WHEELING - Ohio County's property tax base could take a major hit if Congress fails to act on either a delay or a change to the Biggert-Waters Flood Insurance Reform and Modernization Act of 2012.
The U.S. Senate late last month approved a four-year delay in the act, which removes taxpayer subsidies to the federal flood insurance program. The 67-32 vote reflects widespread alarm about changes in the act to shore up the program's finances. In many cases the changes produced unexpected, sky-high insurance rates that are unaffordable for many homeowners in flood-prone areas whose insurance has historically been subsidized by the government and other policyholders.
The bill approved by the Senate would delay for up to four years huge premium increases that are supposed to phase in next year and beyond under new and updated government flood maps. It also would allow homeowners to pass below-cost policies on to people who buy their homes. People who have recently bought homes and face sharp, immediate jumps in their premiums would see those increases rolled back.
It has been estimated by at least one former Ohio County official that up to 25 percent of all homes in the county reside in the flood plain. If changes aren't made to the act, then those homes could become unaffordable, as potential owners likely would pay more for flood insurance - which they are required to have, if they take a mortgage - than they do for the mortgage itself.
That could lead to more homes sitting empty. Also, county assessors in West Virginia are supposed to base property appraisals on fair market value. However, if a home can't be sold due to the cost of flood insurance, then how will any local assessor be able to place a fair market value on that property?
"It's going to ruin real estate. ... Nobody's going to be able to afford to buy these homes," Wheeling Island resident Tom Dorsch said.
Opponents of the bill say it unravels long-sought reforms of the flood insurance program, which has required numerous taxpayer bailouts and owes $24 billion to the Treasury Department as a result.
"It's simply irresponsible for the Senate to gut reforms they overwhelmingly adopted just a year and a half ago," said Steve Ellis, vice president of Taxpayers for Common Sense. He called the bill "an empty, feel-good, four-year delay that will keep people in harm's way, accelerate the insolvency of the program, increase uncertainty about future rates, and cost taxpayers billions."
The measure now is in the House, where there's tension between supporters of the Senate approach and top Republicans like Financial Services Committee Chairman Jeb Hensarling, R-Texas, who is largely standing behind the 2012 changes. Hensarling spokesman David Popp said the chairman wants "free-market alternatives" to the government-run flood insurance program.
Many of those who voted for Biggert-Waters in 2012 - including Sen. Joe Manchin, D-W.Va., and Rep. David McKinley, R-W.Va. - are now among those pushing for changes.
Under Biggert-Waters, those with flood insurance who continue to live in their homes could see annual premium increases of up to 20 percent until they reach "full-risk" rates, while commercial properties will see annual premium increases of up to 25 percent until they reach full-risk rates.
However, the full-risk rates - which can be up to 15 times as high as what owners are currently paying, according to local insurance professionals - kick in immediately for any new policies. This is making it very difficult to buy or sell a home in an affected area because federal law requires mortgage holders to obtain flood insurance in an amount equal, at minimum, to the value of their loan.
Stephanie Hall, who is president of the Island Community Association in Wheeling, finds the situation frustrating. She believes it represents another obstacle as she and others try to improve conditions in the neighborhood.
"The concern that I have now is that we have so many empty homes on the Island," Hall said. "How are people going to buy them and get a loan, fix them up and then pay for this high price on the flood insurance? ... We're going to have a lot more empty houses, is what's going to happen."