R Street, Taxpayers for Common Sense urge Senate to learn lessons from Katrina
WASHINGTON (June 18, 2012) — In a joint letter, the R Street Institute and Taxpayers for Common Sense are warning members of the U.S. Senate not to gut important reforms that would prepare property owners for the consequences of catastrophic floods that breach levees, dams and other flood control structures.
The Senate is set to begin debating S. 1940, a bill that would implement a number of needed reforms to the National Flood Insurance Program, including phasing out subsidized premiums for second homes, business properties and properties that have suffered severe repetitive losses. The bill also would direct FEMA to explore private reinsurance and catastrophe bonds to shore up the balance sheet of the NFIP, which remains $18 billion in debt, the bulk of it incurred from Hurricane Katrina claims in 2005.
But an amendment proposed by Sen. Mark Pryor, D-Ark., and Sen. Thad Cochran, R-Miss., would gut Section 107 of the bill, which looks to apply a key lesson from the experience of Hurricane Katrina by designating communities that continue to face at least a 1-in-500 year chance of flooding, despite the presence of levees and other flood control structures, as “special flood hazard” zones. The designation requires the community to adopt appropriate mitigation requirements and for local mortgages to carry flood insurance.
“Current policy assumes that no levee will ever suffer an overflow or breach,” wrote R.J. Lehman, R Street’s public affairs director, and Steve Ellis, vice president of TCS. “This approach ignores reality. Just last summer, levees along the Mississippi and Missouri Rivers failed. Since all levees have the potential to fail during a sufficiently large flood event, it is irresponsible not to inform people of these risks.”
Lehmann and Ellis note that S. 1940 would treat flood risks faced by property owners equally, regardless of whether or not they live behind a flood control structure. Flood insurance premiums would reflect the level of protection provided by flood control structures, and for most residual risk policyholders would amount to roughly $30 a month, according to FEMA.