Homes go higher as flood insurance surges
In the coastal areas of Greenwich, the latest housing craze requires hydraulic jacks, pylons and stilts. One home towers over its neighbors like a cruise ship. Others look like expensive tree houses.
“People are stopping in to ask us about it,” said Patrick Grasso, 59, a resident of the hedge fund enclave who jacked up his 1920s waterfront house about 3 feet. “Peoplewant to knowhowlong did it take and howmuch did it cost.”
Ten months after Hurricane Sandy, Greenwich is among the first U. S. municipalities to adopt revised flood maps from the Federal EmergencyManagementAgency that predict fiercer waves and higher storm surges. In doing so, the town has fallen in line with a federal initiative meant to thin the density of low- lying coastal populations, prepare for more damaging weather and reduce rebuilding costs borne by taxpayers.
The maps add as much as 5 feet to previous predictions of how high the waters of Long Island Sound would rise during a 100- year storm like Sandy. Starting next year, homes in surge areas across the country won’t qualify for flood- insurance rates based on the old maps. That means some homeowners will face a choice between paying as much as $ 150,000 to raise their houses or accepting premium increases as high as $ 20,000 a year.
Greenwich will soon have company. Over the next four years, coastal communities in about 350 counties are set to receive new maps. Adoption is voluntary, though there’s an incentive: Towns wishing to remain in the National Flood Insurance Program, which insures 5.6 million homes, must accept the maps. Banks typically require homeowners in coastal areas to have flood insurance to secure a mortgage.
The federal government is focusing first on remapping the East Coast and Gulf Coast. Draft plans have added 180,000 residents inNewYork Cityand32,000homesin New Jersey to flood plains. Preliminary maps in theWest Coast are set for the next two years, and the Great Lakes and Florida will get them in 2015 and 2016.
In Greenwich, home to hedge funds including Tudor Investment Corp., AQR Capital Management and Traxis Partners, the median value of a house is almost $ 1 million andmany are at risk. Tougher standards were adopted for 20 percent of the residences in the Old Greenwich section. The neighborhood, which hugs the sound, is the nation’s 11th wealthiest zip code, according to data compiled by Bloomberg.
Many of the first Greenwich residents to lift their homessuffered somuchdamage during Sandy they had no choice: Repairs exceeded 50 percent of the value of the home, which triggered a federal rule requiring the structure to be rebuilt higher.
The Ekvalls in Old Greenwich are a typical example. Sandy’s tidal surge sent water up to the kitchen countertops of their 1930s cottage, which was 6.5 feet above sea level. They decided to raise the first level to 15.5 feet, higher than the 14 feet required by the town under the federal maps. Now the roof is 43 feet high, so tall that the family needed a variance on a differentGreenwich ordinance: one restricting roof heights to 35 feet.
“You are really in the trees,” said Patricia Ekvall, 54, showing off a third- floor view of the tops of weeping willows. From there, she can see several other homes that have been elevated or are in the process. The Ekvalls, whose property was assessed at $ 816,690 before the renovation, spent more than $ 300,000on the project. They drilled steel pins through the muck below and then lifted the house onto stilts. In the next major flood, water will be able to flow under the house like a river below a bridge.
The elevation, while expensive, sent their flood insurance down to $ 458 year. Had they not raised the house, it would have been 6 feet below the new required height and their annual flood- insurance cost would have soared next year to $ 5,500, she said.
Neighbors — even those with far less damage — are considering the same move, said Denise Savageau, the town’s conservation director, who is coordinating federal Sandy relief grants to help owners raise houses.
Waters are rising elsewhere as well. Extremeweather caused by globalwarming is an increasing problem, according to President Barack Obama and state and local government officials. NewYorkMayor Michael Bloomberg has called for a $ 60 billion system of flood barriers to protect the city from tidal surges. The mayor is the founder and majority owner of Bloomberg News parent Bloomberg LP.
New York state now lists climate change as a risk to bondholders after Sandy caused more than $ 40 billion in damage last year, andNewJersey is building dunes to protect its 127- mile coastline.
Under the new FEMA maps, homes more than 4 feet belowflood levels may see premiums jump to $ 10,700 a year from $ 3,600, according to data provided by the agency. Insomecases, annual insurance will rise to$ 23,150a year, according toResources for the Future, a Washington- based group studying the effects of the changes.
The looming increases stem from a law passed by Congress last year to shore up finances at the National Flood Insurance Program. Thesystemowes$ 24billion to the U. S. Treasury, according toFEMA.
“By subsidizing risk, we are encouraging people to build in areas they shouldn’t build and putting that on the taxpayers,” said R. J. Lehmann, a senior fellow at R Street Institute, a Washington- based research organization.
“It is a wrenching process, but as we see sea levels rise and aswe see globalwarming, we are going to see more of this,” said Lehmann, who helped write the lawsponsored by Representatives Maxine Waters, a California Democrat, and Judy Biggert, an Illinois Republican.
Lehmann said the legislationwas backed by fiscal conservativeswhowant to shift the financial burden of waterfront living to homeowners from all taxpayers, and environmentalists who say cheap flood insurance leads to development in sensitive areas.
In other, poorer parts of the nation, there’s more outcry over the proposed maps. Bill Bubrig, 47, an insurance agent in Belle Chasse, La., says his insurance costs will rise to $ 15,000 a year from $ 600 if his community adopts maps thatwould put his home 6 feet belowrequired levels.
“This is devastating,” he said. “This is going to be worse than Hurricane Katrina. This will cripple the area.”