Tuesday, July 23, 2024

Chuck Schumer Fights for Subsidies for NY Millionaires’ Beachfront Homes

'Premiums should be based on risk, so people can have accurate signals about the nature of the hazards they face...'

Sen. Chuck Schumer, D-N.Y., has stalled the federal government’s adjustment of flood insurance rates so that his wealthy Long Island constituents will not have to pay more to protect their beachfront properties, the New York Times reported.

The Federal Emergency Management Agency had planned to hike rates on April 1 so that it could pay down a $20.5 billion deficit in the National Flood Insurance Program, according to Reason magazine.

Congress previously expunged the NFIP’s $16 billion debt in 2017, but without changes the program again fell into debt.

Schumer seemed to hope that Congress would continuously subsidize New York’s beachfront property-owners by canceling the insurance program’s debt rather than raising rates.

He has opposed increases in flood insurance rates since FEMA announced them in 2019.

“How can we ram through a national flood insurance plan that could unfairly put a bullseye on the backs of Long Island and New York homeowners without more consultation?” Schumer said in 2019 according to Newsday. “Halt. Stop. Stop this plan.”

Schumer claims that the flood insurance rate hikes would affect average Americans, even though the nation’s most expensive real estate sits on beachfront properties. And two years later, he’s still claiming that FEMA is acting too quickly.

“FEMA shouldn’t be rushing to overhaul their process and risk dramatically increasing premiums on middle-class and working-class families without first consulting with Congress and the communities at greatest risk to the effects of climate change,” Alex Nguyen, a Schumer spokesperson, said in a statement.

If FEMA implements the changes, then homeowners on Long Island and the Hamptons— where average homes sell for nearly $1 million—would have to pay higher rates.

The changes, which FEMA portrays as a protection against climate change, would also discourage home-building on waterfront areas that routinely suffer from flooding and high winds.

Nguyen said “Congress and the Biden administration must work together in a collaborative and transparent process” to find “affordable protection” for high-risk areas.

A FEMA spokesperson said the proposed rate changes would “better reflect an individual property’s unique flood risk.”

But a community’s flood risk may not be compatible with “affordable protection.”

The First Street Foundation found in a study that the National Flood Insurance Program transfers wealth from Americans living outside flood zones to Americans living inside flood zones.

Yearly premiums for the NFIP average $981, yet the 4.3 million properties that the program insures suffer $4,419 in yearly damages.

First Street’s study, “The Cost of Climate: America’s Growing Flood Risk,” concludes that FEMA needs to increase flood insurance premiums by 450% to cover the true risk.

Without proper risk assessments, wealthy Americans may build on dangerous beachfront properties under the assumption that taxpayers will cover the damages.

“Premiums should be based on risk, so people can have accurate signals about the nature of the hazards they face,” said Chad Berginnis, executive director of the Association of State Floodplain Managers. “I really hope Congress is able to engage constructively here.”

New Yorkers have not been paying premiums based on the risks that their properties face.

Premiums for FEMA’s Special Flood Hazard Areas in New York average $1,860, while the annual expected loss is $5,126.

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