Mayor De Blasio Announces RFPs To Access Flood Insurance Affordability


[City Hall]

Mayor De Blasio

Following vulnerability exposed by Hurricane Sandy, and in the aftermath of last week’s flooding, the de Blasio administration announced that it is launching two key studies, as well as a consumer education campaign, to better understand and communicate the impact that rising flood insurance costs and an expanded floodplain will have on New Yorkers, and to help FEMA keep flood insurance affordable. This proactive step complements significant ongoing investments across the city in flood protection measures.

On Friday, the administration released a Request For Proposal (RFP) to run the consumer education campaign; additionally, RFPs to conduct affordability studies for multifamily and 1-4 family homes were released yesterday and will be issued on May 12, respectively.

New Yorkers face increased flood insurance premiums for two major reasons:

In July 2012, Congress passed the Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12), which required changes to FEMA’s National Flood Insurance Program (NFIP) that eliminated certain subsidies, resulting in significant rate changes. While the Homeowner Flood Insurance Affordability Act – which the city advocated for and President Obama signed into law in March – will mitigate some of the immediate impacts of BW-12, owners will still face lower property values as potential buyers take into account insurance costs. Homeowners will also see annual increases between 15 and 18 percent as all policies move toward eventually paying FEMA’s newly assessed higher rates.

In December 2013, FEMA released Preliminary Flood Insurance Rate Maps (FIRMs) for New York City. While these maps likely won’t be finalized until 2016, the Preliminary FIRMs show an expanded floodplain that nearly doubles the number of impacted structures from 36,000 to 68,000. Homes with federally-backed mortgages will be required to purchase flood insurance when the FIRMs are finalized.

For a home newly mapped into the floodplain, a $500 annual premium could easily rise over time to $5,000 or even $10,000 for the same amount of coverage. This increase in flood insurance premiums directly impacts neighborhood stability and housing affordability, especially for working and middle class New Yorkers. The impact will hit especially hard for the 20 percent of households in the floodplain that are living at or below the federal poverty line.

Today’s announcement complements major ongoing investments by the city and its partners to start the process of protecting its 520 miles of coastline, including:

Beach replenishment and dune construction, with more than 1.2 million cubic yards of sand added to Coney Island, Staten Island, and the Rockaways in the past year, and another 2.9 million cubic yards to be placed in the Rockaways in 2014; Improving drainage of low-lying neighborhoods by investing in the city’s Bluebelt natural storm water management system in Staten Island and Queens; and: Improving storm sewers; for example, the first of five planned sewer projects in Coney Island is under construction, and six storm sewer projects have advanced in Brooklyn near Fresh Creek. Furthermore, the city recently announced funding for $100 million in roadway and drainage upgrades in low-lying areas of the East Shore of Staten Island.

These are just a few examples of the progress outlined in the April 2014 PlaNYC Progress Report, which details the city’s resiliency and sustainability efforts, and is available at:

“Hundreds of thousands of New Yorkers along the city’s 520 miles of coastline face significant increases in their flood insurance rates – especially at a time when many can least afford it. Yet again and again, we see the impact of flooding on our communities,” said Mayor de Blasio. “Through these studies, the city will work to ensure that FEMA’s flood insurance program remains available and affordable for all New Yorkers.”

“Flood insurance is a key component of risk management and works in concert with other risk reduction measures, such as coastal protection and building upgrades,” said Daniel Zarrilli, New York City’s Director of the Mayor’s Office of Recovery and Resiliency. “This new work will provide vital data and analysis to inform the city’s efforts to keep flood insurance available and affordable in our coastal neighborhoods and will help educate New Yorkers on the changes happening in the flood insurance marketplace.”

“We want to encourage people to purchase flood insurance, understand their risks, and mitigate risk,” said Roy E. Wright, Deputy Associate Administrator for Mitigation at the Federal Emergency Management Agency. “We look forward to reviewing New York City’s results and working toward our shared goals of affordable flood insurance and reducing the risks and consequences of flooding nationwide.”

The three RFPs that are being released by the city, through the New York City Economic Development Corporation (NYCEDC), are:

Consumer Education on Flood Risk, Maps, and Insurance (RFP released May 2):

·        The campaign aims to educate residents (especially those newly mapped into the floodplain) on exposure to flood risk, insurance policy coverage, and resources available for assistance.

·        The competitive RFP seeks a consultant to run an educational campaign outlining these risks, changes to the flood map, and resulting impacts to residents.

Affordability Study on Multifamily Flood Insurance (RFP released May 6):

·         The study will assess the impacts of flood insurance on mixed use and multifamily buildings, which represent a significant portion of the city’s housing stock and reflect the unique urban challenges the city faces in addressing flood insurance requirements.

·         The competitive RFP seeks a consultant to: 1) design a sampling approach to study buildings across a mix of types and attributes; 2) conduct a survey to get coverage, take-up, and premium data; and 3) engage with the insurance industry to get data on coverage to supplement the survey.

