[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]
FEMA'S FLOODPLAIN MAP MODERNIZATION: A STATE AND LOCAL PERSPECTIVE
=======================================================================
HEARING
before the
SUBCOMMITTEE ON REGULATORY AFFAIRS
of the
COMMITTEE ON
GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
__________
MAY 8, 2006
__________
Serial No. 109-205
__________
Printed for the use of the Committee on Government Reform
Available via the World Wide Web: http://www.gpoaccess.gov/congress/
index.html
http://www.house.gov/reform
______
U.S. GOVERNMENT PRINTING OFFICE
31-182 WASHINGTON : 2007
_____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
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COMMITTEE ON GOVERNMENT REFORM
TOM DAVIS, Virginia, Chairman
CHRISTOPHER SHAYS, Connecticut HENRY A. WAXMAN, California
DAN BURTON, Indiana TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida MAJOR R. OWENS, New York
JOHN M. McHUGH, New York EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida PAUL E. KANJORSKI, Pennsylvania
GIL GUTKNECHT, Minnesota CAROLYN B. MALONEY, New York
MARK E. SOUDER, Indiana ELIJAH E. CUMMINGS, Maryland
STEVEN C. LaTOURETTE, Ohio DENNIS J. KUCINICH, Ohio
TODD RUSSELL PLATTS, Pennsylvania DANNY K. DAVIS, Illinois
CHRIS CANNON, Utah WM. LACY CLAY, Missouri
JOHN J. DUNCAN, Jr., Tennessee DIANE E. WATSON, California
CANDICE S. MILLER, Michigan STEPHEN F. LYNCH, Massachusetts
MICHAEL R. TURNER, Ohio CHRIS VAN HOLLEN, Maryland
DARRELL E. ISSA, California LINDA T. SANCHEZ, California
JON C. PORTER, Nevada C.A. DUTCH RUPPERSBERGER, Maryland
KENNY MARCHANT, Texas BRIAN HIGGINS, New York
LYNN A. WESTMORELAND, Georgia ELEANOR HOLMES NORTON, District of
PATRICK T. McHENRY, North Carolina Columbia
CHARLES W. DENT, Pennsylvania ------
VIRGINIA FOXX, North Carolina BERNARD SANDERS, Vermont
JEAN SCMIDT, Ohio (Independent)
------ ------
David Marin, Staff Director
Lawrence Halloran, Deputy Staff Director
Teresa Austin, Chief Clerk
Phil Barnett, Minority Chief of Staff/Chief Counsel
Subcommittee on Regulatory Affairs
CANDICE S. MILLER, Michigan, Chairman
CHRIS CANNON, Utah STEPHEN F. LYNCH, Massachusetts
MICHAEL R. TURNER, Ohio WM. LACY CLAY, Missouri
LYNN A. WESTMORELAND, Georgia CHRIS VAN HOLLEN, Maryland
JEAN SCHMIDT, Ohio
Ex Officio
TOM DAVIS, Virginia HENRY A. WAXMAN, California
Ed Schrock, Staff Director
Erik Glavich, Professional Staff Member
Benjamin Chance, Clerk
C O N T E N T S
----------
Page
Hearing held on May 8, 2006...................................... 1
Statement of:
Odeshoo, Janet, Deputy Regional Director, Federal Emergency
Management Agency [FEMA]; Lieutenant Colonel Donald Lauzon,
member, Corps of Engineers; Judson Gilbert II, Michigan
State Senator, 25th District; and Jon Manos, supervisor,
Clay Township.............................................. 11
Gilbert Judson........................................... 35
Lauzon, Lieutenant Colonel Donald........................ 23
Manos, Jon............................................... 41
Odeshoo, Janet........................................... 11
Wilson, Chris, city manager of Algonac; Manfred (Whitey)
Simon, president, Harsens Island, St. Clair Flats
Association; and John Collison, owner, Sterling Real Estate
Co., representing Michigan Association of Realtors......... 60
Collison, John........................................... 73
Simon, Manfred........................................... 67
Wilson, Chris............................................ 60
Letters, statements, etc., submitted for the record by:
Collison, John, owner, Sterling Real Estate Co., representing
Michigan Association of Realtors, prepared statement of.... 76
Gilbert, Judson, II, Michigan State Senator, 25th District,
prepared statement of...................................... 37
Lauzon, Lieutenant Colonel Donald, member, Corps of
Engineers, prepared statement of........................... 26
Manos, Jon, supervisor, Clay Township, prepared statement of. 45
Miller, Hon. Candice S., a Representative in Congress from
the State of Michigan, prepared statement of............... 6
Odeshoo, Janet, Deputy Regional Director, Federal Emergency
Management Agency [FEMA], prepared statement of............ 14
Simon, Manfred, president, Harsens Island, St. Clair Flats
Association, prepared statement of......................... 69
Wilson, Chris, city manager of Algonac, prepared statement of 63
FEMA'S FLOODPLAIN MAP MODERNIZATION: A STATE AND LOCAL PERSPECTIVE
----------
MONDAY, MAY 8, 2006
House of Representatives,
Subcommittee on Regulatory Affairs,
Committee on Government Reform,
Clay Township, MI.
