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.
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.
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.
- Land costs are the largest component of development costs. They’re also the fastest rising component. So buying cheap, flood-prone land rewards developers.
- Not installing enough detention rewards developers because they can sell more lots.
- Decreasing lot sizes (which increases the percentage of impervious cover) increases their profit margins.
- Clearcutting 268 acres all at once increases efficiency.
- Ignoring the Army Corps’ wetlands jurisdictional delineation procedures saves time.
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
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!
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.