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Erik Burgess, Published August 27 2013

Fargo pleads case for FEMA to keep basement exception for flood insurance

FARGO – Federal flood insurance officials still don’t know if the city’s basement exception will go away, leading to skyrocketing flood insurance premiums because of a recent overhaul of the National Flood Insurance Program.

Officials from the Federal Emergency Management Agency met with city and county leaders, area real estate agents and home builders on Tuesday to gather more information on how the basement exception works in Fargo.

Fargo has had a basement exception for flood insurance since 1975. More than 600 homes now have flood-proofed basements, which allow homeowners in the 100-year floodplain to have basements and keep their flood insurance premiums low, at an estimated $400 a year.

Premiums could be $10,000 to $12,000 per homeowner if the exception goes away, city officials say.

Dennis Kuhns, who heads FEMA’s risk insurance division, said the exception appears to be working well in Fargo, but he still doesn’t know if it will go away as the nation’s flood insurance program strives to eliminate subsidies and attain financial self-sustainability.

“We don’t know what we’re going to do yet,” Kuhns said Tuesday. “We’re going to look at it some more. But we have to make sure … that the program is solvent.”

Last year, President Barack Obama signed the Biggert-Waters Flood Insurance Reform Act of 2012, which is intended to remove subsidies from national flood insurance over time. Fargo officials are concerned that means the city’s basement exception will also go away.

Fargo and 53 other communities nationwide – including 14 in North Dakota – have a basement exception that doesn’t affect who has to get flood insurance. It affects how much those who already need flood insurance need to pay.

In a community with an exception, homeowners in the 100-year floodplain with basement floors below the base flood elevation of 38.5 feet pay thousands of dollars less in flood insurance premiums than they would without the exception, in exchange for “flood-proofing” the lower level of their home.

In a roundtable led Tuesday by Sen. John Hoeven, R-N.D., city and county officials made their pitch to FEMA that Fargo is the poster child for why the basement exception is “good policy,” as Mayor Dennis Walaker described it. Walaker argued that the exception is a form of mitigation, not a subsidy.

With a basement exception in place, FEMA requires the lowest opening of a home to be 1 foot above the base flood elevation.

Fargo has gone above and beyond that mandate, requiring that the top of basement walls be at least 2.5 feet above the base flood elevation. The city also requires that fill adjacent to the structure is 2 feet above that elevation.

“All of that is intended to push the floodwaters away,” City Engineer April Walker said.

Fargo requires homes in and within 50 feet of the special flood hazard area to have flood-proofed, reinforced basements, with thicker concrete walls, more rebar support and a waterproof membrane sprayed around the walls, among other things, said Nathan Boerboom, the division engineer for Fargo.

Since the 1970s, more than 600 foundations in Fargo have been flood-proofed without one failure, Walker said.

Flood-proofed basements in Cass County have also proven themselves to be effective at mitigating financial risk, said Darrick Guthmiller, president of the Home Builders Association of Fargo-Moorhead.

Since 1977, Cass County residents, including in Fargo, have paid $104.4 million in flood insurance premiums. They have received only $24.3 million in claims.

When Hoeven heard that statistic Tuesday morning, he stopped the meeting and asked Guthmiller to repeat it again loudly.

“We are helping FEMA remain solvent,” Hoeven said.

Kuhns said he is impressed by what Fargo has done with flood-proofing.

“All the evidence seems to show that it does work,” Kuhns said, referring to the basement exception.

Still, there’s no solid answer about the exception’s fate, Kuhns said, which is part of the reason FEMA officials visited Fargo on Tuesday.

“At this point, I really don’t know what we’re going to do,” he said. “We’re going to look at it some more.”

Kuhns said “there needs to be some sort of reasonableness” in whatever FEMA ends up doing.

If the basement exception goes away, mandatory flood insurance premiums could be as high as $12,000 a year for some homeowners, which semi-retired civil engineer Bruce Langness argued would be unreasonable.

“Can you imagine the outcry? … Somebody’s going to lose their job if that happens,” he said.

FEMA officials said there is another unanswered question. What happens if the base flood elevation goes up?

A current proposed FEMA remapping of the area would bump it up to 39.5 feet. That’s expected to take place next summer. The U.S. Army Corps of Engineers has said the base flood elevation in Fargo should be 42.5 feet.

“That’s why we need the diversion,” Walker said, because the proposed flood channel around the F-M metro would lower the river levels in town, thereby lowering the base flood elevation.

Readers can reach Forum reporter

Erik Burgess at (701) 241-5518