Federal Flood Insurance Law Endangers Future of Friendly City

By Steve Novotney


Nearly 25 percent of all property owners in Wheeling continue to navigate the new payment requirements for flood insurance with the federal National Flood Insurance Program after two new laws were approved by Congress and signed by President Barack Obama.

The Federal Emergency Management Agency administers the NFIP, and following Hurricane Katrina in Louisiana and Alabama and “Superstorm Sandy” along the New Jersey and New York coastlines, the program was $24 billion in debt.

In 2012, the Biggert-Waters Flood Insurance Act was passed into law and called for all flood-plain property owners to begin a four-year cycle of premium increases. The law mandated those increases to be as much as 25 percent.

In March 2014 reforms were made via the Flood Insurance Affordability Act. This law mandates an 18 percent increase be paid by residential property owners, but the legislation did not alter the payment schedule for owners of rental and commercial property owners. Residential property owners who paid the 25 percent increase started receiving refunds from the Federal Emergency Management Agency beginning on Oct. 1.

Only flood-plain property owners who are still paying mortgages are required by lending institutions to purchase the protective policies. However, the real estate market involving flood-plain properties has drastically slowed in Wheeling, and “Friendly City” taxpayers recently footed a $23,000 bill to insure the “floodable” Robert C. Byrd Intermodal Transportation Center in downtown Wheeling. The policy includes a $1 million deductible.

“It’s made of concrete and steel,” said Wheeling City Manager Robert Herron. “We keep very little in that basement, so I’m not really sure how much we risk. But our residents have to pay for it because of the laws passed by the federal government.

“It’s a useless policy for the City of Wheeling that we will never have to use unless a tidal wave hit that parking structure,” he said. “It’s causing us to just throw the money away.”

Herron said the city’s new flood insurance policy is only one example of how the new mandates will not only affect those who own properties in the Wheeling Island, downtown Wheeling, Elm Grove, Dimmeydale, Pleasanton, Edgwood, Woodsdale, and Fulton neighborhoods, but all citizens because of the potential loss of parcel inventory. If the Wheeling real estate market realizes a 25 percent reduction in residential, rental, and commercial properties, overall property values would decrease, and property taxes would increase.

“If this is not fixed in the near future, this will devastate the city of Wheeling,” said Herron. “The owners of flood plain properties in Wheeling are not risking the same as those who live along the coastlines or in cities such as New Orleans.

“In the coastal areas, those property owners risk the total destruction of their homes, and sadly we have seen that happen,” he continued. “But in this city and up and down the Ohio River, our risk is most frequently a muddy basement and damage to what we choose to keep in those basements.”

The motivation behind the law, the city manager said, is clear to see.

“The way I look at that issue is that the federal government passed legislation because FEMA was in a financial hole. What they have done is place that burden on the people who live in flood-plain areas,” Herron said. “To me, that’s shifting a federal burden onto local governments because not only are citizens going to have to pay more for flood insurance, but it also is going to dramatically reduce the property values in those flood plains.

“In communities in the core of our country – like Wheeling – it’s going to reduce property values, and that will reduce the amount of property taxes for local government. No one pays property taxes to the federal government. They pay them to local governments, and if this is not changed, it is going to create an incredibly difficult burden on local governments.”

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On Sept. 17,, 2004, Hurricane Ivan settled over the tri-state region, and Wheeling residents living along creeks and streams sustained flash flooding following 10 inches of rain in 10 hours. Two days later, the Ohio River flooded Wheeling Island. Officials of the National Weather Service referred to the weather event as a, “100-year flood.”

“That was the worst flooding I have seen in Ohio County since I started working with the Ohio County Emergency Management Agency in the 1990s,” explained EMA director Lou Vargo. “The affected residents along the creeks were hit the hardest because it all happened so quickly, but I think the people on Wheeling Island had some time to get prepared.

“It was a record-setting event most of us will never see again … I hope,” Vargo said. “We didn’t have any homes float away; the insurance rates are so high because that’s what our residents have to pay to protect against. It makes very little sense to those of us who live and work in areas like these in our country.”

Chad Broadwater, who owns and operates Broadwater-State Farm Insurance in the Warwood section of Wheeling, refers to the federal government’s new mandates as, “a very frightening nightmare.”

“And that’s because there’s so much to risk, and not just here in Wheeling,” he explained. “This area has seen a population decline for the past several decades, but it has picked up in the past few years. If this stays the way it is, the premiums are going to be too much for new homeowners, and that means they will look at houses in other areas.

“It’s very unfair to residents in this area for a lot of different reasons, but the biggest is because there exists no scale-of-risk formula when developing a property owner’s premiums. None whatsoever. The scale-of-risk formula is included in every other insurance policy that is out there. Why not this one?”

U.S. Rep. David McKinley (R-WV 1) has worked on the issue, instigating an ongoing conversation with FEMA officials.

W.Va. Sen. Rocky Fitzsimmons (D-1st) introduced a bill that would authorize private insurers to offer flood insurance in West Virginia. The bill passed by wide margins in both the Senate and House of Delegates, and Gov. Earl Ray Tomblin quickly signed it in to law. Sen. Fitzsimmons explained it will take a few years for the private market to react and begin offering private insurance policies to compete against the NFIP.

“West Virginia residents understand that our flood risks are very different from those in coastal areas,” Fitzsimmons said to media members at the time. “Most homeowners affected by increased flood insurance costs are trying to protect their primary residence, not a vacation home. The insurance market should be allowed to meet this most important need.”

W.Va. Del. Erikka Storch (R-3rd) resides in the Woodsdale section of Wheeling, and approximately three feet of her residential property lies within the flood plain. A stream known as “Long Run” flows under W.Va. 88 across Edgwood Street from her dwelling.

“Of course, I supported Sen. Fitzsimmons’ bill when it came to the House and not just because FEMA’s new flood lines determined I had to buy the insurance. I supported it because it makes sense, and we have to do something about it. Since it seems Congress is unable to figure this out, then we have to.

“My hope is that several private insurance companies begin selling the policies here in West Virginia, and that would show the rest of the states how to take care of this,” she said. “I believe that’s what needs to happen unless our congressional members finally insert some fairness into the law.”