WASHINGTON – To the great relief of property owners and home buyers in low-lying parts of Florida, Congress is moving quickly to delay a huge hike in flood-insurance rates, sparing many from paying hundreds or even thousands of dollars a year.
Across Florida, owners and insurance agents welcomed a reprieve from higher rates that they fear would cripple the state's housing recovery and devastate property values in coastal communities and along inland lakes, canals and riverbanks.
It's not a done deal. But a bill filed in the U.S. Senate on Tuesday and backed by members of both parties in the U.S. House showed a strong will in Congress to halt the higher rates for four years and assess their impact.
"I think it's fantastic," said Jonathan D. Rausch, an insurance agent in Pembroke Pines. "This way, a homeowner who was paying $300 a year and facing more like $1,000 a year now will see it go down to the original $300 renewal. All the customers love it. Everyone is super happy."
Rausch was able to tell a condo group in Hollywood that if the new rates are delayed the owners could renew their lapsed policy for $5,126 – not $36,584, which is what they faced under the new rates approved by Congress last year.
"They (members of Congress) are starting to realize that people cannot possibly afford to choke down some of these rates," said John Wilson, an agent in Winter Park for the Insurance Group of Central Florida. "Some of them are just incredible increases. Something certainly needs to be done."
Pressure from places like Florida, home to 37 percent of the nation's flood-insurance policies, prompted members of Congress to try to undo or delay legislation passed last year with strong bipartisan support to phase in actuarially-sound rates.
Most policy holders face relatively small increases in premiums. But unless the new rates are delayed, tens of thousands of Florida owners in the riskiest places would pay increases of 25 percent a year starting this year until they reach the full-risk rate. In some of the most extreme cases, insurance would cost as much as 10 percent of the property's value, according to federal officials.
Business properties, second homes, property repeatedly damaged by floods and homes sold after the new law was signed in July 2012 face the full actuarial rate -- prompting Gov. Rick Scott to warn that the shock would devastate Florida real estate.
The new law had sailed through Congress last year – one of its few accomplishments -- to make the National Flood Insurance Program solvent after running up a $24-billion deficit.
The program was created in 1968 after a costly batch of floods prompted Congress to provide cheap insurance at subsidized rates rather than send disaster aid. But after a decade of hurricanes and big deficits, lawmakers last year decided to phase in rates that reflected the full risk of flooding.
New flood maps, meanwhile, put many homeowners in Central Florida in flood zones for the first time. New proposed maps in Broward County, on the other hand, put many residents outside the riskiest flood zones. The designation is crucial because lenders require insurance for property in the riskiest areas.
"My house is by a road, another set of homes and then a small retention pond. The retention pond is two-feet deep. My dog goes into that retention pond and his stomach doesn't get wet," said Mike Kirby, 56, of Longwood. "But I've been forced to get flood insurance!"
Kirby, who pays $900 a year, was grateful for word that the increased rates may be delayed. "They need to think everything out and look at all the consequences of something before they throw it out there," he said.
The bipartisan legislation would delay the rate hike while the Federal Emergency Management Agency takes a close look at the impact.
Proponents say the law is needed and should not be delayed because it spares taxpayers from subsidizing insurance and discourages development in vulnerable places. But many in Florida say they should not face a sudden rate hike for existing property after playing by the rules.
"The thinking is that if people can afford the house, they can afford the insurance. But that's not necessarily true," Wilson said. "It may very well be that it shouldn't be a problem for somebody in Orange County that somebody else decided to buy a house on the beach. But the problem is, how do you rein that back in? We did allow it. We did have a program in place. So now we have homes there, and people did manage to buy the homes. But they can't afford to pay $12,000 or $13,000 a year for flood insurance."
Many homeowners and buyers are just catching up to the new rates -- and of attempts to delay them.
"I'm holding my breath," said Douglas Rill, who is awaiting his insurance bill for a home along the Intracoastal Waterway in the Town of Palm Beach. "I don't have the number yet, but I'm a little freaked out about what it could actually be. It's not real popular to help wealthy people along the water."
Rill, a real-estate broker, is also concerned about the impact on sales.
"It's surprising that after surviving the downturn in the market, there would be another factor of uncertainty that would shake people's confidence and make buying a home more difficult or more expensive," he said. "It's exactly what we don't need."