TV-6 Investigates: Flood Insurance Reform, Impact On Neighborhoo - News and Weather For The Quad Cities -

TV-6 Investigates: Flood Insurance Reform, Impact On Neighborhoods

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The National Flood Insurance Program owes taxpayers $24 billion.

The government's auditor says flood insurance won't be able to pay the money back with the way flood insurance premiums are priced.

Congress passed a fix two years ago to strip away subsidized insurance and have people pay the true rates.

Flood insurance reform has shocked property owners with new rates for living and doing business in flood plains.

TV-6 has talked with people having their rates increase by over 200 percent.

TV-6 also talked with people trying to sell their homes, who've had flood insurance scare buyers away.

The last groups impacted are the communities with neighborhoods built in flood plains before flood maps existed.

Those neighborhoods could be doomed if people can't afford the insurance, and can't sell to anybody else.

"That was my first semester of city administration," says Bettendorf Administrator Decker Ploehn. He will never forget Duck Creek's 1990 flood.

"Ten inches of rain in an eight hour period, and then again 13 days later, we had another five or six inches of rain."

The flood sent eight feet of water rushing into 275 homes. 75 basements collapsed. It was almost the end of the neighborhood. After the flood, the city considered converting the neighborhood into green space.

"We talked about that frankly in 1990, we haven't had that experiences since then, and it has not been on our radar since then," says Ploehn.

After the water receded, and didn't return, memories faded. People moved out, and the flood of 1990 has largely been forgotten.

"There are still some old timers there, but pretty much it's turned over and I'm not sure that everybody either is aware of all of the concerns going into that neighborhood," says Ploehn.

Until a new flood threat emerged, the threat of drowning in flood insurance premiums.

"We weren't aware of the total impact cause we really hadn't analyzed the bill."

Ploehn says the increases could spell disaster for the area, pricing people out of those homes.

"That's great affordable housing in the city and a very nice neighborhood, it has got attraction to Grant Wood school, you've got a whole plethora of kids that go to that school."

The city passed a resolution asking federal lawmakers to delay the law in November. The Senate passed a bill delaying the flood rate hikes last week. Flood plain managers feel Congress is back pedaling from a mess it created.


"In my mind anyway Congress didn't exactly write the best bill to start with and now it has gone way above their head and they're trying to scramble to get back and get things under control," says Whiteside County Flood Plain Manager E. Stuart Richter.

He says there are ways to avoid rising insurance costs. Property owners can spend money up front to flood proof their homes and businesses, cutting their rates. Communities can adopt tougher standards for buildings in the flood plains. That can earn discounts on flood insurance for everybody in that area. Richter says the best strategy may have been to slow down the rate hikes.

"If it was phased in and people used programs available when they're available to correct problems with their structures, it could work out not many people are paying for flood insurance at all," says Richter.

The list of additional flood plain regulations is long, 614 pages, and Ploehn feels river communities like Bettendorf should be treated differently than coastal ones.

"There's a big difference between what's happened on this waterway, a Mississippi River flood, then say a Katrina flood or Superstorm Sandy. To put them all in one bucket, is probably not a fair way to look at that," says Ploehn.

One suggestion is to use different flood statistics. Calculating a more likely 50 year flood, as opposed to the 100 year flood. FEMA says the law was written in 1968 to use 100 year floods. Staff at the Chicago office says homeowners need to weigh flood risks against a big picture.

"Over a 30 year mortgage that equates to a 26 percent over 30 years that the location would be inundated with flood water," says Risk Analysis Branch Chief Eric Kuklewski.

Flood insurance specialist David Schein says people don't question having fire insurance. Even though he says there's less of a chance of a fire over 30 years in a flood plain.

"The risk of having a flood, versus a fire, you're three times more likely to flood than burn over the life of a 30 year mortgage in a flood plain," says Schein.

Flood insurance prices may get a break if the House approves delaying the increases. As written, the bill would require FEMA to complete an affordability study first before implementing new prices. Ploehn says the city will keep fighting for the Duck Creek neighborhood no matter what happens.

"We would never do this again, (build in the flood plain) but the fact of the matter is they're there now, how do we take care of them," says Ploehn.

Communities across the country will be asking the same questions as people choose to live in homes built before flood maps ever existed.

Right now flood insurance reform increases rates on different types of property.

Businesses, vacation homes, and repeat flooded structures will see flood insurance rates increase up to 25 percent each year until the true rate has been met.

homeowners with subsidized rates can keep them, although they will see their prices increase by up to 20 percent a year as well.

once a home is sold, the buyer must pay the full flood insurance rate.

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