The subcommittee met, pursuant to notice, at 9 a.m., at the
Clay Township Offices, in Clay Township, MI, Hon. Candice S.
Miller (chairman of the subcommittee) presiding.
Present: Representatives Miller and Turner.
Staff present: Ed Shrock, staff director; Erik Glavich,
professional staff member; and Benjamin Chance, clerk.
Mrs. Miller. It's 1 minute after 9. We are going to start
this hearing on time, here. I certainly want to say good
morning to all of you. We certainly appreciate all of you for
coming.
As you know, I'm Congresswoman Candice Miller. I'm going to
call our Subcommittee on Regulatory Affairs to order and
welcome you all here.
This is a very excellent turnout. We see a number of people
in the audience who are at different levels of government and
everyday citizens and people who are involved in this issue and
have had a great consternation about the issue and how it's
impacting our entire State, quite frankly.
We have titled our hearing, ``FEMA Floodplain Map
Modernization, a State and Local Perspective.'' I'm going to
make an opening statement that will hopefully lay out the
groundwork a bit about the issue and what it means. We are
going to be hearing testimony from Supervisor Jon Manos in just
a moment. Let me thank him personally so much for really being
the squeaky wheel in many ways, a principal advocate of this
particular issue and bringing it to our attention, and Mike
Pellerito, our township clerk, who joins us also, has met with
us here in the boardroom and talked about this issue, and we
have our township trustees and county commissioners who are
here as well. So we appreciate the hospitality for all of us.
We are holding this hearing to examine the State and the
local impact of floodplain remapping. This is an effort
currently underway by FEMA, the Federal Emergency Management
Administration. Actually, it's happening nationwide but they
are currently in our State right now.
FEMA issues flood maps that delineate areas within the 100-
year flood zone and uses the maps to determine flood insurance
rates.
A 100-year flood, also known as the base flood elevation,
is the calculation that represents a level of flood that has 1
chance in 100 of occurring in a given year.
Areas surrounding a potential flood source that are below
this base flood elevation are included in the 100-year flood
zone. If a property sits in the floodplain, then the owner is
required by law to purchase flood insurance if he or she has a
federally backed mortgage. And if an owner does not purchase
the required insurance, then the mortgage lender is required to
purchase it, and it adds, of course, the cost and the
applicable fees to the mortgage.
The National Flood Insurance Program, in my opinion, has
all kinds of inequities. First of all, States with very little
risk for experiencing flooding are funding the program at
astronomical rates, at huge rates, while States that we see are
flooded repeatedly year after year are essentially using FEMA,
if I could categorize it this way, almost as their own personal
ATM machines.
As you can imagine, changes in the flood flap can have a
dramatic affect on homeowners. FEMA is currently engaged in a
project to update the flood maps around the Nation and convert
them into a digital format.
Before they began this project, just about every flood map
in the United States was on paper and most of the maps were
very, very outdated.
Effective maps typically do not reflect changes in
topography or real estate growth that has taken place over the
last 30 years, of course.
FEMA, and then Congress, both realize the need for modern
digital maps. We do want to have the best maps, let's face it.
And Congress is currently providing $200 million per year to
FEMA for its modernization initiative.
And St. Clair County FEMA expects to have new maps in
effect by the end of next year. Everyone here, I think can
agree that the floodplain maps are outdated.
Here in Clay Township, the current flood maps became
effective in 1982 and certainly a lot has changed in the past
25 years.
It is important that the flood maps that communities rely
on for local planning, for local building ordinances, etc., and
used by homeowners and mortgage lenders to determine flood
insurance requirements, that these maps do reflect the growth
that has taken place during that time. But I think FEMA is
proposing to do something that has everybody in our area sort
of scratching our heads here a bit, because they want to raise
the base flood elevation an additional 14 inches.
