I. Introduction

Spending $1.8 million to repair a $600,000 home may not make sense to many, but it is the government’s current approach to floods, and often is the course of action under the National Flood Insurance Program (NFIP).[1] The home that has benefitted from that $1.8 million is in Kingwood, Texas, a northern suburb of Houston along the San Jacinto River.[2] Although its owner estimates it was worth $600,000 to $800,000 prior to Hurricane Harvey, the government’s NFIP has spent $1.8 million to repair the home over the course of four decades and twenty-two floods, averaging a flood every other year.[3] Such payments may seem to defy common sense to some, but the current language of the NFIP has limited the ability of various levels of government to resolve the situation, and may perpetuate the desire of the homeowner to hold the property due to subsidized insurance rates.[4]

On the other hand, the NFIP also faces a crisis of identity and an inability to prevent the construction of new buildings in floodplains, so long as they comply with program-mandated and locally-designated (often higher) lift requirements.[5] The result is that even as flood events have increased, building trends have not avoided problem areas. Even Hurricane Harvey could not end the trend of new construction in floodplains throughout the Houston metropolitan area.[6] The Houston Chronicle reports that in the year following Hurricane Harvey, one in five new home permits in the city of Houston was for the construction of a house in either the 100- or 500-year floodplain.[7] This amounts to over 1,200 new homes, 600 of which are in the 100-year floodplain.[8] Although some of these permits were issued for homes to be built on the site of a destroyed house, many were for the construction of higher‑density clumped townhomes, packing more people into the floodplains.[9] Additionally, because of the current statutory language of the NFIP and the city’s regulations, lift requirements (building a home a certain number of feet above ground) for these permits only applied to new buildings in the 100-year floodplain even though Houston has extended lift requirements to the 500-year floodplain for future permits.[10]

Although I have focused on the Houston area with examples of constantly flooded homes and an embrace of further development in its floodplains, such problems are not unique to the area, and pervade nationwide.[11] The result is, the NFIP faces a crisis from two sides: it has been unable to free itself of repeatedly-flooding homes (referred to as repetitive-loss properties), and it has also proven unable to encourage extensive mitigation efforts and prevent the addition of further at-risk properties to its insurance books. But, the NFIP also faces a third, more hidden, threat: its debt.[12] Starting after Hurricane Katrina, and exacerbated by later flooding events, the NFIP has become heavily indebted to the U.S. Treasury, relying on Congressionally-raised borrowing caps and debt forgiveness to continue payouts and maintain the current system of coverage.[13] Thus, the NFIP faces a crisis from three sides and its current statutory language cannot save it—in fact, the language actually deepens the burden. As a result, major reforms are needed.

Fortunately, the NFIP is due for reauthorization. This long-term reauthorization has been kicked down the road with month-to-month stopgaps as Congress has dealt with other issues and handled the aftermath of the 2018 election. As a result, the reauthorization has taken a back seat and the mandated date for reauthorization has been postponed until September 30, 2019.[14]

The ambition of this Comment is to review current policy statements, goals, and proposals from various groups, professors, and journalists to identify proposals for how to solve the NFIP’s three-sided problem, and in the end, recommend a politically-feasible course of action that aims to create long-term stability for the program. To start, this Comment will briefly explain the current implications of the NFIP’s language broadly and identify key terms and concepts. Then, the current aims of various politicians and groups will be explained in order to identify the parameters of what likely could be authorized by a split Congress, as well as the principles that will guide whether a proposal has support. Third, key policy issues identified by professors and interest groups will be discussed and the various proposals will be examined, chiefly dealing with: (1) Buyout Programs, (2) Eminent Domain, and (3) Subsidized Rates and Possible Financial Assistance. Finally, this Comment will conclude by analyzing political support for the various proposals and combining plausible proposals together to create an image of what the reauthorization of the NFIP could look like if wholesale reform was undertaken. Additionally, in the final Part, I will add my arguments concerning the possible parameters of each program and how they interact or are structured.

II. A Brief Overview of Our Current Flood Insurance System

The National Flood Insurance Program is a complex statutory scheme, so this Comment will begin with a brief explanation of its overarching origins, principles, current status. Where more specific statutory language is implicated, it will be explained later as it is considered.

The NFIP originally started with a crisis of flood insurance availability in the private market.[15] In 1968, Congress passed the National Flood Insurance Act, which authorized subsidized flood insurance for those at risk.[16] As the program developed, it based coverage on dual tenets: (1) community participation with the program; and (2) mapping of communities to determine the 100-year flood plain.[17] The Flood Disaster Protection Act of 1973 added perhaps the most vital regulation: flood insurance was mandated for any property in these 100-year floodplains that was purchased with a federally-insured mortgage.[18] However, some note that this requirement is not well enforced and many homeowners allow insurance to lapse soon after their purchase.[19]

Subsequently, Congress reauthorized the NFIP through the National Flood Insurance Reform Act of 1994 (NFIA).[20] The NFIA established the principle of repetitive-loss structures, defined at that time as properties that incurred two flood losses of at least 25% of the structure’s value in any 10-year period.[21] Today this definition has changed to cover properties that have had two or more losses of $1000 in the past 10 years.[22] In 2004, the concept of a “severe repetitive loss property” was added and defined.[23] A severe repetitive loss structure is a property that has, within a 10-year period, had either: (1) four or more separate claims paid for more than $5,000; or (2) two or more claims where the total value of payments exceeds the value of the structure.[24] These two types of properties form the crux of the NFIP’s current issues, as repetitive loss properties constitute a disproportionate amount of the NFIP’s claim payouts.[25] The NFIP provides some funding for optional mitigation efforts to lift or purchase these properties and has mitigation requirements where damage exceeds 50% of the home’s value, but many identify the lack of stronger mitigation or buyout efforts as a critical weakness of the program.[26]

Currently, the NFIP’s basic structure is unchanged from these historical developments. Communities partner with FEMA to create mitigation plans and map the community for flood risk, which unlocks access to NFIP-backed insurance policies.[27] The mapping scheme identifies properties in the 100- or 500-year flood plain based on the risk assessed.[28] In the 100-year flood plain, insurance is mandatory for those properties purchased with a federally-backed mortgage.[29] As floods occur, properties are classified as repetitive loss or severe repetitive loss properties, which unlocks mitigation funds.[30]

However, underlying this scheme is a system of subsidized and unsubsidized insurance rates. Often, the question of whether a home is eligible for a subsidized rate is determined by whether it was constructed prior to the mapping of the community, or before a subsequent map included it in a floodplain.[31] If the home was constructed prior to mapping or prior to its inclusion in a mapped floodplain, then the home is eligible for a subsidized rate in most circumstances.[32] If the home was constructed after mapping of the land as a flood risk, then no subsidized rate is available.[33] The Biggert-Waters Act and the Homeowner Flood Insurance Act of 2014, taken together, have altered when, and for how long, subsidies will be available in specific contexts. Severe repetitive loss properties, nonprimary residences, and substantially damaged residences all will see premium increases of 25% annually until the full-risk rate is reached.[34] Most other properties, such as primary residences purchased after the date of enactment of the Biggert-Waters Act, will see rate increases of at least 5% until risk rates are achieved.[35] The result is that flood insurance premiums are expected to rise over the next few years.[36] However, even with these rate increases, the Congressional Budget Office (CBO) has stated that the NFIP’s financial future is still bleak.[37] Affordability is a critical issue as well.[38] Thus, the future of subsidies, how they operate, and how they interact with efforts to stabilize NFIP finances, are crucial to the program’s survival going forward.

Of course, FEMA is attempting to solve problems with flood insurance, or at least taking steps to stop massive losses. The key feature of this effort is “Risk Rating 2.0,” the first major attempt since the NFIP’s invention to redefine the way insurance rates are set.[39] FEMA has stated this new rating program will take into account more factors than before, such as types of flood risk and distance to the flooding source, and will utilize modern technology to create flood data.[40] Currently, FEMA plans to release new rates on April 1, 2020, and have them go into effect in October of that year.[41] However, a future with Risk Rating 2.0 is vague at best, as FEMA has made few public disclosures about what rates will look like or how they will be measured, besides the limited statements discussed above and a promise to follow statutory rate hike limits.[42] This has led some politicians to raise concerns about the initiative.[43] Thus, Risk Rating 2.0 may have to deal with political opposition before recalculated rates become a reality.

III. Challenges to Reform: Political Lessons from Flood Insurance Geography, Biggert-Waters, and Current Stances of Interested Groups

Understanding the contours of the political process that NFIP reforms must undergo is an essential step to analyzing and ultimately recommending what policies should be adopted to reform the NFIP. Biggert-Waters will be reexamined, but this time through the perspective of politics, asking what mechanisms led to the passage of Biggert-Waters in the first place, then examining how just a few years later those same mechanisms could lead to significant cuts to Biggert-Waters’ most reformative features. This analysis will pay particular attention to the politicians and their underlying motivations, but intervening events will also be analyzed for possible impacts on NFIP reform. As a result, I postulate that several political factors led to the downfall of significant parts of Biggert-Waters and will continue to impact reform efforts in the future.

A. The Impact, or Lack Thereof, of NFIP Geography

The first political factor that will be examined is the geographic distribution of flood insurance policies, which may have an effect on the voting decisions of politicians both in seats that represent many policyholders, and seats that represent few, if any, policyholders. Paradoxically, it will be shown that although geography may impact voting decisions, it is insufficient to explain the difficultly in passing enduring reform.

