“Florida is worst and first in what climate change is doing to property insurance rates,” faces a property-value “crash”

A property-value "crash" faces Florida and the rest of the country unless government leaders come to terms with climate change, Rhode Island Democratic U.S. Sen. Sheldon Whitehouse warned this weekend in St. Petersburg.

That is the solution to the property insurance crisis gripping Florida (and increasingly more states around the country), Whitehouse said, lest soaring insurance costs spiral into a mortgage crisis and ultimately a property values crash.

"That is the word that Freddie Mac's chief economist use," Whitehouse said, referring to the government sponsored agency designed to expand the secondary market for mortgages.

"Florida is worst and first in what climate change is doing to property insurance rates, but I'm from Rhode Island — I know a preview of coming attractions when I see one. This is coming to all coastal areas of the United States.

"So, understanding what's going on in Florida is really important to us," he told reporters after concluding an hour-long roundtable at a community center Saturday in Shore Acres, a low-lying section of northeast St. Petersburg that sees excessive flooding when even normal rains hit the Tampa Bay area.

"Getting it right in Florida really matters, and the number one lesson is you can't solve your property insurance problem unless you solve the climate problem. And so, when government is in denial about the climate problem, they're hurting you, and we need to correct that."

Whitehouse also visited Miami and Orlando this weekend to hear from community members, homeowners, and local and state legislators contending with the problem.

"The days are hotter, the summers are longer. Often times during the summer, we don't cool off anymore, get below 80 degrees at night," said Tampa Bay area Democratic U.S. Rep. Kathy Castor.

"But now the scientific data is really backing up our lived experience with more of these flooding events, these more intense tropical storms, and it's no wonder that our property insurance is reflecting that increasing risk."

Erase 'climate change'

With its low-lying topography and more than 8,400 miles of shoreline, much of the state and its coastal population are vulnerable to rising sea levels, according to the Florida Climate Center.

Yet just four months ago Gov. Ron DeSantis signed legislation that erased the words "climate change" from the Florida Statutes and restructured the state's fossil fuel-based energy policy to remove references to climate change as a priority when making energy policy decisions.

DeSantis has supported programs to make Florida more resilient to the effects of climate change, with funding into the billions of dollars to contend with sea level rise and coastal flooding, said Susan Glickman of the CLEO Institute, a nonprofit dedicated to addressing global warming. But she said the state's effort is inadequate to the problem, using a metaphor of a sink overflowing with water.

"It's the equivalent of walking into your bathroom," she said. "You grab the towels off the hook. You mop the floor up, and you never turn off that faucet," she said. "Similar, to Gov. DeSantis' credit, they have given out $2.5 billion or more in towels, and we're doing vulnerability assessments. … But there is no turning that faucet off, and that is because of the outsized influence primarily of the investor-owned utilities [which] cover 75% of the state."

Glickman and Castor noted how disproportionately Florida's power companies rely on natural gas for energy generation. The state gets 75% of its energy from natural gas, which an official with the Florida Electric Power Coordinating Group recently told the Florida Public Service Commission is more than any other state in the nation.

'Reality'

"The reality in Florida isn't that climate change is a thing that we might see. It's a thing that we are living," said Dawn Shirreffs, Florida director at the Environmental Defense Fund, a participant during the roundtable discussion.

"And it doesn't just affect our weather, it's actually effecting our wallets." She noted that with record summer heat in the past year have come record high electricity rates, along with the escalating property insurance rates. Florida has some of the highest property insurance rates in the country, with homeowners paying an average $3,340, according to the Insurance Information Institute.

Shirreffs noted Florida's vulnerability when it comes to Citizens Property Insurance Corp., the state's insurer of last resort, originally designed to have around 150,000 policies but which now has over 1.25 million policies.

"We have to understand that there's real ethical questions about whether some residents should be subsidizing risk for others who made choices to live in very vulnerable places," she said. "There are also residents who don't have any choice but to live in very vulnerable places. … We need to make sure that we're really looking at how we put people in places of risk and how everybody pays for that."

In his role as Senate Budget Committee Chair, Whitehouse communicated a couple of times with Citizens' CEO Tim Cerio over the past year over concerns about Citizens' fiscal viability and whether it might need a federal bailout should a major storm cripple Florida, he said. In response to a question from the Phoenix on Saturday, Whitehouse replied that most of his concerns have been alleviated.

"We have been satisfied with their responsiveness," he said. "They've spent a lot of time with the budget committee staff, they provided documents, so I want to give them kudos to that.

"The problem is that they're in a very, very difficult situation. And there are scenarios in which their capacity to pay claims is exhausted and that forces them to go to statewide assessments that may not come in in time to help homeowners or may become so politically toxic to the rest of Florida, or unaffordable to the rest of Florida, that that mechanism collapses. So, it's not a good place that they are in, but I do want to complement them for the responsive the way that they answered our questions."

Climate gentrification

St. Petersburg City Council member Brandi Gabbard, a real estate broker and chair of the Tampa Bay Regional Resiliency Coalition, said the region needs help from the feds when it came to flood insurance, specifically what she said were the lack of mitigation credits in "Risk Rating 2.0," the National Flood Insurance Program's pricing approach introduced in phases from 2021 to 2023.

Gabbard said that if the city can't provide residents with incentives to lower their rates, homeowners may be compelled to sell to investors as rental units, rendering the homes less affordable for the community.

"We're pushing people out of neighborhoods where they have been for generations," she said.

"We're talking about thousands and thousands of homes. These are our residents. These are people who have lived here for generations. If we push them out of these neighborhoods, what happens is, then, all that's left is really the center part of our city, and now you have areas that traditionally were affordable, traditionally were low and moderate area income neighborhoods, traditionally areas where there are large numbers of people of color.

"And now we are pushing the wealth and those coastal neighborhoods into those areas and causing increased gentrification. It changes our city completely if we don't have the vision for how we protect our coastal neighborhoods."

St. Petersburg Mayor Ken Welch and Pinellas area Democratic state lawmakers Lindsay Cross and Darryl Rouson also provided comments during the discussion.

This story first appeared on the website of the Florida Phoenix, a nonprofit news organization dedicated to coverage of state government and politics from Tallahassee