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Florida Sea Grant Coastal Planning Program

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Contents:

  • Legal Workshop "Sea-Level Rise and Flooding: Planning & Law for Local Governments"

  • News on the National Flood Insurance Program

  • Speaking of the NFIP: New Community Rating System Coordinator's Manual Released

  • New Approach to Addressing Seawalls that Allow Flooding

  • Proactive Moves and Frank Discussions in Miami Beach Accompany Action to Adapt to Rising Seas

  • Economics and Sea-level Rise

Legal Workshop "Sea-Level Rise and Flooding: Planning & Law for Local Governments"
The third in a series of workshops that Florida Sea Grant is hosting around the state will take place Thursday, September 21 at the Mary V. McDonald Wilson Center, 1501 N. Australian Avenue, West Palm Beach. The workshop, "Sea-Level Rise and Flooding: Planning and Law for Local Governments," offers professional credits that include CLE for attorneys, CECs for floodplain managers, CMs for planners, and CEUs/PDHs for engineers. The full agenda and registration link are available here.
News on the National Flood Insurance Program
The National Flood Insurance Program (NFIP), with millions of policies in force and trillions of dollars in possible exposure, is critical to communities around the country. This program for decades was virtually the only way for property owners to secure flood insurance (For some background on the NFIP, see brief article here).

The NFIP expires on September 30, 2017 unless Congress reauthorizes it. Many agree the NFIP should be reauthorized, and many want to see it reauthorized for a longer period and ahead of the deadline to promote stability in the mortgage and real estate industries.

After fifteen years of lower-than-expected claims, in 2005 hurricanes Katrina, Rita, and Wilma led the NFIP to borrow $17.5 billion from the U.S. Treasury to cover claims. In 2012, Hurricane Sandy resulted in $8.4 billion in payouts and another $6.25 billion borrowed from the Treasury. In 2016, while no one single “catastrophic” event occurred, it was still the third highest payout year ever due to numerous floods in LA, TX, and Matthew’s flooding in many states along the east coast. Payouts of at least $4 billion are projected from these events, leading the NFIP to borrow yet another $1.6 billion in January of 2017. The NFIP’s current debt is $24.6 billion, resulting in almost $400 million of annual interest payments.

Almost no one argues against reauthorizing the NFIP. Many agree that getting this done well before the September 30 deadline and authorizing the NFIP for more than the usual 5 years are good ideas. But from there things get complicated as there are many different views about how to tweak the NFIP, whether it be to make premiums more affordable, protect specific interests, reduce NFIP expenditures, or increase NFIP participation and revenue. Some of the biggest policy debates include rising premiums and what to do about properties that have repeatedly flooded, are rebuilt/repaired with NFIP funds, and then continue to flood.

Bills before Congress take widely divergent views on increasing premiums. Some parties advocate limiting yearly increases to as little as 3-7% whereas bills in Congress usually range from 10-18% annual increases for primary residences.

Repetitive loss properties pose another challenge. Some characterize large premium increases for properties built before the beginning of the NFIP as the government backing out on a “promise” to provide flood insurance to older properties.

However, during development of the NFIP, it was assumed that over time, properties that did not meet NFIP minimum standards would be replaced by structures that complied with current NFIP standards. This has not happened at nearly the pace or scale over the past four decades as expected, meaning that many homes are still “pre-FIRM,” or built before the NFIP had “FIRMs” (flood insurance rate maps) for their community. The National Association of Counties “is concerned with making sure that all properties that were built prior to the release of Flood Insurance Rate Maps for their area continue to be eligible to receive rate-subsidies under each of the NFIP’s property categories.” http://www.naco.org/resources/reauthorize-national-flood-insurance-program.

However, “[p]re-FIRM policies have experienced 5 times more flood damage than new properties built in compliance with NFIP flood maps and non-discounted rates.” Ironshore, http://www.ironshore.com/blog/2017-reauthorization-and-future-viability-of-the-national-flood-insurance-program “2017 Reauthorization and Future Viability of the National Flood Insurance Program.” This same source states that, “[t]he rollback of the Biggert-Waters rate increases shows the political difficulties around achieving sound rates for NFIP. There is a large group of constituents who are impacted by the rate increases, and policymakers will continue to feel intense pressures from them. There is no defined group that benefits from the rate increases, other than the general taxpayers, and this would come from a relatively small reduction in federal budget expenditures. However, if rates are not brought into line to match risk, NFIP will be unable to serve its intended purpose without continued taxpayer funded bailouts.”

