Deadline approaches for national flood insurance program
by: Herb Jackson and Nicole Gaudiano
WASHINGTON — Home sales in New York and other coastal states could begin to decline this summer in areas prone to flooding as Congress considers dramatic changes to the National Flood Insurance Program.
Congress has until September 30 to renew the program, but disagreements remain over how much homeowners should be forced to pay for flood insurance to make the debt-ridden program more solvent.
Buyers and sellers of real estate in floodplains could start to see an impact as early as July, said Mike Kelly, director of government affairs for the New York State Association of Realtors. Absent congressional action, the National Association of Realtors estimates 1,300 home sales nationwide could be delayed or lost each day that the program fails to be reauthorized.
“It isn’t the drop deadline date when everything comes to a standstill,” Kelly said. “Things start to grind to a halt much earlier. Even before September, we’re going to see pending home sales and home purchases begin to slow because of that ambiguity of, ‘Will the program be authorized or not?’”
Created in 1968, when the private insurance industry largely stopped covering floods, the national program tried to get property owners in flood zones to pay premiums that could be pooled to cover disasters and fund mitigation programs and mapping to spur smarter land development.
Despite bipartisan support, action to renew the law has slowed this spring, and while Sept. 30 may seem a long way off, Congress is only due to be in session about a month and a half worth of legislative days before the law expires.
A bipartisan group of senators proposed an overhaul of the program on Tuesday that would cap premium increases, use advanced radar to make more accurate flood maps, and offer some homeowners vouchers to pay for coverage and loans to elevate buildings.
The bill, sponsored by senators on two key committees and from states that rely heavily on the program, is one of several proposals pending this year for a program that insures 5 million homes and businesses, including 184,000 in New York, but cannot repay nearly $25 billion borrowed from the treasury to respond to catastrophic storms, including Hurricane Katrina in 2005 and Superstorm Sandy in 2012.
Menendez, Kennedy, Warren and Van Hollen all serve on the Senate’s banking committee, which is responsible for writing the new bill. Cochran is chairman of the appropriations committee, which funds disaster relief, and Rubio and Kennedy are members of the committee.