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Here's hoping the flood waters recede

Legislative update

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POSTED: December 26, 2013 2:30 p.m.

On Sept. 25, more than 200 concerned citizens pack the Tybee Island City Hall in a standing-room-only meeting moderated by Mayor Jason Buelterman.
On Dec. 3, more than 350 concerned citizens pack the auditorium at the College of Coastal Georgia in Brunswick in a standing-room-only meeting moderated by Chamber of Commerce President Woody Woodside.
Both of these meetings were held to address the pending impact of the Biggert-Waters Act, the contentious flood insurance legislation that threatens to derail the already shaky economic recovery in the coastal region and potentially displace numerous homeowners.
Horror stories of the effects of this legislation that sets out to make the National Flood Insurance Program (NFIP) more self-sustainable are already being heard.  The massive increases in flood insurance rates for potential home buyers in the coastal region are wreaking havoc on the real estate market, causing buyers, sellers and real estate agents to rethink pending sales.
In one instance, a buyer proposing to purchase a $123,000 home in Glynn County was initially informed by his insurance agent that his flood insurance premium would increase from around $600 per year to $27,000 per year.  
After further research it was determined that his rate would be more in the $2,000-per-year range.  Although the buyer decided to move forward with the purchase, he is now fearful of future increases in premiums.
Another horror story in Glynn County involved a potential sale where the flood premium increased from $548 to $7,990 per year in a policy written in the NFIP.  Fortunately the buyer was able to purchase a policy in a private flood program for $2,441 per year and the sale went through.
However, even with the private program price the buyer’s debt ratios went from 30 percent to 42 percent due to the flood premium.  This means that 12 percent of his income will be spent on a flood premium.
Obviously with more money being spent on flood insurance, less money will be available to be spent into the economy.
The impact of this legislation could potentially be devastating to many facets of our economy in coastal Georgia, not the least of which is the already fragile real estate market.  Although the market has shown signs of finally stabilizing, it can ill afford any more negative forces that will hinder its continued recovery.   
Another recovering industry that could feel the effects of this legislation is the banking industry.  Much like the real estate market, the banking industry is finally working its way out of the Great Recession.  Flood insurance is required with almost all loans made by banks and if its price is cost prohibitive it could mean less loans that borrowers can afford.
Another decrease in the real estate market will also impact city and county tax digests.  As governments finally see revenues moving in a positive direction, another disruption in the real estate market could lead to even more cuts or pressure to raise millage rates.
Fortunately it appears that at least some legislators in Washington have gotten the message and are proposing legislation to help lessen the impact of Biggert-Waters.              
For instance HR 1485 would, among other things, limit the increases mandated by Biggert-Waters to 12.5 percent each year.  
HR 2199, on the other hand, would delay certain provisions of Biggert-Waters anywhere from three to five years.  
But perhaps the most likely legislation to be passed is SB 1610, the Homeowner Flood Insurance Affordability Act of 2013, a bipartisan bill co-sponsored by Sen. Johnny Isakson, R-Ga.
That bill protects citizens from sudden, steep increases in flood insurance premiums by delaying the implementation of rate increases on certain properties until FEMA completes the affordability study mandated by Biggert-Waters and submits an affordability framework for Congressional review.  
It also requires the FEMA administrator to certify that the agency has implemented a flood mapping approach utilizing sound scientific and engineering methodologies before increases can take effect.  
It is a shame that most of what SB 1610 will require is what many legislators felt Biggert-Waters required in the first place — that FEMA perform impact studies on citizens before implementing changes.
Regardless, SB 1610 is needed to stop what could be a potentially disastrous effect on the nation’s economy, particularly in coastal Georgia.                

Carter can be reached at 404-656-5109.

 

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