Tuesday, November 21, 2017
Business

New flood insurance rules have consequences for Florida's economy

RECOMMENDED READING


By any reasonable measure, paradise is worth the wait.

So when Colin and Joyce Elston discovered the Pinellas beaches while on vacation from Connecticut in the 1970s, they agreed they would bide their time.

There were three children to raise. And a job opportunity for an industrial scientist of Colin's expertise in Washington. Even a seven-year stopover in the mountains of Mexico where land was cheap and money could be saved.

Yet the Elstons never forgot about the place where the sun was bright and the water stretched beyond the horizon.

So in June, nearly 40 years after they first vacationed in Tampa Bay, the retirees bought a house in Treasure Island and settled in for what they assumed was forever.

Three months later, paradise was interrupted.

The Elstons had never heard of the Biggert-Waters Act passed by Congress in 2012. They had no idea it revamped the National Flood Insurance Program and was about to cause premiums to skyrocket in high-risk areas.

Two weeks ago they discovered the flood insurance they purchased for $1,750 will likely increase 500 to 600 percent in the blink of an eye.

They are waiting for a survey to determine their home's elevation level, but have been told to expect their premium to cost between $10,000 and $12,000.

"Coming here had always been our dream, and everything seemed to work out perfectly for this house,'' Colin said. "It was going to be a stretch for us, but we … knew this could work.

"Now, we don't know what we're going to do. The best we can hope for is bad news. If it turns out to be the worst, it will be impossible for us to live with.''

• • •

The aim behind the Biggert-Waters Act is laudable.

The execution is most certainly not.

Seeking ways to help the Federal Emergency Management Agency climb out from under an enormous deficit built up from storms like Hurricane Katrina, both houses of Congress agreed the federal government would no longer subsidize flood insurance. In other words, homes in high-risk areas would pay the full freight on their premiums.

In theory, this might make sense. In reality, this problem requires a far more nuanced approach.

Come Oct. 1, any business in a high-risk area will immediately lose its flood insurance subsidy. Any home sold after Oct. 1 will also lose its subsidy. And — to the horror of the Elstons — any home sold after Biggert-Waters passed last summer will lose its subsidy.

For everyone else in high-risk areas, it's more like a slow water torture. Their premiums will increase 20 percent every year until their policies are no longer subsidized.

Admittedly, there is a certain appeal to someone paying the true cost of their home's risk, as opposed to being bailed out by other taxpayers.

But that simplistic approach ignores some important truths.

No. 1, Congress has essentially changed the rules in the middle of a game. You can't provide subsidized insurance for decades, then pull the rug out from under people in a matter of months. That's sort of like telling a politician that campaign donations are simply bribes by another name, and so they will have to fund their own election bids starting in 2014. Not too realistic, huh?

No. 2, even if you are devoid of empathy, the ramifications of this law will impact Florida and other coastal states far beyond insurance premiums. The real estate market will take an enormous hit if high-risk homes become unsellable due to insurance rates. Property values will begin to drop, which will affect tax revenues.

It's easy to say that rich people on the beach should have seen this day coming, but what about families in modest inland homes that are in high flood zones? What about homes that have just been redrawn into flood zones by FEMA?

"There's a much bigger picture here,'' said Anita Ford, a St. Petersburg insurance agent. "It's not just, 'Gee you have a nice waterfront house, why don't you step up to the plate and pay what you owe?'

"We were told St. Pete has more parcels in high-risk zones than the top two beach communities combined. It's ludicrous to think this is just impacting a few rich people.''

• • •

So is there a solution?

Maybe not a perfect one, but there has to be something better than Biggert-Waters.

Getting rid of the retroactive home sales clause would be a start. And increasing the maximum deductible for high-risk homes so flood insurance essentially becomes catastrophic insurance is another idea.

Lawmakers in Louisiana have been screaming about the law for months now, and there is talk of delaying its implementation as well as introducing new legislation. Unfortunately, most politicians in Florida have been shamefully low-key on the topic.

The bottom line is real estate agents are worried. Local officials are worried. Homeowners are downright frightened.

