Gardiner, Hallowell caught in flood insurance confusion
By Paul Koenig, Kennebec Journal, Augusta, Maine | |
McClatchy-Tribune Information Services |
But that was before the developer heard the quote for flood insurance on the property.
The buyer expected to pay about
"That quote literally made everything come to a screeching halt," said
It's at least the second real estate sale in downtown
Although lawmakers updated the law in March to halt most of the steep increases, the subsidized rates for older buildings in the floodplain are still expected to slowly increase until they reflect the actual risk of the properties. Buildings receive subsidized rates if built before the end of 1974 or before the community adopted its first flood map. Most towns and cities in
For properties well below the floodplain, such as Hillman's and the rest of the downtowns of
ANOTHER DEAL DOOMED
An insurance agent in
Madore, a senior account executive at
Now, after the recent changes returned the subsidies starting
He said he doesn't think
"That was my major concern," Madore said. "Whether it's
However, the state coordinator for the federal flood insurance program said it's not clear from the guidance provided by
"We're definitely going to have to be watching this," said program coordinator
Flood insurance is required for buildings in the floodplains with mortgages. It's not required once the mortgage is paid off or if an owner purchases with cash or gets private financing from the previous owner.
More than 35 percent of the roughly 9,200 flood insurance policies in
The new law requires increases of at least 5 percent a year for most subsidized premiums and allows up to 18 percent increases for most buildings.
The increases for some buildings, including non-residences and ones with severe or repetitive losses, were capped at 25 percent a year.
Baker said she doesn't yet know how high the rates will increase each year for property owners. For a building with a
The only thing communities and building owners can do is try to mitigate the risks by taking steps such as flood-proofing the buildings, Baker said.
"In this day and age, you've got to mitigate the problem to change the rates," she said.
REDUCED RISK
He said the immediate, acute need for the city is to ensure property sales aren't falling apart because of flood insurance changes, but the city also needs to look for ways to lower the risk of flooding in its downtown buildings.
"I'm hoping that in the long term we will find the leadership we need to reassess the way this program is administered, so it doesn't represent a grave threat to downtowns like
The Biggert-Waters Flood Insurance Reform Act of 2012 was passed to make the federal flood insurance program, which found itself deep in debt following payouts to property owners hit by Hurricane Sandy in 2012 and earlier storms, more sustainable over the long term. It directed
Most of the buildings receiving subsidies, which represents about 20 percent of total policies nationally, began seeing 25 percent premium increases at renewal.
Some owners trying to sell properties saw ten-fold increases in the premiums, causing outcry in flood-prone areas, especially along the coast.
The changes in March returned subsidized rates for older primary residences and businesses, according to a memo from
Madore, the insurance agent in
Although he doesn't think the rates will rise to the
"The cost to actually build structures or do what is needed, I don't think the building owners could afford to pay it out of their pockets," Madore said. "I think it really has to be the community and the building owners working collaboratively to revitalize their downtown."
Building owners can dry and wet floodproof their structures to reduce their flood risks and lower insurance rates. Dry floodproofing is done by making a structure watertight to prevent a flood from entering, while wet floodproofing measures prevent or provide resistance to damage by allowing flood water to enter the structure.
NEW SLATES FLOODPROOFED
In downtown
Walters said he doesn't remember how much that portion of the construction cost, but he wouldn't have chosen to do it if it wasn't required.
"Is it possible?" he said. "Anything's possible if you have enough money."
The potential cost is why
He said since the federal government recognizes the cultural importance of places and buildings on the
"The situation still remains that flooding is a concern," Wright said. "It always has been. It's no surprise here. The best we can do is make our downtown buildings flood resistant to the very extent possible."
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