Sometimes Humor Brings the Point Across

Flood Insurance Cartoon - Bill Raup #2

Local Artist Bill Raup  posted these two cartoons in his building on Broadway regarding the

Flood Insurance Cartoon

plight of many property owners in Milton and surrounding river towns with regard to Flood Insurance.  Maybe humor will get the attention of our legislators!

Please take the time to communicate your concerns to your legislators.  It’s the only way things are going to change for many river town communities as well as other areas subject to flooding.

New Phone Dialing Procedures Effective Sept. 21st

If you have not heard yet, there will be new dialing procedures for people living in the 570 area code.

Effective September 21, 2013, callers in the 570 area code will need to dial all 10 digits of the phone number, even for “local” 570 area calls.

The new way of dialing is necessary to prepare the region’s telephone customers for mandatory 10-digit dialing, starting in September.  The change paves the way for the October introduction of northeastern Pennsylvania’s newest area code – 272.  Called an “overlay,” the new code will serve the same geographic boundary as the current 570 area code.  The overlay will eliminate the need to split the existing area code into smaller areas.

“An overlay minimizes disruption for our customers because their telephone numbers, including their current area code, will not change,” said Carl E. Erhart, Verizon area vice president.  “But it’s important for customers to get into the habit of always dialing the 10-digit number when they make calls within the 570 area code.”

Starting Sept. 21, ten-digit dialing will be required for all telephone calls made in the 570 area code.  If callers forget to dial 10 digits, they will hear a message instructing them to dial both the area code and seven-digit telephone number.

Even with the dialing change, local calls will still remain local calls.  However, customers will need to reprogram any automatic dialing equipment or services that are programmed to dial a seven-digit number.  This includes life safety systems, fax machines, Internet dial-up modems, alarm and security systems, gates, speed dialers, call forwarding settings and voice mail services.

Business customers should check with their telecommunications vendors to ensure their telephone systems are reprogrammed to handle 10-digit dialing and also to ensure that business stationery or advertising materials include the area code.

On Oct. 21, customers who request new service, an additional line or, in some cases, move their service to another address, may be assigned a number in the new area code, depending upon availability of numbers in the 570 area code.  The addition of the 272 area code will not change local calling areas for customers, dialing 911, or telephone rates.

For additional information, visit Verizon’s FAQ regarding the 570 area code overlay.

Will Flood Insurance Reform Effect Real Estate?

If you live in a special flood hazard area, the short answer is YES.  Please read our previous blog article about the drastic changes to flood insurance to get a background.

As flood insurance rates rise almost 10-fold, many river communities such as Milton, Bloomsburg, Hughesville, Muncy, Jersey Shore and even Harrisburg are going to feel the effects of these new flood insurance reform.

By law, anyone who purchases a property in a special flood hazard zone and will be taking a mortgage on that home (or business), is required to purchase flood insurance on it.  Since 70% of the homes and businesses in the country finance the purchase of real estate, most will be effected by this reform.

When the full increase goes into effect, the cost of the flood insurance will be higher than most people’s principal and interest payments, making the purchase of a property in a special flood hazard area nearly impossible.  Unfortunately, these higher rates go into effect immediately for any new policies, thus if the buyer of real estate purchases a home or business in the flood area after October 1, 2013, they will pay the 10-fold increase immediately; there will be no phase-in period.  With this significant cost burden, buyers will choose not to look  at any property in the special flood hazard area, thus 70% of the potential buyers for these properties will no longer be potential purchasers of their homes or businesses.  With that said, real estate market values for homes or businesses in the special flood hazard area will drop significantly.  This will have a very dramatic effect starting October 1st of this year.

For those homeowners who currently own their home in the flood area, they will be unable to pay the increased cost of the flood insurance in a few years (25% increase each year) plus their principal and interest payments and will begin to walk away from their homes and let the banks repossess them, thus increasing the number of properties on the market and driving the real estate market down even lower.

