Tag Archive for: National Flood Insurance Program

A Simple Proposal to Fix NFIP, Reduce Elm Grove’s Flood Risk, Save Taxpayer Dollars, and Force Perry Homes to Follow Rules

This morning, I was talking to a friend, John Knoezer, about flooding in Elm Grove when he suddenly blurted out, “You know, the National Flood Insurance people should sue Perry Homes and turn that Woodridge Village into a giant detention pond.”

I knew John had a genius for heating and air conditioning. But I had no idea he also had a genius for politics, too. Boom. There it was. One simple idea to fix multiple problems. The NFIP budget deficit. Flood mitigation. Mushrooming tax bills. And rogue developers who ignore flood regulations at others’ peril. And all it requires is getting NFIP to act like any other insurance company.

Get NFIP to Behave Like a Normal Insurance Company

If the National Flood Insurance Program (NFIP) sued the people responsible for flooding Elm Grove, North Kingwood Forest and Porter, it could likely recover enough payouts to fix the lack of detention in Woodridge Village, Perry Homes’ troubled development in Montgomery County.

All we’re really talking about is getting NFIP to behave like a normal commercial insurance company. For instance, if someone rear-ends your car, your insurance company sues the person who did it (or their insurance company) to recover the amount of your claim. But not NFIP, according to everyone I’ve talked to.

Elm Grove after the May 7th storm, where block after block, homes were being gutted. Several feet of water from Perry Homes Woodridge Village development inundated homes that had never flooded before.

NFIP currently carries a $20 billion debt to taxpayers. Going after egregious companies that contribute to repeat flooding could reduce that amount.

It might also get those rogue companies to behave more cautiously and responsibly in the future. That could reduce future claims and NFIP’s overhead.

Imagine all the taxpayer dollars that could have been saved if Elm Grove, North Kingwood Forest and Porter had never flooded.

NFIP has already paid out twice this year to hundreds of flooded homeowners. And those homeowners could easily flood again and again. Because Perry Homes is doing NOTHING to reduce future flooding! Nothing incentivizes Perry Homes to reduce flooding.

NFIP has created no deterrent to flooding neighbors. So why would developers care if they do?

Another Benefit: Recovering Money in Court to Fix the Problem

If the repair costs downstream from Perry Home’s Woodridge Village total $100 million and just half the people had NFIP insurance, that’s $50 million that NFIP might recover from Perry Homes in court.

That money could easily buy the Woodridge Village land and construct a massive detention pond that would prevent future flooding.

Such lawsuits, if won, could also help reduce future taxpayer-subsidized flood-mitigation expenditures, most of which the federal government helps underwrite in some manner. But that’s just for starters.

Get Developers to Stop Pushing the Flood-Risk Envelope

Going after flagrant developers might help in another way, too. It might change the economics of pushing the flood-risk envelope. Right now, the economics favor those who push it hardest and furthest.

Developers have no disincentive to keep pushing these envelopes. NFIP bears all the flood risk; developers make all the profit.

Virtually all the incentives in this process foster behavior that worsens flooding.

We’re giving a competitive advantage to developers who worsen flooding. If NFIP were to sue a developer occasionally, it might change that.

Create Incentives to Follow Rules

In this case, had Perry Homes followed the rules and developed Woodridge the way it said it was going to, hundreds of homeowners would likely not have flooded.

Before Perry started developing the property, Elm Grove and North Kingwood Forest flood victims had weathered many storms as bad as May 7 and Imelda without flooding. So had people in Montgomery County on the western edge of the development where block after block of homes flooded that had never flooded before. See map of that area below and note the number of homes that flooded during the Harvey, Memorial Day, Tax Day and 1994 floods – ZERO!

According to residents, not one home flooded in this neighborhood west of Woodridge Village flooded before May 7, 2019. However, on May 7th, the vast majority of homes did flood…after Woodridge Village contractors altered the drainage going out of the subdivision. Flood data from Montgomery County. Flood Story Map hosted by ESRI.

So far, we’ve found numerous instances where Perry Homes did NOT follow Montgomery County or State of Texas regulations. People downstream paid the price.

More than 200 homes in Elm Grove and North Kingwood Forest flooded in May and more than 300 again in September.

For details, see installments to date in these “What Went Wrong” posts:

  • Part I – Overview
  • Part II – Lack of Erosion and Sediment Controls
  • Part III – The Detention Pond Catastrophe

If NFIP successfully sued the developer, the precedent might encourage all developers everywhere to follow the rules instead of bending them.

