unsafe construction method.

The final rule will be published in the New Jersey Register. For FAQs on the rule, please visit:http://www.nj.gov/dep/special/hurricane-sandy/docs/rebuilding-after-sandy-factsheet.pdf

The source of this article can be found here: http://www.wordontheshore.com/shore-rebuild-shore-higher-cms-2089

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