The geographic distribution of NFIP policies creates a complex political environment given the United States’ two-party political system. Policyholders are usually found in states known for being low-lying and often fronting an ocean or gulf.[44] As of August 31, 2018, a small number of states hold a majority of the 5.2 million NFIP policies currently in effect across the nation.[45] For example, of those 5.2 million policies, Florida has nearly 1.8 million policies in force, Texas has approximately 750,000, and Louisiana has slightly more than 500,000 policies; California, New Jersey, South Carolina, and New York constitute the only remaining states with over 150,000 policies in effect.[46] Thus Florida and Texas alone hold essentially half of the policies in force.[47]

Loss statistics go further to show the regional nature of NFIP policies. As of April 30, 2019, slightly less than $69.5 billion in loss payments have been made.[48] Of this total, Louisiana and Texas alone constitute effectively half of the total payouts, with nearly $20 billion and $16 billion in payouts respectively.[49] Only seven other states have crested $1 billion in payouts on policies in their state.[50]

The statistics show that NFIP policies and payouts are much more common in some states than others. This has created a complex political web of motivations because of the subsidized nature of the NFIP. The original vote passing Biggert-Waters showcases some of these complex motivations, and how they played out to pass, then repeal, the NFIP.

Unfortunately it is difficult to draw lessons from the Senate’s vote on Biggert-Waters because it was couched in the annual reauthorization of highway funds.[51] Although on the surface the vote was 74–19, all nay votes came from Republicans; the only nays coming from senators with a sizeable number of NFIP policyholders among their constituents were Senators John Cornyn (TX), Jim DeMint (SC), Lindsey Graham (SC), and Marco Rubio (FL).[52] In the House, the vote for Biggert-Waters (and the same transportation package) was more of a landslide, passing 373–52.[53] Thus the passage of Biggert-Waters was largely a bipartisan endeavor, but it reveals some of the politics of flood insurance.

NFIP politics reveal the different interests of those who represent large numbers of policyholders, and those who do not. Senator Bill Nelson from Florida, who voted yea for the package as a whole, indicated that his yea vote was motivated by the fact that without reauthorization, the program would become insolvent and stop reissuing policies.[54] This shows that those representatives and senators who represent constituencies with flood policies face the challenge of both keeping flood insurance affordable, but also ensuring that the program itself is funded. Additionally, Senator Rubio indicated that his nay vote was the result of the larger package, and that he would have voted for the reauthorization of flood insurance funds alone.[55]

On the other hand, representatives and senators who have few insured properties or payouts under the program in their districts have almost no political incentive to vote for continued subsidies, and to the contrary, have incentives to rail and vote against them.[56] For example, as politicians were considering the Homeowner Flood Insurance Affordability Act, which was proposed to delay many of the reforms in Biggert-Waters, Congresswoman Candice Miller of Michigan railed against the proposal.[57] In her criticism she identified many of the reasons congressmen and women from districts with little exposure to flood insurance may not support continued subsidies. Congresswoman Miller stated that people from Michigan were basically subsidizing flood insurance for those in other parts of the country, that the program was hopelessly in debt, and that it would be better to seek a private alternative.[58] As a result she urged Rick Snyder, the Governor of Michigan, to opt out of the program altogether.[59] These anecdotal statements show the diverging interests involved in flood insurance, but do not explain the repeal of Biggert-Waters.

The Act repealing Biggert-Waters, the Homeowner Flood Insurance Affordability Act of 2014 (HFIAA), demonstrates that some representatives and senators without large-scale exposure to flood insurance policies still supported reinstituting the subsidized program largely as it existed prior to Biggert-Waters.[60] In the Senate, the bill passed by the same 72–22 margin, but the distribution of votes paints a more complete picture of where support and resistance were found.[61] Both Senators Bill Nelson (FL) and Rubio, who had earlier supported the reforms, voted to delay their implementation.[62] With the exception of Senators John Cornyn and Richard Shelby (AL), all other nay votes came from states with little exposure to the NFIP.[63] In the House, the HFIAA passed 306–91, a clear reversal from the House’s vote for Biggert-Waters two years before.[64] Thus, the HFIAA passed almost as easily as Biggert-Waters, and although those from states with a large number of insurance policies supported it, the support of those without a direct interest cannot be explained by geography.

As a result, as this Comment progresses, I postulate that the geographic dispersion of NFIP policies may impact individual Congressmen’s views on the issue and what they publicly say but has little systematic effect on actual votes or support.

B. Biggert-Waters in Effect: Rate Changes and Reversal

If Biggert-Waters had been a car, it could be seen making U-turn after U-turn, as the drivers explained they did not understand the road, the neighborhood, or the full truth about the car itself. Criticism of Biggert-Waters took many forms, all of which are important when considering how to reform flood insurance. Criticisms range from a common refrain from representatives that the representative simply did not intend for what had happened to happen, to assertions that their original vote was needed to save the program, that affordability studies the representative relied on never occurred, that they did not understand the effects on the housing market, that the rate increases were too high, and that their state was going to be the hardest hit.[65]

Representative Maxine Waters (MO), one of the namesakes and sponsors of Biggert-Waters, was one of the first to take aim at what had just happened.[66] Labeling the effects “unintended consequences,” Representative Waters attempted to explain away Biggert-Waters by saying she did not intend the “harm and heartache” that the implementation of the bill would cause.[67] Chiefly she lambasted the increased, “outrageous,” premiums that many were going to incur, which could push many people out of their homes because they could not afford insurance.[68] Representative Waters also noted that homeowners might find it impossible to sell their houses.[69] She urged a vote to delay the bill’s implementation for three years, giving Congress time to create and pass a program to help homeowners afford the increased coverage premiums, as well as set out a plan to ensure maps accurately reflect risk when the reforms are eventually implemented.[70]

What all of these criticisms bring to light is that any serious flood insurance reform must have a few essential features as a component of its passage in order to prevent failure a few years down the line. First, it must guarantee the program’s future existence, even as the program generates short-term financial losses. Second, Congress must fully understand and be transparent about the effects that any such reform will have ahead of time. The starting point is clear: there must be, preferably before any implementation of rate hikes, updated maps, surveys of what actuarial rates would be under these maps, and surveys of predicted subsidy amounts and the effect on the housing market and overall economy.

C. Interest Group Aims and Objectives

Interest groups are an important part of the U.S. political system. On flood insurance, there are several players in the interest group arena: insurance groups, environmental groups, advocacy groups for low- and middle-income individuals, and the holders of insurance policies themselves.[71]

Insurance and financial groups are arguably the most influential of the groups in the eyes of Congress; and they share many goals with respect to the future of the NFIP. The Mortgage Bankers Association, a newcomer to NFIP lobbying, identifies the expansion of the private market for insurance as a crucial goal.[72] The National Association of Mutual Insurance Companies (NAMIC), an insurance lobbying group, also identifies one of its goals as increasing the private market for insurance, but also supports a shift to risk-based rates with affordability help.[73]

Environmental groups also support reforms to the NFIP, with groups such as the National Wildlife Federation (NWF) stating that subsidized rates promote the destruction of the environment and deter flood mitigation efforts.[74] Additionally the NWF is a member of the SmarterSafer Coalition, which has issued its own policy statement advocating for a larger private role in the market and a shift to risk-based rates, and addressing affordability concerns.[75] In conclusion, insurance, mortgage, and environmental groups largely agree on the basic parameters of a rewritten NFIP.

The main resistance to the reforms favored by insurance, mortgage, and environmental groups comes from the holders of NFIP policies and advocacy groups concerned about the effect of rising rates, as well as municipal groups concerned about possible consequences. For example, several groups in New York have issued a letter to their congressional delegation advocating against the elimination of grandfathering older properties into older rate regimes, and for a lower percentage change for rate hikes that were proposed.[76] Additionally the National League of Cities (NLC) advocates for the continuation of grandfathering as well as affordability programs.[77]

As a result, interest groups agree that affordability concerns should play a role in the reauthorization of the NFIP, but the long-term financial stabilization of the program and the growth of private insurance involvement in the flood insurance marketplace are more important to the financial interests than community groups and could possibly be both a point of compromise and contention.

D. Political Conclusions on Flood Insurance

Combining the geography of flood insurance, the adverse effects that forced the repeal of Biggert-Waters, and the current desires of Democrats, Republicans, and the interest groups to which they listen, there is one major lesson to take away: the next reform to the NFIP will have to take into account diverging goals, interests, and aims. A large caucus wants the government out of the business. However, Democrats, some Republicans, and those who represent flood zones, have a clear sensitivity to issues of affordability and the effects of flood insurance reform on the ability of the poor and middle class to afford to continue to live in their homes, and eventually to sell them without incurring a massive financial loss. Interest groups, as well as a cluster of environmental and free market interests, want to stunt growth in flood zones and prepare for rising sea levels and the effects of climate change. Thus, as we move into actual reform proposals, each will be analyzed for who would support it and who would oppose it, as well as the impact it would have on the program as a whole.

IV. Legal Reforms: Strategies for Stabilizing the National Flood Insurance Program

Understanding that political constraints exist on where the NFIP can be modified, this Part analyzes possible policy reforms. These reforms range from those that purport to partially resolve the program through strategic buyouts and other government actions, to more wholesale reform of how flood insurance is sold, how rates are structured, and who ultimately assumes the risk of future floods. As part of this analysis, I will include proposals for increasing mitigation efforts and safeguarding communities against future floods, because such efforts are a vital part of future flood risk.

A. Prior Use of Buyouts: A Basis for Expansion?

The first strategy for stabilizing the NFIP arises out of the proposed use and expansion of government buyout programs, and the use of the Takings Clause to possibly reach those holdouts that refuse to sell. There are numerous proposals and programs in action under this umbrella, and I do not purport to cover them all in detail. Rather I will briefly detail the current NFIP buyout structure, then analyze some different proposals and programs and their possible effects, as well as the benefits and detriments of such policies. Finally, I will discuss the application of existing political constraints to each commonality.

The NFIP’s buyout structure gives substantial federal aid for communities to attempt to conduct buyouts, but also creates perverse incentives for communities looking at damage mitigation strategies.[78] FEMA, the administrative agency responsible for the NFIP, is allowed to fund up to 75% of the expenses of voluntary buyouts that comply with certain standards.[79] These Hazard Mitigation Grant Program subsidies also vary based on the amount and timing of the buyout plan’s implementation, with the 75% contribution occurring only after a federally-declared major disaster.[80] On the other hand, if a state sought to purchase the property from unwilling homeowners through an exercise of eminent domain, the state would bear the full brunt of paying the state’s mandated formulation of just compensation.[81] The current structure incentivizes states and localities to voluntarily buy out homeowners and property, but to wait until after a disaster declaration to do so. As the following examples show, this has made the occurrence of a disaster a precursor to most buyout programs.

