FEMA threatens to raise flood insurance rates over mismanagement

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    La Crosse, WI (La Crosse Tribune) — Residents in the city of La Crosse could see an increase in flood insurance rates next year if a series of non-compliance issues with the Federal Emergency Management Agency aren’t sorted out.

The city was told by FEMA in September that it was missing information and in violation of standards to qualify for its flood insurance program and current discounts, and premiums could go up by 10% on April 1, 2021, if not addressed.

FEMA is currently giving the city until mid-December to correct the issues, though it’s still unclear if the matter can be properly remedied, and city officials said they are dealing with decades of mismanagement.

On Sept. 18, FEMA submitted a letter to the city of La Crosse after a typical review of its participation in the National Flood Insurance Program and found the city was not up-to-date on some of its data, information and processes required by the agency.

The city of La Crosse is “no longer considered to be fully compliant with the minimum development and participation standards of the NFIP,” FEMA wrote in its letter.

A variety of mistakes and missing information on the city’s floodplain management were cited by FEMA, including over 40 structures that are currently in violation of developmental standards, incorrect variance permits, missing environmental details on building permits, incomplete repair reports and errors on development permits.

“It’s fallen between the cracks here and all of a sudden we’re in the naughty chair,” said Bill Bosshard, who sits on the city’s Floodplain Advisory Committee.

“I think the transition, the hand-off, for whatever reason just didn’t go well and this stuff fell through the cracks.”

But city staff said that the issues cited by FEMA are decades old, and that its relationship with the federal agency has long been rocky.

“We’ve been in this situation before, because when FEMA conducts these community visits every few years, they provide us with a list of issues,” La Crosse Mayor Tim Kabat said. “Some of the issues go back 20, 30 or more years.

“I don’t know that it’s so much of falling through the cracks,” Kabat said. “You had different philosophies back in the 1980s, and 90s and 2000s, when there were many of these structures that were permitted. And the city’s historical relationship with the DNR or with FEMA was not necessarily the best.

“So the city permitted structures, and in retrospect, some of those should probably not have been permitted,” he said.

The mayor said that floodplain management has been juggled between several staff members and departments for some years, saying when he was first elected nearly eight years ago, there was no one tasked to manage it.

“In the past, duties of the floodplain management have shifted to various departments, with a combination of duties and titles shared,” between the building and inspections, planning and engineering departments, Kabat wrote in a memo.

If the issues listed by FEMA aren’t corrected in time, the city will be moved from a “Class 8” rating using its Community Rating System — which gave residents a 10% reduction in premiums — to a “Class 10” rating, erasing that discount.

In total, residents in La Crosse pay between $650,000 and $800,000 in flood insurance premiums annually, meaning this loss of a discount could cost upwards of $65,000 — which is on top of increases residents have already seen in recent years because of federal changes.

“I was hearing some horror stories a few years ago,” Kabat said. “People were seeing some pretty significant increases in their premiums. Hundreds and hundreds of dollars just from one year to the next.”

Increased rates are one thing, but the problem goes much deeper, officials urged.

Officials said the threat to increase rates is a bit sour, because despite paying hundreds of thousands of dollars each year to the flood insurance program, the city rarely sees any of that come back to help the city.

“Anything we pay back, is kind-of, for lack of better terms, sent out to the deep blue sea, because La Crosse gets little to nothing back,” Bosshard said, saying that city residents often don’t collect floodplain insurance claims, because resources are sent out to larger, more frequent emergencies like hurricanes.

“It’s even more salt in the wound,” he said.

“We’ve argued for a long time, the $700,000-$800,000 in flood insurance premiums that leave La Crosse,” Kabat said, “never to see a penny of that come back. If we were able to keep a portion or all of that here locally .. we could move our timeline up in dealing with some of these problems.”

These problems Kabat alludes to, are challenging for the city, which is dealing with a unique landscape of flooding problems.

“We’re kind-of stuck in a tough situation” Kabat said, because the solution to flooding in areas around the city are different.

In some areas, the solution is to address and upgrade levies, in other areas the city’s trying to remap the floodplain because so many homes no longer flood, while other parts of the city still have structures that are below the floodplain boundary and need to be raised or removed.,

“We’re in a situation where we’ve been actively managing our floodplain, we have levies and pumps and situations in place,” he said, “and yet because we have so many homes in the floodplain, we’re getting punished by FEMA for that.”

“It’s unfortunate, because we have this challenge between these historic neighborhoods with these homes that were long-established before flood maps, and what I hear from residents at times, is ‘Yes, I’m in the floodplain, I’ve got to pay flood insurance, but I’ve never had a drop of water in my basement,’” Kabat said.

“When it comes to changes, our processes, and doing the things we’ve been doing the last several years,” he said, “I think we’ve been making very positive and significant progress. But it’s, the solutions to some of these structures are just not, they’re not cost effective or they’re just problematic.”

“It’s just not an easy thing to deal with,” he said.

Specifically on the minds for some officials is the city’s current project of remapping the Ebner Coulee neighborhood on the South Side, where more than 50 structures currently reside in an outdated floodplain map and are forced to pay for flood insurance despite not experiencing any flooding.

A third party is conducting the study and remapping, which will then go to the Wisconsin Department of Natural Resources, then to FEMA with hopes of convincing them to no longer mandate premiums from those homeowners.

“We’re remapping that area, all on our own dime to show that the maps are incorrect and hopefully that will remove dozens and dozens of properties out of the floodplain that way,” Kabat said.

It’s still unclear if this new insurance issue with FEMA could impact that study’s success.

“It’s an embarrassment to the Floodplain Committee, because we thought we were making some progress on this, and all of a sudden we have this setback,” said Bosshard, who himself lives in the Ebner Coulee district.

“If this thing going on now somehow affects this, that’s going to really fire me up,” he said.

What’s next
The city has several steps drafted to address the non-compliance issues cited by FEMA, and plans to work with U.S. Rep. Ron Kind and Sen. Tammy Baldwin as they work through the myriad challenges the city faces with the federal agency.

Specifically, the city plans to centralize its floodplain management to the Community Risk Management department (which replaced the building and inspection department), with consultation from the city utility manager, and polish responsibilities for staff.

The CRM department has four certified floodplain managers on staff, and the city has plans to also add a full-time floodplain manager position in 2021, after securing funding for the position in its 2021 Operating Budget that was just passed this month.

The city also will train or hire an engineer to review environmental standards for permits, educate the Board of Zoning Appeals and Floodplain Committee, who often review and approve such permits, and will provide FEMA with all missing documentation, including completing any that were not done and determining if there are true violations and finding remediations to them.

For the more than 40 structures in noncompliance with FEMA, Kabat said he is specifically working with staff to evaluate the issues and remediate, according to his memo.

But there’s still concern that it might be too late.

“I have been told by FEMA staffers that FEMA will retrograde the city’s CRS class rating to a 10, raising our insurance premiums by 10% no matter what our response is,” city utility manager Bernie Lenz told the Tribune in an email.

“Regardless, in our response we plan to show our progress and request that insurance premiums not be raised, and we will go above that staff level if they truly already made that decision without giving the city an opportunity to reply to the concerns in the letter first,” Lenz said.

“It’s not an easy solution,” Kabat said.

“And a 10% increase,” he said, “now’s not the time, obviously. With everything going on with COVID and just the economic impacts that people are experiencing, now is definitely not the time. So we are doing everything we can to avoid that.”

The Floodplain Advisory Committee will meet again on Dec. 3 to discuss next steps, just several days before FEMA’s Dec. 18 deadline for remediation.

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