Homeowner Flood Insurance Affordability Act of 2013 -- Motion To Proceed

Floor Speech

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Mr. President, I rise in support of the Homeowner Flood Insurance Affordability Act, which I have sponsored with Senator Isakson. It is a bipartisan, bicameral piece of legislation to ensure that families will be able to afford flood insurance so they can stay in their homes, businesses can stay open, and property values will not plummet. This broadly bipartisan legislation will stop the most onerous and damaging rate increases while minimizing the impact on the National Flood Insurance Program's solvency.

I want to thank all of those who have supported the legislation, all of our cosponsors, as well as the National Association of Home Builders, the National Association of Realtors, the American Bankers Association, the Independent Community Bankers of America, the Independent Insurance Agents and Brokers of America, the National Association of Counties, the National League of Cities, and Greater New Orleans, Incorporated, who have all endorsed our bill.

I specifically want to thank my lead Republican cosponsor Senator Isakson. I have had the pleasure to work with Senator Isakson on a number of issues. I have come to respect his honesty and desire to come together and get things done regardless of the issue.

I also want to thank Senator Landrieu who has been focused like a hawk on this issue for years now. She is without a doubt the Senate's preeminent expert on disaster recovery and flooding issues. The people of Louisiana are fortunate to have such a tireless champion. She has taken the time and effort to understand every aspect of flooding and disaster recovery.

I saw that expertise firsthand when Senator Landrieu came to New Jersey after Sandy struck and worked with us. I cannot thank her enough for the valuable insight she gave to us as we were dealing with Sandy recovery.

When Sandy struck New Jersey, over 2 million households were without power, 346,000 homes were damaged or lay in ruin, and, most tragically of all, 37 fellow New Jerseyans lost their lives. But true to our State's motto we were Jersey tough. People who lost their homes were knocked down but not out. They got up, dusted themselves off and started the long process of rebuilding.

But just as they were getting started, they got hit by another disaster, this time a manmade one that took the form of drastic flood insurance premium hikes that threaten to finish the job that Sandy started. I started receiving letters--first dozens, then hundreds, then thousands of people pleading to me for help. They wrote in desperation that their insurance premium was about to go from about $1,000 a year to an incredible $10,000. They told me after exhausting all of their savings on repairing and rebuilding their home, they simply had no more to spare--none left.

They were being hit by what I have come to call a triple whammy. First they got hit by the worst natural disaster in our State's history. Then they were faced with drastically elevated premiums mandated by Biggert-Waters. Finally, they had to contend with fatally flawed mapping processes that further exacerbated the drastic rate increases.

While Sandy made New Jersey especially vulnerable to the rate hikes required under Biggert-Waters, make no mistake about it, this is not a New Jersey or New York issue. It is not even a coastal issue. The reason this bill has such broad support across the ideological and geographical spectrum and the political spectrum is because flood insurance is not just a coastal or a northeast issue, it is an issue that affects the entire country.

The fact remains that 55 percent of Americans live within 50 miles of the coast. National Flood Insurance insures more than 5.5 million properties across all 50 States. Every State in the Nation will see premiums on some of their properties increase as a result of Biggert-Waters. As this map shows, FEMA is in the process of updating maps in every State. The different colors are simply what the status is of that effort.

People who played by the rules and built to code will suddenly find that they are no longer in compliance and will be faced with a difficult decision: Spend upwards of $100,000 to elevate their home 3, 4, 5 or more feet from its current level or see their annual insurance premium spike from $1,000 to $10,000 to $20,000 over the next 5 years.

Not all of these increases will be so drastic, but the many that are will act as a de facto eviction notice for homeowners who have lived in their homes and played by the rules their entire lives. If they try too sell their homes, prospective buyers will balk after learning of the high premium cost that comes with it, leaving the owner no choice but to sell at a fire sale.

This will drive down property values just as the housing market is still struggling to recover. We all know that declining property values have a domino effect, causing entire neighborhoods to decline in value, which in turn hurts the broader economy. What is most alarming is the fact that FEMA does not even know the size or scope of this problem.

They were supposed to complete a study into the affordability of rate increases under Biggert-Waters by last April, but they failed to do it. This was a mandated study that I was able to include in Biggert-Waters because I knew that this was going to be a problem. The main reason for the delay is they simply do not know what the new rates are going to look like. They do not know how many families will see rates double or triple--or many times more--so they cannot even guess on how these hikes will affect affordability.

Think about that for a second. We are making dramatic changes in policy that could impact more than 5.5 million policyholders--that is really families. These changes can have ripple effects throughout the housing market and our entire economy, before we even know the extent of the changes and their impact.

That is simply not acceptable. No one can argue to me that is sound public policy. In addition to the impacts on families, the housing market, and the economy, drastic rate increases could actually have the perverse effect of undermining the solvency of the program. It could end up costing taxpayers more in disaster assistance payments by pricing homeowners out of insurance.

Recent reports suggest that only about 18 percent of properties in the flood zones participate in the program. One study has shown that for every 10-percent increase in premiums, program participation decreases by approximately 2.9 percent, almost 3 percent.

