The flood fixer: Mike Vernon has made a business out of lowering other people’s premiums

Aug. 25--VIRGINIA BEACH -- Mike Greaney remembers having one thought as he watched a strange dance of construction workers and hydraulics lift his neighbor's house several feet off its foundation: I'm next.

No more paying upward of $6,000 a year in flood insurance premiums. No more stockpiling cinder blocks in case he needed to raise a basement bed a few feet off the floor. No more running downstairs with a bleach solution at the first sign of rising water.

But then, suddenly, he was no longer "next." No one in Virginia Beach was. The city, which first approached him in 2012 about raising his Lynnhaven Colony house as part of a FEMA grant program focused on homes that repeatedly flood, ditched the initiative this year after it became too difficult to manage.

Now, as Greaney faces premium increases of 25 percent a year, his hopes are pinned on a Virginia Beach man who has carved out a niche by helping homeowners buttress their properties against flooding.

Mike Vernon gets enough calls that he doesn't need to hunt for customers. But cruising through a flood-prone neighborhood in Norfolk, the self-branded "flood insurance guy" points out some of the red flags: Does the street sit higher than the house? Is there a standing puddle? Does the house sit on a slab with nowhere for the water to flow underneath?

"If one of my kids were to buy a house on a slab in Hampton Roads, I'd be pissed," Vernon said as he drove.

He and his one-man operation, Flood Insurance Hampton Roads, have become the go-to for homeowners and real estate agents facing rising flood insurance bills. In April, Vernon was quoted in a New York Times story examining the effects of climate change and how homeowners are facing their flood-filled future.

He said he typically has 10 to 15 consulting jobs each month. Now he's adding small businesses to his roster of clients, and he's eyeing an expansion by teaming with trusted contractors and suppliers to create a one-stop shop of sorts.

In an area as vulnerable as Tidewater, you might expect a cottage industry of flood insurance fixers. But Vernon's specialty remains rare: looking at a home's flood elevation and inventing ways to shore up its defenses, potentially dropping insurance premiums by thousands of dollars.

"This is, no pun intended, a very fluid industry," said Vernon, describing how the nascent business is just beginning to grow as more companies realize the opportunity and premiums keep rising.

Homeowners can no longer get away with doing nothing until an inevitable storm prompts a claim. The National Flood Insurance Program, administered through the Federal Emergency Management Agency, has amassed billions of dollars in debt after years of paying out more in claims than it earned from subsidized premium rates.

The Biggert-Waters Act of 2012, followed by the Homeowner Flood Insurance Affordability Act, advanced the principle that taxpayers as a whole shouldn't necessarily be on the hook for a much smaller subset who own flood-prone properties yet pay unrealistically low premiums. Nowadays, homeowners are feeling pressure to make preventive fixes or pay the consequence: higher insurance bills.

"When you go into an industry that doesn't exist, it's interesting to see how it develops over the years," Vernon said. "Now it's moving at 900 miles an hour."

Vernon, who graduated from Old Dominion University in 1983 with a degree in marketing, spent much of his career in financial services and business consulting before zeroing in on flood fixes about five years ago.

His work is not wizardry. It's recommending raising electrical or air-conditioning systems or installing basement vents for water to rush through below or sacrificing a lower-level bedroom by converting it into something uninhabitable (think storage or garage). That's not to say it's always an easy decision. The fix could mean filling in a finished basement with sand or turning a four-bedroom house into a three-bedroom.

The process is bookended by elevation certificates. Vernon seeks one before any work is done to see where a property sits relative to FEMA's floodplain maps. He obtains another after the fixes are made to see where it settles. And before launching into a project, he analyzes whether it will save the homeowner enough in premiums to be worth the cost.

Vernon, who navigates FEMA maps and rules with ease, has depended largely on word of mouth, selling his services via one-man road shows to real estate offices (17 on his calendar so far) and civic league meetings.

That's how Mike Reames found him. The Keller Williams Realtor, who specializes in Peninsula properties, heard about Vernon two years ago and has sought his help ever since.

"Almost every buyer's agent that calls us about one of our listings, the first question they ask is: Is the home in a floodplain? The second question: How much is the insurance premium?

"That's before we get into bedrooms, bathrooms, style," Reames said. "It's every day. It's hard for people to believe."

One of Reames' clients, who wanted to move to Texas to be closer to her grandchildren, had been trying to sell a $400,000 three-story house in Yorktown with an annual flood insurance premium of more than $4,000. Vernon recommended vents below the house and turning a bedroom on the first floor into a storage room. Those changes, which cost less than $5,000, raised the house's base elevation enough to drop the premium to less than $450.

"We started working with Mike from the very beginning," Reames said.

Reames said he tries to tell people not to wait to think about making the fixes until they're ready to sell their homes.

"If you wear your seat belt, studies have shown there's less fatalities," he said. "It's the same thing. If you do this, there's going to be less (flood) loss."

Moving was an option at one point for Mike Greaney, but not anymore -- not if he wants to get a decent price, he said. "I love this neighborhood," he said. He and his family kayak in the nearby water, the same water that can swell and flood his home.

He bought his three-story, split-level house, built on what were once old sand dunes near Lynnhaven Inlet, in 1992. At that point, there was no record of it flooding. That changed six years later when water breached the first-level basement for the first, but hardly the last, time.

The basement family room has been his bedroom since 2013, the year his wife died from cancer and he moved downstairs to give his three children their own rooms upstairs. He lost much of the floor, a carefully arranged tile mosaic that his wife had designed, to flooding a year later.

He's seen as much as 2 feet of water collect in the basement.

Vernon has told Greaney that to get his house above a certain elevation based on FEMA maps, he'll likely need to tear out his downstairs bathroom, convert his bedroom into storage space and elevate his electrical and HVAC systems. The payoff? He could save about $5,000 a year in insurance premiums.

After years of waiting for city help, "I am moving forward," Greaney said.

Vernon might be the first to admit he's no miracle-worker. Some houses are beyond help, he said. They should either be "raised or razed."

"Water never forgets. And it always finds where it has been," he said.

Every city in Hampton Roads has pockets of flooding where claims and insurance premiums run high.

The number of severe repetitive loss properties, according to FEMA standards (four or more claims worth more than $5,000 each or $20,000 cumulatively), is highest in Norfolk. Since 1968, when the National Flood Insurance Program was created, $15.7 million has been paid out on 653 claims related to 115 properties in Norfolk. Eighty-nine properties in Hampton accounted for 460 claims worth $12.6 million. In Virginia Beach, a close third, $12 million has been paid on 447 claims for 77 properties. Suffolk has had just three repetitive-loss properties, claiming losses of $1.4 million.

Karen Gaskins, managing broker of Rose & Womble Realty's office in Chesapeake, said it doesn't matter whether a home is on the waterfront. Elevation makes the difference, and evolving flood maps pose one of the biggest challenges for homeowners. A house that was not in a flood zone when it was bought 20 years ago might now be.

Gaskins said her office consults with Vernon on about five properties a month. She credited him with saving the company from taking on 10 deals so far this year involving homes that wouldn't qualify for a lower premium no matter what fixes were made.

Her office now includes in buyer contracts this warning: "subject to review of the flood insurance premiums and if they're acceptable."

And if the seller exercises his or her legal right not to disclose the information?

"We call Mike. That's what we do."

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