DUNEDIN — City officials are sounding the alarm about new federal legislation they say could mean staggering flood insurance premium increases for up to 12 percent of Dunedin single-family homeowners come Oct. 1, potentially leading to a plunge in population, home sales and property values.
Congress in June 2012 passed the Biggert-Waters Act to help the Federal Emergency Management Agency recover its multibillion dollar losses from Hurricanes Katrina and Sandy. The act removes subsidies that had kept the rates on older homes in flood zones low and forces property owners to bear the full burden of the flood risk on their property.
That means that the rates for homeowners at or above base flood elevation will remain the same or even lower.
However, the premiums for owners whose property is below base flood elevation will spike over time by as much as 25 percent per year until they reach full risk.
And anyone who purchased such a home after July 2012, or whose flood insurance policy lapsed or was canceled, or who doesn't count the home as their primary residence will start paying the full rates immediately.
According to city officials, a homeowner who had been paying a premium of $2,000 might see their rate spike to as much $10,000 or more under the new guidelines.
That's bad news for Dunedin, which sits on St. Joseph Sound in Pinellas County — officially proclaimed to be the hardest-hit area in the nation.
Both city officials and insurance experts say they have already heard reports of potential home buyers abandoning purchases.
Pinellas County Property Appraiser Pam Dubov says 1,189 of Dunedin's 9,870 single-family residences are pre-FIRM homes — built before Flood Insurance Rate Maps were adopted in the 1970s and 1980s — located in high-risk flood zones. Dunedin has the fifth-highest number of affected homes in Pinellas, though some beach communities with smaller populations have a much larger percentage of homes affected, she said.
Dunedin city commissioners this month passed a resolution opposing the legislation and also urging county, state and federal lawmakers to delay or reverse the decision.
Saying that the resolution "is not nearly enough" and that "this (legislation) is so huge and so life affecting that it could cripple our property values," Vice Mayor Julie Ward Bujalski suggested that the city explore hiring a lobbyist.
"It's not something we should be waiting and seeing," she said. "It's something we should be actively dealing with. It's very, very, very serious."
About 40 residents who packed a town hall meeting at the Dunedin Community Center Wednesday agreed.
During the 90-minute meeting, the confusion, worry and anger were evident as residents peppered city officials and an insurance expert with questions about their home's status, ways to lower premiums and lawmakers they could contact.
The most affected neighborhood "by far" will be the Baywood Shores subdivision, a waterfront community off Alt. U.S. 19 and Curlew Road, said city planning director Greg Rice.
Seventy of Dunedin's 81 repetitive loss properties (meaning the homeowner has filed two or more flood claims over the years) are in Baywood Shores. On average, he said, homes there were built 7 or more feet below base flood elevation.
Other potentially hard-hit areas, Rice said, include Buena Vista, Santa Barbara and Harbor View drives, as well as some inland properties to the east of Alt. U.S. 19 or those along city creeks.
"It's just going to be a nightmare for everybody," said Baywood Shores resident Dan Pearson, 64. "What more can you say?"
But Jennifer Rabon, an insurance agent with Connelly, Carlisle, Fields & Nichols, said there are things residents living in high-risk flood zones, like A or V zones, can do to soften the blow.
For example, she said, homeowners can lower their premium by either eliminating contents coverage or by increasing their deductible on either their building, contents or both from the standard $1,000 deductible to $5,000.
Elevating homes on stilts is also an option. Rice said several Dunedin homeowners have received contractor estimates of $225,000 or more. He said the city is confirming that FEMA is offering grants to raise homes at a cost of $175,000 or less, as well as looking for contractors who can meet that price.
Still, the tips did nothing to erase several homeowners' sour feelings.
One woman said buyers who purchased homes after the bill passed were essentially duped.
Rabon said the status or potential impact of a projected 2015 review of Pinellas County flood maps that could push some homeowners from a preferred risk zone (B, C, D or X) to a high-risk zone like V or A remains unknown.
It's also unclear how the new legislation will affect businesses and condos, officials said.
According to Rabon's company, the Tampa Bay region is the 16th most likely area to flood in the world.
"As (the new legislation) reads now," she said, "it definitely stands the potential to kill the housing market, to kill the economy."
Added Rice: "It could be another way of foreclosure, where some people walk away. It could be devastating to neighborhoods, no doubt about it."
Keyonna Summers can be reached at (727) 445-4153 or firstname.lastname@example.org. To write a letter to the editor, go to tampabay.com/letters.