Posted: Nov 3, 2013 3:28 PM
Updated: Nov 3, 2013 3:29 PM
GALVESTON, Texas (AP) Residents, business owners and officials in Galveston are worried about the prospect of flood insurance premiums spiking due to recent changes in federal law.
Legislation passed last year to eliminate the National Flood Insurance Program's multibillion-dollar shortfall will result in higher premiums for many homeowners along the Gulf Coast. In Galveston, a city councilwoman told the Houston Chronicle (http://bit.ly/18QlU9K ) that some people could see premiums that are three to four times what they're currently paying.
"I think it's going to be catastrophic to us," said Terrilyn Tarlton, the city councilwoman and a local insurance agent.
Congress last year passed a law that allows flood premiums to rise heavily for people in flood-prone communities. The threat of rising premiums has hit homeowners on the East Coast rebuilding after Superstorm Sandy, and it's affecting residents of the Texas Gulf Coast who are still working to move on from the impact of Hurricane Ike five years ago.
In Galveston, 50 miles southeast of Houston, City Manager Michael Kovacs worries about rising costs driving away middle- and working-class residents, leaving behind "the very affluent and then those on public assistance."
Many of the homes in Galveston were built before 1970, the year the city joined the national flood insurance program. The phasing out of federal subsidies, combined with more expansive flood maps being drawn by the Federal Emergency Management Agency, means some people could see "premiums of $30,000 a year, and that's no joke," Tarlton said.
Rick Bafico, the 71-year-old owner of a home built in 1887, said he's likely to drop flood insurance because he does not have a mortgage, but worries about the home's real estate value.
Affected homeowners with mortgages won't be able to drop flood insurance, Tarlton said. And business owners worry about passing on the costs of higher premiums.
"It would be very significant," said Bill Ross, manager of Mitchell Historic Properties, the largest property owner in Galveston's historic district downtown. "Most of our tenants down here are mom-and-pop operators."
Information from: Houston Chronicle, http://www.houstonchronicle.com