The Skinny on Flooding, FEMA, and Flood Insurance Rates.
by John V. Gallant
It is important Monroe County property owners, and prospective owners, be acquainted with The National Flood Insurance Program (NFIP) which is administered by FEMA, The Federal Emergency Management Agency. Much of Florida, and all of Monroe County is classified as a coastal flood plain, which makes insurers use derogatory language such as high risk, and increased premiums.
There are three categories of flood zones; X, AE, and VE. Zone X may not require flood insurance as the area is deemed to have a very low chance of flooding. Zone AE will have a number attached to it detailing the elevation required for the lowest floor to be “above flood”. Zone VE will also have a number attached to it denoting required elevation, and VE is considered to be the highest risk area for flooding.
Properties built before Dec. 31, 1974 are referred to as Pre-FIRM, and exceptions are made for downstairs enclosures below flood, usually referred to as legal–nonconforming. There are rules regulating the ability of an owner to remodel or upgrade legal-nonconforming areas, and these regulations can be found at the local building department.
Structures built after Dec. 31, 1974, which are not in an X flood zone, must have the lowest floor of any habitable space elevated above their designated flood zone. Should one of these homes have habitable space below flood, they may face significant expenses for removing appliances or fixtures that designate it as illegal-nonconforming.
In these newer homes and structures, legally permitted enclosures below base flood elevation may be used for parking and limited storage of items such as wheelbarrows, yard tools, etc. But they may not be used to house refrigerators, workbenches, or other items that could be damaged by salt water.
Insurance costs and property values are influenced by flood risk which in turn vary with elevation and location. Currently in Monroe County, these elevations are based on surveys from 1929 Datum (NGVD 29), but will be updating to 1988 Datum (NAVD 88).
Opinions vary on the outcome a change from NGVD 29 to NAVD 88 will have on zoning, elevation, and insurance premiums. The new flood maps could potentially change elevations up to 2.5 feet. Monroe County planning personnel do not believe the change in flood elevations will have a significant impact. However, in listening to other industry professionals, they are not certain how the changes implemented from NAVD 88 will influence flood zones and elevations within Monroe County. There are a few industry professionals who feel that the change will negatively affect many properties in the keys, categorizing them as a higher flood risk.
Premiums for flood insurance will also be changing over the next few years due to recent legislation passed in 2014. In certain higher risk flood zones, it is possible that flood insurance will become cost prohibitive again. If you are not aware of the difficulties that had been faced by property owners after the passage of the Biggert-Waters Act of 2012, when it was enacted, some property owners received NFIP premium quotes for over $25,000 for an annual policy.
As Biggert-Waters caused serious discomfort to property owners, keeping rates lower for homeowners became a particular concern for Congress. Unfortunately, at the same time, The National Flood Insurance Program (NFIP) had reached a $24 Billion debt. To avoid a total disaster, congress passed The Homeowner Insurance Affordability Act of 2014 (H.R. 3370), which helped to protect primary residences below flood for the short term.
H.R. 3370 was not a permanent fix towards lower policy premiums, but it will allow more manageable increases of up to 25% per year to be applied to premiums of properties that are not primary residences. Nationally, many insurance premiums will continue to increase until the NFIP becomes solvent and self-sustaining.
The effect of insurance premiums rising by 25% annually for properties in AE and VE zones could potentially reduce the number of willing and able buyers. In extreme cases it could reduce the pool of potential buyers to only those who are able to purchase the home without financing, and are willing to forgo flood insurance.
There is no one-size-fits-all metric to use when addressing these issues. Each property should be evaluated individually, and professionals should be utilized for expertise in their respective fields. I would highly suggest enlisting the assistance of a Realtor® who has a good working knowledge of flood maps, elevation, and new regulations; as this will effect not only the price paid or received in a transaction, but the value and desirability of your property in the future. This is not all bad news, I believe the value of many properties could benefit from these changes.
It is important to expound on the word National in The National Flood Insurance Program. We are in a pool of insured properties with homes within the Mississippi River Basin, in New Orleans, and other low lying areas; and those losses end up affecting our premiums, possibly more than if we were to be evaluated separately.
A good online resource to research specific properties is https://msc.fema.gov. While the contour lines may look like a topographical map showing ground elevations, it is not. The contour lines serve to estimate the levels that water could potentially rise to in a flood situation, and establish base elevations for the lowest level for a habitable floor in a building. If your property appears within two different flood zones, the property will most likely fall into the less advantageous zone.
As an example, if you find your property located within a zone labeled AE 8, the elevation of the lowest living quarters needs to be 8.0 feet. AE 7 would require 7.0 feet.
For the upper keys, I have had an excellent experience both using and recommending Massey-Richards Surveying. They are a good source for elevation certificates and surveys.