Washington spending bill includes limited flood insurance rate hike relief

U.S. Sen. Bill Nelson called the bill a small step toward a fix.
U.S. Sen. Bill Nelson called the bill a small step toward a fix.
Published Jan. 15, 2014

WASHINGTON — A massive spending bill introduced by lawmakers late Monday includes provisions to prevent flood insurance rate hikes from taking effect, but the measure is short term and does not apply to properties that already have been socked with higher insurance bills.

The fix, tucked into the $1 trillion spending proposal that could be voted on this week, applies only to homes that were grandfathered in when new flood maps were developed to reflect higher risk, officials said.

It prevents FEMA from instituting changes that could drive up premiums for those homeowners — changes that would not have taken place until this fall anyway.

But people in Florida, Louisiana and other states who already have received higher bills are not helped.

The measure, which extends only to the end of the Sept. 30 fiscal year, does not help people who are trying to sell their homes but are prevented from passing along insurance subsidies to buyers, which has slowed down the real estate market.

Yet U.S. House members from Florida heralded the news as a positive development to buy time as a longer-term fix is developed.

A Senate bill that is gaining bipartisan support would prevent increases for four years while the affordability of new rates, designed to shore up the deficit-strapped National Flood Insurance Program, is studied and the flood maps are scrutinized.

"During the delay, the Federal Emergency Management Agency and Congress need to go back to the drawing board for a permanent fix to ensure that our neighbors and small-business owners do not suffer unconscionable increases," Rep. Kathy Castor, D-Tampa, said in a news release.

Sen. Bill Nelson, D-Fla., issued a statement praising the move as a first step but later Tuesday stressed that it was limited.

"We've accomplished a small step toward the solution of the huge flood insurance hikes, but we still have a long way to go," read his updated statement. "Less than a quarter of the policies, the rate hikes have been avoided. But in order to eliminate the rate hikes for the next three years, until we can do an affordability study, we have to pass the bipartisan (Senate) bill.

"We're getting partisan resistance. My hope is that everybody will see that this is absolutely necessary to delay the rate hikes."

Heritage Action, a group influential with conservatives, issued a statement urging lawmakers to vote against the omnibus spending measure, and singled out the flood insurance measures.

"When Congress reauthorized the National Flood Insurance Program (NFIP) in 2012, it also required the phase-out of subsidies on insurance premiums so that policyholders would eventually begin paying actuarially sound rates," the group said. The language "would delay the start of that much-needed reform for one year, setting a terrible precedent that this promising reform may never be allowed to go into effect and taxpayers would be left holding the bag."