A federal bill to delay national flood-insurance rate hikes by at least four years has the support of Lowcountry legislators, Beaufort County flood-plain officials and local Realtors, many of whom fear a dip in the real estate market as the hikes gradually take effect.
Though the delay provides a reprieve for property owners -- some of whom will see tenfold increases in annual premiums -- several officials worry it merely postpones the inevitable.
"It will probably stop the worry in the meantime, but it is going to come sooner or later," said Richard Spruce, flood-plain manager for the Town of Hilton Head Island.
Introduced Tuesday in the U.S. House and Senate, the bill would delay rate increases from the Biggert-Waters Flood Insurance Reform Act of 2012. The act was passed overwhelmingly by Congress to keep the National Flood Insurance Program solvent after a barrage of claims from catastrophes such as hurricanes Katrina and Irene left the program $24 billion in debt.
Key to the 2012 flood insurance act is getting rid of subsidized flood-insurance rates, so that homeowners pay the true risk of living in a flood zone.
For homes built before current flood maps went into effect, subsidized rates will be phased out at 25 percent a year until the premium reflects true market risk. In others cases -- as with the sale of a home -- the subsidy will be wiped out at once.
More than 7,000 of Beaufort County's 93,000 properties with flood policies have subsidized rates, the second-most in the state, according to the Federal Emergency Management Agency. Charleston County has the most.
Legislation to delay the flood insurance act received bipartisan support last week and seems likely to pass, according to the McClatchy News Washington Bureau.
U.S. Rep. Mark Sanford, a Charleston Republican and a co-sponsor of the bill to delay the rate increases, said Friday the flood insurance act "puts the cart before the horse. It allows government to set new premiums now and charge more without disclosure of how they are deriving their new rates."
U.S. Sen. Tim Scott, R-S.C., agrees with Sanford, whose district includes part of Beaufort County.
"Our current flood insurance system has made it harder for folks who play by the rules," Scott said in a statement Friday. "A temporary delay will allow for a halt in overly burdensome rate increases while we develop ways to make the system more affordable and more sustainable."
That's good news for Beaufort County Realtors, who say they've seen signs of the market slowing since the increases took effect Oct. 1.
"I've only heard of a few deals that fell apart," said Edward Dukes, a Realtor in Beaufort. "But frankly, there are probably many buyers who didn't make offers because of the insurance cost, and it would only get worse."
For new homeowners or those whose policies lapsed, the flood insurance act provides no subsidies, according to FEMA. For current homeowners with subsidized properties, certain elements determine the rate increase. A home's elevation relative to sea level, the year it was built and the amount of flood-vent space, for example, can alter the rate.
"In a sense, there's not much you can do if your house is affected," Dukes said. "Many of the older homes are built on slabs, and it's not cost effective to raise them."
Businesses would be hit hard in Beaufort, as well, said Allen Patterson, who owns Allen Patterson Residential, a construction company in Beaufort.
He said nearly all of Bay Street in downtown Beaufort is four feet below flood level -- making it prime territory for substantial rate increases.
On Hilton Head Island, thousands of owners of older homes in low-lying areas such as Sea Pines, Point Comfort and North and South Forest beach will feel sharp rate increases, said Rob Reichel, an agent with Sea Pines Real Estate at the Beach.
He supports the delay, but thinks the rate increases, even if put off for four years, have already crept into the subconscious of buyers.
"People may really like a property, but it gives them a hesitation because we don't really know what the rates will become," he said. "As you can imagine, waiting in the real estate market is the kiss of death."
Hakim Bayyoud, Beaufort County flood-plain manager, said 90 percent of his calls since the new flood rates kicked in have been from Hilton Head residents.
He said the delay would be good, because it will require FEMA to perform an affordability study and revisit flood maps, which could lower some premiums.
"There's been a lot of people with sticker shock, and I don't think that was the intent," he said. Some residents he's spoken with have seen $6,000 increases in annual rates.
But Bayyoud maintains the rate increases will still come, whether today or four years from now.
"It's definitely good to delay it," he said, "but it's going to happen regardless."
Follow reporter Dan Burley on Twitter at twitter.com/IPBG_Dan.