Insuring for floods could be at risk - pressofAtlanticCity.com: Breaking News

Insuring for floods could be at risk - pressofAtlanticCity.com: Breaking News

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Insuring for floods could be at risk

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Posted: Sunday, July 7, 2013 4:40 pm

A bill to allow homes, restaurants and offices to be built on some Hudson River piers could endanger the state’s participation in the National Flood Insurance Program, flood-policy advocates are warning.

The bill, sponsored by state Sens. Nicholas Sacco, D-Bergen, Hudson, and Joe Kyrillos, R-Monmouth, would allow housing and commercial development on about six Hudson River piers that are designated in velocity zones, as long as municipalities pass an ordinance also allowing the practice. The bill passed both the Senate and Assembly by wide margins and is expected to go the governor this week for a signature.

However, advocates warned in letters to Gov. Chris Christie’s office that by passing a law allowing development prohibited in the National Flood Insurance Program, the Federal Emergency Management Agency could suspend the state, or even specific municipalities, from participation in the program.

Atlantic City is the only municipality in New Jersey where state regulations allow hotel and commercial development on piers in velocity zones, a measure that was permitted in the 1980s to allow a hotel project that was never built, said Mark Mauriello, a former commissioner of the state Department of Environmental Protection and a flood policy expert.

The fact that this type of development is allowed by the state in Atlantic City was a key reason for introducing the bill, Sacco said. “If the whole coastline was banned, then maybe the bill wouldn’t be successful.”

The stakes could be huge. The governor is being heavily lobbied on both sides: Hundreds of millions of dollars worth of investment in cities where waterfront redevelopment is a key part of economic growth versus the risk of the federal government suspending towns’ or even New Jersey’s participation in the NFIP. The bill also could be considered the first legislative test after Hurricane Sandy of how the Christie administration will permit future building in flood zones.

The NFIP prohibits commercial or residential development over water that is considered a velocity zone, the highest-risk part of a coastal flood area.

While such structures could not be insured under the program, the fact that a law or even an ordinance is on the books allowing the practice could trigger the program to review participation, said John Miller, legislative committee chairman with the New Jersey Floodplain Managers Association.

The National Flood Insurance Program, run through the federal government, is considered to be voluntary. In order for home and business owners to obtain insurance, towns and cities must adopt and enforce regulations designed to reduce flood risks. Those communities that don’t adopt and enforce the minimum standards can be sanctioned, including the elimination of discounts, probation or even suspension from the program, according to NFIP regulations.

“Our association believes that the state puts itself in jeopardy for participation in the National Flood Insurance Program with something like this,” Miller said. “Certainly that’s the largest penalty that could happen.”

FEMA does not comment on pending legislation, spokesman Dan Watson said.

New Jersey ranks third in the nation for the number of flood losses since 1978, with more than $5 billion as of April 30.

Chad Berginnis, executive director of the Association of State Floodplain Managers, based in Wisconsin, said in a letter to Christie that velocity zones are considered the most vulnerable places in flood regulations and that allowing residential development, as is permitted in the bill, could have major repercussions for public safety during natural disasters.

Additionally, Berginnis wrote, “States and communities working to reduce the costs of future flood disasters and dependence on federal disaster relief are encouraged to sharply constrain and certainly not expand such dangerous development.”

In 2006, FEMA warned New Jersey in a letter that the state was at risk of being suspended because a nuance in state laws barred communities from adopting tougher flood standards than the state adopted.

Sacco, in response to the criticism of the recent legislation, said, “There will always be people opposed to development making their case about why development can’t take place.”

Waterfront development, particularly in North Jersey, has been a key economic-growth issue, and some business interests warned after the state adopted advisory base flood maps in January that redevelopment was effectively banned. Sacco said the bill would apply only to about six piers on the Hudson River, with a project in Weehawkin as the one that sparked interest in crafting the legislation. Sacco said during an April 25 Senate committee hearing on the bill that the buildings would be well above flood elevations and built to tough engineering standards.

“It just seems terribly unfair for a plan already taking formation, to make someone’s investment meaningless and also be contrary to the town’s attempt to expand the ratable base,” Sacco said Wednesday.

DEP spokesman Larry Hajna said the agency has no position on the bill.

Mauriello said that if the bill was allowing a practice currently banned statewide, there might have been more concern among legislators and regulators. Many, Mauriello said, look at the bill as extending rules that encourage redevelopment.

“If the governor doesn’t sign the bill, it raises another question about what do you do about Atlantic City,” Mauriello said. “Folks would argue it’s unfair and applies in one community and not another.”

Contact Sarah Watson:

609-272-7216

SWatson@pressofac.com

Follow @acpresssarah on Twitter

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