Realtors may have breathed a brief sigh of relief when the U.S. Senate passed a badly needed flood insurance fix recently, but there is still plenty of work still to be done if the legislation is to get approval from Congress.
A House bill that mirrors what the Senate approved has more than 180 sponsors, but right now Republican leaders are resisting.
After the bill passed, Democratic Sen. Bill Nelson pointed toward the House chambers and remarked, “Now the question is, what happens down there?”
Republican House Speaker John Boehner is saying he won’t take up the bill, something that must pretty much irk Gov. Rick Scott, who was very vocal in pushing the legislation passed in the Senate.
This bill is important for homeowners, who are facing annual increases of $2,000 to $10,000. Because those increases can stall property sales in older, low-lying neighborhoods, it is also critical to Realtors that the bill get House approval.
That’s why it would probably be a good idea for Northeast Florida Realtors to reach out to Republicans Ander Crenshaw of Jacksonville, Ron DeSantis of Ponte Vedra Beach and Ted Yoho of Gainesville, and press them on getting a House vote on the Senate bill.
Crenshaw, DeSantis and Yoho are among seven Florida Republican members who have not signed on to the House bill.
The Senate legislation, which passed on a bipartisan vote of 67-32, will delay flood insurance rates that soared for homeowners when they took effect last October as a result of the 2012 Biggert-Waters Insurance Reform Act.
Even supporters of the Senate bill say it is not perfect.
But, most agree it is an improvement over Biggert-Waters and will give homeowners at least a temporary reprieve from the massive increase in flood insurance rates.
The bill approved by the Senate only affects primary homeowners and does not delay increases for non-homeowner-occupied properties.
People buying homes in flood zones as a second home or investment property will continue to pay the higher rates. Most real estate experts say this will dampen sales in some Florida neighborhoods.
By most accounts, the intention of the law was good: eliminate subsidies for homes built before federal flood maps were drawn, discourage building in risky areas and stabilize the National Flood Insurance Program, which is $24 billion in debt, primarily as a result of Hurricane Katrina and Superstorm Sandy.
I assume most Floridians don’t think it pertains to them because the state hasn’t suffered recent catastrophic losses like New Jersey did with Superstorm Sandy and Louisiana with Hurricane Katrina.
In fact, Florida could have as many as 250,000 properties that could face huge rate hikes – three times the number as in New Jersey.
Pinellas County, the largest affected area in the state, would account for 50,000 policies. That’s one out of every eight properties.
Those affected will be small business owners to owners of older homes who may find their communities have adopted new flood insurance rate maps.
The amount of risk is determined by a certificate of elevation that each municipality determines differently. In the past, the federal program did not require a certificate of elevation.
Biggert-Waters mandated higher premiums to match the real costs of flood risk, which sounds reasonable. At this time, the National Flood Insurance is $24 billion in debt to the U.S. Treasury.
In hindsight critics say the 2012 law had consequences that weren’t well thought out.
As a peninsula with about 2,276 miles of tidal shoreline, real estate in Florida was greatly impacted.
The state has more subsidized flood insurance policies that face rate hikes than anywhere in the country.
In addition to delaying rate hikes for up to four years, the Senate bill requires the Federal Emergency Management Agency (FEMA) to develop an affordability study — something called for in the Biggert-Waters law but not implemented by FEMA.
FEMA is also to develop recommendations for a policy to assist homeowners who cannot afford their premiums.
Florida senators, Democrat Nelson and Republican Marco Rubio, voted for the bill. Nelson helped draft the legislation, while Rubio bucked some conservative organizations to join 13 other Republicans to vote with the Democrats.
Now, it will take Nelson and Rubio and many others to get the legislation across the finish line in the House.
When property owners begin receiving their bills that include the increases after Oct. 1, it will be the first time many will realize how much they are affected.
By then, it may be too late.
— Jim Bailey is publisher of Realty/Builder Connection and president of Bailey Publishing & Communications Inc. He can be reached at [email protected].