The first general policy centers around the expansion of voluntary buyouts to purchase and subsequently redevelop or commit the property to natural use.[82] John Lovett details several of these programs, based at both the federal and state or local level, with a large variety in structure and scale.[83] Considering the aim to provide broad statutory solutions, I will keep my analysis to those larger programs, with an eye towards those with federal leadership.[84] Lovett begins with his focus on two communities that reside on the tidelands of Louisiana and Virginia; the former (a Native American tribe) received a large grant to relocate, while the latter demanded that a seawall be built to protect them.[85] Lovett looks at the law surrounding eminent domain and buyout programs to leave, and the law surrounding government decisions on flood prevention.[86] The programs he examines provide a window into how buyout programs have been, and potentially could be, operated.

The first program detailed is the Baker Bill.[87] Although it ultimately was not enacted, the Baker Bill is an example of what politicians have proposed as a large-scale flood solution.[88] Proposed in Hurricane Katrina’s aftermath, the Bill proposed creating a federal agency responsible for purchasing land in Louisiana, and packaging the purchased tracts into larger parcels that would then be resold for large scale development that met modern building standards.[89] The Bill essentially proposed replacing older buildings that had not been built to modern lift and code requirements with new buildings that complied with such rules. If authored into the NFIP, such a program would probably fall under the leadership of FEMA and be targeted to areas where the NFIP has sustained either the most losses or appears to have the greatest risk.[90] Although there was local political and business support for the Baker Bill, President Bush ultimately refused to support the measure.[91]

The Louisiana Road Home Program offers a different structure for such buyout plans. The Road Home had three options for homeowners in the aftermath of Hurricanes Katrina and Rita.[92] Option one offered grants of up to $150,000 to rebuild in place, while options two and three were buyout options.[93] Option two offered the same amount of money as option one to buyout the homeowner and have them rebuild elsewhere in the state of Louisiana, while option three offered another buyout to those moving out of state at a 40% reduced offer price.[94] The Road Home statistics show that the vast majority of people accepted the rebuilding grants over the buyout options. Across most parishes, homeowners overwhelmingly accepted the rebuilding option, while a few took option two, and even fewer, often in the single digits, took option three.[95]

A third program examined by Lovett is New Jersey’s Blue Acres Program that was implemented in the aftermath of Hurricane Sandy.[96] Instead of offering a blanket slate of options like the Road Home, the Blue Acres Program targeted 1,300 flood damaged homes for purchase by the state’s Department of Environmental Protection.[97] The Blue Acres Program offered up to 100% of the pre-storm value for a home, and instead of selling the land for redevelopment, sought to demolish the homes to create barriers for future floods.[98] So far the program has extended nearly 900 offers, and has purchased almost 700 homes.[99]

Analyzing these three programs in addition to others, Lovett has several conclusions about buyout programs.[100] First, buyout programs are more successful when they target small areas.[101] Additionally, the buyout offer must make homeowners feel as though they are receiving enough money to relocate and cannot penalize those who were uninsured.[102] Finally, programs need to recognize the personal nature of people’s ties to their homes and communities by meeting and negotiating with homeowners in person and reassuring the community that it will remain a community unit.[103]

Beyond the programs or attempted programs Lovett discussed, several others have proposed future modification or additions to how government entities should buy property to relieve financial strain on the NFIP.[104] For example, the National Resources Defense Council (NRDC), one of the members of the SmarterSafer Coalition, has its own proposal for offering pre-flood buyout guarantees.[105] Instead of relying on regional or community level plans that are created after a storm occurs, the NRDC proposes that qualifying homeowners be guaranteed a future buyout if their home is substantially damaged by a later storm.[106] The NRDC argues its proposal avoids limited funding and extended delays before the buyout officially occurs, issues that plague current buyout structures.[107] Instead, property qualification, homeowner participation, and agreement on valuation would all occur prior to any flood occurring.[108] Upon acquiring the home after a flood, the community or state would then become responsible for demolishing the home and creating open space.[109]

Finally, more recent proposals have looked at whether the government should exercise eminent domain to buy out the most at-risk homes. Alexander Mendelson argues that if subsidized rates are incapable of being undone, the government should enable communities to exercise eminent domain to purchase severe repetitive loss properties that have been the cause of much of the NFIP’s financial weakness.[110] Mendelson proposes that the current system of Hazard Mitigation Grants should be modified to remove the need for a voluntary sale.[111] Thus, communities could avoid the problems that have pervaded voluntary programs, chiefly adverse selection and moral hazard, where the homeowners of properties most at risk are incentivized to refuse buyouts due to the advantageous subsidized rate structure.[112]

There are many different ways the NFIP could attempt to use buyouts or eminent domain to begin to reduce the number of homes and homeowners in flood zones, or otherwise use such tools to build more sustainable developments in them. However, these choices are necessarily limited by what can be passed in Congress.[113] The next Section will look at the policy issues facing these buyouts and exercising eminent domain.

B. Policy Analysis of Buyout Programs and Eminent Domain

As a matter of policy, all buyout forms have their advantages and shortcomings, and would have varied success at becoming a wider part of the NFIP’s statutory scheme. A buyout scheme focused on private redevelopment, like the Baker Bill, would have several policy advantages.[114] First, making redevelopment of the community a statutory goal helps relax the worries of local politicians and the business community, who fear that buyout schemes reduce their tax base and will ultimately lead to the dispersion of their community.[115] Second, privately-led redevelopment programs would have the support of those who favor letting private corporations take the lead in the flood insurance system, chiefly fiscal conservatives.[116] However, advocacy groups for the poor and underrepresented would probably voice fears that such redevelopment programs could constitute a nationwide, government-led gentrification program that would work to displace minorities and the working poor.[117] Additionally, the wisdom of conducting buyouts to facilitate redevelopment in an area with a history of flooding should be questioned.[118] As a result, redevelopment may have initial support, but the actual implementation of the program and its long-term effects on flood mitigation could undermine its long-term policy durability.

Buyout programs focused on relocating homeowners like the Road Home, Blue Acres, and proposed NRDC Projects, at least on the surface, solve the detriments of private redevelopment. Relocation programs often turn the land over to public use and pay homeowners some form of fair market value for their home, allaying some of the negatives of redevelopment projects.[119] Additionally, if payout schemes were based on an uncapped fair market value, owners may be more receptive to selling.[120] However, without the possibility of redevelopment, a larger funding source for the purchases would be required. As a result, relocation programs may run into trouble with fiscal conservatives who want to reduce NFIP spending.[121] Additionally, large-scale buyout programs will continue to draw strong resistance from local communities and their leaders, risking a backlash that politicians fear.[122] Finally, the voluntary nature of such programs could work to undermine their effectiveness at creating the flood mitigation infrastructure that proponents envision being built in their place.[123] As Lovett previously stated, relocation or mitigation focused buyout programs are more likely to struggle as they grow larger.[124] This does not mean that they are not plausible on policy grounds, as the NFIP currently has a built-in buyout program, and expansion of it for other policy revisions discussed later may provide an adequate trade-off for expanded buyouts.[125] However, the optional nature of buyouts makes eminent domain an attractive option on the surface.

Eminent domain is a controversial topic.[126] As a result, I start from the premise that statutory reform to explicitly allow large-scale use of eminent domain is probably not feasible.[127] However, the use of eminent domain in an explicitly limited role to construct or provide flood mitigation infrastructure or create public greenspace probably could garner political support, similar to other uses of eminent domain.[128] Eminent domain probably is not a fix-all for the NFIP, but strategically enabling its use by the NFIP could prove a form of shoring up inherent flaws in a voluntary system. Overall, buyouts have a complex option of structures and ramifications, but further use of such programs should constitute an essential part of the NFIP’s structure.

C. Shorting-Out Subsidies: Financial Assistance and Flood Insurance

The current web of NFIP subsidies is a common enemy for those most concerned about the state of the NFIP.[129] It is hard to see subsidies as they currently exist forming a part of any substantial effort to alter the NFIP.[130] As a result, this Section will start from a premise far different than the current scheme of subsidies as discussed above: there are no subsidies.[131] This Section will be based on the belief that the rate increases contemplated by Biggert-Waters and the Homeowner Flood Insurance Affordability Act of 2014 are going to occur because there is little political or academic motivation to continue the current subsidization scheme as it exists. Instead of focusing on subsidy schemes, this Section will ask a different question: without subsidies, should the NFIP include affordability assistance, and if it should, what form should that assistance take?

Before the statutorily mandated rise in insurance premiums, the NFIP already had affordability issues. But as rates rise, these stories of unaffordability have become even more common and widespread; people who once could afford rates no longer can, and those who could not afford rates to begin with are even farther from being able to.[132] Some of these affordability issues are shown by the difference between the median income of NFIP-insured households who live in the flood plain, and the median income of families in the same flood plains that do not carry an NFIP policy.[133] For example in Texas, the median income of households in the flood plain carrying flood insurance is nearly $46,000 higher than the median income of households in the flood plain who do not have an NFIP policy.[134] Thus, some of those who desire to get rid of NFIP subsidies because they are a subsidy for the rich may only see half the story.[135] The evidence suggests that the reason the numbers skew insurance subsidies for the rich is that those who are poor, but otherwise would receive a subsidized rate, cannot afford even that rate, or have other pressing financial needs.

