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U.S. House overwhelmingly passes flood insurance relief bill

WASHINGTON — The House on Tuesday night voted to undo major provisions of a 2012 law that has caused sharp flood insurance rate increases, signaling possible relief after months of rising tension among home­owners in Florida and other states.

The bill would eliminate a provision of the law that said government-subsidized rates disappear when a person sells a primary home; provide a refund for those who already got hit under that provision; and maintain protections due to sunset for "grandfathered" properties built to code after a community adopted its first Flood Insurance Rate Map.

The legislation still allows FEMA to impose premium increases on homes built before those maps. But the change will be more manageable, bill supporters argued, ranging between 5 and 15 percent on average with a hard cap of 18 percent per year until reaching actuarial risk.

Owners of grandfathered second homes and commercial property would also be spared, but older properties of the same type built before the Flood Insurance Rate Maps are not covered by the legislation and could face significant increases.

Passage of the bill was a rare show of bipartisanship in the typically discordant House. And it came despite significant opposition from conservatives, budget watchdog groups and some environmentalists who said the 2012 reforms were needed to shore up the National Flood Insurance Program, which is more than $24 billion in debt, and to wean people off government subsidies.

The vote was 306-91 with enough Republicans joining Democrats to meet a required two-thirds majority since the bill bypassed the committee process. Every member of the Florida delegation voted yes; Rep. Corrine Brown, D-Jacksonville, missed the vote though supporting the bill.

"Families who were facing massive flood insurance premium increases now can breathe easier," said Rep. Kathy Castor, D-Tampa.

Rep. Vern Buchanan, R-Sarasota, called on the Senate to pass "this critical legislation, which has been endorsed by a broad coalition of homeowners, realtors, home builders and bankers."

The Senate passed a different bill in late January, but sponsors seemed receptive Tuesday to taking up the House legislation. "For the sake of policyholders facing massive rate hikes, I hope we can get a final version sent to the president quickly," said Sen. Bill Nelson, D-Fla.

Opponents of the bill fought throughout the day to keep the 2012 law, known informally as Biggert-Waters, intact. The loss of subsidies, painful as it may be to some, is necessary to keep flood insurance solvent over the long haul, insisted a group of conservatives and environmentalists called the SmarterSafer Coalition.

The group pointed out that the Obama administration has previously opposed delaying the rate hikes, saying it would "further erode the financial position" of the national flood program and "reduce FEMA's ability to pay future claims made by all policyholders."

Steve Ellis, vice president of Taxpayers for Common Sense, said the coalition would support a bill that would slow down the rate increases and offer relief to the hardest hit. "This does the exact opposite," he said. "It brings back some of the bad policies of old."

Florida has more subsidized flood insurance policies facing sharp rate hikes than anywhere in the country — 50,000 in Pinellas County alone — and some homeowners are seeing annual increases from $2,000 to $10,000 or more.

The Senate bill largely sought a four-year delay on Biggert-Waters changes. House leaders said they wanted a more permanent fix and also wanted to avoid adding to the insolvency of the National Flood Insurance Program.

The House bill allows annual increases of no more than 18 percent annually per property, down from 20 percent under Biggert-Waters but more than the 12 percent Democrats sought.

Alex Leary can be reached at leary@tampabay.com. Follow him on Twitter @learyreports.

Comparing the flood legislation

The Biggert-Waters Flood Insurance Reform Act of 2012 passed with overwhelming support in the House and Senate and aimed to eliminate subsidies for two kinds of homes: those built before flood maps existed and those that face higher premiums when a new map placed them at higher flood risk. But the law has caused soaring premiums, alarming homeowners and driving lawmakers to undo the law.

The Senate passed a bill earlier this year that generally called for a four-year delay of Biggert-Waters, which allowed up to 20 percent annual premium increases. On Tuesday, the House approved a different version that makes permanent changes.

Primary home sales

One of the biggest problems has been the law removed premium subsidies when a primary residence is sold. New buyers have been shocked to discover they owe thousands more than expected. And some would-be home buyers have backed off.

• The Senate bill would delay up to four years annual premium increases associated with sale of a primary home built before the first flood maps went into place.

• The House bill eliminates the sale trigger and refunds any increased premiums a new homeowner paid. But going forward, rates could rise by no more than 18 percent per year until actuarially sound rates are achieved.

Homes with subsidies

Starting Oct. 1, Biggert-Waters began to phase out subsidies for owners of homes built before federal flood maps were drawn. Later this year, the same was scheduled to happen for so-called grandfathered homes that were built to code but then came under higher-risk zones and new maps.

• The Senate bill called for a four-year delay in both cases. The House bill restores the rates for grandfathered homes, and for other properties, says FEMA should not increase rates more than 15 percent on average and imposes a hard 18 percent cap per property. It mandates that FEMA raise rates at least 5 percent on average for homes with subsidized rates. The increases are designed to reflect true risk and shore up the National Flood Insurance Program, which is more than $24 billion in the red. The delays under the Senate bill would mean the loss of more than $2 billion in premiums, according to the Congressional Budget Office.

• The House bill does not result in lost revenue because it has mandated annual increases plus an annual surcharge of $25 for primary residences under the National Flood Insurance Program and $250 for secondary residences and businesses.

Alex Leary, Times staff writer

U.S. House overwhelmingly passes flood insurance relief bill 03/04/14 [Last modified: Tuesday, March 4, 2014 11:31pm]
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