According to FEMA, the reason for this proposal is to
ensure that the area flood maps, again, accurately reflect the
area's risk of flooding.
The proposal is based on an 1988 study on water levels in
the Great Lakes which was conducted by the U.S. Army Corps of
Engineers.
We are not going to be here today to debate the science
behind that study, but the last year the data used by the Corps
for the study was 1986, which we all remember was a year that
the Great Lakes hit their historic high.
I was a township supervisor at the time in Harrison
Township down in Macomb County. I remember those high water
levels very vividly.
FEMA'S proposal seems to contradict what everybody around
here has witnessed over the past 20 years, and that is that
Lake St. Clair has dropped almost 3 feet since 1986. It is now
almost 5 feet below the current base flood elevation.
If FEMA goes ahead with the proposal, the new base flood
elevation will be 6 feet above the current lake level, even
though the lake has been below its historic level since 1998.
Over the past 20 years the lake's average level has dropped 11
times.
Furthermore, in the last 88 years, the Army Corps has been
tracking lake levels for the last 88 years. The lake levels
have changed an average depth of less than 6 inches per year.
This is why so many of our local residents are very upset
in that FEMA's proposal would be reasonable, perhaps, if this
area was actually prone to all kinds of flooding every year.
There are two tables of information on display here, and
you might take a look at those. The table on your left, my
right, I guess, includes statistics indicating the amount of
money different States have paid into the flood insurance
program between 1978 and 2002 and how much they have actually
taken out. And, of course, these are the figures that were
before the recent hurricanes that the Gulf area of our Nation
experienced.
Between 1978 and 2002 there were 10 States that received
more in claims than they paid in premiums. These States
received over $1.5 billion more from the program than they
paid. Yet the average premium in those States was only $223.
Michigan, on the other hand, paid almost $120 million more
into the program than we have received. Yet the average premium
for Michigan policy holders was almost $260. Quite a difference
there.
Obviously, we ask the question of ourselves, how can this
possibly be? If you think about the nature of insurance, people
that do not experience losses typically subsidize those that
do. But, certainly, I think if a private insurance company
decided to charge significantly higher premiums for policy
holders with little or no history of claims, they would
probably be hauled in front of our State insurance commissioner
to answer the question of why that is all happening.
The chart on your right, my left, I hope I'm pointing in
the right direction, outlines data that is recent through the
end of February of this year.
In four States that are seemingly hit with hurricanes every
year, the premiums per policy that will be paid to each of
those States is an average of $175 below the rate that is paid
by Michigan policy holders.
You know, if you think about that just for a second,
Michigan residents are paying on average 51 percent higher
premiums than five Gulf States: Louisiana, Mississippi,
Florida, Alabama, and Texas, which seems to me to be patently
unfair.
Obviously, we all watched the terrible events of Katrina,
and some of the other hurricanes that hit Florida. And we are
all Americans before everything else. We are Americans first,
and we are a compassionate Nation, and we certainly feel for
the people in those areas.
However, if you look at the floodplains claims again in
recent years, there is only two ways they can increase the fund
into this flood insurance program. They either have to raise
the premiums or force more people into the program. And to the
residents of St. Clair County and, in fact, the entire State of
Michigan, it seems obvious. They are trying to force more
people into the program knowing they will not have to pay us
back in the form of claim payments.
Municipalities in St. Clair County that would be directly
impacted by Lake St. Clair pay nearly $700,000 more in flood
insurance premiums than they can expect to receive in an
average year.
For the county as a whole, here in St. Clair, residents
will pay close to $1 million in premiums. But in 28 years, the
county has received only $2.7 million from FEMA in the form of
claims. And that means that in St. Clair County alone, this
county has made more than $8.1 million to FEMA than it has
gotten back in claims.
What would FEMA's proposal do specifically to raise a
floodplain here in Clay Township? Well, the average premium,
again, for township is roughly $500, and local officials
estimate that a minimum of 700 homes would be brought into the
flood insurance program if this proposal, as is currently
constructed, is finalized.
This means in Clay Township alone, residents here would pay
an extra $350,000 per year, or over $770,000 total. In 3 years
Clay Township will pay more to FEMA than it received in flood-
loss claims over the life of the program.
We can think about what that actually means as far as
driving up property values and the potential impact on this
area. And I'm afraid, and I think many of us fear, that FEMA
perhaps is not taking all of these consequences in its proposal
into account.
