Measure needed to protect access to federal flood insurance

In April 2016, the Federal Emergency Management Agency (FEMA) sent a letter warning the state of Hawaii that it will suspend Hawaii’s participation from the National Flood Insurance Program (NFIP) because of Act 203, which exempts agricultural structures from building permits.

Act 203 was passed with intent to ease building costs for farmers wanting to construct greenhouses, storage containers, and other structures not intended for dwellings as long as they are under 1,000 square feet. However, reports of unauthorized homes being built on flood planes in agricultural districts raised concerns, causing FEMA to take action because they require permits for all construction.

In FEMA’s letter, it stated, “Failure to address this compliance problem by July 31, 2017, will force FEMA to initiate suspension procedures for the State and all Hawaii communities that participate in the NFIP.”

What many people do not know is that all properties are at some risk for flooding. In 1968, Congress established the NFIP, which enables homeowners, business owners and renters in participating communities, such as Hawaii, to purchase federally backed flood insurance. This potential suspension would have negatively affected existing policies in Hawaii and would adversely affect new policies as required by mortgages.

Hawaii currently has 60,000 flood insurance policies totaling over $13.2 billion in flood insurance covered by these NFIP policies, which were vulnerable to cancellation from FEMA’s suspension warning.

For the past four decades, Hawaii benefited from nearly 4,600 claims paid, totaling over $87 million. It is estimated that Federal Disaster Assistance made available to the state of Hawaii since 1980 provided under the NFIP, has totaled over $400 million following Hurricanes Iwa, Iniki, Tropical Storm Iselle, the magnitude 6.7 Kiholo Earthquake, and various severe storms, tsunamis, earthquakes, volcanic activity and flooding.

Furthermore, FEMA’s letter threatened that all federal agencies will also be prohibited from making grants, loans or guarantees for the acquisition or construction of structures, including assistance from the Federal Housing Administration, Veterans Administration, and the Small Business Administration, among others, if the state of Hawaii was suspended from the NFIP.

This year, efforts were initiated by state Rep. Ryan I. Yamane, with the support of FEMA Region IX, the state Legislature, the Engineering Division of the Department of Land and Natural Resources, Hawaii’s four counties, the Hawaii Association of Realtors, the Hawaii Farm Bureau, and Hawaii’s insurers, banks, and builders to address this federal warning with House Bill 1418.

Rather than repeal Act 203, HB 1418 continues support for Hawaii’s agricultural communities. It also includes language ensuring that all new structures are in compliance with the NFIP’s requirements. Thanks to those involved, the state of Hawaii is on track to pass HB 1418 to clarify our state building laws and avert a disaster in our federal flood insurance coverage.

Should HB 1418 pass, Hawaii’s property owners can trust that their NFIP federal flood insurance will be protected and remain in place, protecting them from future flood disasters.

As REALTORS®, we are committed to staying informed and advocating when necessary for our communities.

Susan Savage is the 2017 president of the Hawai‘i Association of REALTORS® and has been a real estate broker on Molokai for more than 10 years.