Florida’s contentious 2012 legislative session was notable for finally producing a compromise no-fault auto insurance reform bill, as well as legislation – signed into law this week by Gov. Rick Scott – significantly scaling back Citizens Property Insurance Corp.’s ability to assess private insurance policies to make up for any shortfalls. Separate legislative proposals to reform both Citizens and the Florida Hurricane Catastrophe Fund ultimately fell short.
But amidst all that clamor, relatively little attention was paid to H.B. 503, an uncontroversial measure that looked merely to speed up the process of securing construction development permits. The bill sailed through the House on a 112-0 vote and the Senate by a unanimous 40-0.
That, it is now becoming clear, may have been a big mistake.
The problem lies with a section of the bill declaring that Florida counties and municipalities “may not require as a condition of processing or issuing a development permit that an applicant obtain a permit or approval from any state or federal agency unless the agency has issued a final agency action that denies the federal or state permit before the county action on the local development permit.”
The problem, Federal Emergency Management Agency Regional Director Major May made clear in a March 30 letter to Scott, lies with a little thing called the National Flood Insurance Program.
FEMA, which administers the NFIP, sets as a precondition for joining the program that local communities meet minimum floodplain management standards, which includes reviewing “proposed development to assure that all necessary permits have been received from governmental agencies from which approval is required.” If they don’t do that, they don’t get access to federal flood insurance.
“If communities in Florida are unable to comply with the NFIP’s minimum floodplain management requirements, the communities will be subject to suspension from the NFIP,” May wrote. “One consequence is that flood insurance may not be sold or renewed within the community. Another consequence is that federal agencies are prohibited by statute from making grants, loans, or guarantees for the acquisition or construction of structures located in a Special Flood Hazard Area…Also, many lending institutions may require private flood insurance for high-risk properties at significantly higher cost to the homeowner, assuming private insurance is even available in the area.”
Obviously, this would be quite a big deal for Florida. With 459 NFIP communities, 2.06 million policies and $471 billion of coverage in-force, it is by far the largest participating state in the program
Bryan Koon, director of Florida’s Division of Emergency Management, sent an April 4 reply to FEMA suggesting that it was all just a big misunderstanding. The language in question only requires that counties and municipalities begin processing and issuing permits even if all state and federal requirements have not yet been met. Separate language in the bill allows Florida’s local governments to require that all state and federal permits have been obtained before development actually could commence, which he asserts “reduces any potential conflict between House Bill 503 and federal regulations.”
Koon said the division would send out advisory bulletins to Florida’s NFIP communities informing them of the need for permit conditions for flood hazard zones, as well as working with state lawmakers to craft clarifying language during the next legislative session.
It’s not yet clear whether that response will satisfy FEMA’s concerns, although it may. It’s also not clear whether Scott will sign the bill. The consequences of losing flood insurance coverage across the state would be quite dire, so that’s one reason to suspect he’d veto it. On the other hand, measures that fly threw two houses unanimously don’t frequently get the veto pen.
But what is quite clear is that Florida, and the nation, needs more private options for flood insurance. If a robust private market for coverage already existed, then this would be a much less significant issue.