House Republican leaders have cleared the way for a floor vote on a bill that would roll back portions of a 2012 overhaul of the federal flood insurance program, offering hundreds of thousands of property owners relief from sharp premium hikes.
The bill also would pass along taxpayer subsidies on insurance premiums to people who buy properties in flood-prone areas, drawing praise from real estate groups who say that it would stabilize the housing market.
The bill takes a different approach than a measure that passed the Senate on Jan. 30 to delay for four years many of the premium hikes under a 2012 law aimed at restoring the National Flood Insurance Program to fiscal solvency after the ravages of Hurricanes Katrina and Sandy. It also is less generous, allowing some premium jumps at earlier dates.
At issue are the mandatory $250,000 flood insurance policies that owners of properties in flood zones have been required to buy since the 1960s. To encourage participation in the program, the government has held down premiums, effectively subsidizing policies for people in flood-stricken areas.
But the devastation from Katrina in the Gulf Coast sent the program’s deficit soaring to $24 billion debt, prompting the so-called Biggert-Waters reform law of 2012, which called for phasing in higher premiums until they reflect properties’ true actuarial risk.
The Congressional Budget Office projected that the Senate bill would cost taxpayers about $2.1 billion over 10 years. Republicans said that the CBO had advised them their bill would not worsen the program’s deficit.
“This bill is a more comprehensive and fiscally sound approach than the Senate version and will ensure that no family is left out in the cold,” said Republican Rep. Michael Grimm of New York, the bill’s chief sponsor.
However, Democratic Rep. Maxine Waters of California, a co-author of the 2012 law, who reversed course after an outcry from those affected, said that she has “significant concerns” that the House Republican measure “will not provide the necessary relief to those facing skyrocketing flood insurance premiums.”
Republicans will need support from a substantial number of House Democrats to move the bill to the floor, because the leadership planned a vote to suspend the rules – requiring a two-thirds majority, or 290 votes – to bring it to the floor.
Republican Rep. Vern Buchanan of Florida said that the House bill would:
– Calm the real estate market in coastal and other flood-prone areas by allowing homeowners to pass on their premium subsidies to people trying to buy their homes.
– Reduce maximum annual rate increases from 20 percent to 15 percent for homeowners in affected areas who bought their houses before the first flood insurance maps were drawn.
– Give primary homeowners who built their homes to code by giving them the option of keeping the federal flood insurance rate they received at the time of construction, regardless of what new mapping concluded about their flood risks.
– Give buyers of homes after passage of the 2012 law the option of a refund or a credit for any steep premium hikes they’ve faced.
Earlier in January, Congress passed and President Barack Obama signed into law a more modest rollback of the law, delaying premium hikes for owners of primary residences and businesses that were built to code and then mapped into a flood zone.
The Federal Emergency Management Agency, which manages the flood insurance program and is responsible for mapping zones with a risk of flooding every 100 years, said that the law passed in January would prevent any premium increases from taking effect for up to two years.