A bill in the House introduced by New York State representatives, would extend the grace period for flood-insurance-premium increases for Superstorm Sandy victims.
The legislation was introduced as information became available that the cost of Sandy to the National Flood Insurance Program will be in the neighborhood of $7 billion.
Federal Emergency Management Agency officials have not responded to repeated requests over the last several days, but sources with knowledge of the costs to the program says Sandy flood claims have totaled about $6 billion so far, with projections to go to maybe $7 billion.
One source says FEMA officials project that the cost may go a little higher because of long-tail claims like Increased Cost of Construction or ICC.
These costs develop because of the need to rebuild in existing areas at higher elevations, the source says.
The source also notes that Sandy claims to the program are slowing and that "The agency has plenty of money."
The agency has borrowing authority of up to $30.4 billion. "FEMA shouldn't come close to that to pay for Sandy claims," the source says.
As to the latest legislation, if enacted it would extend the premium-increase timeline for primary residences in areas that have been declared a federal disaster area after July 6, 2012 from 5 years to 8 years.
The bill is H.R.960, the Flood Victim Premium Relief Act of 2013.
Its primary sponsors are Reps. Michael G. Grimm, R-N.Y., who represents Staten Island, and Gregory Meeks, D-N.Y.
Co-sponsors include Reps. Charles B. Rangel D-N.Y.; Eliot Engel, D-N.Y., and Jerold Nadler, D-N.Y., and other members of the New York congressional delegation.
The bill would amend the NFIP reform law of 2012 that reauthorized the program for five years.
In order to pay off the agency's growing debt, the maximum rate increase the NFIP could impose in a given year was raised from 10 percent to 20 percent.
The proposed legislation would slow that rate of increase for Sandy-stricken areas.
"If we allow flood premiums to increase on their current schedule, based on the new maps, homeowners are going to be in an impossible position of trying to both pay their mortgage as well as increased flood premiums that may rise over $10,000 in some cases," Grimm says.
He adds that this situation will almost certainly lead to a surge in defaults and foreclosures and cost the taxpayers vast sums via the government's exposure to Fannie Mae, Freddie Mac and the FHA.
"Allowing an extra three years to increase premiums will give both homeowners and localities time make smart, long term flood mitigation and rebuilding plans," Grimm contends.
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