If rates are raised too high and too quickly, people will simply opt to drop their insurance, decreasing participation and the risk pool the National Flood Insurance Program draws on. The sharper the increases, the higher the proportion of dropouts. As with any insurance fund, this is about spreading risk. The smaller the risk pool, the greater the risk, and, therefore, the higher the costs. It perpetuates itself.

By pricing people out of the flood insurance program, increasing rates could have the unintended consequences of actually making the program less solvent. Reduced program participation would also increase the amount taxpayers are on the hook in disaster assistance payments.

Since FEMA grants, SBA loans, and other disaster assistance are reserved for unmet needs, more uninsured homeowners translate into more disaster assistance payouts.

Not only are we blind to the extent of these rate hikes and the effect they will have on program participation and the overall budget, we are also allowing what I believe to be a highly questionable mapping process to justify them. My experience with FEMA's map updates has led me to have serious doubts about the process and the accuracy of their results.

In December of 2012, FEMA released advisory base flood elevation maps, or ABFEs, for 10 counties in New Jersey. These showed a dramatic expansion of what are known as a V zone, which are high-risk flood zones that require houses to undergo special retrofitting that is often prohibitively expensive. For the thousands of families who were now in this dread V zone, the notification they received might as well have been an eviction notice, because they were never going to be able to afford the retrofitting, and without it they couldn't afford their premiums.

To be fair, FEMA did say that this first round of maps was conservative and subject to change in the next phase of the updates, but they maintained the changes would be minimal and the zones would remain largely intact.

After working with municipalities and counties, challenging the accuracy of these maps, and pushing FEMA to expedite their review process, they finally released a new iteration that showed as much as an 80-percent decline in the V-zone area in some of our counties. This was not a small mistake or a rounding error, it was a fatally flawed process that resulted in needless anxiety and frustration for thousands of homeowners only months out from Sandy.

While this is bad enough, imagine how much worse the consequences would have been if premium rates were increased to reflect these inaccurate ABFEs. Families would be forced out of their homes and homeowners would lose the most valuable asset they have--something they have worked their whole lives for--all because of inaccurate maps.

While there is no question we need to put the flood insurance program on a more solvent trajectory, we first need to understand the scope of these changes and be sure the mapping process used to set these rates is accurate. We need to understand the impact these dramatic changes in Biggert-Waters will have on the housing market before it is too late.

Unfortunately, Biggert-Waters forces changes that are far too large, far too fast, without having all the facts. It requires FEMA to increase rates dramatically even before FEMA knows the scope of these changes or how they will impact program participation. That is why our bill would impose a moratorium on the phaseout of subsidies in Biggert-Waters for most primary residences until FEMA completes the affordability study that was mandated in Biggert-Waters and proposes a regulatory framework to address the issues found in the study.

It would also require FEMA to certify in writing that it has implemented a flood mapping approach that utilizes sound scientific and engineering methodologies before certain rate reforms are implemented. For any property sales that occurred during this period, the homeowner would continue to receive the same treatment as the previous owner of the property, unless they trigger some other provision of Biggert-Waters not covered by this bill. For prospective home buyers, the certainty that they will not see their rate dramatically increase simply because they purchased a home is critically important to maintaining property values.

Also, this new legislation would give FEMA more flexibility to complete the affordability study. It would reimburse qualifying homeowners for successful appeals of erroneous flood map determinations. It would give communities fair credit for locally funded flood protection systems. It would continue the fair treatment afforded to communities with floodproof basement exemptions. It would provide for a FEMA ombudsman to advocate for and provide information to policyholders.

Just as important as what this bill would do, it is also important to know what this bill will not do. The legislation would not stop the phaseout of taxpayer subsidies for vacation homes and homes that have substantially been damaged. It would not stop the phaseout of taxpayer-funded subsidies for properties that have been repetitively flooded, including the 1 percent riskiest properties that account for over one-third of all claims. It would not encourage new construction in environmentally sensitive or flood-prone areas, and it would not stop most of the important reforms included in Biggert-Waters.

This legislation simply provides temporary relief to a targeted group of property owners who played by the rules and are now poised to see the most valuable asset in their life become worthless, all through no fault of their own.

This bill doesn't include everything I wanted--and I know there are many other ideas that other cosponsors wanted to include--but in order to reach a true consensus, this bill focuses on ideas that had broad bipartisan support. That is why we are here today, Democrats and Republicans, asking for the support of the Senate on this vital piece of legislation.

We tried to reach a delicate balance with this bill that recognizes the need to improve solvency and phase out certain subsidies, but tries to do so without discouraging program participation and thus undermining solvency and fiscal responsibility.

Finally, this isn't only about insurance rates, tables, and actuarial risk rates, it is about our fellow citizens. It is about people, people who played by the rules their whole lives and are now facing a life-altering event they never could have prepared or planned for.

If Biggert-Waters is allowed to be implemented as written, we will see property values drop, middle-class families forced from their homes, and our economy suffer.

The Homeowner Flood Insurance Affordability Act is a broadly bipartisan, carefully crafted, tightly targeted approach to restore the solvency of the program, while fulfilling the original intent of the program to make flood insurance affordable and accessible. That is why we hope our colleagues will vote yes on cloture so we can proceed to provide relief to families before it is too late.

I yield the floor.

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