ESA Changes to National Flood Insurance Program Harm Housing Affordability

Late last month, NAHB urged Congress to oppose the inappropriate use of the Endangered Species Act to change the focus of the National Flood Insurance Program (NFIP) away from its mandate of protecting lives and property due to flooding loss.

As the result of a recent settlement with environmental groups, there are much tighter restrictions on any development in designated special flood hazard areas to protect certain kinds of fish, including species of trout and salmon that spawn in fresh water but live in seawater.

NAHB warned that mandated changes instituted by the National Marine Fisheries Service (NMFS) will harm housing affordability and economic activity in the communities that the NFIP serves.

Testifying on behalf of NAHB before the House Transportation and Infrastructure Committee, Jon Chandler, CEO of the Oregon HBA, told lawmakers that the changes will “add duplicative, burdensome and costly regulatory barriers that will prevent the development of communities near well-paying jobs, and increase the price of housing beyond the means of many middle-class working American families.”

Perhaps worst of all, communities nationwide that participate in the NFIP will have little choice but to comply with NMFS’s required changes. Failure to do so means they may be forced to drop out, keeping many banks and other financial institutions from offering federally backed mortgages in those communities. It is truly a lose-lose proposition for local governments, prospective home buyers and home building alike.

The Federal Emergency Management Agency (FEMA) administers the NFIP, created in 1968 to provide affordable flood insurance to property owners and encourage communities to adopt and enforce floodplain management regulations.

Importantly, Congress did not give FEMA land use authority and the NFIP’s purpose is not to protect endangered species.

However, due to a lawsuit from environmental groups, FEMA is now required to consult with the NMFS in many states to ensure the protection of endangered species.

The NMFS recently released its Biological Opinion in Oregon that calls for FEMA to implement the NFIP by imposing severe restrictions and bans on future statewide floodplain development to protect fish on the endangered or “threatened” species list and in areas designated as “critical habitat” for any endangered or threatened species.

Chandler told lawmakers that compelling FEMA to harshly tighten regulations applicable to floodplain standards in Oregon and other parts of the country to comply with the NMFS opinion would severely restrict development options for public and private landowners and harm property values.

“Home buyers should not be subject to increases in cost due to a regulation that not only conflicts with state and local interests, but was not the intent of the original program,” he said.

“During the upcoming reauthorization of the NFIP, NAHB urges Congress to use its oversight authority to ensure the potential negative ramifications of the opinion do not needlessly harm communities and housing affordability,” Chandler added. “It is necessary to retain the NFIP’s original intent to focus solely on the protection of homes and communities from flooding.”

This article is a post from NAHB’s NAHB Now blog.