Frank and Shirley Davis represent what went wrong with flood insurance reform. The couple, in their 70s and in ill health, wants to sell their three-bedroom St. Petersburg home. But after federal flood insurance subsidies for older homes went away on Oct. 1, the Davises are stuck trying to sell a moderately priced home that buyers fear could come with a huge flood insurance bill. The Davises are not alone. Sales of bay area homes in flood zones have plummeted since a new federal flood insurance law took effect, the Tampa Bay Times' Drew Harwell reported this week. Congress created this mess, which is ruining the housing market and too many lives in too many neighborhoods, and Congress should clean it up.
Passed in 2012 to help pay down $24 billion in debt after Hurricanes Katrina and Sandy, the Biggert-Waters Act was supposed to level the playing field by ending homeowner flood insurance subsidies on older houses, many constructed more than 30 years ago. The law calls for premiums to rise by 20 percent each year for the next five years or until they reach market rate. Even worse is that subsidies would end immediately on homes that are sold, resulting in skyrocketing rates and driving away potential buyers.
Pinellas County, which leads the nation in flood insurance subsidies, has been hit particularly hard under the new law with sales falling dramatically in flood zone communities. In Shore Acres in St. Petersburg, sales are down 60 percent from November 2012 to November 2013. The picture is even bleaker in neighborhoods such as Disston Heights, Holiday Park and Garden Manor, where November sales tumbled 87.5 percent compared to the same period a year ago. At its worst, the new law hamstrings sellers, violating their right to sell their property without government interference. It also puts buyers in a bind, with good deals gobbled up by rising insurance bills.
Florida legislators are reasonably exploring the possibility of creating a less expensive alternative to the federal program. But the most pragmatic answer remains in Washington, where Congress should delay the implementation of Biggert-Waters and work on a better solution. It is the right thing to do for Frank and Shirley Davis, and it is the right thing to do for Florida.