Executive Summary: Flood Insurance in NYC

CONFIDENTIAL 1

FEMA Flood Maps and Flood Insurance March 23, 2015

CONFIDENTIAL 2

Executive Summary: Flood Insurance in NYC

New Preliminary FEMA Flood Insurance Rate Maps (FIRMs) have been issued for New York City

• Expand floodplain and flood insurance purchase requirements significantly • Expect FIRMs to be official for insurance purposes after 2016

Federal legislation has changed FEMA’s National Flood Insurance Program removing long-standing subsidies

City is taking steps to mitigate risk

• $19.5B resiliency plan including enhancing coastal defenses • Flood insurance affordability studies

Key actions for residents: • Understand their risk and flood insurance purchase requirements • Buy flood insurance: call at least 3 agents for quotes • Consult resources for help

CONFIDENTIAL 3

Agenda

FEMA NFIP Overview

FEMA Flood Maps

FEMA Flood Insurance Reform

Key Communication Timeline and Messages

City Efforts and Next Steps

CONFIDENTIAL 4

The Biggert-Waters Act

passes

History of Flood Insurance

National Flood Insurance Program created within HUD

Great Mississippi Flood

New York City adopts its first

Flood Insurance Rate Map

Mandatory Flood Insurance

Purchase Requirement

Hurricane Katrina hits

the Gulf Coast

The Homeowner Flood Insurance

Affordability Act is passed

Hurricane Sandy hits the Northeast

1927

1968

1973

1983

2005 2014

2012

1979

FEMA established and

NFIP moved from HUD to FEMA

CONFIDENTIAL 5

FEMA’s National Flood Insurance Program

Voluntary program based on a mutual agreement between the Federal government and the local community:

In exchange for adopting and

enforcing sound floodplain management regulations and mitigating risk, Federally-backed flood insurance is made available to property owners and renters throughout the community.

CONFIDENTIAL 6

FEMA’s National Flood Insurance Program Program

Player Responsibility

Administers NFIP

Underwrites almost all

residential flood risk

Sample providers who sell

flood insurance policies and

manage claims as per

FEMA’s guidance

CONFIDENTIAL 7

Agenda

FEMA NFIP Overview

FEMA Flood Maps

FEMA Flood Insurance Reform

Key Communication Timeline and Messages

City Efforts and Next Steps

CONFIDENTIAL 8

Key functions: Shows current flood risk

Defines Special Flood Hazard Area (SFHA)

VE, AE and AO zones “100-year floodplain” with 1% annual

chance of flood (~26% chance over a 30-yr mortgage)

Determines flood insurance requirements

If you have a federally backed mortgage or received federal disaster assistance, including assistance through Build it Back

Informs building code standards

FEMA’s Flood Insurance Rate Maps (FIRMs) FEMA’s flood maps are developed as part of the National Flood Insurance Program.

CONFIDENTIAL 9

FEMA 2007 Flood Insurance Rate Maps (FIRMs)

FEMA 2007 FIRMs 100-year Floodplain

Source: FEMA

Flood Insurance Rate Maps Prior to Sandy, FEMA’s 2007 FIRMs were the best indicator of the city’s vulnerability to flooding.

100-year Floodplain*

2007 FIRMs

Residents 218,000

Jobs 214,000

Buildings 36,000

1-4 Family 26,000

Floor Area (Sq Ft.)

377M

FIRMs not significantly updated since 1983

In 2007, digitized existing paper maps, did not update accuracy

1983 maps based on outdated topography and weather data

* Numbers are rounded for clarity

CONFIDENTIAL 10

FEMA 2007 FIRMs 100-year Floodplain

Sandy Inundation Area (outside the 100-year Floodplain)

Source: FEMA

Damage outside 2007 100-year floodplain:

• > 1/3 of red- and yellow-tagged buildings

• ~ 1/2 of impacted residential units

• > 1/2 of impacted buildings

Flood Insurance Rate Maps Sandy demonstrated that New York was more vulnerable than previously thought.

