National Flood Insurance Changes by ESA to Harm U.S. Home Affordability

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The National Association of Home Builders (NAHB) have urged Congress this week to oppose the inappropriate use of the Endangered Species Act (ESA) to change the focus of the National Flood Insurance Program (NFIP) away from protecting lives and property due to flooding loss.

NAHB warned that mandated changes to the NFIP instituted by the National Marine Fisheries Service (NMFS) will harm housing affordability and economic activity in local communities served by the NFIP. It will force a series of federal protection requirements that restricts states, local governments and private landowners from future development within floodplain areas.

Testifying on behalf of NAHB before the House Transportation and Infrastructure Committee, Jon Chandler, CEO of the Oregon Home Builders Association, told lawmakers that such changes to the flood insurance program 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, NFIP-participating communities in Oregon and nationwide will have little choice but to comply with NMFS's required changes to the NFIP. Failure to do so will mean these communities may be forced to drop out of the NFIP. This will restrict many banks and other financial institutions from offering federally-back 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, which was created in 1968 to provide affordable flood insurance to property owners and encourage communities to adopt and enforce floodplain management regulations. 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 (BiOp) in Oregon that calls for FEMA to implement the NFIP by imposing severe restrictions and bans on future statewide floodplain development in order to protect ESA-listed anadromous fish species.

Chandler told lawmakers that compelling FEMA to harshly tighten regulations applicable to floodplain standards in Oregon and other parts of the country in order to comply with the NMFS BiOp 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 BiOp 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."