Flood insurance rate increases also lurk in state building code

By on January 19, 2014

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Rules requiring buildings to be above base flood level can earn towns and counties discounts on flood insurance rates.

By Catherine Kozak
Coastal Review Online

Another potential headache looms for North Carolina residents who live in flood zones, and it has nothing to do with recent changes in federal law that will eventually spike rates in flood insurance.

Amendments to the state building code could affect discounts awarded to counties and towns participating in the National Flood Insurance Program’s Community Rating System, translating to higher policy rates for property owners.

That’s in addition to increases established by the 2012 Waters-Biggert Flood Insurance Reform Act. The federal law is intended to remove most subsidies provided in the overstretched program managed by the Federal Emergency Management Agency.

Legislation that was introduced to delay the biggest increases for four years is not expected to make progress in Congress this year. However, a provision in the $1 trillion budget bill signed by President Obama Friday would postpone some increases until Sept. 30, according to the Boston Globe.

But the impact of recent building code revisions could have similar affects on rates.

In unincorporated Dare County, for example, the expiration this month of the building code provision that required structures to be an additional one foot above the minimal base flood elevation – known as freeboard — would mean a loss of 200 points toward a discounted rate in the Community Rating System.

Without the freeboard regulation in place, along with other deficiencies, the county risks losing a total of 500 points when its CRS is recalculated in 2015, said Donna Creef, county planning director.

On Jane 6, the Board of Commissioners wrote the freeboard provision into its own ordinance in hopes of saving the 200 points at risk.

The rating system, a voluntary nationwide program, awards points to communities for certain activities that help prevent flood damage. In turn, a discount, ranging from 5 percent to 25 percent, is provided to residents on their flood insurance policies.

Dare is ranked Class 8, which qualifies the county for a 10 percent discount. It would fall to Class 9, a 5 percent discount, if the 500 points are not made up, Creef said. Beside adding the freeboard provision to its ordinance, Dare is also studying ways to gain more CRS points to qualify for a Class 7 rank, which would provide a 15 percent discount in rates for its residents.

Class 1 communities qualify for a 45 percent discount.

insurance-code-book-200Out of North Carolina’s 570 eligible communities – that is, those that are covered by the National Flood Insurance Program — only 82 participate in the CRS, said John Gerber, state NFIP coordinator.

“We’d like to see more communities getting involved in the CRS, especially with the impact the Biggert-Waters Act is having,” he said.

Savings per policy can range from less than $20 a year to nearly $300 annually.

In Dare, a total of $665,253 is saved every year, topped statewide only by the town of Nags Head, which is ranked Class 6 and receives a 20 percent discount with a total annual savings of $675,394.

Meanwhile, the N.C. Building Code Council recently considered a proposal to adopt new international building codes every six years, rather than the current three-year cycle. The N.C. General Assembly has already extended the amount of time between revisions to state building codes for residential construction from three years to six years. The building code for commercial projects still would be updated every three years.

Typically, states follow the practice of the International Code Council, which updates national model codes every three years to reflect the latest construction methods and technologies. If the change were made in the code cycle, costs for flood insurance coverage would increase in 14 communities in the state, Gerber said.

At a meeting on Dec. 10 of the N.C. Building Code Council, most comments at a public hearing were opposed to going to the six-year cycle. The matter was tabled for a vote at the March meeting.

In its 2013 assessment of 18 hurricane-prone states’ building codes and enforcement systems, the Insurance Institute for Business & Home Safety, a group representing insurance providers that promotes strengthening construction in hazardous areas, faulted North Carolina for taking negative action in its building regulations — the only state in the report besides Louisiana to do so.

Si Farvardin, manager of codes and standards for IBHS, said that it is important to have the most up-to-date codes to ensure public safety.

“The code is a living document,” he said. “You see the improvement over the years in the reduction of losses.”

According to the institute, statewide building codes ensure consistent standards – and consequently, uniform protections — for new construction across the state.

The institute’s report was also critical of a change in March to North Carolina’s building code that it said weakened the technical standing related to bracings in structures. It also expressed concerns about changes that eliminate permanent anchors that provide windborne debris protection and broaden relevant wind speed standards. Also criticized was a change made by the legislature that limits the number of building inspections local governments can require.

Duke Geraghty, a member of the Outer Banks Home Builders Association and owner of Starco Realty & Construction, said the reason the building industry has pushed for some changes in the code, including the removal of the freeboard regulation is that the stricter provisions are excessive, costly or premature.

There’s no way to build a completely hurricane-proof structure, Geraghty said. Flooding has not been an issue with newer construction, he said, but hyperbole makes everything sound worse.

“So far,” he said sardonically, “there’s already been three storms of the century.”

Geraghty said that until the new FEMA flood maps are released later this year, it makes no sense to implement regulations based on information that could change significantly.

With the freeboard rules the way they were, he said, builders had struggled to elevate things like water heaters and heat pump stands to meet the standard, at times having to put them on interior floors. But he said that only Hatteras and Stumpy Point in Dare have had issues with flood damage below base flood elevation.

“It’s restricting, and I don’t see any reason for that,” Geraghty said.

Groups like the IBHS, he said, “don’t know anything about building” and seem more interested in changing the codes just for change’s sake.

“There is nothing wrong with our building code,” he said. “Everything holds up.”

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