As a result of these affordability issues, several organizations have proposed plans to attach subsidies to NFIP policies in order to aid affordability. The Government Accountability Office (GAO), in a report requested by Congresswoman Maxine Waters after the passing of the Homeowner Flood Insurance Affordability Act of 2004, proposed three options for affordability help: means-tested help based individually or geographically; rate caps; and affordability help based on the cost of mitigation.[136]

Means-testing aid on the basis of individual eligibility would be the most direct way of providing affordability help.[137] On the most basic level, the NFIP would provide affordability assistance in a way similar to other government-provided means-tested programs by collecting a homeowner’s financial data to determine how much they could afford to contribute to their flood insurance policy.[138] Because this program would be the most individualized and render the most direct aid, the GAO also stated it might be the most problematic to implement due to the data required to make determinations and the large shift involved in doing so.[139] Some of these problems could be alleviated if a geographically-based subsidy scheme was adopted, but it would be less direct in its impact.[140]

Additionally, the GAO identifies the possibility of capping insurance premiums at a percentage of the total coverage provided as an option.[141] Under this program the insurance premiums paid by a homeowner, regardless of ability to pay, would be capped at some percentage of the policy coverage.[142] However, the GAO identifies a crucial problem with this option: it would effectively detach the insurance premium from the risk involved.[143]

Finally, the GAO proposes some form of mitigation assistance as a way to create insurance affordability.[144] Basically, the government would provide help to homeowners to mitigate the risk of a flood event occurring, and as a result, their flood insurance premium would be lowered.[145] However the GAO identifies several reasons that this could be difficult to do: additional funding requirements, prohibitively expensive mitigation costs, and the inability to mitigate risk for certain properties.[146]

Kousky and Kunreuther provide a slightly altered mitigation program that may help to resolve some of the issues found in the GAO’s proposals.[147] Kousky and Kunreuther propose creating a dual system that provides means-tested vouchers for a lowered premium rate along with a low-interest loan from the government for the homeowner to engage in mitigation efforts.[148] They argue that their proposal would reduce the overall cost of the NFIP to both the homeowner and the government, because the homeowner would be immediately eligible for a reduced insurance premium upon completion of mitigation efforts, and the government would save on subsidy costs over time as mitigation efforts were completed.[149] Their system would operate by capping the total contribution of a household to pay for flood insurance to a certain percentage of income (they use 5% as an example), and then any amount over that attributable to a higher premium or loan for mitigation costs would be paid via a voucher.[150] As a result once the mitigation efforts were complete, the insurance premium lowered as a result, and the loan “paid off,” the homeowner would save a substantial amount of money.[151] Additionally the government would save money because mitigation costs would reduce premium rates and the subsidies it would be paying, and the total risk to the NFIP would decrease.[152]

D. Political Constraints on Subsidies and Affordability

Overall, the shift away from the current subsidy system and a shift towards risk-based rates has widespread popularity politically.[153] Additionally there is widespread agreement that some form of affordability help is appropriate.[154] However the exact form and generosity of assistance are probably up for debate, and each of the affordability proposals outlined would have supporters and critics. First, indirect geographic, rate-cap, and mitigation-only proposals would have issues with Democrats who would fear that many would slip through the cracks or be left out by an inability to afford even a capped rate.[155] Second, some Republicans may criticize a means-tested program in perpetuity as a government welfare program and redistribution effort towards some geographic areas.[156] Finally, it is unlikely that environmental interest groups would support rate caps that mask risk, and it is likely that some would be hesitant to encourage minimal-effort mitigation in an era of climate change.[157] However given the impending effects of rate hikes for the foreseeable future, it is likely politicians would be forced to pass some sort of subsidy program that helps homeowners and fulfills other political aims. As a result, the plan submitted by Kousky and Kunreuther is intriguing because it does something for most everyone involved. For Democrats, the program could probably change to an individual means-tested voucher approach that provided affordability help. For Republicans, it would have a long-term effect of reducing the government’s exposure to flood insurance, and because the government would only be giving vouchers and not institutionally-embedded subsidies, private insurers could get involved. And for interest groups and homeowners, the shift to a private marketplace and overall cost savings would be beneficial as well.

V. Recommendations for Stabilizing the NFIP and Creating Long-Term Solutions in a Flood-Prone World

At this point, it is my turn to lay out what I would propose if I were delivering recommendations to Congress. Flood insurance is a complex market for the government to be in, considering the complex period of climate change and the impending realities of sea-level rise and more frequent flooding events. As a result, I would propose reforms not only focused on creating financial stability for the program, but also a true shift towards creating enduring mitigation efforts and strong disincentives to further development in floodplains.[158]

A. Reforming Buyouts and Eminent Domain

On buyouts I propose adoption of the NRDC pre-buyout plan on a nationwide level within the 100-year flood plain, but would add a condition that funds may not be used to buy housing in a mapped floodplain and reduce requirements to qualify a property for purchase.[159] Additionally, I propose adopting reforms that free up funding for communities to use for buyouts prior to a flood, on the condition that the funds are used towards purchasing properties to build active flood mitigation infrastructure.[160] To this end, I would allow communities to use funding under an exercise of eminent domain to purchase holdout properties, but only after a threshold amount of properties have been purchased.[161] After a flood occurs, I would retain the current structure, but mandate that future relief efforts include a buyout offer when substantial loss occurs.[162] Through these reforms, I target the goal of a slow mitigation of damages and a gradual move away from flood plains themselves. I argue that various buyout programs should be implemented to play the long game and put the NFIP on a stable financial footing with lower total risk 20 years from now.

B. Subsidies and Affordability

My starting point with subsidized properties would be an immediate revision of risk-based rates and the creation of a new plan for affordability assistance on a program-wide scale.[163] Starting from risk-based rates, I propose the adoption of Kousky and Kunreuther’s voucher and mitigation scheme with a few adjustments in order to incentivize buyouts and long-term stability. First, I would adopt it based on individualized means-testing instead of a rate cap, and then I would require the program to be implemented in accordance with community planning schemes that ensure mitigation efforts are done on a community level. Second, such an affordability scheme would be focused on homeowners who purchased their homes before the enactment of the voucher program, and the voucher program would only be available for post-enactment home buyers if the community received a variance based upon the percentage of non-flood plain properties available for purchase.[164]

VI. Conclusions on the Future of Flood Insurance

There is no silver bullet that will cure America’s flood insurance issues. As this Comment has laid out and as I believe, however, there are solutions such as buyouts and voucher-based subsidy and mitigation programs that can have a meaningful impact on saving the NFIP by rectifying its rate structure, allowing communities and the NFIP to take the initiative on repetitive loss properties, and encouraging and enabling homeowners in at-risk zones to undertake the mitigation efforts that will reduce future costs and impacts of flood events. Perhaps the best way to describe what our newfound approach to flood insurance should be is a simple phrase: “Up or Out.” With the impending changes from climate change, and unhindered and until recently, unregulated growth in flood plains, we may not have a choice.

  1. Ruth Simon, One House, 22 Floods: Repeated Claims Drain Federal Insurance Program, Wall St. J. (Sept. 15, 2017, 6:43 AM), https://www.wsj.com/articles/one-house-22-floods-repeated-claims-drain-federal-insurance-program-1505467830 [https://perma.cc/EW6E-M7BH].

  2. Id.

  3. Of course, those $1.8 million in payments do not take into account inflation nor any possible increase in the home’s value, and as a result, even though it may look like the government has purchased the home three times over, it likely has contributed far more than that amount. Id.

  4. See infra notes 110, 112.

  5. See Lowest Floor Elevation, FEMA (Dec. 2010) https://www.fema.gov/media-library-data/20130726-1537-20490-8154/fema499_1_4.pdf [https://perma.cc/E6KW-V55J]; Mike Morris & Matt Dempsey, Even After Harvey, Houston Keeps Adding New Homes in Flood Plains, Hous. Chron. (Oct. 10, 2018, 11:47 AM), https://www.houstonchronicle.com/news/houston-texas/houston/article/Even-after-Harvey-Houston-keeps-adding-new-homes-13285865.php [https://perma.cc/MGA3-L8SM].

  6. Morris & Dempsey, supra note 5.

  7. Id.

  8. Id.

  9. Id. A factor in the continued increase in density even in these floodplains is that Houston’s increasing need for housing, especially near downtown, has incentivized the building of such units regardless of the risk involved. See id. Additionally, the normalization of building in these floodplains and the embrace of such developments by political figures, such as Mayor Turner, has worked to reinforce this development. Id.

  10. Hous. Pub. Works, Floodplain Management Data Analysis Chapter 19, at 12, 15, 18 (2018) https://www.houstontx.gov/council/g/chapter19/Floodplain-Mgmt-Data-Analysis.pdf [https://perma.cc/67LY-J7K2]. It should be noted that many builders voluntarily complied with the requirements in the 500-year floodplain. Morris & Dempsey, supra note 5.

  11. See, e.g., Carla Astudillo, These N.J. Properties Flood Over and Over Again, Costing Taxpayers Like You Millions, NJ.com (July 2018), https://www.nj.com/data/2018/07/these_nj_properties_flood_over_and_over_again_costing_taxpayers_like_you_millions.html [https://perma.cc/8WNL-SJKU].

  12. Ray Lehmann, NFIP’s $20.5B Debt to Taxpayers Could Grow After Florence, Ins. J. (Sept. 13, 2018), https://www.insurancejournal.com/blogs/right-street/2018/09/13/500996.htm [https://perma.cc/GL25-U3LV]. These numbers precede Hurricanes Florence and Michael, and probably have risen since the most recent debt figures were unveiled in February. Id.

  13. The NFIP reached its statutory borrowing cap and required Congress to forgive $16 billion of its debt to the U.S. Treasury in order to continue payouts for Hurricane Harvey and later storms. See id.

  14. National Flood Insurance Program: Reauthorization, FEMA, https://www.fema.gov/national-flood-insurance-program/national-flood-insurance-program-reauthorization-guidance [https://perma.cc/MQC3-HWM8] (last updated June 11, 2019). This September 30, 2019 deadline will arrive after this Comment is published, but before it is distributed.

  15. Jeffrey Valacer, Thicker than Water: America’s Addiction to Cheap Flood Insurance, 35 Pace L. Rev. 1050, 1051 (2014).

  16. Id.

  17. Id. at 1052–53. It is notable that early on, few communities were deemed eligible to participate in the program, and the NFIP’s early success was more attributable to the fact that the St. Germain Amendment allowed communities to join by only passing floodplain controls. Id. at 1053–54*.* Thus, the mapping issues that are commonly targeted as a weakness of the NFIP were virtually waived early on, perhaps contributing to such issues. Id.

