In the wake of flooding that left many Bethany Beach homeowners with swimming pools for yards during and immediately after the May 12 nor’easter, U.S. Sen. Tom Carper (D-Del.) arrived in the town May 29 to see how well the town had recovered from damage to its newly reconstructed beach and from the extensive flooding.
He was also there in support of Senate Bill 2284, the Flood Insurance Reform and Modernization Act of 2008, for which he had voted on May 13. The bill came out of the Senate with a 92-to-6 vote in favor and is now due to be reconciled with similar legislation in the U.S. House of Representatives.
“It was 40 years ago that we passed the legislation for the National Flood Insurance Program,” Carper pointed out to those present May 29 at Bethany Beach Town Hall, including Councilmen Bob Parsons and Jerry Dorfman and Town Manager Cliff Graviet. “And it’s been 40 years spent trying to get it right.”
The National Flood Insurance Program (NFIP) was created in 1968 to provide subsidized insurance to cover flood damage. Today, it covers more than 5 million property owners, including more than 22,000 in Delaware. Homeowners must participate in the NFIP if their property stands in a designated Special Flood Hazard Area, which includes Delaware’s beach communities.
The turning point for the program, Carper said, was Hurricane Katrina.
“Katrina brought the National Flood Insurance Program — not to its knees, but into a whole lot of red ink, like it was $20 billion under water. It broke it,” he said, noting the costs for the storm, and the subsequent Hurricane Rita, that the program has not been able to recoup after claims were paid.
That money was borrowed from the U.S. Treasury, to keep the program temporarily solvent, but SB 2284 takes that help a step further, forgiving the $20 billion in debt entirely.
With a clean slate for the NFIP’s previously bleak financial picture, SB 2284 reauthorizes the program for five years and also aims to do just what Carper said: finally get it right. Changes imposed under the bill and its House version include:
• Requiring the NFIP to establish a reserve fund equal to at least 1 percent of the value of flood insurance coverage in force during the previous year;
• Increasing the cap on average annual rate increases that can be imposed on policyholders, from 10 percent per year to 15 percent per year (average rates prior to Katrina had been about 7 percent per year);
• Phasing out subsidized premiums for some policy holders;
• Requiring policy holders to carry a larger deductible; and
• Prohibiting the Federal Emergency Management Agency (FEMA) from subsidizing new or previously unsubsidized policies.
Maps, premiums aim to make program more fair
Carper said May 29 that a core goal of the program is to ensure that premiums collected for flood insurance under the NFIP are appropriate when the risks associated with the covered properties are taken into account. Those who build in riskier locations will pay appropriately higher premiums, he said.
Hand-in-hand with those changes come required updates to the programs flood maps, which are designed to indicate whether homeowners are building in areas of risk for severe flooding and must therefore purchase flood insurance from the NFIP.
“Perhaps most importantly, this bill compels FEMA to modernize its flood maps,” Carper said. “Technology now allows for the creation of exact, detailed flood maps, so homeowners and communities are better prepared before another Hurricane Katrina strikes again.”
“Homeowners in Delaware should know when they are building or rebuilding on flood-prone property, and they should have affordable insurance coverage in the event a major flood were to strike; the updated flood maps and the strengthened insurance reforms of this bill are long overdue,” he said of his vote of support for SB 2284.
The new flood maps for the NFIP will be aimed at ensuring that property owners do not mistakenly purchase flood insurance when their property is not really at risk for flooding — a higher possibility in recent years, as the existing maps have become outdated and as technology for creating accurate maps has improved.
They will also help ensure that those most likely to suffer damage to their properties will meet the requirement to enroll – and pay appropriate premiums commensurate with the risk of that location. Lenders not enforcing the requirement for such properties to be enrolled in the NFIP would also face much stiffer penalties.
Those particularly targeted to pay more are some property owners with structures built prior to the completion of original flood insurance rate maps, or prior to 1975, known as pre-FIRMs. SB 2284 would allow average rate increases of up to 25 percent for some of those properties, including some of the area’s most common uses — second homes and vacation homes.
Also subject to the higher rate increases are pre-FIRMs that have been flooded four or more times, with total claims payments exceeding $20,000, and properties with two or more claims exceeding the fair market value of the property, “severe repetitive loss properties”; pre-FIRMs that sustain damage exceeding 50 percent of the fair market value of the property after enactment of the bill; and pre-FIRMs that undergo improvements or renovations exceeding 30 percent of the fair market value of the property.
That could spell big premium increases for some of the town’s oldest homes, especially those that have proven vulnerable to flood damage in the past.
Pre-FIRM property owners have been charged, on average, just 60 to 65 percent of the normal rate for their coverage – an average of $800 per year for each of about 475,000 properties. The changes to the cap on premium increases would be designed to ensure that affected pre-FIRM property owners are paying roughly the actuarial rate for their flood insurance within 10 years.
