Posted: Mar 24, 2014 1:02 AM
Updated: Mar 24, 2014 1:03 AM
GALVESTON, Texas (AP) Zoila Navarro's bakery in Galveston has persevered through tough times. It reopened after being flooded by Hurricane Ike in 2008, and stayed open after her husband was killed outside last year during a robbery.
But the 60-year-old business owner is unsure her Southeast Texas Gulf Coast bakery can withstand what might be its toughest challenge: That's an increase in flood insurance premiums from about $2,600 annually to more than $11,000 after a 2012 law overhauled the federal government's flood insurance program.
President Barack Obama signed a law Friday offering much-needed relief for policyholders like Navarro by rolling back steep hikes that took effect almost overnight as a result of the 2012 reforms. But for many, the reprieve is temporary.
The legislation still imposes mandatory price hikes of 25 percent every year on businesses and second homes, until the owners switch from a subsidized rate to one based on the real risk of flooding. Other homeowners face increases that are capped at 18 percent per year.
Like other communities around Texas and the country, Galveston's business owners, real estate agents and officials say the overhaul could have dire economic consequences stifling home sales and shuttering businesses.
Across Texas, more than 61,000 flood insurance policies are expected to increase due to the overhaul. It was aimed at weaning hundreds of thousands of homeowners off of subsidized rates and shoring up the flood insurance program, which is $24 billion in debt.