Save Tax Dollars

The precedent of NFIP suing a developer might also deter other developers in the future from pushing flood-prone projects or developing them in ways that contribute to flooding. So it could further reduce NFIP payouts and overhead. That could save even more dollars for this taxpayer subsidized program.

Bypass County Commissioners Who Refuse to Enforce Their Own Regulations

Another benefit of John’s brilliant suggestion: it eliminates a political battle with Montgomery County Judges and Commissioners – which may be unwindable for people in another county. Just get NFIP to make an example of a high-profile developer, such as Perry Homes. That might change some developers’ behavior who operate under the protective cover of local politicians. Those politicians compete for development dollars by not enforcing their own regulations. And that’s a huge part of the problem. Especially when a county line divides the perpetrators and victims as it does in this case.

Posted by Bob Rehak on 11/26/2019, with inspiration from John Knoezer

819 Days since Hurricane Harvey and 68 since Imelda

The thoughts expressed in this post represent opinions on matters of public concern and safety. They are protected by the First Amendment of the US Constitution and the Anti-SLAPP Statute of the Great State of Texas.

Benefits of Flood Insurance vs. Disaster Assistance

At the 2018_FloodWarn_Training_Kingwood on May 2, Diane Cooper of FEMA pointed out several startling statistics about the Hurricane Harvey Flood and flood insurance.

Home outside the 100-year flood plain during Hurricane Harvey.

According to the City of Houston, approximately 90,000 structures OUTSIDE of the 0.2% Risk Area (500-year flood plain) were impacted. Additionally, another 30,500 structures INSIDE the 1% risk area (100-year flood plain) and 29,000 in the 0.2% risk area flooded.

However, out of approximately 150,000 total homes flooded, only 26,511 insurance claims were filed. That’s because approximately only one in six Houstonians had flood insurance.

Most people felt that if they lived outside the 1% risk area, flood insurance was an expense they could do without. Yet four in every five flooded homes were outside the 1% risk area.

Let’s examine flood insurance vs. disaster assistance as hedge against such risk.

The following information came from the National Flood Insurance Program (NFIP) portion of the FEMA website.

Flood Insurance

Flood insurance has six primary benefits:

  • You are in control. Flood insurance claims are paid even if a disaster is not declared by the President.
  • More than 20 percent of NFIP claims from from outside of mapped Special Flood Hazard Areas.
  • There is no payback requirement.
  • Flood insurance policies are continuous, and are no non-renewable or canceled for repeat losses.
  • Flood insurance reimburses you for all covered building losses up to $250,000 for residential occupancies and upon to $500,000 for businesses. Contents coverage is also available up to $100,000 for residential occupancies and up to $500,000 for businesses.
  • The average cost of a flood insurance policy is about $600 annually. The cost of a preferred risk policy is less than $450 annually, if you live in a moderate-to-low-risk area.

Disaster Assistance

Compared to flood insurance, disaster assistance has several drawbacks.

  • Most forms of Federal disaster assistance require a Presidential declaration.
  • Federal disaster assistance declarations are not awarded in all flooding incidents.
  • The most typical form of disaster assistance is a loan that must be repaid with interest.
  • The duration of a small Business Administration (SBA) disaster home loan could extend to 30 years.
  • The average Individuals and Households Program award for Presidential disaster declarations related to flooding in 2008 was less than $4,000.
  • Repayment on a $50,000 SBA disaster home load is $240 a month or $2,880 annually at 4 percent interest.

The More You Know, the Better Flood Insurance Looks

Everyone should have flood insurance. Remember, not all flooding comes from rivers and streams. During Harvey, thousands of homes flooded from overflowing streets when storm drains and sewers backed up. Floods can happen anytime, anywhere…even in deserts.

Homeowners insurance policies typically don’t cover flood damage. Disaster assistance payouts will not come close to covering all the damage that people typically suffer from a flood. And the most common type of disaster assistance is a loan that must be repaid with interest.

You can buy flood insurance through the NFIP regardless of your flood risk; it’s easy to get through any licensed broker. You can even use your credit card. Consider it seriously as we enter another hurricane season and a tropical wave is expected to slime us this weekend.

Posted by Bob Rehak on June 12, 2018

287 Days since Hurricane Harvey