  18. Id. at 1054. Given that 66% of all homes are under some sort of mortgage (only 34% of homeowners have 100% equity in their homes), the mandate would seem to require the vast majority of homes to carry insurance. Kenneth R. Harney, American Homeowners Are Making Headway on Mortgage Debt, Report Finds, Wash. Post. (Aug. 23, 2017), https://www.washingtonpost.com/realestate/american-homeowners-are-making-headway-on-mortgage-debt-report-finds/2017/08/22/3b8fe550-868f-11e7-a50f-e0d4e6ec070a_story.html?noredirect=on&utm_term=.39a26dbabf73 [https://perma.cc/BHT3-SPE3?type=image].

  19. Terry Spencer et al., Why the Number of Coastal Homeowners with Flood Insurance Has Been Shrinking, Ins. J. (Sept. 7, 2017), https://www.insurancejournal.com/news/national/2017/09/07/463548.htm [https://perma.cc/85VE-NAQW]. An interesting contribution to NFIP mortgage insurance requirement issues is the increased swapping of mortgages between banks, often in bulk transactions, has meant that banks often will not check if a home is legally required to maintain flood insurance. Id. Additionally, besides a lack of coverage to the homeowner, the NFIP lacks penalties stiff enough to incentivize such enforcement. See id.

  20. National Flood Insurance Reform Act of 1994, Pub. L. No. 103-325, §§ 501–84, 108 Stat. 2160, 2255–87 (codified as amended in scattered sections of 42 U.S.C.).

  21. See Valacer, supra note 15, at 1057.

  22. See id.; see also Definitions, FEMA, https://www.fema.gov/national-flood-insurance-program/definitions#R [https://perma.cc/8G6W-D2JZ] (last updated Mar. 20, 2019).

  23. See Valacer, supra note 15, at 1057–58.

  24. 42 U.S.C. § 4104c(h)(3) (2012).

  25. Brady Dennis, The Country’s Flood Insurance Program Is Sinking. Rescuing It Won’t Be Easy., Wash. Post (July 16, 2017), https://www.washingtonpost.com/national/health-science/the-countrys-flood-insurance-program-is-sinking-rescuing-it-wont-be-easy/2017/07/16/dd766c44-6291-11e7-84a1-a26b75ad39fe_story.html?utm_term=.ce79e46b7c90. There are some 11,000 severe repetitive loss properties dotting the country, and even though they constitute about 0.2% (11,000 of 5,000,000) of NFIP policies, they account for over 30% of the claims against the program. Id.

  26. See infra Section IV.A.

  27. See Valacer, supra note 15, at 1052–54.

  28. Flood Insurance: Who Needs It?, Harris County Flood Control District, https://www.hcfcd.org/flooding-floodplains/flood-insurance-who-needs-it/ [https://perma.cc/7BD5-Q2P9] (last updated June 22, 2018). The 100- and 500-year floodplains are determined by the chance that an inundating flood occurs in a given year. Id. The 100-year floodplain is a 1% chance of flood, while the 500-year is a .2% chance of flood. Id. As a result, mapping into a 100- or 500-year floodplain does not mean a property is going to flood once every 100 or 500 years, but rather that the randomized annual risk involved averages to one inundating flood in that period. See id.

  29. See Valacer, supra note 15.

  30. See generally 42 U.S.C. § 4104c (2012); 44 C.F.R § 79 (2017). The current structure for flood mitigation grants, and how they operate, is complex and far beyond the scope of this Comment, but where they are implicated in the buyout context, details will be discussed.

  31. . U.S. Gov’t Accountability Office, GAO-16-190, National Flood Insurance Program: Options for Providing Affordability Assistance 7–8 (2016).

  32. Importantly, a post-mapping sale, as well as a post-mapping lapse in insurance coverage, does not end eligibility for these subsidized rates. Id. at 7–9.

  33. See id. at 7–8.

  34. Id. at 9. Importantly, even an annual 25% increase will take several years, maybe a decade or more, to reach market rates. Id. at 3.

  35. Id. at 8–9.

  36. Federal Flood Insurance Average Premium to Rise 8%, Ins. J. (Apr. 2, 2018), https://www.insurancejournal.com/news/national/2018/04/02/485019.htm [https://perma.cc/5C3M-Z5FX]. The average flood insurance rate will be $935 per year, but it is important to note that over $100 in fees and surcharges that are added on top of the advertised premium. Id. Overall, the actual amount paid on average will exceed $1,000. Id.

  37. Even with rate increases and surcharges, the CBO estimates that the NFIP underestimated how much claims will cost by around $1.1 billion. Id.

  38. See infra Section III.C.

  39. Risk Rating 2.0 Overview, FEMA (May 2019), https://www.fema.gov/media-library-data/1558550563770-d208210c51d89467d2a71d2e1e1a1f67/Risk_Rating2.0_Overview_May2019.pdf [https://perma.cc/R4WH-LHDA].

  40. FEMA states the goal of this program is to generate an image of a property’s individualized risk and that rates will reflect actuarial risk. Id.

  41. Wyatt Stewart, FEMA Unveils ‘Risk Rating 2.0’, IA Mag. (Mar. 21, 2019), https://www.iamagazine.com/news/read/2019/03/21/fema-unveils-risk-rating-2.0 [https://perma.cc/49B8-8MBA].

  42. See Risk Rating 2.0 Overview, supra note 39.

  43. Gloria Gonzalez, Rep. Waters Expresses Concerns About NFIP Risk Rating Changes, Bus. Ins. (June 5, 2019), https://www.businessinsurance.com/article/20190605/NEWS06/912328886/Rep-Maxine-Waters-California-expresses-concerns-about-NFIP-risk-rating-changes [https://perma.cc/LR6P-F4E7].

  44. See Policy Statistics Country-Wide as of 9/30/2018, FEMA, https://bsa.nfipstat.fema.gov/reports/1011.htm [https://perma.cc/X88T-GZAN] (last visited Sept. 12, 2019).

  45. Id.

  46. Id.

  47. Id.

  48. Total Policies and Contracts in Force by Geography and Company (as of April 30, 2019), FEMA, https://www.fema.gov/policy-claim-statistics-flood-insurance (last visited Aug. 19, 2019) (for updated data, click on “Policy Information by State”).

  49. Id.

  50. Id.

  51. Jeremy Wallace, On Flood Rates, a Sea Change in Congress, Sarasota Herald-Trib. (Nov. 8, 2013, 8:44 PM), https://www.heraldtribune.com/article/LK/20131108/News/605214312/SH/ [https://perma.cc/JNV4-KXTZ].

  52. H.R. 4348, Roll Call Vote 172, 112th Cong. (2012), https://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=112&session=2&vote=00172 [https://perma.cc/EKN4-NX7J]. For NFIP policy statistics from each Senator’s state, see Policy Statistics as of 8/31/2018, supra note 44.

  53. H.R. 4348, Roll Call 451, 112th Cong. (2012), http://clerk.house.gov/evs/2012/roll451.xml.

  54. Wallace, supra note 51.

  55. Id.

  56. See Stephanie K. Jones, U.S. Congresswoman: Flood Insurance Bill Bad for Michigan, Ins. J. (Mar. 5, 2014), https://www.insurancejournal.com/news/midwest/2014/03/05/322269.htm [https://perma.cc/VKQ9-J323].

  57. Id.

  58. Id.

  59. Id.

  60. See infra notes 61−64 and accompanying text.

  61. H.R. 3370, Roll Call Vote, 113th Cong. (2014), https://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=113&session=2&vote=00078 [https://perma.cc/N352-MJAJ].

  62. Id.; Wallace, supra note 51.

  63. Id.; H.R. 4348, Roll Call 451, 112th Cong. (2012).

  64. H.R. 3370, Roll Call 91, 113th Cong. (2014) http://clerk.house.gove/evs/2014/roll091.xml.

  65. See infra notes 66−70 and accompanying text.

  66. Rep. Waters, Author of Flood Reform Act, Calls for Delay in Implementation, Ins. J. (Sept. 30, 2013), https://www.insurancejournal.com/news/national/2013/09/30/306602.htm [https://perma.cc/3DBS-RN33].

  67. Id.

  68. Id.

  69. Id.

  70. Id.

  71. Brandon Ross, Flood Insurance Lobbying Soars as Program Expiration Looms, Bloomberg BNA (Aug. 10, 2017), https://www.bloomberglaw.com/document/OUFXX63H0JK0 (subscription required).

  72. Id.; Reauthorization of the National Flood Insurance Program, Mortg. Bankers Ass’n, https://www.mba.org/Documents/Policy/Issue Briefs/NFIP Reauthorization. pdf [https://perma.cc/NM5D-YKNU] (last visited Sept. 12, 2019).

  73. Our Positions: National Flood Insurance Program (NFIP), NAMIC, https://www.namic.org/issues/national-flood-insurance-program [https://perma.cc/MMY6-8K3Y] (last visited Sept. 12, 2019).

  74. Joshua Saks, Save National Flood Insurance by Investing in Nature, Opinion, Morning Consult (Apr. 3, 2017), https://morningconsult.com/opinions/save-national-flood-insurance-investing-nature/ [https://perma.cc/45ZD-A9FH].

  75. SmarterSafer NFIP Reform Proposals 2017, SmarterSafer, http://www.smartersafer.org/wp-content/uploads/SmarterSafer-NFIP-Reform-Proposals-2017.pdf [https://perma.cc/AL5U-A6H9] (last visited Sept. 12, 2019).

  76. Flood Insurance Should Be Affordable, Advocates Tell Congress, Ctr. for NYC Neighborhoods (Aug. 3, 2017), https://cnycn.org/flood-insurance-reform/ [https://perma.cc/AK7H-997J].

