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Elevating Homes After Sandy: 'Wait-and-See Approach Is Prudent'

For owners of homes not substantially damaged by the storm, waiting for final flood maps and flood insurance rates could help in making decision.

With a flood map still in flux and flood insurance premium increases still not set, property owners may have too little information to make an informed decision on whether to rebuild their homes at a higher elevation, according to state officials and local insurance agents.

Record flooding from Superstorm Sandy on Oct. 29 caused billions of dollars worth of damage to the coastlines of New Jersey and New York, and in the aftermath of the storm, many owners are wondering if they will be required to elevate their homes.

This much is known: Emergency rules adopted by New Jersey on Jan. 24 require new and substantially reconstructed (where the cost of restoration equals or exceeds 50 percent of the market value of the structure before the damage occurred) buildings to be elevated in accordance with a temporary Advisory Base Flood Elevation (ABFE) map.  

Other area homeowners face a decision based on:

  • Where their property falls on the new map: The Federal Emergency Management Agency (FEMA) released the advisory map last month. It recommends elevations at which a property can survive a 100-year storm with relatively minor damage. It also maps Velocity Zones (V Zones), where properties could sustain damage from storm waves of at least three feet on top of flood waters. Recommended elevations in V Zones are higher. 
  • Whether their flood-insurance premiums will increase dramatically: Shore property owners rely on the government's National Flood Insurance Program (NFIP), which has been billions of dollars in debt since Hurricane Katrina in 2005 and is subsidized by U.S. taxpayers. Legislation approved last year would eliminate taxpayer subsidies and make the program self-sustaining. That means potentially dramatic premium increases for the riskiest policy holders — owners whose properties fall below the base flood elevation on the new FEMA maps.
  • How much it will cost to elevate a home: Estimates have varied wildly in the aftermath of the storm.

The problem for homeowners is that all the factors are still variable.

The "advisory" ABFE maps do not yet take into consideration mitigating factors such as dunes, bulkheads and buildings. Some properties could be moved out of V Zones when new versions of the advisory maps are released in late summer and early fall. Officials in Stafford Township said they plan to challenge many aspects of the maps. 

Flood-insurance premium increases for most property owners have not yet taken effect either. FEMA has warned that the potential increases could be significant as the program moves toward a full actuarial basis, particularly for homes below base flood elevation.

But the only rate increases effective as of January 1, 2013, are for "pre-FIRM" construction (built before Dec. 31, 1974) for nonresident property owners (these increases are 25 percent).

More rate increases won't be effective until Aug. 1, when insurance premiums are likely to go up 25 percent annually for property owners until the flood-insurance program is self-sustaining. Properties far below base flood elevation could pay more than $30,000 annually, while properties that exceed the recommendations could pay less than $3,000.

"People are getting very upset over a lot of possibilities and a lot of unknown," said Michael McMahon of Ocean City's McMahon Agency. "We believe a wait-and-see approach is prudent. Unless you are in the design process of a new home or are required to elevate your home due to substantial damage from Sandy, the ABFE maps have no bearing on you at this time."

McMahon said that if property owners are not forced to elevate because of the 50-percent rule, they could benefit from having more information before making the decision.

__________

Read "FLOOD ELEVATION FAQs: New Jersey's Emergency Flood Elevation Rule" (or click on the attached PDF)

See "Guide to Making the Call on Elevating Your Ocean City Property."
__________ 

Anybody who holds a mortgage on a home in a flood zone is required to carry flood insurance. Buyers of properties in flood zones likely will have to pay the full actuarial flood-insurance rates and won't enjoy the same stepped 25-percent increases as existing policy holders when the changes become effective in August 2013.

"If your property was not substantially damaged, you do not need to take any action now," the state Department of Environmental Protection writes in a FAQ document (see links above) released this week.

"FEMA anticipates some changes to these maps (the ABFE flood maps) for both elevations and zones," the DEP writes. "The ABFEs currently reflect the most accurate modeling, topographic maps and scientific data available. FEMA plans to release updated flood maps over the next six to seven months, which will further fine-tune coastal flood elevations. The regulatory process to finalize the maps could take up to two years."

"Your rates could increase when FEMA adopts its final flood maps," the DEP writes. "If you do not meet its elevation standards, which are likely to be close to the ABFES, your rates could increase even more significantly."

The FAQ from the DEP also echoes what Gov. Chris Christie has been announcing this week — that the state will work to facilitate grants to help provide additional funding for homeowners to elevate their homes:

"FEMA can provide up to $30,000 to cover the Increased Cost of Compliance (ICC) with federal, state and local regulations if you have federal flood insurance. In addition, the Christie Administration intends to provide grants to homeowners with substantially damaged homes to help them offset some of the costs of elevation, mitigation and renovation, and intends to announce in the spring the mechanism for such grants. In order to access any additional funding, FEMA requires property owners reconstruct using the best available data."

The state says that even if homes are substantially damaged (requiring elevation), homeowners can live in the structures for up to four years if they take temporary measures to make homes habitable pending elevation.

Nancy February 10, 2013 at 03:36 PM
This is fine. What do you do if you are on a slab? Do you spend money so you can move back in to possibly eventually have to tear down and build new? Where do you live in the meantime? Nancy
dominic February 11, 2013 at 02:54 AM
I feel the same way. We dont know what to do . At this age almost ready to retire in 4 yrs. Who needs another mortgage. On my block they show my house as the last home in V zone. I own this from 1994 I never saw three foot waves and we are not even near the main lagoon. This is all wrong . All the political leaders either Democrat or Republican wake up stop all the games and help us. Its time to put all the BS aside and help us the hard working people who when called upon come out to help all of you at election time. Well its time all of you come out straighten this back and forth garbage and get us finacial and directive help. We need to have answers, get pricing to raise up these home, who to call that is responsible and good, and most of all someone that isnt going to take our whole life savings. Wake up and start helping us
Laila Owies February 13, 2013 at 06:19 PM
We have to raise our house according to the township. The question: Is this amust?. Also, is flood insurance is a must, taking in concideration that the house was paid?
LJB February 14, 2013 at 06:42 PM
This while process us a nightmare. We are substantially damaged and must raise our house 10-12ft in the air. Initial cost etimates (we r not on a slab)aare $35k for raising and pilings $2-3k for structural engineering plan, just getting quotes for grading plan, who know.how much to build 2 staircase front and back, plus whatever the costs for breakaway walls or putting fill and rock and weed.fabric underneath. Insurance only pays $30, we estimating $45 for costs. Who can afford this? And we need to go up now as we need to replace windows and doors that were all damage better to wait until after u go up to do this. And if We do not insurance will be $12k per year. Accordin the fnew rate est. My family has been in thus home for 40years, first flood loss. Honestly I feel like we r suffering more from these regulation changes which have caused us more financial damage than the storm. Not to mention 2 retirees with replacement knees climbing 12 foot steps with groceries. All of this for less than 1k square feet. Heartbreaking.

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