In Congress, we feel that we need to take a very good look,
obviously, at how the flood insurance program is run. It needs
to be reformed in order to fix the inequities that are inherent
in it. Until that time, though, residents need to be assured
that the program is run fairly. And I truly hope that this is
the case.
I want to thank all of our witnesses who I will introduce
in just a moment as they begin their testimony for this
morning's very important hearing.
I will tell you that it is extremely unusual to have a
congressional field hearing, as we call it a field hearing,
leaving Capitol Hill and going out into the community.
I had initially thought about doing this hearing in
Washington, because it is easy on many of the witnesses that we
would have wanted to have there. However, this is an issue that
impacts this area so dramatically, as I discussed with my other
colleagues, we did decide to bring Washington out to Clay
Township and into St. Clair County.
I think it's an appropriate thing. Based upon the amount of
participation we have this morning, I tell you sincerely, I'm
glad you are all here. You will be able to hear this testimony.
We will not be taking any specific action today. This is for us
to gather information. Then we will be digesting it and we will
let you--we will keep you up to date on exactly how the entire
process is proceeding.
Before we go to the witnesses, let me welcome another
member of our subcommittee, introduce him to all of you, this
is representative Mike Turner, who is an outstanding Member of
Congress. He and I came into the Congress at the same time. We
said we ran for office because we wanted to be freshmen again.
We were freshmen in Congress for a short period of time.
But Congressman Turner is from Ohio, our neighboring State
of Ohio. He has been a former mayor of Dayton, OH. As I
mentioned to the supervisor, he is very well familiar with
local issues, planning issues, and ordinances and how things
like this can impact a community or a city or a township.
He serves with me on the Government Reform Committee, the
subcommittee is under the Government Reform Committee, which is
a committee that I am very proud to serve on, as is Congressman
Turner. We both like to think of ourselves as reformers of
government. And we have been very involved in a number of
various issues, and I appreciate him taking the time to come
from Ohio today. We will both be back in session tomorrow in
Washington. I want to welcome Congressman Turner to the
hearing.
[The prepared statement of Hon. Candice S. Miller follows:]
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Mr. Turner. Thank you. Thank you, Chairman Miller. I
appreciate you having me here for this hearing. I think having
a field hearing is always important because it gives us the
opportunity to expand the congressional record on a particular
issue.
By coming out to this community and having this hearing,
Chairman Miller has really taken to Washington all of the
testimony and all of the input that will occur here today as an
attempt to impact this overall issue. So many times if you have
a hearing in Washington, it's just one of many other hearings
where you have input on Federal issues. But when you take it to
a local perspective and you get the local view, and you can
marry it to the processes of this committee and you can take it
back to Washington, you can enhance your effectiveness.
Chairman Miller, by bringing this here, has helped
highlight this issue and will make a big difference when she
takes this information back to the committee and back to
Washington.
I know you are all very proud of your Congresswoman. I am a
big fan of hers. As you know, with her background serving on
the State level or the local level, being an individual who
knows how to get in and run things and understand the
importance of issues and how they impact people's lives, she is
a great advocate for you in Washington. She is a great advocate
for personal liberties and for personal responsibility.
I served with her also on the Armed Services Committee, in
addition to serving on the Government Reform Committee, where
she is a strong advocate there for your local community.
I know she played a big role in the outcome of the BRAC in
this area and making certain that the facilities that you had
here had a strong voice. And as I'm certain many of you know,
she has been a national voice on the issue of the impact of
illegal aliens on both the number of congressional districts
that are awarded to States on the electoral college. She came
to Ohio and testified before the Ohio House on the important
issue of our census counting illegal aliens for allocating
States, congressional representatives, based on the resident
illegal aliens in their State. It's an issue in an inequity
both to Ohio and, I believe, to Michigan. It's wonderful that
she has brought national attention to an issue that concerns
fairness.
This is an issue of fairness also. And it's great that
Congresswoman Miller, as her chairmanship of this committee, is
reviewing the issues of FEMA and of the floodplains and as they
relate to insurance, and the economic impact to your community.
We all know, as we have seen in the Katrina catastrophe, we
need to take a closer look at how our Federal agencies operate.
And it's all a part of Congresswoman Miller doing that to make
certain that, on the local level, people are served by what
occurs on the Federal level.