  77. Letter from Nat’l League of Cities to Majority Leader Mitch McConnell et al., (Nov. 29, 2018), https://www.nlc.org/sites/default/files/users/user121/NLC Letter Re Lapse in NFIP.pdf [https://perma.cc/X22Y-JP3Q].

  78. See supra notes 25−27 and accompanying text.

  79. 44 C.F.R. § 206.434(c) (2018). These standards require the state conducting the purchase to have procedures and priorities for the selection of mitigation measures that comply with the regulation*.* The procedures that a state establishes must include measures that are a “best fit” with the community’s overall plan for development and/or mitigation in the area, measures that if not taken will have a severe detriment to the applicant, and measures that “have the greatest potential impact on reducing future disaster losses.” 44 C.F.R. § 206.435.

  80. 44 C.F.R. § 206.434(c). Comparing buyout assistance to major disaster response aid, the relative generosity of buyout assistance is clear. Disaster assistance for clean-up and repair efforts, among other purposes, is capped at 20% for those states with an approved “Enhanced State Mitigation Plan” and reduced further to a maximum of 15% for states without a complying enhanced program. This 15% is further reduced as the assistance amount increases, eventually withdrawing additional support once the assistance exceeds $35,333,000,000. See 44 C.F.R. § 206.432.

  81. Florida, for example, fixes just compensation at the “value of the property sought”. Fla. Stat. Ann. § 73.071 (West 2018). Texas uses a similar system, assessing damages as the local market value of the property at the time of the hearing. Tex. Prop. Code Ann. § 21.042. Beyond this, most local governments are required to negotiate with the property owner before initiating proceedings to exercise eminent domain. This, combined with the costs of negotiation and litigation, as well as the time lapse between targeting the property and ultimately exercising eminent domain, often make such proceedings years long.

  82. See John Lovett, Moving to Higher Ground: Protecting and Relocating Communities in Response to Climate Change, 42 Vt. L. Rev. 25, 27−28 (2017). For those interested in reading with an eye towards climate change, Lovett writes under a stronger viewpoint on the subject than I do. For my Comment, I assume that climate science is accurate and see no reason to belabor or enter into a debate on the subject itself.

  83. Id. at 33–51.

  84. This is not to say that I disregard the impact or effectiveness of small-scale state or local programs that act with federal funds. In fact, Lovett’s article strongly suggests that these types of programs enjoy success at achieving high buyout rates and creating enduring flood mitigation results. See id. at 38, 42−45 (detailing the Franklin Creek Floodway Plan and the Cedar Rapids Voluntary Property Acquisition). Thus, one could posit that any real strategy to mitigate flood damage at the community level relies strongly on those community’s efforts to restrict and strategically plan growth, as well as to target buyouts as part of existing mitigation strategies.

  85. Id. at 26–27. In the year since Lovett has written, little has changed for Tangier Island, Virginia. As of my writing, no seawall appears to be in the works, and the island’s residents seem to remain determined to stay where they are. This resistance to leaving continues to rear its head in debates over buyouts and how to deal with flood prone communities. See Earl Swift, The Doomed Island That Loves Trump, Politico (Aug. 19, 2018), https://www.politico.com/magazine/story/2018/08/19/tangier-island-donald-trump-2016-219349 [https://perma.cc/Z2U2-YAH3].

  86. See Lovett, supra note 82, at 28–31. Lovett argues that current case law supports the conclusion that a taking does not exist where the government fails to build infrastructure to protect property. Id. (citing Allain-Labreton Co. v. Dep’t of Army, 670 F.2d 43 (5th Cir. 1982); Bayou Des Familles Dev. Corp. v. U.S. Corps. of Engineers, 130 F.3d 1034 (Fed. Cir. 1997)). As a result, those who flood due to the lack of a protective levee, or people like those on Tangier Island, Virginia, do not have a takings claim against the government for that lack of protection. Id.

  87. Id. at 34−35.

  88. Id. at 35. The Baker Bill was proposed by its namesake, Representative Richard Baker of Baton Rouge, Louisiana. The Baker Bill was meant to help redevelop the southeast Louisiana region, and some envisioned it acquiring as many as 100,000 parcels of land for redevelopment. Id.

  89. Id. at 34–35. Although the Baker Bill prevented the use of eminent domain, a bill that allowed usage of eminent domain to purchase inconvenient holdouts and create more saleable parcels could run into issues presented by some state eminent domain statutes that limited what their constitutions consider a “public use” in response to Kelo v. City of New London, 545 U.S. 469 (2005). Importantly, both Florida and Texas have restrictions on what constitutes public use. See Tex. Const. art. 1, § 17; Fla. Const. art. 10, § 6.

  90. Any statutory revision of the NFIP would probably be kept in house in order for the program to create and execute cohesive planning in terms of buyouts and target areas. Although Representative Baker proposed a separate federal agency, the Louisiana Recovery Corporation, it would make little sense for such a project to operate independently or in its own name.

  91. Lovett, supra note 82, at 35. It is interesting to note that the Baker Bill was actually the central plan created by many important political and business leaders in the state of Louisiana. Wrong-Headed Decision, Gambit (Jan. 30, 2006, 10:00 PM), https://www.theadvocate.com/gambit/new_orleans/news/commentary/article_c218a193-6185-5268-a8d6-07c77ff17d7e.html [https://perma.cc/P6RN-9B34]. Although, the structure of the program as a promoter of free enterprise with government assistance in the form of land packaging and flipping probably would garner the support of businesses that could profit, and politicians that champion the free market.

  92. Lovett, supra note 82, at 38−41. The Road Home was ultimately the program adopted to aid Louisiana in the aftermath of Katrina and Rita instead of the Baker Bill. Id. Whereas the Baker Bill sought to create the Louisiana Recovery Corporation, the Louisiana Road Home Program was administered under existing government programs. Id. The Department of Housing and Urban Affairs provided the funding via a Community Development Block Grant. Id. This differs from some NFIP buyouts under the Hazard Mitigation Program. Id. Due to limited space I will not address the issue, but this difference in funding sources and grant structures has created administrative difficulties and increased costs that are the focus of some attention. See U.S. Gov’t Accountability Office, GAO-17-425, Flood Insurance: Comprehensive Reform Could Improve Solvency and Enhance Resilience (2017).

  93. Lovett, supra note 82, at 38−39. The grant under option one was valued at the lesser of the home’s pre-storm value or the cost to repair the home. The $150,000 cap itself loomed over both of these as an overarching limitation. Id. Additionally, those who had not purchased flood insurance were subject to an additional 30% penalty on what would otherwise have been awarded to them. Id. The only exception to these mechanisms to reduce the award was an Additional Compensation Grant, which was adopted after advocates pointed out that the above limitations tended to have the greatest effect on low-income homeowners’ awards. Id.

  94. The three options were designed to incentivize homeowners to stay in their homes, or at least in the state itself. In this way, the Road Home does share similarities with the Baker Bill in that it did not seek to remove populations from areas prone to flooding, but rather had the goal of incentivizing rebuilding in them, albeit at a higher standard. Option three did have one exception to the 40% penalty incurred for leaving the state, which was for those homeowners who were 65 or older. Id. at 39.

  95. Id. at 40−41. A total of over $11 billion was disbursed in the Road Home program once base grants plus Additional Compensation Grants are totaled. Ultimately, approximately 130,000 people took advantage of one of the three options, with 119,227 accepting an option one rebuilding or repair grant, 8,435 accepting the option two grant to relocate elsewhere in the state, and 2,385 accepting the option three grant to relocate outside of Louisiana. Thus, of the total program, only slightly above 7% accepted one of the buyout options. Id.

  96. Id. at 45−48. Unlike the other two programs I have analyzed, the Blue Acres program was a state-led initiative; however, it is a good example of a third possible design for a buyout program and therefore I have included it.

  97. Id. at 45−46. The targeted nature of the Blue Acres Program has meant that the state itself has decided who receives a buyout offer, unlike the Road Home program, where the homeowner had their own choice. This also means that the Blue Acres program has not only targeted specific flooded-out properties but has been able to strategically attempt to buyout problematic clusters of homes or entire neighborhoods. This has led to some complaints from local politicians. Id. at 47−48.

  98. Id. at 46. This originates from the Green Acres Program that preceded Blue Acres. Because the statutes that enabled Green Acres control the Blue Acres program, every home purchased must be demolished, and once the acquisition is completed a permanent deed restriction is placed on the property that guarantees that it only may be used for public recreation or conservation purposes. Thus, the Blue Acres program is the only program I have examined that does not allow rebuilding or redeveloping the land.

  99. Id. at 48; see also David Matthau, 600 and Counting: NJ Blue Acres Continues to Buy Flood Homes, N.J. 101.5 (Aug. 15, 2017), http://nj1015.com/600-and-counting-nj-blue-acres-continues-to-buy-flood-homes/ [https://perma.cc/M2PV-HNA2?type=image]. Although the Blue Acres program was state led, it did receive funding from both FEMA and HUD. Interestingly, Larry Hajna, the spokesman for the Department of Environmental Protection, stated that some of the success of the program may be attributable to the use of the pre-flood fair market value as the buyout price due to the fact that the flood itself has made people believe that their home values were reduced. Id.

  100. See Lovett, supra note 82, at 33−51.

  101. Id. at 50. Lovett attributes this to growing fears among local politicians and leaders that as the program grows, their tax base will be decimated and their community itself will erode. Id. Thus, NFIP-wide buyout programs may face a sort of dual threat depending on their structure: they not only threaten local politicians with reduced income but also the people themselves with the loss of community ties and their family home.

  102. Id. Part of the reason Lovett believes there should be no penalty for the uninsured is that sometime the uninsured will have lived in areas not designated as a floodplain. As a result, penalizing the uninsured is not as clean of an issue as it may seem on the surface. Id. Additionally, Lovett states that even if the offer is right, post-relocation assistance is an important element of ensuring success. Id.

