Wednesday, October 23, 2013

Red Hook Residents Write A Letter To Congress: Pre-Sandy Changes In Flood Insurance Rules Will Be More Ruinous Than The Storm Itself. UPDATED 10/26: Bloomberg PRESS RELEASE; Rep. Maloney: Sunday Press Conference; New York Times Article, UPDATED 10/27: Velazquez Joins Maloney: PRESS RELEASE (SEE BELOW)

 Pioneer Street - courtesy of the SSAIL Facebook Page.

Red Hook residents are extremely concerned about the affordability of flood insurance for their homes. Anyone who attended the public meeting last week for the NY Rising Community Reconstruction Plan heard that concern stated over and over again, with many attendees saying it was one of the most important issues for Red Hook home-owners who are worried about the future affordability and viability of living in Red Hook.

As we know, after the destruction and upheaval that Superstorm Sandy caused, Red Hook residents struggled with getting fair compensation from their flood insurance companies for the damages they suffered. Some home-owners, nearly 12 months after the storm, are still waiting for satisfaction and are caught in a long-term legal fight to get that much needed (and deserved) payout.

Now, adding insult to injury, changes that were made to the National Flood Insurance Program (NFIP) by Congress via the Biggert-Waters Act of 2012 (pre-Sandy) are making the renewal or purchase of flood insurance much more expensive - by a factor 60 in some cases (quotes of $36,000/year) - regardless of any reasonable measures that the home-owner might have made to protect or reduce potential damage to their homes from future flooding (raising mechanicals to upper floors, elevating electric meters, etc.).  These coming increases will restrict the community's ability to insure their properties; force residents out of their homes; drive down property values and affordability; and will have flow-on effects that may prove even more harmful to Red Hook's residential and commercial community than the storm itself. The fact is, if these increased costs do become insurmountable, this would have an enormous impact on the resilience and successful post-Sandy recovery of the neighborhood, which so many of us are working towards. It would be a disaster.

This is what Red Hook residents are so worried about.

To raise awareness of this issue, Red Hook home-owners have banded together to start a group called "Sandy Survivors for Affordable Insurance Legislation - SSAIL" (Facebook page here which has links to many stories on this subject). Additionally, a letter has been composed by residents of Pioneer Street (full disclosure: my street), in which they detail the terrible impact that the Biggert-Waters Act will have on the people living on this particular Red Hook street - impacts that will similarly be borne throughout the neighborhood.

I could outline the many arguments that are being made for rolling back this destructive law, but it's probably best if the reader takes a look at the points these Pioneer Street residents have compiled in the letter. It's pretty compelling.

The letter will be presented to the House Financial Services Committee by an organization called Coalition for Sustainable Flood Insurance (CSI), which is representing many communities around the country that are being impacted negatively by the changes made by the Biggert-Waters Act.

Here is the letter - (PDF available here)

The historic Brooklyn neighborhood of Red Hook, in New York City is home to many working and middle‐class families who have lived here for generations, as well as artists and small businesses which have contributed to the recent revitalization of this diverse waterfront community. Pioneer Street is one of the few preserved blocks in the neighborhood, comprised of nearly forty late 19th century brick row houses. These small, three‐story buildings, each between only 1500 and 1800 square feet, are mostly primary residences. Many also include a rental unit on one floor, and this income helps keep the neighborhood affordable by reducing the expenses of home‐ownership in New York City. In turn, this affordability helps keep property values in the neighborhood stable.

Pioneer street itself is approximately seven and a half feet above sea level, and even though it is located well inside New York Harbor, and not subject to any wave action or moving water, the flooding that resulted from Super Storm Sandy did inundate the lowest, “garden-­‐level” floors of all of our homes, which are a few steps down from the street. This was the first flooding of this kind in well over 100 years, if ever. The damage from this stillwater flooding was significant, but not crippling. Mostly, it was mechanical equipment, electrical service, insulation and finishes that needed repair. Only a few homes had any structural damages, and this was typically minor. Almost all of these homes were fully repaired within six months, and most homeowners were able to continue to live in their homes during the repairs. Although the storm was devastating, its effects were relatively short-­‐lived.

This will not be the case with the Biggert‐Waters Flood Reform Act, which threatens long­‐term and irreversible damage to our homes, our neighborhood, and our community. This so‐called reform act, which was passed months before Sandy, calls for dramatic and unprecedented increases in flood insurance premiums for policies administered through the National Flood Insurance Program (NFIP). These premiums will be set primarily according to the elevation of a home relative to a base flood elevation, which is approximately twelve feet above sea level on Pioneer Street, regardless of when the homes were actually constructed. This is a departure from the previous regulation, which did distinguish between pre‐existing houses and new developments. As a result, Red Hook homeowners may see premiums rise as much as sixty times their current rates, from as little as $1,600 per year to as much as $36,000. According to FEMA, the only way to afford these crippling rates would be to literally raise our homes by as much as 8 feet.

The 19th Century, joisted­‐masonry construction of our houses makes them impossible to elevate. In order to avoid these new premiums, our only option would be to tear down our entire block – forty Civil War Era houses – and rebuild from scratch, which is not financially feasible for any of us because like most Americans, most of our net worth is in our homes, and subject to mortgages which we work very hard to pay off.