FEMA 1983 FIRMs vs. Sandy Inundation Area

CONFIDENTIAL 11

100-year Floodplain*

2007 FIRMs

2013 PFIRMs

Change (%)

Residents 218,000 400,000 83%

Jobs 214,000 290,800 35%

Buildings 36,000 71,500 99%

1-4 Family 26,000 53,000 104%

Floor Area (Sq Ft.)

377M 532M 42%

FEMA 2013 Preliminary FIRMs 100-year Floodplain

FEMA 2007 FIRMs 100-year Floodplain

* Numbers are rounded for clarity

Flood Insurance Rate Maps The most recent maps, called Preliminary FIRMs, were released in December 2013 and show a floodplain that is 51% larger than previously.

FEMA 2007 FIRMs vs. Preliminary FIRMs

Homeowners with a federally-backed mortgage in the 100-year floodplain are required to buy flood insurance

Source: FEMA

CONFIDENTIAL 12

Source: FEMA

FEMA 2013 Preliminary FIRMs 100-year Floodplain

Projected 2020s 100-year Floodplain

Projected 2050s 100-year Floodplain

Source: FEMA; CUNY Institute for Sustainable Cities

* Numbers are rounded for clarity

Flood Insurance Rate Maps Given the City’s projections on sea level rise, these floodplains will extend even further by the 2020s and into the 2050s.

Projected floodplain for the 2020s and 2050s 100-year Floodplain*

2013 PFIRMs

2050s Projected

Change (%)

Residents 400,000 801,000 100%

Jobs 290,800 555,700 91%

Buildings 71,500 114,000 59%

1-4 Family 53,000 84,000 104%

Floor Area (Sq Ft.)

534M 855M 42%

CONFIDENTIAL 13

2009 - 2012 2013 2014

Comments and appeals

Final mapping

Preliminary Flood Insurance Rate Maps (FIRMs) released

FIRM adopted

Activity

FEMA conducts regional technical flood study

www.region2coastal.com

www.nyc.gov/floodmaps

Flood Insurance Rate Map Update

2015 2016

Insurance purchase requirements don’t take effect until maps are adopted

Today

CONFIDENTIAL 14

Appeals and Comments Process Public review period of Flood Insurance Rate Maps

Comments Appeals

Location of municipal boundaries Road name errors and revisions Requests to incorporate Letters of Map Change (LOMAs, LOMR-Fs and LOMRs) Other possible omissions or potential improvements to the maps

New or modified BFEs Floodplain boundaries SFHA zone designations

Accepted anytime 90-day statutory period

N/A Must be based on scientific and technical issues with FEMA methodology and mapping Must contain supporting data and documentation

Timing

Requirements

What submissions can address

CONFIDENTIAL 15

Agenda

FEMA NFIP Overview

FEMA Flood Maps

FEMA Flood Insurance Reform

Key Communication Timeline and Messages

City Efforts and Next Steps

CONFIDENTIAL 16

NFIP Challenges • Pre-Sandy, NFIP was $18B

in debt to Treasury ($16B from Katrina)

• Expected Sandy payouts are $12-15B

• Subsidized rates do not adequately reflect actual flood risk

July 2012: Biggert-Waters Flood Insurance Reform Act

• Prohibit premium subsidies

on new or lapsed policies

• Phase out subsidies for all policies

• Require banks to enforce purchase requirements more vigorously

• Analyze affordability impacts by April 2013

National Flood Insurance Program Reform The NFIP has undergone significant regulatory change over the last two years.