  103. Id. Lovett’s argument is that people’s subjective values in their home (most likely coming from historic family ties or other factors) necessarily require the process to have a personal element where the official is willing to listen to people share their stories and negotiate with that in context. Id. A link to this is actually found in the story of Tangier Island, Virginia, where the people’s connection to the island community means that a standard fair market value offer probably would be insufficient to start any serious negotiations to leave. See Swift, supra note 85. Communities like Tangier Island probably would require an individualized program even if the NFIP was expanded to have generalized buyout opportunities. This inherently creates an advantage for smaller-scale programs because of the time required to have these one-on-one meetings in a large-scale buyout would probably become a burden on the program.

  104. See infra note 105.

  105. Seeking Higher Ground: How to Break the Cycle of Repeated Flooding with Climate-Smart Flood Insurance Reforms, Nat. Res. Def. Council (July 2017), https://www.nrdc.org/sites/default/files/climate-smart-flood-insurance-ib.pdf [https://perma.cc/8WPW-GY8L] [hereinafter Seeking Higher Ground]; Coalition, SmarterSafer, http://www.smartersafer.org/coalition [https://perma.cc/23A7-L23X] (last visited Sept. 12, 2019).

  106. Seeking Higher Ground, supra note 105, at 5. As part of its proposal, the NRDC lays out five criteria that must be met in order for a homeowner to participate in the program. Id. at 6. They are (1) the homeowner maintain flood insurance on a property valued at less than $250,000; (2) the owner earn less than 120% of the adjusted median income for their community; (3) the property has a history of flooding or otherwise is at high risk of flooding in the future; (4) the property is located in a community that supports and promotes relocation efforts and takes ownership in them; and (5) FEMA determines it would be cost-effective to purchase the property instead of having NFIP continue to fund repairs. Id. Once these conditions are met, the buyout would become a benefit of the insurance and the homeowner would qualify for lower rates. Id. I would note that the fifth condition of being pre-cleared seems to still reserve to FEMA wide discretion when it comes to the number of properties the program would actually cover.

  107. Id. at 6. The NRDC sees these two issues as critical errors in the current buyout structure. Id. Under the current structure, local governments must apply for buyout funds after the storm occurs, and as a result may not be able to guarantee to a prospective seller that they can buy the home. Id. Further, the current process for gaining funding means some of those owners who were willing to sell may withdraw from the process either because they grow impatient or their home is repaired before funds are available. Id.

  108. Id.

  109. Id. at 5. Unlike other buyout programs, the funds for buyouts under the NRDC plan would come out of the National Flood Insurance Fund. Id. The NRDC provided estimates for the total possible cost of the program based on both a three- and six-foot sea-level rise, estimating that a three-foot rise in sea levels could cause $250 billion worth of property damage, with a six-foot rise causing substantially more. Id. at 12−13. Although they approach the total cost from the standpoint of a sea level rise due to climate change, the large cost assessment is worth noting in the context of mass flooding events like Hurricane Harvey, Superstorm Sandy, and Hurricane Florence because such events may present issues of funding and disbursing the buyout payments when losses occur in a major event rather than a gradual process of sea level rise.

  110. Alexander S. Mendelson, Note, Taking Away the Tightrope: Fixing the National Flood Insurance Program Circus via Eminent Domain, 83 Brook. L. Rev. 1519, 1535−36 (2018). For purposes of my Comment, I do not engage in the constitutional scheme surrounding eminent domain and the Takings Clause at either the federal or state level. Thus, for purposes of analysis and policy review, I presume arguendo that any exercise of eminent domain completed by a government entity comports with that entity’s constitutional and statutory requirements, including possible mandated good faith negotiation.

  111. Id. at 1526.

  112. Id. at 1526−29 (discussing why private insurers left the market, and how the problems that led them to leave still persist). Issues of adverse selection arise because of the limited number and type of properties that are required to buy flood insurance: those that are currently in the 100-year floodplain (a “Special Flood Hazard Area”) that are acquired with federally-backed mortgages, and even then, enforcement is often left to private parties. Id. at 1528; Heather Long & Andrew Van Dam, Only 10 Percent Have Flood Insurance on Hard-Hit Carolina Coast, Wash. Post (Sept. 17, 2018), https://www.washingtonpost.com/business/2018/09/17/only-percent-have-flood-insurance-hard-hit-carolina-coast/?utm_term=.4b24946fb9c1 [https://perma.cc/PXW7-8CY7?type=image]. As a result, only the highest risk properties are subject to even limited purchase mandates, and the government does little to ensure compliance even in these high-risk areas. Long & Van Dam, supra note 112*.* Additionally, moral hazard exists because continued subsidies have encouraged people to develop and maintain properties in flood-prone areas, with the knowledge that flood insurance will cover potential losses. Mendelson, supra note 110, at 1529.

  113. See supra Part II.

  114. See Wrong-Headed Decision, supra note 91. The support for the Baker Bill in the community as a whole following Hurricane Katrina should be noted considering the problem of garnering public support in buyout programs.

  115. See Lovett, supra note 82, at 36−37 (discussing public resistance to the Mississippi Coastal Improvements Program). Although I did not discuss the Mississippi Coastal Improvements Plan above, the resistance to it is worth mentioning. The program itself was proposed and the Army Corps of Engineers attempted to implement it a couple years after Hurricane Katrina but encountered swift resistance locally from those who said it was too late and questioned the effects on the tax base and community. Id.

  116. See Mike DeBonis, Congress Passes Flood Insurance Extension, Again Punting on Reforms, Wash. Post (July 31, 2018), https://www.washingtonpost.com/powerpost/congress-passes-flood-insurance-extension-again-punting-reforms/2018/07/31/82b72d08-94cb-11e8-a679-b09212fb69c2_story.html?noredirect=on&utm_term=.976ab4d734b1 [https://perma.cc/5SCE-ZGSW] (noting that fiscal conservatives want to end the federal role in the flood insurance market); Diane Katz, The National Flood Insurance Program: Drowning in Debt and Due for Phase-out, The Heritage Found. (Backgrounder No. 3224), June 22, 2017, at 1, 8, https://www.heritage.org/government-regulation/report/the-national-flood-insurance-program-drowning-debt-and-due-phase-out [https://perma.cc/7ZH8-EL4J] (concluding that phasing out the NFIP would be the most beneficial route forward).

  117. The fears of such effects could be mitigated by affordable housing requirements and other programs aimed at allowing members of the community to afford to live in the redeveloped area, but such fears would be hard to allay on such a nationwide level. The resistance to eminent domain usage in poorer and minority-majority communities serves as a good warning that there will be skepticism to widespread redevelopment. See Cliff Albright, Gentrification Is Sweeping Through America. Here Are the People Fighting Back, Guardian (Nov. 10, 2017, 5:00 AM), https://www.theguardian.com/us-news/2017/nov/10/atlanta-super-gentrification-eminent-domain [https://perma.cc/GPK5-YG76] (noting resistance to usage of eminent domain in Atlanta).

  118. Shockingly, there are few proponents of ending or restricting floodplain development as a matter of policy. Rather, environmental groups usually challenge one-off developments that are shown to threaten wildlife or another subject of interest. See, e.g., Rob Manning, Proposed Restrictions Building in Oregon’s Flood Plains, Ins. J. (Apr. 18, 2016), https://www.insurancejournal.com/news/west/2016/04/18/405712.htm [https://perma.cc/BJ2Q-W9PC].

  119. See Lovett, supra note 82, at 38–39. This is not to say that a buyout paying some formulation of fair market value is guaranteed to be equitable. As previously mentioned, the Road Home had to provide extra funding for certain homeowners because the fair market value method does have a tendency to penalize poorer families. Id.

  120. See Lovett, supra note 82, at 50. Lovett argues this is due to the need for families to relocate and purchase different properties. Id. Of course, some of this also probably arises from the system itself: when owners are compensated to fix their homes under subsidized policies, why accept a below-market offer when you can use the funds to repair your house, then sell it on the open market for near market value? This may also point to why the Road Home had a low take rate on the buyout options, because capping the buyback at $150,000 probably did not get close to reflecting the market value of most homes.

  121. See, e.g., DeBonis, supra note 116; Jones, supra note 56. Such calls that the NFIP buyout programs constituted a subsidy for southern states would probably be a primary argument for those that already oppose federal involvement in the program.

  122. See Lovett, supra note 82, at 36–37, 47−48 (discussing local resistance to the Blue Acres Program). Notably, local resistance to the Blue Acres Project did not prevent its implementation, but resistance to the Mississippi Coastal Improvements Plan did. Id. at 36−37, 48. Thus, local resistance is not always fatal, but incorporating an expanded buyout provision into the NFIP could raise local resistance on a widespread level.

  123. Voluntary buyouts by definition are voluntary, and some holdouts could prevent planned infrastructure from being built unless the entity resorted to eminent domain.

  124. See Lovett, supra note 82, at 50.

  125. See DeBonis, supra note 116. The comments gathered by DeBonis show that Republican politicians are certainly pulling in different directions on the NFIP. However, this very disagreement among Republicans, added to Democrats’ openness to different policy options on the program, creates an environment where compromise and policy reform on several different fronts may be the easiest path forward, that way each voting block receives something that it desires. For more on the Democrats’ stances, see Sylvan Lane, House Passes Bill to Renew, Overhaul Federal Flood Insurance, Hill (Nov. 14, 2017, 5:16 PM), https://thehill.com/business-a-lobbying/360350-house-passes-bill-to-renew-overhaul-federal-flood-insurance [https://perma.cc/QUZ3-666X].

  126. See Mendelson, supra note 110, at 1535. Mendelson proposes several reasons eminent domain is unpopular, including American’s general value of private property. I also add that the ways in which eminent domain has been used has made it unpopular in different contexts, whether it be to redevelop areas through a transfer to large corporations, see Kelo v. City of New London, 545 U.S. 469, 473–75 (2005), or because it is perceived as targeting minority populations and the working poor, see Albright, supra note 117.

  127. I merely am stating the inclusion of an explicit eminent domain clause is not where consideration should begin. I, however, do not believe that the program should be explicitly precluded from using eminent domain either.

  128. I mean limited usage of eminent domain to construct widely supported projects, such as roads, schools, and other public infrastructure. Notably, I conducted news searches to find examples where the public supported such an exercise, and could not find a single article that held eminent domain in positive regard.