Affordability Study on 1-4 Family Flood Insurance (RFP to be released May 12):

·         The study will build upon prior city work to assess the impacts of flood insurance on 1-4 family homes. The National Flood Insurance Program (NFIP) is the primary source of insurance for these homes, yet only 55 percent in the current FEMA floodplain have flood insurance, and—among those with federally-backed mortgages who are required to get flood insurance—only 65 percent do.

·         The competitive RFP seeks a consultant to collect and analyze critical missing data (like address-level elevation), assess the economic impact of increased insurance rates on individuals and at-risk neighborhoods, and assess options to reduce risk for 1-4 family homes.

“Storms such as Hurricane Sandy and last week’s rain further illustrate the toll that flooding can take on communities throughout New York City,” said U.S. Rep. Grace Meng. “I applaud Mayor de Blasio’s efforts to keep flood insurance affordable, and for seeking to better educate New Yorkers about the risks, coverage and resources associated with flooding.”

Rep. Nydia M. Velázquez said, “Affordable flood insurance is vital to preparing our city for future disasters and we must ensure families and homeowners impacted by Sandy are not hit again – this time by a flood of rising insurance premiums. These studies will help ensure New Yorkers can obtain coverage at affordable premiums.”

Queens Borough President Melinda Katz said, “This is an important step, which should bring greater predictability—especially for homeowners, as well as the city, as we push forward with rebuilding. Our neighborhoods need to be rebuilt in a smarter, safer, and more resilient manner, and the potential information from the study would further inform crucial decisions which must be made. The announcement of studies concerning flood insurance affordability and consumer education is a major step toward protecting residents from costly insurance premiums, which could ultimately force them from their communities.”

“As New York City neighborhoods continue to rebound from Super Storm Sandy, we need to ensure homeowners are equipped with the tools and resources to better deal with future disasters, while also keeping flood insurance rates reasonable and affordable for all New Yorkers. Homeowners, already on a tight budget, should not be forced to bear the burden of escalating flood insurance premiums,” said State Senate Co-Leader Jeffrey D. Klein.

“Sky-high costs for flood insurance are yet another impact of a post-Sandy city,” said State Senator Daniel Squadron. “I commend Mayor de Blasio for taking this on and proactively working to help all those impacted to mitigate the impacts for their homes and their wallets.”

“Hurricane Sandy was an abrupt wakeup call about the need for flood insurance. The more affordable we can make flood insurance and the more education we can provide, the more we help people rebuild and prepare for the future. I join the waterfront neighborhoods of Astoria and Long Island City in applauding Mayor de Blasio for this initiative and look forward to helping our city prepare for any future flooding,” said State Senator Michael Gianaris.

“The risk of skyrocketing insurance rates is the dark cloud that still plagues our community,” said Assemblyman Phil Goldfeder. “Instead of waiting for the federal government to act, we must take a proactive approach and create a system that is sustainable and will provide the coverage and protection that our families need. I commend Mayor de Blasio for taking the initiative to ensure that all homeowners are not flooded by increased insurance premiums during their continued recovery.”

“I am very encouraged by the concrete steps Mayor de Blasio is taking to come up with solutions for homeowners in floodplain zones, faced with soaring insurance costs, to ensure they can continue to afford to live in their homes. Some of the hardest-hit areas by Hurricane Sandy were here on Staten Island, and I am confident the steps being taken today will make our borough safer and more prepared for future flooding events,” said Assemblyman Michael Cusick.

“We need to make sure that storm victims and other vulnerable residents are not exploited for a big payday for the insurance industry. The incredibly high premiums that many homeowners now face are an insult to working families, who have built their lives in these communities and are still waiting for storm aid. The city must work with impacted neighborhoods and use these studies to reach workable solutions that address insurance risks and alleviate financial burdens,” said Council Member Mark Treyger.

“One of the biggest problems with flood insurance is that residents often don’t understand the program, what it does, its limits, and how it operates. As the council member representing the North and East shores of Staten Island and Chair of the Council’s Waterfronts Committee, I applaud the administration for looking for ways to educate our residents and make flood insurance more affordable in the future,” said Council Member Debi Rose.

Council Minority Leader Vincent Ignizio said, “In the aftermath of Sandy, many homeowners in our communities feared inevitable sky-high flood insurance rates, even more than they feared another storm. A program to educate homeowners and help them navigate the labyrinthine rules of flood insurance will alleviate some of those fears, while an affordability study will help to inform federal policies and hopefully ensure that our constituents are not priced out of their homes. I applaud the Mayor for these prudent and helpful measures.”

“For some lower-wealth homeowners residing in the floodplain, higher premiums will impose an unexpected financial burden,” said Howard Kunreuther, James G. Dinan Professor of Decision Sciences and Business and Public Policy at the Wharton School, University of Pennsylvania, and co-director of the Wharton Risk Management and Decision Processes Center. “New York City’s affordability studies will provide crucial data and analyses to inform the national conversation regarding the extent of the affordability challenge facing the National Flood Insurance Program, and the potential costs of solutions, such as means-tested low-interest loans and/or vouchers that could encourage investment in loss-reduction measures and result in lower premiums.”



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