March 2014: Homeowner Flood Insurance Affordability Act

• Repeals trigger for new or

lapsed policies

• Caps rate increases at 18% annually (some exceptions)

• Enables newly mapped properties to purchase preferred risk rate for 1 year

• Authorizes additional funds for affordability study

• Provides refunds for certain policies affected by BW-12

CONFIDENTIAL 17

$493 $581

$685 Newly

Mapped Current

Rate

National Flood Insurance Program Reform NFIP Grandfathering for newly mapped • When new maps become effective, current

subsidized rates will increase 18% per year upon renewal (does not include new fees)

• Increases continue until premiums reach projected Full Risk Rating X-zone rate

Projected Rate Cap

$452

$2,640

12 years

X Zone/A Zone With basement

$808

CONFIDENTIAL 18

$493 $581

$685 Current

Rate

Projected Rate Cap

$452

$2,640

12 years $493

$581 $685

Newly

Mapped

Rate

$452

$7,800

17 years

PRP purchased before maps adopted – grandfathered as “X” zone

Policy Purchased after maps adopted, Newly Mapped in A Zone

National Flood Insurance Program Reform Due to grandfathering, for those outside the current SFHA, benefit to purchasing a flood policy before new maps are officially adopted.

Newly

Mapped

* Policy for X Zone rated, with basement in AE zone

Projected Rate Cap

Rate cap will depend on structure elevation

CONFIDENTIAL 19

National Flood Insurance Program Reform Rates increase based on building height relative to expected flood height. Home elevation will reduce risk and premiums.

Rising Tides, Rising Costs, CNYCN

CONFIDENTIAL 20

NFIP Surcharges and Fees

Effective April 1, 2015 Policyholders must provide

proof their property is a primary residence to avoid

excessive surcharges

CONFIDENTIAL 21

Agenda

FEMA NFIP Overview

FEMA Flood Maps

FEMA Flood Insurance Reform

Key Communication Timeline and Messages

City Efforts and Next Steps

CONFIDENTIAL 22

Technical appeals period is coming

Outreach Timeline Q4 2014 – 2017

Key Message

Dec 2014 July 2015 April 2015 Today 2017?

90-day statutory appeals period

Final mapping

FEMA flood maps are changing

You should buy flood insurance

You are legally required to buy flood insurance

Flood risk is increasing

1. Community Coordination and Outreach (CCO) Meeting

City-led initiatives

Maps become official FEMA-led initiatives

CONFIDENTIAL 23

Key Actions for Property Owners

Understand your risk and flood insurance purchase requirements

• Identify your property’s flood zone designation on FEMA’s Flood Insurance Rate Maps

• Even if you live 2 miles away from the coast you could be at risk of flooding

Buy Flood Insurance

• Call at least 3 agents listed on floodsmart.gov for quotes

• Homeowners insurance does not cover damage from floods and federal assistance is not guaranteed in the event of a flood

For help, consult the following resources:

• Flood risk information and address lookup: FloodHelpNY.org

• Flood insurance agent lookup: floodsmart.gov

• FEMA Map questions: 1-877-FEMA MAP (1-877-336-2627)

• FEMA Flood Insurance agent referral: 1-888-435-6637

CONFIDENTIAL 24

FloodHelpNY.org

CONFIDENTIAL 25

Agenda

FEMA NFIP Overview

FEMA Flood Maps

FEMA Flood Insurance Reform

Key Actions for Property Owners

City Efforts and Next Steps

CONFIDENTIAL 26

FEMA, OEM

Reduce risk • City’s $19.5 Billion plan lays out 257 initiatives to strengthen coastal defenses, improve

buildings, protect infrastructure and make neighborhoods safer and more vibrant Improve risk-based pricing • Neighborhood: Army Corps and FEMA do not always agree on flood protection benefits • Household: 40% of City’s buildings cannot be elevated; exploring alternative mitigation

strategies • “Pre-FIRM” construction: Need updated rate-setting methodology for old building stock

(focus of the Negatively-Rated Building Study being conducted by the National Academy) Launch affordability studies • Launching two studies assess affordability impacts and potential solutions for multifamily

and 1-4 family homes

Inform the public • Launching public education campaign regarding risks, mitigation and flood coverage

1

2

3

4

City Efforts and Next Steps City is taking steps to reduce risk and increase understanding of its exposure.

CONFIDENTIAL 27

nyc.gov/resiliency @Planyc