An opinion piece in The Hill by Alice Hill and Craig Fugate titled “The same houses flood every year and we keep paying for them,” available at  http://thehill.com/blogs/pundits-blog/energy-environment/344607-the-same-houses-flood-every-year-and-we-keep-paying-for (last visited Aug. 4, 2017), provides some stark numbers. A $56,000 house outside of Baton Rouge, Louisiana has flooded about 40 times and made $430,000 in flood claims. A house assessed at $72,400 in Houston, Texas has received over $1 million in flood insurance payouts. Just 1% of all NFIP policies accounted for 30% of all the claims ever filed under the NFIP.  This leads authors Hill and Fugate to suggest that any reauthorization of the NFIP ensures that each property pays for its own risk rather than subsidizing that of other properties and that the NFIP should ensure that we stop the cycle of flood damage, flood claim, repair, and flood damage again that consumes a disproportionate amount of the NFIP’s resources.

For a summary of some of the bills moving through Congress in 2017 related to the NFIP, click HERE.
 
Speaking of the NFIP: New Community Rating System Coordinator's Manual Released
The 2017 CRS Coordinator's Manual is now available at www.CRSresources.org/manual.  Even while awaiting final release of the new manual, FEMA had already been working to prepare floodplain managers for the new manual.

Here is a FEMA-compiled list of changes to the 2017 Manual.
 
New Approach to Addressing Seawalls that Allow Flooding
The City of Fort Lauderdale, facing high-tide flooding in many areas, wanted to address areas that flooded at high tide due to one or just a few sub-standard seawalls that allowed water into an area. This case study, starting on page 4 of the Florida Bar's Environmental & Land Use Law Section's June 2017 Reporter, examines the innovative approach taken by Fort Lauderdale of citing the owners--public and private--of properties that allow sea water to flow off of them and flood other properties.

In addition, up-to-the minute information on Fort Lauderdale's experience with it's ordinance allowing citation of property owners for allowing saltwater to flow off of their property and flood others will be provided at the workshop "Sea-Level Rise and Flooding: Legal Issues for Local Governments," noted at the beginning of this newsletter, by Dr. Nancy Gassman, Assistant Public Works Director, City of Fort Lauderdale. 
Proactive Moves and Frank Discussions in Miami Beach Accompany Action to Adapt to Rising Seas
As one of the most vulnerable areas to the risks of sea-level rise, the City of Miami Beach has been working already for years to understand their risk and find ways to adapt. Miami Beach has received extensive news coverage for its work elevating roads and installing stormwater pumps to address tidal flooding in the City. The work of Miami Beach, since it is innovative, complex, expensive, and disruptive, has not been without challenges—just last week an extremely heavy rainstorm caused serious flooding and knocked several pumps offline. As part of dealing with such challenging issues, Miami Beach has worked very hard to keep the public informed while also listening to and addressing concerns. Miami Beach has been having numerous public meetings and has shared extensive information with residents.

Miami Beach’s work to inform and include the public has resulted in discussions that have aired many of the difficult issues that local governments face in adapting to sea-level rise. Last week, Miami Beach adopted a new resolution saying that homeowners would not have to pay a separate fee to connect into the public drainage infrastructure that Miami Beach is creating. This was a change from Miami Beach’s previous proposal for the new drainage systems associated with street raisings to be sized to allow connection of private stormwater inputs but to also charge property owners a fee for connecting to the new drainage system. A news article that traces the discussions from last week demonstrates many of the issues that other local governments will be facing as they move forward, too. The news article is available at http://www.remiamibeach.com/citywide/homeowners-to-tie-into-stormwater-system-without-charge/.
Economics and Sea-Level Rise
Awareness continues to grow that sea-level rise presents multi-faceted challenges for local governments. Many of these are economic in nature. An article in the May 1“The Florida Bar News” notes that the Florida Bar’s Tax Section plans to look at how sea-level rise will impact tax revenues at the local-government level in Florida.

An April 18 article in the New York Times Magazine looks at the complications the National Flood Insurance Program faces as sea-level rise exacerbates flooding in low-lying areas. One person in the article bought a house for $320,000 ten years ago in the Norfolk area; the house suffered two floods in a garage that had been converted to rec room. Flood insurance kept increasing for the house until it was $6,000 a year. The owner wanted to sell the house but was told by a real estate agent that with the flood insurance and flood risk, she would be lucky to sell for $180,000. The article discusses long-term fiscal realities of how flood insurance difficulties today are harbingers of greater challenges to come.

