OCEAN CITY, NJ -- Elevate, pay thousands more in flood insurance premiums or simply walk away from homes? That is the question on the minds of some Hurricane Sandy victims.
The first floor of Craig Verran’s Manasquan home was totaled. A home that never took on water in its nine years is now being refurbished prior to Verran making his decision.
“It’s a tough decision,” Verran said. “You either elevate or else. It’s an 'or else' situation. You’re going to face premiums that are unbearable.”
Property owners in Ocean City and across the Jersey Shore are facing the same decision.
In addition to $150,000 toward the damage to his home and car, Verran will be facing at least $75,000 to elevate his home or a $7,500 increase in his insurance, he said.
Before Sandy, Verran’s home was 1 foot above the required elevation and not in a flood zone. Now, with FEMA’s new Advisory Base Flood Elevation maps, Verran is located in a flood zone and 2 feet below the recommended elevation levels.
‘Waiting for a better scenario’
The and recommend that residents in flood zones raise their homes on average between 1 and 5 feet. Based on a scientific analysis of recent and past storms, the flood maps estimate the kind of flooding various zones can expect during a once-a-century storm, such as Hurricane Sandy.
While homes deemed more than 50 percent damaged are required to elevate, homeowners below that threshold are not, but they’ll face the increased cost of flood insurance premiums.
When the state adopted the FEMA maps in January, Christie explained the kind of flood insurance premium increases property owners could anticipate if they don't build to, or above, the new flood maps.
If a property in an A Zone, which is described as a high-hazard zone, is 4 feet below the flood maps, the owner can expect to pay up to $31,000 in insurance a year. If the property is built or elevated to the new standard, that total drops to $7,000. Another 2 feet above the recommended height and that total is cut in half.
“This is the beginning of potentially very bad things to come,” Verran said, anticipating foreclosures and bankruptcy, not to mention an impact on municipal tax revenues. “(Sandy victims) think they’re stressed now, there’s many more years of stress to come.”
Spending more than $75,000 to raise his home would be better than an $8,000 annual insurance premium in the long run, Verran said. Either way, Verran would be putting a heap of money toward a home with declining value.
“I’m waiting and seeing. I’m not really doing what Christie has advised because I don’t even think the governor understands,” he said, adding that the concept of elevating or pay high insurance costs seems unrealistic. “In my mind, it’s so unrealistic that I’m just going to wait. I’m waiting for a better scenario.”
Allstate and National Flood Insurance Plan representatives told Verran that he has four years to make a decision, before the increases go into effect. Until then, with hopes changes might be made, he’s making his home livable.
“I think there’s been a total overreaction to a very bad storm. The reason I’m so upset is because of the magnitude of what they’re scaring us with,” he said.
Verran, a senior citizen on a fixed income, cannot afford either.
“I couldn’t walk away because I still have an asset here that’s worth something in my pocket after I pay my mortgage, but it’s not a lot,” he said. “Those under water in mortgage, they might just walk away.”
Like Candice, an Ortley Beach resident who declined to offer her last name. Her home has been in her family for 16 years and is located on the center of the island.
Even though it’s her family’s primary home, the property is still in her parents’ name, making it a “secondary” home and disqualifying her for Increased Cost of Compliance funding from FEMA.
“Originally the insurance adjuster came out and told us all that needed to be replaced was 4 feet of drywall and carpeting,” Candice said. “Unfortunately, because of Toms River’s slow response, the damage increased as time went on so all of the floors, walls, and ceilings had to be torn out as well, which we did on our own. “
Once Candice heard about elevation requirements and insurance premium increases, she halted the work on her home.
Her options? The home was built in the 1960s, and Candice has been told it cannot be elevated. Candice would have to demolish and rebuild or repair and encounter the insurance rates. Additionally, most repairs aren’t covered by insurance since damage was caused by “insufficient time to get in and make repairs” rather than the initial flooding, she said.
“Help available is very minimal, which leaves my family with little option but to try to sell being there is no other option we can afford.
“Cost of living may go up but income doesn't, so if we can pay the mortgage off and keep enough for a down payment on a new home we'd be satisfied,” she said. “Who knows how long it will be before Toms River, New Jersey, and the federal government will have any answers and we simply can't wait that long and are trying to avoid foreclosure.“
No concrete answers
George Kasimos of Stop FEMA Now recently met with Toms River Mayor Thomas Kelaher, FEMA representatives and Christie’s policy advisers.
“Basically, we don’t have the information to make an educated decision in terms of whether we should rebuild, raise or simply walk away from our homes,” he said.
Currently, there aren’t any programs to assist secondary homeowners, he said. Hazard Mitigation funding is six months to one year away. Community Development Block Grants through the U.S. Department of Housing and Urban Development will be made available in the future but Kasimos worries it will be first come, first serve at the expense of those who need help most.
“How do we rebuild if we don’t get the money to rebuild?” he said.
Homeowners also don’t know if the flood map zones are going to be reduced, he said.
“We’re six months after Sandy, and we’re still waiting for these maps. We can’t wait eight years,” he said, referring to New Orleans, which recently received its maps.
