Horry County folks' federal flood insurance jeopardized by appeals board, state says

State officials fear that an obscure board's decision to allow a developer to build dozens of homes in an Horry County flood zone may lead to higher flood insurance premiums for locals and could even jeopardize residents' ability to obtain flood coverage.

At issue is an Aug. 31 vote by the Horry County Construction Board of Appeals, a low-profile panel of construction industry professionals that was established to hear challenges to the decisions of county building officials. The board also weighs requests for exceptions to the county flood ordinance.

When this board agreed that builder Great Southern Homes should be able to construct 46 houses along the Waccamaw River at a lower elevation than required by the county's flood ordinance, the move raised red flags for both state officials and environmentalists.

"It is egregious that a couple of engineers have found a way to circumvent the law in order to build new homes that will flood which completely negates the will of this council and the county's data-driven regulations," said April O'Leary of the group Horry County Rising, which pushed for the stronger flood protection policies that Horry County Council approved last year.

The county's flood ordinance provides three reasons why a variance may be granted: for repairs to historic buildings, for agricultural buildings and for functionally-dependent uses. But the appeals board decided its authority to grant exceptions went beyond those three points, siding with a developer who argued the higher elevation would cost an extra $30,000-to-$40,000 per building and make his homes less marketable to older buyers who don't want to deal with steps.

A confusing history

After the board of appeals approved the exceptions on Aug. 31, the panel drew the attention of Horry County Council members, some of whom didn't know the board existed until county staff explained the potential ramifications of its decision.

"I don't know what the function of this board really is," councilman Gary Loftus said. "Who appointed the people that are on there? I don't know."

County council members do appoint the seven-member board, according to county code. But the board's origin story is confusing. In fact, this isn't even the first time county leaders have questioned how the board should operate.

In 2012, the county's then-planning director Janet Carter told council members that having an appeals board was a requirement of the International Building Code. However, she said she couldn't find any evidence that county council had ever voted to formally add the board to the county's list of ordinances, despite the fact that the board was taking action on appeals.

At that time, she said the board rarely met — maybe once or twice per year — and all the board members making decisions were voting even though their terms had expired.

"We need to, in my opinion, do this by ordinance this time," Carter said, "so that we don't have to go looking, trying to figure out what the rules and regulations that govern this board are."

In May 2012, the council voted to formally establish the board.

Loftus said he's learned that the board still doesn't meet often, which is why he and other council members were caught off guard. And while the county code states that appeals board members should have building or construction experience, Loftus remains wary of contractors policing their own industry.

"You've got foxes watching the henhouse," he said. "It's totally insane."

Loftus said he's opposed to diluting the county's flood ordinance, though he would consider supporting this 46-home development if buyers were required to sign a waiver acknowledging the flood risk.

"Put that on every deed and on every transaction," he said, "I might — I'm not saying I will — I might [go along with it]."

A controversial project

Before the county ever approved its new flood ordinance, Great Southern Homes' Donald Godwin spent $3 million developing land off S.C. 905 near Conway for his project, he told the appeals board during its Aug. 31 meeting.

The county approved the plat and he built it up out of FEMA's floodplain to an elevation of 17 feet, the flood level from Hurricane Florence in 2018.

When the county passed its ordinance requiring developments to be built 3 feet higher than the Florence flood levels, he said, he was assured by county council that his development would be grandfathered in and he wouldn't have to abide by the new rules. That didn't happen.

"If we were to design this project today, we would go by all the new elevations, all the new floodplains, everything," Godwin told the appeals board. "But I feel like we did everything that we were supposed to do and above to get to where we needed to be. I think we got hoodooed on it. I really do."

Steve Powell of Venture Engineering told the board during that meeting that since water, sewer and roads had already been put into the development, they couldn't put in more fill dirt to raise the height, leaving stem-wall slabs the only solution. The homes already permitted there feature monolithic slabs, and the 46 houses in question would all end up being 3 feet higher than the others.

"So not only will you have $30, $40,000 additional cost for each one of these homes, but they're gonna be up in the air and less desirable," Powell told the board. "Really, the issue is, you're asking Great Southern Homes to spend $30-to-$40,000 of additional cost to elevate it in the air 3 feet and in so doing, make it both less marketable, less appealing to buyers and less successful to – let's call it our buyer demographic – which is old people."

A backlash

Unlike the county's planning commission, board of appeals decisions are not recommendations. Horry County Council cannot overrule the board.

"It's kind of a touchy situation there," councilman Al Allen said. "My philosophy is … if you're going to have these zoning board[s] or this process of appeals … you need to leave it in place whether you agree with it or not.

After the board's controversial Aug. 31 decision, county council members met in executive session to discuss their options.

Council members acknowledged that they could challenge the board's decision in court, but there is a deadline for such a filing and councilmen have tried to avoid taking that step. That's why they wanted the board to hold a special meeting last week.

If the board agreed to reconsider the decision, council members hoped they could have more time to figure out how to navigate the situation.

So county staff asked the board to hold another meeting on Wednesday to warn its members of the potential consequences of their actions.

The most severe of those consequences involves flood insurance.

Horry County participates in the Federal Emergency Management Agency's (FEMA's) Community Ratings System (CRS) an incentive program that rewards communities for adopting stronger floodplain management rules than the minimum federal standards.

Communities with stronger standards are awarded a CRS rating, which determines how much money homeowners can save on federally subsidized flood insurance premiums.