People are always very disappointed when they look at
States' programs and find that their donors to programs that
perhaps are benefits to others. And the only way to make
certain that we have that equity is to have strong voices like
Chairman Miller. I appreciate being here. I look forward to the
testimony and I look forward to the additional input from FEMA.
Mrs. Miller. Thank you very much. Because the Government
Reform Committee is the only committee in the House that has
subpoena authority, it is always the process of the committee
to swear in any of our witnesses who are going to testify. If
you will all rise, please, and raise your right hands. If there
is--not everybody in the audience because you won't all be
testifying, just our witnesses here that will speak.
Although I could swear you all in, who knows what you would
say.
[Witnesses sworn.]
Mrs. Miller. Thank you very much. I appreciate that.
And you will see these lights, as do our witnesses that go
on here. Obviously, the red light, when we get--we try to keep
the testimony within about a 5-minute timeframe, but I'm not
going to cut you right there. Just to sort of keep the flow of
it, you will see these lights on, when the red light goes up
there, that has been 5 minutes.
Our first witness this morning is Janet Odeshoo. Am I
pronouncing that correctly?
Ms. Odeshoo. Odeshoo.
Mrs. Miller. She is the Deputy Regional Director for the
Federal Emergency Management Agency [FEMA], at the regional
office in Chicago. She has been there for 10 years. She's
currently responsible for the implementation of disaster
response and recovery activities and oversight of FEMA's
prevention activities and preparedness activities for the
States of Illinois, Indiana, Michigan, Minnesota, Ohio and
Wisconsin. She has worked for FEMA for over 25 years. During
that time, she was the Director of the National and
Technological Hazards Division, which was responsible for
administration of the National Flood Insurance Program, the
Earthquake Hazards Reduction Program, the Chemical Stockpile
Emergency Preparedness Program and the Hazardous Material
Program as well.
She has been overseeing programs, including the National
Flood Insurance Program, trying to assist communities in
reducing or eliminating the effects of disasters on people and
property.
We certainly welcome her to the hearing this morning. We
appreciate you taking the time to travel to Clay Township. The
floor is yours. We look forward to your testimony.
STATEMENTS OF JANET ODESHOO, DEPUTY REGIONAL DIRECTOR, FEDERAL
EMERGENCY MANAGEMENT AGENCY [FEMA]; LIEUTENANT COLONEL DONALD
LAUZON, MEMBER, CORPS OF ENGINEERS; JUDSON GILBERT II, MICHIGAN
STATE SENATOR, 25TH DISTRICT; AND JON MANOS, SUPERVISOR, CLAY
TOWNSHIP
STATEMENT OF JANET ODESHOO
Ms. Odeshoo. Thank you. Good morning, Chairman Miller. I am
Janet Odeshoo. I'm Deputy Director of the U.S. Department of
Homeland Security Federal Emergency Management Agency Region V
Office in Chicago.
As Chairman Miller said, I have been with FEMA for over 25
years. I'm a career FEMA employee, and all of my 25 years of
government have been with FEMA. I have a lot of experience in
emergency management.
I appreciate the opportunity to appear before the
Subcommittee on Regulatory Affairs. I will highlight some of
the information in my written testimony for your consideration.
I am aware of the controversy concerning our remapping of
flood risk in St. Clair County and recently received a copy of
Michigan House Resolution 158 urging FEMA not to remap flood
risk in several Michigan counties.
Michigan House Resolution 158 discusses an economic
hardship that must be born by those required to buy flood
insurance. It is our belief, based on prior experience, working
firsthand with flood disaster victims, that uninsured flood
damage causes far greater economic hardship.
Many of the Nation's flood risk maps need to be updated,
St. Clair County's maps included.
Most communities in the county that have voluntarily joined
NFIP have flood risk data that is more than 25 years old.
In 2003, FEMA launched the congressionally mandated Flood
Map Modernization Program called Map Mod to update and
modernize the Nation's flood insurance rate map over a 6-year
period. St. Clair County--is part of the national Map Mod
efforts.
Identifying flood risk is very important and FEMA uses the
best information available when we prepare new maps.
The base flood elevations [BFEs], for waterways in the
Great Lakes system that have shown on the existing flood
insurance rate maps were derived from data compiled by the U.S.
Army Corps of Engineers in 1977.
In 1988, the Corps updated their earlier work and published
a report entitled Phase I Revised Report on Great Lakes Open
Coast Flood Levels. The Corps published a Phase II report that
revised BFEs for the St. Clair River and other connecting
waterways.
