Behind flood bill, a torrent of lobbying

Trade groups in Washington won a major victory Tuesday as the House passed a bipartisan deal on federal flood insurance.

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Groups representing builders and realtors had lobbied hard for a legislative fix for the program, warning that a spike in premiums threatened to spread economic pain across the country and dampen the housing recovery.
 
With the deadline for action approaching, the House was on Tuesday night approved legislation that would repeal reforms to the National Flood Insurance Program (NFIP) that Congress passed just two years ago.
 
Lobbyists for the National Association of Realtors and the National Association of Home Builders, along with their allies in local government and the financial services industry, rallied behind the bill over the fierce opposition of conservative groups.
 
“Thousands of home owners are facing increasing premiums. It's making it harder for people to sell their homes. It's making harder for people to buy their homes. It has locked up the housing market in quite a few places,” said Jim Tobin, senior vice president for government affairs for the Home Builders.
 
Jamie Gregory, the Realtors’ deputy chief lobbyist, said House passage of the bill was “extremely” important for his trade group.
 
“It's having a real impact on specific markets, people who are in flood plains, and it's not just coastal areas,” Gregory said.
 
The flood insurance bill was sponsored by Rep. Michael Grimm (R-N.Y.), whose Staten Island constituents took a major hit in 2012 from Hurricane Sandy. He was joined on the bill by Rep. Maxine Waters (D-Calif.), the House Financial Services Committee’s ranking member, as well as other members from storm-ravaged states, including Rep. Bill Cassidy (R-La.), who is running for Senate this year.
 
Placed on the rules suspension calendar, the bill needed votes from at least two-thirds of the House members present to pass. It cleared that hurdle in a 306-91 vote.
 
The House bill would set back reforms put forward in the Biggert-Waters Flood Insurance Reform Act of 2012.
 
Changes in that law were designed to help steer the flood insurance program back towards solvency. The program is now in debt of $24 billion after payouts for damage from major storms like Sandy and Hurricane Katrina.
 
Among the changes, the Biggert-Waters law ended insurance subsidies for some properties, eliminated the grandfathering of properties at old insurance rates after flood zones have been remapped and moved the program toward charging more full-risk rates, according to a Government Accountability Office report released in January. The report said about 1.1 million of 5.5 million NFIP policies are at the subsidized rates.
 
Supporters of the law hoped that the changes would shift NFIP policyholders from the government-backed program into private-sector options.
 
Steve Ellis, vice president of Taxpayers for Common Sense, said the House bill set for floor action on Tuesday would reverse the reforms and encourage people to live in dangerous flood plains.
 
“This undoes those reforms, which were first instituted when the program was only $17 billion in debt. This will have the program go insolvent sooner,” Ellis said. “We are subsidizing people to live in harm's way. One of government's fundamental responsibilities is to keep its citizens safe. This puts them at risk.”
 
Ellis’s group is part of the SmarterSafer.org coalition, which opposes the House bill and includes environmental groups and budget hawks.

In addition, conservative organizations such as the Club for Growth and Heritage Action for America have promised to key-vote the bill and urge lawmakers to vote against it.
 
Insurance trade groups have spoken out against the bill, with the National Association of Mutual Insurance Companies warning last week that the government keeping insurance rates artificially low will plunge the program further into debt.
 
Ellis said “keeping rates low discourages people from making decisions to keep themselves safe — elevation, flood-proofing and storm and flood damage projects.”
 
But lobbyists in support of the bill argue that insurance rates have jumped over the past two years. Six different insurance agents have given rates of $10,000 to $30,000 per year rate for one property with the true rate being $500 a year, according to one document being shared with lawmakers by the Realtors.
 
Linda Langston, president of the National Association of Counties (NACO), said the group has “seen the circumstances where the rates have gone astronomically higher.”
 
“If a homeowner walks away from their house or a business owner walks away from their business and they can't sell it, the property tax value will drop. That's what funds the local services that we provide,” Langston said.
 
NACO is backing the House bill.
 
The Senate has already passed legislation that would delay insurance rate hikes, but the House bill would go further by repealing several insurance premium increases. Without the House legislation, “the negative impacts on the housing recovery will continue through the spring selling season,” Gregory said.
 
Others see politics at play, with lawmakers wanting to ease their constituents’ anger over rate hikes before the midterm elections.
 
“This has always been about politics, not policy. This is so they [lawmakers] can say that we are doing something and that they can tell their constituents that they bailed them out,” Ellis said. 

— This story was updated at 7:09 p.m.