Smith Canal: ‘Wealthy’ homeowners with beach houses?

We’ve written plenty about Stockton residents who are worried about potentially enormous increases in flood insurance rates, and legislative efforts to delay those increases.

But there is another side to the story.

Here’s how the R Street Institute, a D.C.-based small-government think tank, views the situation, according to a statement released in late October. That statement says, in part:

“Legislation set to be introduced by House Financial Services Committee Ranking Member Maxine Waters, D-Calif., would gut crucial reforms passed by Congress last year to stabilize the 45-year-old National Flood Insurance Program.

“The NFIP, which provides flood coverage to roughly 5.6 million Americans, is nearly $28 billion in debt to U.S. taxpayers and hasn’t repaid any principal on its loans since 2010. By overwhelming margins, Congress passed reforms to fix some of the program’s glaring defects, including the incentives it provides to drain environmentally sensitive wetlands and develop coastal barrier islands.

“But Waters, who had been co-sponsor of the Biggert-Waters Flood Insurance Reform Act of 2012, is now calling for a four-year delay to any rate increases called for under the law. Because the bill will expire in 2017, a four-year delay would effectively render the law moot. Sen. Bob Menendez, D-N.J., also is preparing to introduce a Senate version of the legislation.

“Among the changes Waters’ legislation would delay is a scheduled phase-out of premium subsidies, which historically have disproportionately benefited upper-income policyholders. According to the nonpartisan Government Accountability Office, 78.8 percent of subsidized policies are in counties that rank in the top 30 percent of home values, while less than 1 percent are in the counties that rank in the bottom 30 percent.

“‘Delaying the scheduled phase-out of flood insurance premium subsidies amounts to a gift to mostly wealthy homeowners who get to enjoy cheap insurance on their beach homes thanks to taxpayer support,’ said R Street Senior Fellow R.J. Lehmann.” (emphasis mine)

Folks living in Stockton’s Smith Canal neighborhood, where the elimination of subsidized rates could have the greatest impact, can hardly be described as “wealthy homeowners” enjoying their “beach homes.”

Some pockets of the neighborhood are modest, at best, with some homes abandoned and boarded up. I spent one morning last spring crisscrossing the area, looking for folks who have been forced out because of building restrictions tied to the area’s high flood-risk designation.

And I can’t tell you how many calls I’ve gotten over the years from elderly residents who are on a fixed income and are worried about this new, unanticipated expense.

I don’t pretend to know what the answer is to the NFIP problem, and R Street Institute’s description of the majority of subsidized rate-holders may well be correct.

But the institute’s generalizations certainly don’t describe Smith Canal.

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  • Blog Author

    Alex Breitler

    A native of Benicia, he lives in Stockton with his wife, Ann, who forces him to go backpacking in the Sierra Nevada or Trinity Alps at every opportunity. He has been writing mostly about natural resources since 2003, first in Redding and now in ... Read Full
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