Because the market values will have dropped significantly, a homeowner will be applying to their county’s assessment office for a re-assessment of their property.  All the government taxing bodies shall see a significant drop in their taxable values.  It is a total snowball effect that this act has on any property owners in the special flood hazard area.

We don’t profess to have the answers, but can only predict that this act will be the total demise of river towns such as Milton and any other communities that have significant flood plains.

We do know that after a flood, real estate market values do drop somewhat for several years after and people start to “forget” about the river and flooding.  That will no longer be the case — market values are about to drop significantly and for most homeowners (and business owners) their home/building is one of their largest assets.  Not any more.

Our US Senators Casey and Toomey need to hear from you and hear your concern on this issue as well as our local House of Representative Tom Marino.  It is important that you contact all of them, not just one, so they all hear your concerns.  Here are they links to their websites:

Senator Pat Toomey:   Phone: 717-782-3951

Senator Bob Casey:         Phone: 202-224-6324

House Representative Tom Marino:                Phone: 570-374-9469

Drastic Change to Flood Insurance

The Biggert Waters Flood Insurance Reform Act of 2012, unless changed, will bring an end to all our lovely riverside communities that are subject to flooding.  In the past several years the climate has changed, flooding has become more wide spread and hurricanes Katrina and Sandy have combined to leave the National Flood Insurance Program Billions in debt.   Last year Congress, knowing that the red ink had to stop, passed the Biggert Waters Flood Insurance Reform Act.  What they told us sounded reasonable, flood insurance rates would have to go up and the government would no longer help pay the rates for second homes.  Now FEMA has released the regulations and insurance rates that will go into effect on October 1, 2013.

For existing flood insurance clients in special hazard zones (Zones that start with an “A”) the rates for owner-occupied homes will increase about 10% per year and all other policies will increase 25% per year until they hit the new actual rates.  To determine the new actual rates policyholders will have to pay to have an Elevation Certificate done by a licensed surveyor or engineer.  It will be this Elevation Certificate that will show where the first floor (the basement) sits in relation to the Base Flood Elevation.  In our town of Milton, the Base Flood Elevation is the same as the 1972 flood level.

For every new policy after 10/1/13 (or a late payment and lapsed policy rewrite) policyholders will have to have to pay for an elevation certificate (normally in the $300-$700 range depending on how close a benchmark is) and the new actual rates.  Also, anyone who started a new policy after 7/6/12 will have to get an elevation certificate and pay the new rates when their policy renews the first time.

For policyholders that are in flood zones B, C or X (low hazard areas) they will see small and reasonable increases in their premiums and in most cases will still qualify for a “Preferred Risk Policy”.

But policyholders in the A Zones, the high risk areas where the homes and building often have basements that are 15 or more feet below the Base Flood Elevation (BFE) will see large rate increases until they get a flood elevation certificate and lock in the following new rates:

Each of these quotes are for $100,000 coverage on the building/house and $20,000 on the contents with a $2,000 deductible which applies separately to the building and contents:

1 Family Dwelling:

With current subsidized rates:  $1,063.

New rates with an elevation certificate showing the basement at 15 feet below the 100 year flood level BFE:  $12,936!

Non-Residential Building:

With current subsidized rates: $1,123.

New rates with an elevation certificate showing the basement at 15 feet below the 100 year flood level BFE: 17,782!

Tenants in these buildings have to pay rates on their contents based on the basement floor too even if they only rent the 2nd floor of the building!

Homeowners will have to consider moving all their utilities, heat & water systems to their 2nd floors and literally fill in their basements so that their main floor becomes their “first” floor.  If by doing that the first floor is only 6 feet below the BFE the new rates will be $2,675 –  still a lot more than they are paying now but at least something reasonable.

Our only hope is to convince Congress to amend the Act to allow for some sort of long-term subsidized rates for homes and buildings built before the days of flood insurance.  If we can’t, things are going to get ugly fast in “River Towns USA”.

We urge everyone with a property in a Special Flood Hazard Area to call your flood insurance agent to discuss your options.