With the expected passage of the recent Continuing Resolution (CR), Congress is poised to avert two looming crises – a government shutdown and a lapse of the National Flood Insurance Program (NFIP). This week, the House passed a CR that would fund the government until December 11, 2020 and extend the NFIP for one year to September 30, 2021. Senate passage of the CR is expected early next week.
Without an extension, NFIP policies would be unable to be issued or renewed, which could lead to significant distress in the broader real estate market and threaten financing and loan terms for multifamily developers, owners and operators.
NMHC recently joined with a variety of other business, real estate and insurance trade groups in calling on Congress to once again provide for an extension of the NFIP, which is set to lapse on September 30.
A one-year extension of the NFIP is a big win for NMHC and other stakeholders who have argued the short-term and last-minute nature of previous extensions have been problematic and caused unnecessary market disruptions. While not as long as we believe necessary, this extension will ultimately provide time for the new Congress and a potential new Administration to negotiate a long-term reauthorization and reform package for the NFIP.
The NFIP’s reauthorization has been a key priority for the apartment industry given the critical role the program plays in helping multifamily firms mitigate the financial risk of flooding events. In addition to reauthorizing the program and providing certainty to the market, NMHC has pushed Congress to make a host of reforms to the multifamily and commercial policy structure of the program, such as:
- Improving coverage options for multifamily and commercial property owners through the creation of Business Interruption coverage through the NFIP; Moving commercial and multifamily claims to Replacement Cost Value (RCV) as opposed to Actual Cost Value (ACV); and allowing for multiple buildings to be covered by one NFIP policy.
- Increasing the accuracy of the FEMA flood mapping process and overhauling the map appeals process to make it far less costly to individual owners.
- Prioritizing more effective pre-flood mitigation and employ resources to help commercial and multifamily owners benefit from existing mitigation programs.
NMHC will continue to urge Congressional leaders to work towards a long-term reauthorization and programmatic reforms necessary to ensure the ability of the industry to manage flood risk and provide secure housing for many of the 40 million apartment households. For more information on the NFIP and our industry’s advocacy efforts, please click here.