An article at the Risk & Insurance website (http://riskandinsurance.com/coastal-mortgage-value-collapse/) asserts that there has already been a weakening of resale values in Miami, Atlantic City, and Norfolk. The article notes that insurance will not save the market value of the trillions of dollars of coastal property whose value may drop. Some in the article propose different strategies for promoting the large infrastructure investments that can help communities at risk. However, even large infrastructure projects will have time-limited utility, especially in southeast Florida, as seas continue to rise ever higher.

Even the architects now discuss rising seas and insurance risks. An article in “The Architect’s Newspaper” notes that sea levels are rising faster than ever in southeast Florida, but that there are efforts to create new designs for neighborhoods and to take maximum advantage of the coral “ridge” on which Henry Flagler built the railroad that eventually reached Key West. Those quoted in the article strike very different tones depending on the themes, scenarios, and time scales they are discussing. While some focused on the current development occurring with much higher resilience standards right now in Miami Beach, others acknowledged the eventuality of investment money moving elsewhere.

Insurance, financing, and economics also came up in the conversations had last week by the Miami Beach City Commission noted in the first article above. During discussions where some felt that individual neighborhoods should get to vote when and if the roads in their neighborhood were raised, it was pointed out that the issue of sea-level rise and adaptation is not just neighborhood by neighborhood but rather is part of the overall resilience plan of Miami Beach. If the City does not work towards a comprehensive approach towards resilience, then insurance and financing will be more difficult or impossible to get and one would likely see an undermining of the economic resilience of the City.

Overall, no one is quite sure how the finances of sea-level rise are going to most dramatically impact our coastal communities. Can communities hold off an insurance, mortgage-lender, or bond-rating crisis indefinitely by massive infrastructure investments that increase resilience?  Two very likely candidates for carrying much of the economic burden at the local government are stormwater fees and Municipal Services Benefits Units—a way of assessing properties a proportional share of cost for infrastructure that serves those properties. But even such approaches have their limits: for both of these, as one increases the fixed costs of property ownership through fees and assessments, this tends to push down property values as many people purchase property not with cash but based on monthly payments. Thus, if the annual infrastructure special assessment on a property is $800 per month and flood insurance is another $1,000 per month, that translates to $1,800 additional dollars not available for a monthly
mortgage payment by a potential buyer.

Dependence on special assessments does, however, accomplishes one potentially desirable policy result: it assigns costs based on the vulnerability of specific properties. As I have noted before, "[S]ome might suggest that the people and property most vulnerable to SLR and other coastal hazards should bear the bulk—if not all—the extra costs necessary to protect them. Those supporting this approach reason that those that choose to own property in the most vulnerable areas should not be able to push the costs of their choice onto property owners, citizens, or taxpayers that have made decisions to live in less vulnerable places." Thomas Ruppert & Alex Stewart, Florida Sea Grant, Sea-Level Rise Adaptation Financing at the Local Level in Florida (2015), available at https://www.flseagrant.org/wp-content/uploads/Local-Gov-Financing_FINAL_10.8.15_1.pdf.

While there may be positive aspects to linking property vulnerability to a requirement that the property pay for needed protective infrastructure, there exists a countervailing argument to limit this:

"Making vulnerable properties pay their own way for protection could be a death knell for poor or modest communities while being little more than an annoyance for very wealthy property owners [citing Jeremy Martinich, James Neumann, Lindsay Ludwig, & Lesley Jantarasami. Risks of sea level rise to disadvantaged communities in the United States, 18 Mitigation and Adaptation Strategies for Global Change 169 (2013)]. The challenge of incorporating socio-economic and environmental justice issues into [sea-level rise] adaptation often bears strong resemblance to the challenges these issues present in reducing and eliminating subsidies in flood insurance under the National Flood Insurance Program." Id.

The complexity of sea-level rise issues scientifically, technically, economically, and socially requires that community’s work to have broad-based public engagement and participation at every stage, from learning about the science to conducting a vulnerability analysis to making infrastructure and financing decision. This certainly makes the process slower and more arduous, but it is the only way to generate the broadest possible community support for adaptation and resilience planning.
Copyright © 2017 Florida Sea Grant, All rights reserved.


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Florida Sea Grant Coastal Planning Program · 1762 McCarty Drive · Bldg. 803 · Gainesville, Fl 32611 · USA

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