Real estate brokers have joined the chorus of those asking Congress to halt some of the changes to the nation’s flood insurance program that will raise premiums for some owners of property in flood zones.
At the invitation of Florida Gov. Rick Scott, Florida Realtors President Dean Asher spoke to members of the Florida Cabinet this morning about the “unintended consequences” from the federal Biggert-Waters Flood Reform Act of 2012, signed into law on July 6, 2012.
Asher urged the Florida Cabinet to call on Congress to act now to delay implementation of the rate increase provisions for grandfathered and newly purchased properties until the Federal Emergency Management Agency (FEMA) submits an affordability study that is required by the Biggert-Waters law.
That affordability study was supposed to be submitted to Congress this past April.
FEMA Director Craig Fugate, whose office administers the National Flood Insurance Program (NFIP), told a Senate subcommittee last week that the affordability report could not be done in the time period allowed and also said he does not have authority under the law to postpone rate increases. He said he would need legislative authority to do that.
Gov. Scott also called upon Congress to delay implementation in a recent letter to Senators Bill Nelson and Marco Rubio. Scott said he fears the potential impact of the insurance changes on the state’s economy.
Asher, broker-owner with Don Asher & Associates Inc. in Orlando, said that the state’s growing real estate market is contributing to Florida’s strengthening economic recovery. According to the most recent housing data from Florida Realtors, August marked the 20th month in a row that the statewide existing single-family home median sales price rose year-over-year.
But flood insurance could slow this progress, he said.
“Unfortunately, the federal Biggert-Waters Flood Reform Act passed by Congress could bring that positive momentum to a screeching halt,” Asher said. “I want to be sure that the general public knows that Realtors understand the need for solvency in the federal flood program. However, the Biggert-Waters Act contains severe unintended consequences that are harmful to Floridians as well as other states. We believe the reforms will have a detrimental impact on the entire economy of Florida, including existing homeowners and those who want to buy Florida properties.”
While most sections of the Act relating to rate changes offer a “glidepath” or “phase in” to actuarial soundness, it does not have such a provision for new homebuyers, he said, adding “this reform measure will, in effect, lock many current homeowners into their property. Homeowners won’t be able to sell because no one will be able to afford to buy after they learn what the flood insurance premium will be.”
Also addressing the Cabinet on flood insurance reform issues were Brandi Gabbard, a Pinellas County Realtor and chair-elect of the Pinellas Suncoast Association of Realtors, and Bill Foster, mayor of the city of St. Petersburg.