‘50 percent rule’ for flood insurance has been disregarded for decades

In the month after Houston’s 2015 Memorial Day flood, the city sent about 1,000 letters to homeowners whose homes were more than 50 percent damaged that they would have to elevate and rebuild rather than repair.

An immediate outcry ensued, and then-Mayor Annise Parker sought to calm her traumatized constituents.

“For those who are substantially damaged in Meyerland, I can almost guarantee that if you just go get a new appraisal of pre-flood value, you shouldn’t have any problem,” she said.

In a recent interview, Parker said the process wasn’t as simple as giving people the damage declaration they wanted. The city had based its calculations on homes’ appraisal district values, and those often come in lower than market value, she noted. “It’s a matter of allowing citizens options in a very difficult situation,” she said.

For decades, community officials nationwide have flouted the “50 percent rule,” which says that flooded homes whose repair costs will exceed half of their pre-flood market value must be elevated or removed from the flood plain — no matter the hardship. But little has been done to change that.

The Federal Insurance Administration, later absorbed by FEMA, reported problems with substantial damage in 1980. Five other reports on the topic by watchdog groups, including the FEMA inspector general in 1999, have drilled deeper into the flaws. When Hurricane Floyd ravaged the east coast that year, one community certified that all its buildings were no more than 49 percent damaged.

A 2006 evaluation of the National Flood Insurance Program, commissioned by FEMA, found the problems had, if anything, grown worse as more communities were added to the insurance program.

Researchers who interviewed flood plain managers around the country for that report said some described substantial damage as “the biggest challenge for the (flood insurance program) and the region,” “the number one compliance problem,” or “the biggest failure of the compliance process.” One FEMA program specialist said substantial damage is an issue that “drives the region crazy.”

The narrative hasn’t changed much since the early reports. The substantial damage process has remained open to manipulation, especially after disasters, positioning the flood insurance program to pay future claims on homes that will flood even in lesser storms, just like Galveston.

Shortly after the flood insurance program evaluation, and after Hurricane Katrina flooded about 70 percent of New Orleans homes in 2005, city officials reported that, in one month, they reviewed 250 appeals of substantial damage declarations per day and approved about 90 percent of those appeals.

“It was very much a political response just because people were so concerned and then, before any other decisions could be made, hey, they got the permit and 48 percent damage,” Marla Nelson, an urban planner at the University of New Orleans, told The Advocate, the Baton Rouge newspaper.

A Homeland Security inspector general’s report found there was no documentation to support 95 percent of the appeals that resulted in damage assessments being reduced to below 50 percent, and, moreover, the city had not inspected those homes in person.

A New York Times reporter who witnessed the appeals process noted that people went to city hall with their appeals and left only minutes later with declarations below 50 percent. A New Orleans building inspector told the reporter the process was “really fly-by-night, chaotic, wild west, get-what-youwant.”

In summer 2016, storms flooded about 160,000 properties in central Louisiana. By the following January, Baton Rouge had lowered assessments on 93 percent of properties initially flagged as substantially damaged, The Advocate reported.

In the nearby city of Central, it was also 93 percent. In Ascension Parish, 79 percent of appeals succeeded. Building officials in the area acknowledged they didn’t have the resources to guard against inflated appraisals and lowballed contractors’ estimates.

The town of Denham Springs overturned 94 percent of substantial damage declarations appealed by residents, while its mayor went to Washington to tell Congress to waive the rules: “The majority of the structures that will face elevation requirements will be a distant memory before a thousand-year flood of this magnitude occurs again,” Mayor Gerard Landry told a House committee.

But it had taken only 35 years to beat the record flood of 1983.