Since the Anchor Bay portion of Lake St. Clair has
different dynamics, the State of Michigan contracted with the
Corps to do a separate study on expected flood elevations on
Anchor Bay. That report was completed in 1989.
Lack of funding prevented us from updating the flood
insurance rate maps for communities at that time to reflect
this new flood risk data. However, these reports represent the
best available data that we have for the Great Lakes region,
and with map modernization, that new data is being incorporated
into the digital flood hazard map we are now producing for all
counties in the Great Lakes.
Clay Township officials have referenced a report from the
International Joint Commission that they interpret as refuting
Phase I and II reports.
It is our understanding that the Corps will address the
technical merits of these reports in more detail.
A common theme in the IJC and Phase I and II reports is the
cyclical nature of the Great Lakes water level. A building
constructed in the floodplain of a Great Lakes system waterway
is likely to exist through a number of high and low-water level
cycles. Lake level may be cyclically low now, but they will
rise.
The GIS format Flood Insurance Rate Maps [FIRMS], have not
yet been compiled, but Macomb County, which is adjacent to St.
Clair County, is further along with the remapping process and
can serve as an example of our mapping in this area.
The display FIRM provides examples of the old and revised
floodplain delineations in the St. Clair shore area. We have
added information on the revised map to make it easier for you
to compare the limits of the old and new floodplain boundaries.
The revised map identifies the floodplain based upon data
and the Corps' Phase I report. Please note, although the
floodplain now includes some structures that were not located
in the floodplain before, many structures that have previously
been identified in the floodplain--I'm sorry, let me repeat
that. Please note, although the floodplain now includes some
structures that were not located in the floodplain before,
using better topographic data provided by the county has
allowed us to remove many structures that had previously been
identified in the floodplain. The Macomb County FIRM will
become effective on September 29th of this year.
The decision to map or not to map flood risk zones cannot
be based on the perceived economic impact of the cost of flood
insurance. It must be based on risk and risk must be based upon
science.
Valid scientific methods and the best-available data were
used in the 1988 Phase I and II, as well as the Anchor Bay
reports.
Although we anticipate little change in expected flood
elevations, we have asked the Detroit district to validate the
1989 Anchor Bay analysis to incorporate recent engaged data to
determine impact on expected flood levels in St. Clair County.
To conclude, FEMA remapping uses the best science available
to model the risk and present that information to communities
so they can use it to guide development and protect their
citizens.
It is important to understand that FEMA will continue to
accept and consider any technical or scientific data or
information on flood risks. Data supporting a map revision may
be submitted at any time.
As technically valid data is developed, new digital mapping
format will allow us to easily revise the maps to incorporate
new modeling that meets NFIP Guidelines and Specifications.
Ignoring or minimizing flood risk serves no use or purpose.
Our communities and citizens benefit from knowing the valuable
information they need to make responsible risk management
decisions.
Congress has mandated that we update our maps to more
accurately identify flood risk. We remain committed to
providing the best available flood risk data using the
financial resources provided and the congressional support of
Map Mod to produce the best maps we can.
Thank you for providing the opportunity to share these
views today. I will be happy to answer any questions that you
may have.
Mrs. Miller. Thank very much. We appreciate the testimony.
[The prepared statement of Ms. Odeshoo follows:]
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Mrs. Miller. Our next witness is Lieutenant Colonel Lauzon,
who actually is one of our neighbors. He lives at Selfridge Air
National Guard Base. He is going to be retiring unfortunately--
I think very unfortunately, is it the end of June.
Colonel Lauzon. July, ma'am.
Mrs. Miller. July. He has done a remarkable job as a member
of the Corps of Engineers and for our community, in particular.
Previous assignments include service as chief operations
with the Defense Mapping School in Virginia. He is a resident
engineer at Fort Dix in New Jersey, a company commander of the
299th Engineer Battalion at Fort Carson, CO, and also Oklahoma.
He was also Deputy Chief of Engineers at the Army Corps of
Engineers headquartered in Washington. We have worked together
over the years and he has served here in our area on a number
of issues that have had a huge impact for our immediate
community here. He was very responsible in assisting with the
dredging of the St. Clair River, as well as out into Lake St.
Clair freighter channels. He has worked with us on dredging
assignments throughout the area on environmental management
activity that is happening for the St. Clair River basin and
out into Lake St. Clair as well. So certainly we have
appreciated his services. He spent quite a bit of time in Iraq,
and certainly for all Americans, appreciate this great patriot
and the floor is yours, Colonel Lauzon. We look forward to your
testimony.