Our intimate knowledge with the flooding caused by Sandy, and our associated experience filing flood insurance claims through the NFIP, uniquely qualifies us to evaluate the proposed changes to this program. To be blunt, we are confused as to how the new, unsubsidized premiums can be justified as "actuarial". These yearly premiums represent, on average, somewhere between 33% and 200% of the actual settlements paid out by the NFIP to Red Hook policy‐holders following Sandy. This for an event with a probability of occurrence of 1/100, according to FEMA’s own flood maps (in truth, Sandy is likely the worst flood in 500 years of recorded NYC history, arguably making it less likely). Even if we were to assume that the frequency of these events will increase twofold over the next fifty years, and factor in generous allowances for overhead and administration, the numbers don't come close to adding up. In fact, the premiums would be unjustifiable even if these policies had paid out 100% of their value ($250k) following Sandy, which they did not.
No rational homeowner would participate in this program at these rates, since it would be vastly cheaper to self‐insure. This will deplete the insurance pool, leading to more deficits for the NFIP. In addition, those of us who are required by their mortgagees to carry such insurance will be caught between a rock and hard place; unable to afford their homes as result of these crippling flood insurance premiums, yet also underwater on their mortgages and unable to sell and relocate because of the effect mandatory insurance at unjustifiable prices will have on property values.

Fortunately, there are many alternatives to Biggert‐Waters’ “reforms” which can improve the solvency of the NFIP without victimizing homeowners. A team of New York City experts under the Special Initiative for Rebuilding and Resiliency (SIRR) proposed several such alternatives. For example, offering homeowners the option of lower cost, high deductible policies would help mitigate some of the severe affordability issues that Biggert‐Waters threatens, would continue to protect homeowners from catastrophic loss, and would ease future demands on the NFIP by reducing smaller, non‐catastrophic repetitive claims. Similarly, the NFIP could offer credits – substantial enough to serve as an effective incentive – against insurance premiums for proven flood design improvements, such as elevating sensitive equipment and electrical service, avoiding the use of permeable construction materials like BATT insulation or drywall, and employing flood vents to equalize hydrostatic pressure across structural walls in the event of severe flooding to prevent serious structural damage. These design improvements alone would have reduced the Sandy flood damage experienced in Red Hook by upwards of 66% for most properties.

Biggert‐Waters tries to balance the flawed design of the NFIP on the backs of innocent, hardworking homeowners in neighborhoods such as ours. This is an outrage, especially because so many good alternatives exist. Biggert‐Waters needs immediate and dramatic reform along with an affordability study that accurately reflects the repercussions the removal of these subsidies will have on average working class Americans. We implore you to get to work.

UPDATE 10/27


Red Hook's Congresswoman Nydia Velázquez (NY-7) joined Congresswoman Carolyn Maloney (NY-12), New York City property owners, co-op residents, insurance experts, small-business owners and community advocates today outside 200 East End Avenue, an Upper East Side co-op building that, after recouping from $4 million of damage after Hurricane Sandy, could be hit with sky-high flood insurance premiums through the National Flood Insurance Program, as a result of the the Flood Insurance Reform Act of 2012. Other attendees from around New York City are also facing the reality of soaring flood insurance premiums that are unaffordable and could prevent people from purchasing insurance. Congresswoman Maloney called for a delay in the rate increases, many of which took effect on Oct. 1, and could raise New Yorker’s premiums by $5,000-$10,000, according to a recent City report.

“The flood insurance program should not harm New Yorkers with unreasonable rate increases. We must work together to find a solution that protects New Yorkers in high-risk flood areas,” said Congresswoman Velázquez.

Read the entire press release HERE

Photo Caption: Congresswoman Maloney (NY-12) (center), is joined by Congresswoman Velazquez (NY-7), homeowners, advocates and community members from Manhattan, Brooklyn and Queens to call on Congress to delay drastic increases in premiums for flood insurance through the National Flood Insurance Program.

UPDATES 10/26:


"The Number of Families Required to Pay for Federal Flood Insurance will Double When New FEMA Maps are Complete; Congress and FEMA Must Ensure that Coverage Is Not Cost Prohibitive"

“For thousands of New Yorkers, the difference in the cost of insurance as a result of Federal policy changes is the difference between being able to stay in their neighborhoods and having to move,” said Mayor Bloomberg. “We will continue to lobby the Federal government to implement solutions to help New York City residents mitigate the significant rise in their flood insurance costs and help New Yorkers damaged by Hurricane Sandy to recover and rebuild.”

Press release here

Click here for study.



~Rep. Maloney, residents, small-business owners, members of insurance industry call for delay in drastic premium hikes for federal flood insurance through the National Flood Insurance Program~

New York, NY – Congresswoman Carolyn Maloney (NY-12) will be joined by New York City residents, members of the insurance industry, community advocates and small-business owners on Sunday, Oct. 27, 12 noon, in front of 200 East End Avenue, between 89th and 90th Streets, in Manhattan, to highlight the fact that many property owners are facing drastically high increases in their federal flood insurance premiums, as a result of the Biggert-Waters Flood Insurance Reform Act. 200 East End Avenue is a Co-Op building that suffered millions of dollars of damage in Hurricane Sandy. But, as a result of Biggert-Waters, it could see an unaffordable increase in premium rates for flood insurance through the National Flood Insurance Program (NFIP).

Press Contact – Nick Moroni (212) 860-0606, (646) 831-1649

NY TIMES ARTICLE: Insurance for Floods May Force Relocations - HERE

"The number of properties in New York City that will be required to have federal flood insurance will nearly double in 2015, and the accompanying higher premiums may mean that many city residents will have to relocate, Mayor Michael R. Bloomberg said on Friday."

“We’ve got to figure some ways to solve the problem,” Mr. Bloomberg said during his weekly radio program on Friday. “An awful lot of people just don’t have the money. It’s the old blood from a stone problem.”


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