This hurricane season, how can the federal government improve the National Flood Insurance Program?

Sandy flooding in New Jersey
Damaged homes along the New Jersey shore after Sandy. Photo by the U.S. Fish and Wildlife Service via Flickr.

When communities are hit by a hurricane or flooding, the National Flood Insurance Program helps families recover and rebuild. Changes to the program proposed by Smart Growth America—and supported by the Obama Administration—could help homeowners reduce their flood risk and cut costs for the federal government at the same time.

Most homeowners’ insurance policies do not cover damage from flooding, and the National Flood Insurnce Program (NFIP) is a supplemental insurance offered by FEMA to protect families financially from flood damage. Many NFIP plan members pay highly subsidized rates that do not reflect the true risk of flooding or the costs associated with it, and these subsidies have contributed to increased development in flood hazard areas, putting more people and property at risk. All this has come at a high cost to taxpayers: The program is currently almost $24 billion in debt to the Department of Treasury.

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Rethink Real Estate: Eliminate some rate subsidies from the National Flood Insurance Program

Clarksville, TN
Federally subsidized flood insurance makes it easier to build homes in flood-prone areas. Image via Wikimedia.

This is the first in a series of posts discussing recommendations from our new platform Federal Investment in Real Estate: A Call for Action. The series will highlight what is lacking in current federal real estate policy and how our recommended improvements could generate better returns for families, communities and taxpayers.

The National Flood Insurance Program (NFIP) is intended to provide property owners and renters with a way to financially protect themselves from flood damage. Administered by the Federal Emergency Management Agency, the NFIP works closely with nearly 90 private insurance companies to offer flood insurance to homeowners, renters and business owners.

LOCUS

Smart growth news – January 3, 2012

The bold urban future starts now
Salon, December 31, 2011
In cities in every region of the country, pie-in-the-sky ideas are moving from brainstorm to blueprint to groundbreaking — and 2012 will prove it.

Oklahoma City reaps positive effects of economic development
The Oklahoman, January 1, 2011
“Downtown Oklahoma City experienced significant changes this year (2011), but probably the most impactful was the renovation and grand reopening of the Myriad Gardens,” Jenkins said. “Construction of the Level Apartments and Aloft Hotel in Deep Deuce have really given that area a dense, urban feel, and the launch of the ‘Downtown It!’ advertising campaign increase awareness of all that downtown Oklahoma City has to offer.”

Study: Cities subsidize townships
Oxford Press (Ohio), January 2, 2012
There is an inequity in government subsidies for roads, police protection and other services that township residents receive compared with city residents, though both groups pay the same taxes, a University of Toledo study shows.

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