STATEMENT OF LIEUTENANT COLONEL DONALD LAUZON
Colonel Lauzon. Good morning, Chairman Miller and
Congressman Turner.
I first like to thank both you for your leadership roles on
the Armed Services Committee. Thank you for your service to the
Nation.
My name is Lieutenant Colonel Donald Lauzon, 52nd Commander
of the Detroit District of the U.S. Army Corps of Engineers.
I appreciate the opportunity to appear today before the
Subcommittee on Regulatory Affairs. It is an honor to be able
to testify on such an important topic.
The Detroit district, which faithfully served the Great
Lakes region in the Nation since 1841, covers 82,000 square
miles of land and has over 4,000 miles of Great Lakes
shoreline.
The district's major mission is to investigate, plan,
design, construct, operate and maintain congressionally
authorized water resource projects throughout the Great Lakes
basin.
The district also operates and maintains the world famous
Soo Locks, as wells as 94 harbors throughout the Great Lakes.
In support of the Nation, the U.S. Corps of Engineers often
provides technical support to other government agencies,
including the Federal Emergency Management Agency.
Over the years, the Corps has done a variety of work for
FEMA, and this has included the determination of 100-year flood
elevations for the Great Lakes.
This testimony provides a summary of the Great Lakes flood
levels studies that were done. It is being provided in response
to recent concerns about FEMA's remapping of flood risk in St.
Clair County.
In 1974, FEMA contracted the Corps of Engineers to
investigate methods and determine the 100-year flood levels for
the U.S. shoreline of the Great Lakes.
Based on these investigations and subsequent reviews from
the Great Lakes States and other Federal agencies, a procedure
was adopted. Using this procedure, the Corps of Engineers
derived flood levels for the Great Lakes and their connecting
channels with certain probabilities of occurring.
The results were provided to FEMA in 1977 in a report
entitled Report on Great Lakes Coast Flood Levels. It was the
flood levels from this report that FEMA used to map the
original 100-year floodplains.
In the mid-1980's, the Great Lakes experienced record high
levels which resulted in significant flooding and damages. In
some locations, the reported water levels equaled or exceeded
the 100-year flood levels published in the 1977 reports.
In 1987, FEMA contracted the Corps of Engineers to update
the 1977 report. This update retained the basic approach
utilized in the 1977 report and incorporated additional water
level data through 1986. The methodology and the resulting
flood levels received considerable State and Federal agency
review.
The revised flood levels were provided to FEMA in 1988 in a
report entitled Revised Report Great Lakes Open Coast Flood
Levels.
The method adopted in both the 1977 and the 1988 reports
analyzed peak levels recorded at water level gauges each year.
Based on the number of years in the gauge record, and the
number of times levels were exceeded, water levels with certain
probabilities of being exceeded were determined.
The 100-year flood level represents an event that has a 1
percent chance of being equaled or exceeded in any given year.
All the water level gauges on the Great Lakes and the
connecting channels, with at least 10 years of records, were
used in the 1977, as well as the 1988 reports.
The highest instantaneous water levels recorded each year
were used in these analyses. These water levels include both
the still water level of the lake and the wind set-up at the
gauge location. Wave run-up caused by storm waves meeting the
shore was not considered in the 1977, nor the 1988, report.
For communities bordering Lake St. Clair, flood levels
determinations were made using water levels recorded at St.
Clair--at the St. Clair Shores gauge. At this gauge, the 100-
year flood elevation increased 13 inches from the 1977 report
to the 1988 report.
The Anchor Bay portion of the Lake St. Clair has a
different dynamic than the open lake. Strong winds often push
water higher in the bay than on the lake's open coast. For that
reason in 1989, the State of Michigan contracted the Corps of
Engineers to do a special study to determine the 100-year flood
elevations in Anchor Bay. Wave run-up was not included.
The Anchor Bay study resulted in a 100-year flood
elevations that are 2 to 5 inches higher than the level for the
open coast in the 1988 report.
FEMA is using the flood levels from the 1988 Great Lakes
open coast to update the flood maps for the open coast of the
Great Lakes and their connecting channels.
For Anchor Bay, FEMA is using the elevations from the 1988,
1989 special study contracted by the State of Michigan.
During the 12 years following the record high levels of
1986, the Great Lakes continued to be well above average.