FEMA assured it would not take eight years to finalize the maps. New Jersey was further along in the process than New Orleans when Katrina struck, FEMA Hazard Mitigation Branch Director Bill McDonald said. New Jersey was already going through a map revision two years prior to Sandy while revisions for New Orleans weren’t even in development yet.
The maps are “conservative,” and zones may shrink, he said, although he could not say by how much.
“We’ve attested the fact it's based on the best available data we have,” he said. “We would rather be conservative and have people build safer and more resilient…It’s a choice they need to make. We’re just trying to provide them with all the information available.”
Kasimos, a primary homeowner in Toms River, is rebuilding but not yet elevating because FEMA is not going to pay for his family to live elsewhere until the maps are official, he said.
He was going to reconstruct his home in December when a neighbor told him about the FEMA maps and insurance premiums.
“We stopped reconstruction,” he said, adding that he found out his flood insurance will go from $1,000 to $15,000 annually. “Can we even afford the home?
“There’s so much misinformation out there. Nobody has concrete answers,” Kasimos said of why Stop FEMA Now convened. “Everybody thinks this is a Sandy rebuilding issue. Millions of people have been flooded in the past. The issue is rebuilding to the new maps.”
Mary Ryan, president of the Manasquan Beach Improvement Association, has a membership of 300 households. She too sees the maps as the issue.
“They are creating such an issue for people,” she said. “It does seem to be an extreme reaction to what happened with superstorm Sandy. We’re really talking about a lot of height.”
Funding that’s “supposedly” available is not easily accessible, she said. Many of the association’s members are still displaced, held up by insurance carriers and without contractors to do the work.
While she hasn’t spoken to all 300 households, many people are unsure of how to proceed, she said.
“There are so many different factors playing into decisions that people are making. It has really created a very difficult situation for people,” she said. “People have said they don’t know if we’re going to be able to stay here.”
‘Scraping up all resources’
McDonald recommends homeowners contact their local officials before making a “hasty” decision. Hazard Mitigation will only be available to towns that applied, even then, the state will prioritize which projects to pursue.
“There are other opportunities and that’s why they need to contact their local officials,” he said.
The Housing Resettlement Program through CDBG is aimed at homeowners who are considering selling or abandoning their property. Funded at $200 million, the program will provide $10,000 grants to eligible homeowners to remain part of their communities. But 60 percent of the funds will be reserved for low-to-moderate-income households. More information on CDBG funding can be found here.
But Toms River Mayor Thomas Kelaher is still “afraid” of losing residents, he said.
“There’s been some cases of people saying we’re out of here,” he said, adding that close to 10,000 homes have suffered significant damage. “If only 100 have that problem, that’s 100 I don’t want to see go.
“We’re scraping up all resources. Our mission is to do everything we can to get as many people we can back into their homes as fast as we can,” Kelaher said.
Marshall McKnight, spokesman for the state Department of Banking and Insurance, does not anticipate a high number of foreclosures and bankruptcies due to the cost of homeowner’s insurance. His department reviews homeowner’s insurance premiums and has a mediation program to help consumers who have unresolved issues with their carriers.
He has seen some increases in homeowner’s insurance but said it’s still too early to tell how Sandy will impact the market. Homeowners are still able to obtain insurance, as the FAIR Plan, which is an insurer of last resort, is at an all-time low, he said.
“We continue to monitor the FAIR Plan since that would be the first indication of policies leaving the voluntary market,” he said.
McKnight recommends those who can’t afford or get coverage to call 1-800-446-7467. But the issue of affordability mainly lies with the National Flood Insurance Program, he said.
FEMA does collaborate with the state and insurance industry but has no control over the cost and rates of insurance, he said.
“I don’t know of any way there is going to be a negotiation,” he said, adding that FEMA has to comply with the flood insurance reformat of 2012.
The National Flood Insurance Program is administered by FEMA. The federal program enables property owners in participating communities to purchase insurance to protect from flood losses. In exchange, participating communities agree to adopt and enforce ordinances that meet or exceed FEMA requirements to reduce the risk of flooding.
FEMA works closely with nearly 87 private insurance companies who participate in the Write Your Own Program, McDonald said. Those companies’ write and service flood insurance in their own names while operating within the context of NFIP.
Provisions to legislation will require the NFIP to raise rates to reflect the true flood risk and change how Flood Insurance Rate Map (FIRM) updates impact policyholders.
Among other factors, structural characteristics such as the type of building and flood mitigation techniques are considered during the rating of every flood insurance policy, McDonald said.
The elevations prior to FEMA’s revision did not depict the true risk, he said.
“I emphasize that we just provide the information,” he said. “The state adopted it under their emergency act. It’s something they found and agreed that it’s important if you’re rebuilding, to rebuild higher, safer, stronger and more resilient.”
McDonald could not say whether the new “true risk” would cause an influx of foreclosures and bankruptcy.
“All of this looking forward is the flood insurance issue…The people who still have mortgages have that issue to contend with,” Ryan said. “Gov. Christie keeps saying elevate, elevate, elevate. People are getting to the point where they’re too tired to be scared anymore.”
A representative from Christie’s office did not return calls for comment.