Carper said continuing to subsidize some of these premiums “does not make sense, especially with the deficit.”
The changes also expand eligibility for the NFIP to additional property owners and alerts those in the 500-year floodplain of their flood risk — something Carper said would likely increase the number of property owners who voluntarily enroll in the program.
It does not take a more extreme step, as Dorfman suggested to Carper, of restricting building in flood-prone areas. Property owners will still be able to build according to code, but they will likely find their NFIP premiums to be higher than those of their neighbors who built on parcels less at risk.
Wind coverage not likely to be added to NFIP
One aspect of the proposed changes to the NFIP that was rejected by the Senate involved how the program would deal with damage due to winds. The House version of the bill included the ability for the NFIP to include coverage for wind damage. The Senate rejected the notion.
“We had a hard time paying just for the flood damage,” Carper said, adding that he didn’t expect the final version of the bill, when reconciled between the two houses, would include any provision for coverage for wind damage. Parsons said he would like to see wind-damage coverage as an option property owners could choose to pay additional for.
The issue of wind damage from coastal storms has been a controversial one, since a substantial number of damage claims from Hurricanes Katrina and Rita involved either wind damage or what insurance companies subsequently declared to be damage as the result (directly or indirectly) of winds from the storms. Some of the companies were taken to court by policyholders over the issue.
That controversy did not lead to sufficient support in the Senate for provisions for wind-damage coverage to be included in the overhaul of the NFIP, despite House support.
“But the program will be solvent,” Carper emphasized. “It will discourage people from developing where it’s not safe and will encourage some communities to mitigate their risks.” The program would encourage communities to work on floodplain management measures.
“It’s a great way to end the 40-year journey,” Carper added.
Protection provided by dune praised
Before a photographic tour of the worst of the downtown flooding from the May 12 nor’easter, Carper kicked off his May 29 visit with a trip down to Bethany’s storm-damaged, reconstructed shoreline.
“Without the dune, most of the boardwalk would be sitting here, on Oceanview Parkway,” commented Parsons, who lives on that street, just a block off the ocean, and took some of the illustrative photographs from his second-story deck.
“The boardwalk would have been destroyed,” added Graviet, “if the dune had not been there.”
Graviet said he felt the beaching of the storm-abandoned research vessel the Russell W. Peterson would have been a death knoll for the boardwalk and bandstand without the dune, since it originally came ashore right at Garfield Parkway before running aground about two blocks to the south.
“We would be looking for millions of dollars for repair of the boardwalk,” Graviet said.
“The boat would have been on the boardwalk,” Dorfman agreed.
“It came ashore stern-first, right at the bandstand. It would have been in the bandstand without the dune,” Graviet emphasized.
Carper said the dune and beach widening that came as part of the beach reconstruction project in Bethany Beach had proven their worth with that storm protection alone.
“This is why we spent the money to protect the beach,” he said, pointing to the potential damage to public and private property, and to infrastructure, had the project not been essentially complete prior to the May 12 storm.
Beach getting back to normal after storm
The U.S. Army Corps of Engineers, which originally oversaw the reconstruction project, is currently overseeing the rebuilding of the dune and dune crossings.
Tony Pratt, program administrator for the Shoreline and Waterway Division of the Delaware Department of Natural Resources and Environmental Control (DNREC), said the Corps had instructed contractor ERM to start putting back the “hard-pack” material that makes up the dune crossings in Bethany Beach.
The dune has essentially been rebuilt, Pratt said, with the restoration of dune fencing and rebuilding of crossings in Bethany Beach expected to take a few more weeks before completion.
Meanwhile, with minimal damage in South Bethany, work has also begun to replace the lost dune fencing there, Pratt said.
As for less obvious but larger-scale impacts to the beach in Bethany from the nor’easter, “The beach continues to build,” said Pratt mid-week. “The sand is still coming back in. That process is still playing out and will continue to be over next few weeks.”
That natural process will be the limit of what is planned for repairs from the nor’easter until at least the fall, Pratt said.
“I don’t think we’re going to be doing much more than we’re doing now,” he said. “We’ll be repairing the fencing and the crossings. And nature generally provides the material back up on the beach. In six months, we’ll see how much sand has flowed back up out of South Bethany.”
Pratt encouraged beach-goers and local residents to be patient with the recovery process.
“It does take a long time for these processes to play out,” he said.
With the dune, crossings and dune fencing restored by man in the coming weeks, much of the remaining work to return the beaches to something resembling how they looked on May 11 will be handled by Mother Nature.
“We’ll be looking at a scheduled renourishment in three years,” Pratt said. “And if there’s a deficiency or things needs to be altered, we’ll talk to the Corps about making it bigger where it needs to be bigger.”