(April 25, 2014) Despite being lobbied heavily this week by those feeling both edges of the sword, the city continued to stay relatively neutral in the ongoing issues surrounding the Federal Emergency Management Agency’s flood plain re-mapping.
As of March 14, the city is currently in the formal 90-day appeal window whereby individual property owners, or the town as a whole, may contest their proposed new FEMA flood designation.
But while local insurance broker Reese Cropper continued to lobby on the city’s vulnerability under a relaxed insurance regime, council declined a direct request by some north-end property owners to fund their struggle to have FEMA relax their zoning even further to match the rest of the resort’s oceanfront.
“We can facilitate that process, but will not be responsible for challenging the data,” said City Manager David Recor.
To do so, the town would need to hire someone to re-do FEMA’s study, costing tens of thousands of dollars and opening the city up to considerable liability.
In its notice to the city of the appeal period, FEMA states that “we ask that you review and consolidate any appeal data you may receive and issue a written opinion stating whether the evidence provided is sufficient to justify an official appeal by your community in its own name or on behalf of the interested parties.
“If we do not receive an appeal or other formal comment from your community in its own name within 90 days of the second date of public notification, we will consolidate and review on their own merits such appeal data and comments from individuals that you may forward to us.”
Essentially, the city will not be exercising the former option and will not be lobbying any appeal in the town’s name. However, city staff will review and advise property owners on any individual appeals they wish to file over the next six weeks.
“We don’t have the staff to evaluate them,” said Planning and Community Development Director Matt Margotta. “What we can do is look at them and let [property owners] know ‘you can help yourself by adding this information’ and things to that effect.”
“We just don’t’ have the credibility or certifications to endorse everything they send to us,” Margotta said.
The city has received strong interest in appeals from ocean front property owners at the extreme north end of town, between 146th and 143rd Streets, whose properties did not receive the same break as their neighbors.
When FEMA revealed its new flood risk maps several months ago, it was discovered that most of Ocean City’s oceanfront had been de-classified from its previous designation as a “V” zone, indicating risk of flooding as well as high-velocity impact during storms.
This was what the city was hoping for, in part, given that the town had lobbied to have FEMA take the city’s man-made dunes and beaches into account as defense against seaborne storm damage.
Much to the town’s surprise, FEMA did not downgrade the “V” zone to an “A” zone – which indicates flood risk but not velocity – as the city had expected.
Instead, most of Ocean City is now an “X” zone, where mortgaged properties will not be required to have flood insurance under the National Flood Insurance Program. Only the aforementioned uptown blocks, as well as the downtown bayside area and some low-lying areas in the center of town, will still be in the “A” zone that requires full flood insurance on any property being leveraged.
While “X” properties are still technically in a flood risk area, they are not in a 100-year flood plain, and are treated much more loosely under FEMA’s building codes. The city adheres to these codes in order to secure the highest possible discount on NFIP policies for in-town structures.
The concern of those property owners still in the “A” zone is the effect that mandatory insurance will have on their market values.
“It seems to me you should be our sword and shield,” Robert Chertkof, who owns property on 144th Street, told the council. “It just seems inequitable for you not to stand up and help us in some way.”
His neighbor, Gwyn Tober, said her previous annual premium of $312 would be going up to between $7,000 and $9,000.
However, it is important to note that this is not because of the property’s specific zoning, but because FEMA is drastically reducing the rate subsidies for properties in all zones in order to reduce the NFIP’s deficit of over $25 billion.
The rate difference between the “A” and “X” zones, local insurance broker Reese Cropper noted, is actually quite small. The important difference is that those in the “X” zone would not be forced to buy the pricey policy, even if their property was mortgaged.
Because of the rate hikes, most properties in the “X” zone are dropping their policies, as is anyone in an “A” zone without a mortgage, Cropper said.
Thus, the difference between the two zones will have little impact on those who have paid off their homes and plan to stay in them – but it would make “A-zone” properties essentially un-sellable, relative to similar properties to the south, unless the buyer was paying outright.
To get the uptown “A” blocks incorporated in the “X” zone, the appellant would have to prove FEMA’s analysis wrong – a rather tall order given that FEMA is one of the few agencies in the world capable of carrying out a such a comprehensive study.
“[FEMA] hits us with their data and there’s little else we can get back from them,” Margotta said. “FEMA has never given us any indication that they care about opinion…that you think the dune is at the right level or that you think your neighbor is being treated differently than you.
The city, or any individual property owner, could hire an engineer to re-evaluate the mapping. But prices on this range from $10,000 to $20,000 per property.
“The town has the ability to hire our own consulting firm to evaluate whatever comes to us…but I’m not recommending we do that,” Margotta said.
“If [private properties] are willing to pay for their own engineer, we’ll help facilitate the process, I think that’s what Matt’s saying,” said Council President Lloyd Martin.
The largest building in the north-end “A” zone, the Ocean Place Condominium, has already arranged for its own engineer.
“We’ve already started our own process,” said Ocean Place board member Mac Balkcom. “I just wish we could’ve had this discussion sooner. A lot of absentee property owners don’t know about this and still won’t until it hits them.”
“Even if they’re not condominiumized, all the neighbors should get together are hire an engineer for the whole area,” agreed Councilman Joe Mitrecic.
But if a large enough group of property owners were confident in their appeal, Councilwoman Margaret Pillas posed, the city would have no reason to not back them up.
“They’re saying ‘we don’t understand why you would not hire a consultant for us because we are taxpayers of the town…and we feel this is not our classification and we want to appeal it,’” Pillas said.
“It’s probably not appropriate for the town to get involved with private property owners and how they handle their insurance,” Margotta said. “I don’t know where the line on ‘majority rules’ falls for you, other than to say you’re getting a lot of interest from a certain group.”
“It opens the town up to huge liability,” said Heather Stansbury from the office of City Solicitor Guy Ayres. “It would be very hard for staff to regulate how the consultant did his or her job…and in a catastrophic loss scenario, everyone is going to get sued.”
On the other side of the coin, some have argued that the “catastrophic loss” scenario is reason for the city to put money not into relaxing flood zones, but lobbying to tighten them or otherwise impose some type of mandatory insurance.
“We all seem reluctant to go to the federal powers that be and challenge them on what they do,” Cropper levied. “There’s a deep reluctance to go to FEMA and discuss this.”
Critically, he noted, the storm of 1992 that washed over Assateague and did considerable damage to Snug Harbor was not considered in the FEMA data. Neither was Hurricane Sandy, even though both storms did serious damage to the dune line and saw record high waters on the bayside.
“If anything, FEMA should at least withdraw the maps for now and look at what Sandy’s effect would’ve been on this city if it had hit as hard as it was supposed to,” Cropper said. “I think you’ll find that most people think it’s the most ludicrous thing to think we’re on a barrier island and flood insurance is going to be optional for most of the city.”
To Cropper’s point, FEMA’s downgrading of Ocean City’s risk does seem to be counterintuitive to the purpose of NFIP reform under the Biggert-Waters Act. If the federal government was interested in making the NFIP more solvent, they would continue to charge “V” rates in relatively dense, affluent areas such as Ocean City.
“Here’s FEMA saying ‘we need to build up our coffers,’ but in Ocean City’s case people are getting reductions, in some cases massive reductions, even though the Biggert-Waters act takes away a lot of the subsidies,” Margotta said.
In fact, Recor noted, national media reported last month that the FBI had launched an investigation into seemingly undue rate reductions in areas of the Gulf Coast that had been decimated by Hurricane Ivan in 2004.
“Something’s not right,” Cropper said.