July24

August 2014 – The Power of Unintended Consequences (Part II)

By Tony Shepley

Some times, after a lot of initial panic, things work out the way they’re supposed to. As the July deadline for Shepformation approached, the MA House and Senate had set a 6 person committee to look at budget differences between the House Budget that had already passed and the Senate budget which was late in passing. True to political form, some interesting last minute legislation was introduced into the Senate’s budget so as to camouflage its very existence. The Senate budget is not exactly the place where we would think to look for mandatory fire sprinkler legislation and that of course is exactly why it was put there. Every time this legislation comes up, it is voted down by the Bureau of Building Regulations and Standards (BBRS) as an unnecessary cost driver that has not been proven to save lives in 1-2 family dwellings. The key was not that anyone opposes fire sprinklers , it’s just the idea of mandatory fire sprinklers that we see as unfair and unnecessary. The 6 person House/Senate review committee saw this same view and removed the legislation from the budget. That’s good news for affordability and for choice rather than mandate.  So much for part 1, now on to part 2!

The next issue we face as an industry, as a coastal community, as homeowners and as rate payers for insurance, is that of FEMA Flood Plane Re-Mapping. Intended as a means to get the Federal Government out of the flood re-insurance business, this can have huge and catastrophic effect on coastal areas. The short story is that FEMA was established in 1979 to help handle national emergencies  that  can overwhelm local resources in the US. This includes everything from terrorist attack to natural disasters including hurricanes and floods. At a recent seminar on flood plane re-mapping, I asked the experts whether it was true that the FEMA flood reserves had been depleted by $7 billion, because the funds were simply moved elsewhere in the government coffers, therefore causing the “emergency” cash shortage that is precipitating the current re-mapping effort. They collectively answered “Yes” without even missing a beat. In the same co-mingling slight of financial hand that has brought us to Social Security melt down, our “gubmint” seems to have raided yet another cookie jar! Despite the fact that such shenanigans would sentence any of us to crushing rocks on a Georgia work farm, it’s apparently just another day at the FEMA office. The Biggert Waters Act, that initiated the re-mapping, would effectively take government backing and re-insurance away from policies held on properties mapped within the critical flood plane zones. How bad is it? Some have calculated that the Town of Dennis with 10,000 homes, and 1,000 in the old flood plane would have between 3-4,000 in the new flood plane zones. Insurors would be allowed by law to raise insurance premiums by 25% per year until the premiums met the “new “ levels that  insurors would be allowed to charge in the flood plane areas. What does a homeowner do if their insurance premium goes from $6,000 a year to $44,000 a year, only 10 years later. That’s what the effect of 25% per year increases create!

This is not the time to sit back! Here is what you can do to help:

  • Join your local Home Builders Association http://www.capecodbuilders.org/join-us/why-join.html  or http://www.nantucketbuildersassociation.org/membership.html . Your Home Builders membership supports the strongest legislative effort you can possibly muster. Strength is always in numbers and politicians listen to numbers.
  • Get a determination (Certificate of Elevation) from an engineer to see if you will fall in a critical zone after the new mapping is in effect.
  • Speak with your insurance company to get an understanding of what this re-mapping can mean for you, your neighbors and your clients in terms of premium increase.
  • Talk with your legislators and let them know that the Federal Government is breaking its promise and has mismanaged itself into trouble once again. Enough already!

At Shepley, we have been very involved with the Home Builders Associations for 30 years. It is times just like these (sprinkler bills and flood plane re-mapping) when your membership dollars pay for themselves many times over. Without the Home Builders Associations, we would likely be sprinkling all new dwellings in MA. FEMA Re-mapping is next. We need your involvement and your membership to get this re-mapping effort contained and realistic.

“If we don’t change direction, we’ll end up where we’re going.” ― Irwin Corey, comedian and stage performer

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