When the county updated its flood ordinance last year, officials approved new building requirements for properties in not only the high-risk flood zones designated by FEMA but also those that fall in supplemental flood zones, areas that flooded during Hurricane Florence in 2018 but were not in a FEMA flood zone.

Those zones were drawn by the Program for the Study of Developed Shorelines at Western Carolina University and are based on the flood levels from Florence.

Under the county's ordinance, new homes must be built 3 feet above the Florence flood levels.

That section drew criticism from some local engineers, who argued that the new rules would negatively affect the aesthetics of developing neighborhoods. They said new houses on one side of a street would be significantly higher than older homes on the other side, giving the neighborhood an awkward look. They also questioned the wisdom of using a record-setting weather event — a historical outlier — as the standard.

In the case of Great Southern Homes, the plat for that development has already been built above the FEMA floodplain. But the county's new rules are more restrictive than FEMA's, and the rules at issue in the variance request are entirely county rules.

Hence why Great Southern Homes sought the exceptions from the appeals board.

But decisions involving the flood ordinance don't happen in a vacuum.

Laura Whittle with the state Department of Natural Resources' flood mitigation program told county staff in an email that if FEMA came for a community assistance visit and saw the county wasn't upholding its own rules, there could be severe consequences. Whittle is also a National Flood Insurance Program (NFIP) specialist. The NFIP is managed by FEMA.

"I have heard back from FEMA," Whittle wrote. "With regard to the 46 structures that we talked about per our phone conversation last week, suspension or probation from the NFIP would be a possibility once cited as violations. … Also Horry County would lose CRS points as a result of this because they are not upholding and enforcing the higher standards in which they've adopted to be a CRS community."

A FEMA bulletin presented during last week's board meeting said variances under the national program for flood insurance should be decided "only on a structure-by-structure basis," and should not be reviewed or granted "for multiple lots, phases of subdivisions or entire subdivisions."

The bulletin said when determining if an applicant has a sufficient hardship to justify a variance, an appeals board "must weigh the applicants' hardship against the community-wide flood damage prevention requirements."

According to the bulletin, "inconvenience, aesthetic considerations, physical handicaps, personal preferences, the disapproval of one's neighbors, or homeowners association restrictions do not qualify as exceptional hardships. This applies even if the alternative means of construction are more expensive or complicated than building the structure with a variance, or if they require the property owner to use the parcel differently than originally intended or build the home elsewhere."

Before the county passed its new flood ordinance, it had a rating of CRS7, which earned them an estimated savings of $869,426 in annual flood insurance premiums for the county's flood insurance holders, according to a presentation at last week's meeting. The county projected their new ordinance would get them a rating of CRS6 or CRS5, which would have saved policy-holders $1,180,206 or $1.5 million in annual premiums, respectively.

To remedy the potential violations of the NFIP, the county would have to elevate or purchase and demolish the 46 homes at a cost of between $15 and $20 million, according to the presentation.

"Anticipated issues, and this is if we get probation or suspension from the NFIP, federal flood insurance would not be available," Horry County Planning Director David Jordan told the appeals board. "It also eliminates individual property owners from FEMA assistance. You have to remedy the violations and correct the deficiencies, which means you would either have to elevate or purchase and demo potentially 46 houses at $320,000 a house, is $15 million, plus you got litigation expenses, moving expenses."

All of this was new information to the appeals board and to Great Southern Homes. It was not presented during the Aug. 31 meeting. The county sent an email to the board and the applicant at 11 a.m. on Sept. 23 for "county staff to provide additional information concerning variances to the flood ordinance," Jordan said. But the email didn't explain which variances would be discussed or why.

"This is the shadiest, most egregious thing I've ever seen," said Allen Hutto, vice president of government affairs for Great Southern Homes. When he received the email, he emailed Horry County Floodplain Manager Lauren Harrelson.

"I emailed her back, said 'How does this affect us?'" he recounted. "'The variance was granted, do I need to be here?' I never got a response. So I talked to Ms. Harrelson as we're coming in, I said, 'Do I even need to be here?' And she said, 'You can or can't; it's up to you.' Well, this certainly looks like we're being ambushed and this whole thing is gonna be reheard on a topic that I didn't, hell, I didn't even know I was supposed to be here. So I believe it's procedurally improper because the county should be appealing to circuit court."

Asked why the applicant and board didn't get more details about what would be discussed last week, Jordan said after the meeting, "Everything was getting put together at the last minute."

In an interview, Hutto said he had doubts about the effect the variance would have on the county's flood insurance, citing a flood insurance expert he knows.

"What they put up there, I don't think that's accurate," he said. "If it is, we haven't had any opportunity to get it and look at it. That's the first time I've seen it. If it is accurate, let's sit down and talk about it. But we were not given a chance to talk about it."

The board declined to rescind its approval of the variances, but its members voted merely to "reconsider" and let Great Southern Homes meet with county staff within the next 30 days and try to come up with a solution that would prevent a lawsuit.

"We felt as if the parties were going to end up in litigation," board member Kirk McQuiddy said. "Whoever prevailed, the opposing party would end up in litigation and we'd like to see them work something out that avoids litigation."

Despite the board's actions, Great Southern Homes filed an appeal in circuit court on Friday.

"These Variances were properly granted and then improperly 'reconsidered' and revoked at the subsequent meeting," the filing noted.

Horry County Government spokesman Thomas Bell declined to discuss the appeal, saying the county typically doesn't comment on pending litigation.