It would be nice if our congressional representatives had the guts to stand up and defend homeowners, or else look them in the eye and explain why they don't see this as a problem.

Comments
Eight women say Charlie Rose sexually harassed them - with nudity, groping and lewd calls

Eight women say Charlie Rose sexually harassed them - with nudity, groping and lewd calls

Eight women have told the Washington Post that longtime television host Charlie Rose made unwanted sexual advances toward them, including lewd phone calls, walking around naked in their presence, or groping their breasts, buttocks or genital areas.Th...
Updated: 9 hours ago
St. Petersburg council okays restaurant deal for Manhattan Casino

St. Petersburg council okays restaurant deal for Manhattan Casino

ST. PETERSBURG — The City Council on Monday approved a lease for the Manhattan Casino, a landmark building in the city’s historic African-American business and entertainment community.It was a controversial decision for some of the city’s black resid...
Updated: 9 hours ago
Tampa Electric, contractor fined $43,000 in gas leak

Tampa Electric, contractor fined $43,000 in gas leak

APOLLO BEACH — The federal Occupational Safety and Health Administration fined Tampa Electric $18,108 and gave the company two "serious" citations for its response to a gas leak at the Big Bend Power Station in May, the agency announced late Friday.T...
Updated: 10 hours ago
Forecast: Florida retailers expect strong holiday shopping sales

Forecast: Florida retailers expect strong holiday shopping sales

‘Tis the season for holiday shopping, and this year is expected to be particularly kind to retailers.The Florida Retail Federation’s holiday shopping forecast predicts that a combination of high consumer confidence, strong tourism numbers and a littl...
Updated: 10 hours ago
Up for sale? Activist investor grabs stake in Tampa’s Bloomin’ Brands

Up for sale? Activist investor grabs stake in Tampa’s Bloomin’ Brands

TAMPA — If you tread water too long in the same spot, someone might start asking why you’re not trying to swim somewhere.Tampa’s Bloomin’ Brands — parent company of such prominent restaurant chains as Outback Steakhouse, Carrabba’s Italian Grill and ...
Updated: 10 hours ago
Glenn Thrush, New York Times reporter, accused of sexual misbehavior

Glenn Thrush, New York Times reporter, accused of sexual misbehavior

The New York Times said Monday that it was suspending Glenn Thrush, one of its most prominent reporters, after he was accused of sexually inappropriate behavior.The move came after the website Vox published a report containing allegations that Thrus...
Published: 11/20/17
Most air travelers say taking off your shoes is okay. An etiquette expert disagrees

Most air travelers say taking off your shoes is okay. An etiquette expert disagrees

Unless you are ensconced in first class, sleeping on a plane is as intimate as dozing off in a waiting room on jury duty — everyone on the aircraft knows the decibel level of your snoring and the sad state of your socks.To gauge how passengers percei...
Published: 11/20/17
Senator Nelson on tax reform bill: Small business will ‘get it in the neck.’

Senator Nelson on tax reform bill: Small business will ‘get it in the neck.’

TAMPA — A week ahead of the expected vote on a controversial tax reform bill, U.S. Sens. Bill Nelson and Ron Wyden, D-Ore., visited Tampa to deliver a message to small businesses: This bill will hurt you."Small businesses are the economic engine of F...
Updated: 6 hours ago

Stolen car crashes in St. Pete, leaving passenger, 15, with life threatening injuries

Two boys in a stolen car struck a dip in the roadway and crashed into a tree, leaving the 15-year-old passenger with life-threatening injuries, St. Petersburg police said.The crash occurred about 11:25 a.m. Sunday as the car sped west on 11th Avenue ...
Published: 11/19/17
Updated: 11/20/17

Search suspended for missing Cortez boater who left from Egmont Key

The U.S. Coast Guard suspended its search for a missing 63-year-old boater on Sunday evening, two days after he and his dog were reported missing 5 miles northwest of Mead Point, just inland from Anna Maria Island.On Friday, Fraser Horne of Cortez le...
Published: 11/19/17