  129. See Ike Brannon & Ari Blask, The Government’s Hidden Housing Subsidy for the Rich, Politico (Aug. 8, 2017, 5:38 AM), https://www.politico.com/agenda/story/2017/08/08/hidden-subsidy-rich-flood-insurance-000495 [https://perma.cc/XH8M-VBQS].

  130. In all of my research for this project, I have seen few, if any scholars or politicians state that they support the current subsidy scheme.

  131. What I mean is that there will be a blank slate to redo a subsidy scheme based upon everyone paying full-risk rates.

  132. See Danny Vinik, ‘People Just Give up’: Low-Income Hurricane Victims Slam Federal Relief Programs, Politico (May 29, 2018, 5:08 AM), https://www.politico.com/story/2018/05/29/houston-hurricane-harvey-fema-597912 [https://perma.cc/2CFN-CK4J]. Lower-income areas where people are less likely to carry flood insurance are most affected by the high price of flood insurance. Id. In the Houston neighborhood of Kashmere Gardens, where the average income is $23,000, most people could not afford to carry flood insurance and were already blocked from receiving an NFIP claim payout. Id. However, to add to the pain, the current statutory interaction between the NFIP and FEMA disaster aid makes carrying flood insurance a prerequisite for FEMA aid for those that live in a floodplain. Id. Thus, not only did many people not receive a claim payment to repair their home from the NFIP, but many also found out after the fact that their FEMA Disaster Relief Aid claims had been denied because they were not carrying flood insurance at the time of the flood. Id. As a result, even a year after Hurricane Harvey, some of Houston’s poorer neighborhoods have seen little in the way of repairs, and many homes may never get repaired. Id.

  133. Id. Nationwide, the income difference between households in the floodplain not carrying an NFIP policy, and households in the floodplain carrying flood insurance was around $27,000, a substantial amount that suggests a vast subset of America’s lower and even middle-income families have simply opted-out of carrying flood insurance. Id.

  134. Id.

  135. See Brannon & Blask, supra note 129. Brannon and Blask use the data showing disproportionate subsidies for wealthier households as a rationale to argue for full privatization and risk-based rates. Id. However, it would seem such data more appropriately supports a shift in the way subsidies operate.

  136. U.S. Gov’t Accountability Office, supra note 31, at 1.

  137. See id. at 10.

  138. Id. at 10–17. The GAO compares the provision of affordability help in this context to some Housing and Urban Development loan-eligibility programs. Id. A difficult determination in this context would be eligibility and the amount of aid given to homeowners, as undoubtedly some would support affordability help if it were narrowly given but may be less supportive if the program had the looks of “another government handout” or welfare program.

  139. See id. at 11−17. The GAO states several reasons that the shift to individual affordability assistance would be problematic. First, the NFIP has never dealt with affordability help on an individual level and does not have the information available to make determinations. Id. at 13. The NFIP would need to create the administrative infrastructure to collect and analyze the data, make determinations, and distribute or apply the subsidies. Id. Additionally, even though transmitting the data from the IRS would make some sense, the current privacy laws that govern which agencies can receive IRS data do not include the NFIP, so Congress would need to alter that law as well. Id. Finally, the GAO outlines a final problem in determining just what is taken into account when determining how to distribute or measure subsidies, i.e. whether they are solely based on income or other data, and what is included in income or otherwise measured. Id. at 15−16.

  140. Id. at 16−17. The GAO identifies the biggest issue with a geographically based program as the risk that people fall into and out of the cracks, that is, some people who can afford insurance receive a subsidy, and some people who cannot afford insurance do not. Id.

  141. Id. at 18.

  142. Id. Although the GAO identifies the possibility of a 1% cap, a variable cap depending on repetitive loss status and other factors could also be an option. Id. However, even with a variable cap, it is unlikely that premiums would reflect rates very well.

  143. Id. The GAO identifies this as a twofold risk: that people would continue to not pay rates that relate to their risk, and that this could discourage those with higher rates from undertaking mitigation efforts. Id.

  144. Id. at 19−21.

  145. Id. The GAO includes the possibility of buyouts and relocation as a mitigation option, and that such mitigation efforts would have the immediate effect of reducing the total flood risk the NFIP is exposed to. Id.

  146. Id. While the GAO identifies crucial issues with relying on mitigation efforts as an affordability option because of the time involved in mitigating risk across the board and the cost of doing so where the NFIP would probably have to fund the vast majority of mitigation costs for poorer homeowners, the long-term benefit of a mass mitigation effort may provide the best way to financially stabilize the NFIP, because although the initial costs would be high, the NFIP could strategically mitigate the risk in high risk areas to reduce the total risk it faces and future claim payouts it would make to repetitive loss properties. See id.

  147. See Carolyn Kousky & Howard Kunreuther, Addressing Affordability in the National Flood Insurance Program, J. Extreme Events, Aug. 2014, at 1, 19–20, http://opim.wharton.upenn.edu/risk/library/J2014_JEE_Addressing-Affordability-NFIP.pdf [https://perma.cc/T4VS-43EF].

  148. Id. Interestingly, they suggest that the payor of the subsidy should be up for debate, and that the government could consider a surcharge on other NFIP policies to finance the subsidies.

  149. Id. at 14−18. Kousky and Kunreuther, unlike the GAO, propose that the Department of Housing and Urban Development (HUD) could manage the voucher program instead of having the NFIP gain the necessary information to manage the program itself. Id. at 14. They argue that HUD already has the information available to make affordability decisions, and the experience to administer such a program. Id.

  150. Id. at 15–17. For purposes of illustration, they also propose that the mitigation loans would be for 20 years at 3% interest. Id. at 16. One issue that I did not notice discussed was how low to middle-income families would qualify for the loans, or if some qualification process would even take place.

  151. Id. at 15–17. In their examples with a 5% income cap, their math would create a savings of $1,800 and $8,190 annually in two hypothetical scenarios. Id. at 16–17. Both would have incomes of $50,000, but Homeowner A would live in a home with a $4,000 premium and $25,000 cost to elevate, and as a result the voucher would be for $1,500 until mitigation occurred and the homeowner would pay $2,500. Id. at 16–17. However, post-mitigation, Homeowner A would have a premium of $520 and a loan payment of $1,680, and pay $2,200 and no voucher would be needed. Id. Thus, overall $1,800 in annual savings would occur. Id. Homeowner B’s premium of $18,550 would mean a $16,050 voucher without mitigation, but with $55,000 in mitigation, a loan of $3,660 and premium of $6,700 would result meaning that the voucher would only be for $7,860, creating $8,190 in savings. Id. at 15–17.

  152. Id. at 18.

  153. See supra Section III.C.

  154. See supra Section III.C.

  155. See Rep. Waters, Author of Flood Reform Act, Calls for Delay in Implementation, supra note 66.

  156. See Jones, supra note 56.

  157. See Saks, supra note 74.

  158. To start, many scholars and interest groups have discussed the need for some of the most basic aspects of the program to change. For example, flood maps that set the 100- and 500-year floodplains are in desperate need of updating and should be redone not only to reflect current models, but also predict and reflect the next decades of change. See SmarterSafer NFIP Reform Proposals 2017, supra note 75. Further, the NFIP needs to become more transparent in how it operates, and fully detail how rates are set and flood maps are made and what they reflect, so that homeowners and potential buyers and builders understand the true risk of what they are considering. See Seeking Higher Ground, supra note 105, at 7. Finally, though I will discuss it a bit above, the NFIP needs to conduct substantial outreach to those without insurance to inform them of the availability of flood insurance, that their standard homeowner policy usually does not cover floods, and that, if adopted, subsidies would be available to aid low- and middle-income homeowners afford to insure their home. See SmarterSafer NFIP Reform Proposals 2017, supra note 75. I wholeheartedly support and reinforce the need for such reforms, and believe without them substantial reform will not be as fruitful as it could otherwise be.

  159. That is, when the homeowner accepts the NFIP pre-buyout of their home, a condition of the funding would be that the housing purchased with the funds could not be in a mapped floodplain. I view this as a mitigation policy in itself because it would de-facto create a slow move away from the riskiest building sites and limit the market for housing built in floodplains post-storm. Additionally, I would eliminate all but one requirement that the NRDC has: that it be determined to be cost-effective. Cost-effectiveness, determined by prior floods and evaluated risk, should be the only calculation that determines whether an offer is made to buyout the home.

  160. To this end, I would urge the reauthorization of the NFIP to contain a provision creating a flood mitigation team that worked with at risk communities to target high-reward mitigation projects (projects that have low costs but have the potential to mitigate high damage values in a storm). With this, I would also allow for rapid remapping of areas once mitigation projects are complete, so that communities could take advantage of potential floodplain reductions.

  161. I would propose the threshold amount be 90% of the properties in a given target area have accepted buyout offers. However, such an option would only be available if an active flood mitigation system was being built by the community, state, or federal authorities.

  162. Because a substantial loss is considered to be, in one method, over 50% of pre-storm market value, I believe this constitutes good policy. Basically, although up-front costs may be higher, the long-term costs of the program would be reduced because any second substantial loss on the property would automatically exceed the buyout amount. Additionally, because this program would be automatic, and only target the most damaged homes, it would prevent delays in the process that have previously been the cause of complaints. Once again, the stipulation that the next purchase occur outside a mapped floodplain would hold.

  163. For those not eligible for subsidies based upon a means-tested program in year 1, the current scheme of rate hikes would take place, but the homeowner would have an opportunity to qualify for a voucher every time the coverage was renewed.

  164. The scheme would have the implicit goal of reducing the number of subsidy-eligible people in floodplains by discouraging their purchase of housing in floodplains. Exceptions would be made where communities have few properties not mapped as at risk of a flood, however, in communities where housing is available in areas mapped as not at risk, there would be a stated goal of encouraging the purchase of less risky property. Because of the availability of a pre-buyout, the impact upon homeowners fearful of lowered sales value would be diminished.