The Daily Item, Sunbury, PA

News

January 29, 2014

State lawmakers probe rising federal flood insurance premiums

— HARRISBURG — State lawmakers are examining their options to help the thousands of Pennsylvanians facing rising flood insurance premiums and the municipalities and businesses dealing with the fallout due to the Biggert-Waters Act.

Monday, the House Democratic Policy Committee hosted a hearing and Tuesday the Environmental Resources and Energy and Banking and Insurance committees hosted a joint hearing on the controversial legislation.

State Sen. Gene Yaw, R-23, of Loyalsock Township, co-chaired Tuesday’s hearing, where senators heard testimony from a variety of people, including home and business owners, Lycoming County officials, realtors and insurance agents.

The hearing was to educate the committee on the effects of the law, which are now being felt across the commonwealth, Yaw said.

“We want to find out where we were, what changed and the effects of those changes,” he said.

However, the law is a piece of federal legislation, which makes the solution to the problem tricky.

“This is a federal issue but it’s affecting a lot of people throughout the commonwealth,” said Don White, R-Indiana, who co-chaired the session with Yaw. “And the sticker shock has been great no matter where you are throughout the commonwealth.”

Among those hit hard were Lurie and Mike Portanova, who purchased a property in Jersey Shore, Lycoming County, in November 2012. The couple had plans to revamp the historic buildings, Lurie said.

“We had a vision to bring back Main Street to put a lot of work into it,” she said.

The couple paid their $2,861 flood insurance bill up-front and thought everything was fine when they received a call from their insurance agent in August. The couple was told that as a policy written after July 2012, they would need to get an elevation certificate to determine their new flood insurance rate.

They complied and received notice of “the changes that would soon devastate our lives,” Lurie said.

Their new flood insurance bill was $40,000 per year.

“That averages out to over $3,300.00 a month, over $800,000 over the life of our loan,” she said. “Had we been informed of this, we would have walked away from the deal.”

Lurie questioned why an area that has been revamped and made marketable through a rail trail and other green projects would suddenly be made subject to these devastating provisions.

“I just don’t understand why they pour money into these river towns and then (undermine them),” she said. “There’s no way we’ll purchase property in the flood zone if this is not changed.”

Muncy resident Jeff Waltman said he’s considered walking away from his home, which he purchased in December 2012. In October 2013, Waltman, who also was told to obtain an elevation certificate, was told his flood insurance bill would be going from $500 per year to more than $9,000 per year on a home valued at $60,000.

“Well, it was worth $60,000,” he said. “It is now worthless.”

In the Valley, homeowners are dealing with similar struggles.

Pat Grell, 67, and George Jones, 68, have lived at  10101 River Rd. in New Columbia for 19 years now, the “second house south of river,” he said. The couple bought the house for $63,000 and paid off the mortgage a few years ago. With improvements, Jones said, the two-bedroom, 1 ½ bath house is valued around $100,000.

“We found out three years ago they changed the flood plain,” Jones said. “It didn’t affect us until 2011, we got a bill for flood insurance for $1,700” up from $589 per year.

In 2012, the bill was $1,800; 2013, it was $1900. “It hit us hard,” Jones said, noting the couple paid the bills by credit card and have been paying them off.

Under the new law, the couple is looking at potentially a $9,000 bill for flood insurance.

“I don’t see how anyone on Social Security can afford it,” he said. “We’ve been fairly lucky because I have a good retirement and a partial pension from the National Guard. We have some Social Security. But if something happens to me, she couldn’t afford anything.”

And it’s not just the owners of the policies who are dealing with the consequences of the law. Municipalities could be left holding the bag if homes in flood planes become, essentially, worthless.

“There is a corresponding decline in property values where there are people who have difficulty selling their properties,” said Lisa Schaefer, director of government relations for the County Commissioners Association of Pennsylvania. “We have people that would just like to walk away from their properties. In that case, we end up with vacant and possibly blighted properties.”

During Monday’s hearing, State Rep. Rick Mirabito, D-Williamsport, added that the impact on an area’s tax base could be hurt as well.

“If tax parcels in the floodplain are deemed to have no value and if there is no property tax paid by homeowners and businesses, the tax burden will be shifted to other taxpayers, which will be devastating for the economic development and well-being of our state,” Mirabito said.

As far as what the state government can do, Tuesday, Lycoming County commissioner Jeff Wheeland, said state lawmakers need to reach out to federal lawmakers to repeal or delay the law so they can take a moment to take stock of the situation.

“We need an immediate stop so we can regroup,” he said. “Even simply delaying it is a good thing because it will give us a chance to regroup. But no matter what happens in Washington, these properties are forever tainted now unless we provide permanent fixes.”

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