In the late 1990's, very dry conditions across the Great
Lakes basin, coupled with the mild winter and very little snow
or ice cover, caused a rapid decline on water levels on Lake
St. Clair.
By 1999, the level of Lake St. Clair was below its long-
term average. In the 6-years since then, the level of St. Clair
has remained at or below its long-term average.
What effect adding these 19 years on both high and lower
levels would have on flood frequencies is not clear and would
need to be evaluated.
Water level fluctuation on the Great Lakes is driven by
weather. The Great Lakes have been in existence for thousands
of years but water levels have only been recorded for a
relatively short portion of that time.
It is very likely that lakes may reach higher and lower
levels than those that have been recorded. Flood levels
statistics only predict the probability that certain levels
could occur. They cannot predict future floods.
There have been questions concerning a 1993 report
completed by the International Joint Commission, the report
referred to as the Levels Reference Study, Great Lakes and St.
Lawrence River Basin. This study was conducted in response to
record high waters in the mid-1980's. One part of the study
looked at water level statistics for decisionmaking. The Levels
Reference Study did not determine probable flood levels, but
did develop methods for looking at lake level probability for
an evaluating proposed regulations plans.
In conclusion, there are many techniques and factors that
can be considered in determination of probable flood levels.
The methodologies used in the 1988 Great Lakes Open Coast
Report and the 1989 Anchor Bay Special Study were reviewed by
multiple agencies and are considered to be valid approaches for
determining probabilities along the Great Lakes and the Lake
St. Clair--St. Clair shorelines.
With more data, the numbers will change. The magnitude of
these changes would not be expected to be great, but evaluation
would be needed to quantify them. Adding more years of data and
looking at more detailed analysis would always be the preferred
option.
Again, thank you for allowing me the opportunity to speak
with you today, and I will be happy to answer any of your
questions. Thank you.
[The prepared statement of Lieutenant Colonel Lauzon
follows:]
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Mrs. Miller. Thank you very much. We appreciate that. And
our next witness is a good friend of this community, long
time--lived here many, many years and represented this area as
well, and that is State Senator Jud Gilbert. We appreciate his
attendance here and how involved he has been for the State
level. In fact, before he testifies, I notice there are a
couple of your colleagues out in the audience as well. Let me
just recognize them quickly. This has been every level of
government working together at the Federal, the State, the
local level. I see State Representative Phil Pavlov is in the
audience. We appreciate your attendance, Representative.
I see some county commissioners. No one gave me a list. I
hope I'm not going to miss anybody. I see Pam Wall, County
Commissioner Pam Wall, and Terry Lundon is with us as well, and
Jeff Blum I see out in the audience, also and Wally Evans, I
saw a little bit earlier. So hopefully I have seen all of our
county commissioners. We appreciate everybody's interest in
attendance. I hope I didn't miss anyone.
Senator Gilbert has represented this area, as I said, very
well in a number of different capacities over the years. Right
now, as some of you may know, he is the chairperson of Senate
Committee on Transportation. We have worked together on a lot
of road projects, funding for the Bluewater Bridge Plaza and
many other kinds of issues relating to transportation as well.
He also serves as vice chair for the Senate Committee on
Agriculture, Forestry and Tourism. He has been very, very
involved in a number of different community organizations here,
Optimist Club Youth for Christ, the Algonac Rotary Club, etc.
We appreciate the Senator's attendance here. The floor is
yours, sir. We look forward to your testimony.
STATEMENT OF JUDSON GILBERT
Mr. Gilbert. Good morning, Madame Chair and Representative
Turner. I would like to welcome you to my 25th Senate District
and my hometown. I have not only lived here many years, it's
been all my life. It's even longer than that.
Mrs. Miller. Even longer than many years.
Mr. Gilbert. Well, many of the points that I want to make
were touched upon in your opening statement and other
testimony, and I'm sure Jon Manos will hit on those again. The
fact that this map will be changed 14 inches I think is
significant. Those of us who live in the area can't remember
that water levels have been so low for such a long period of
time.
One of the things that I believe is a great injustice is
the fact that what we are dealing with, on the increased
floodplain levels, is 20-year-old data. People have made their
decisions on elevations for their homes, decided where they are
going to move and all of a sudden, by administrative fiat, they
are going to be put in this floodplain at considerable expense.
The point has been made that there is more premiums paid in
than claims; that we are a donor State. Many of my constituents
have felt because of FEMA's financial problems, they are coming
to Michigan where there's very low risk and coming in trying to
bail out FEMA at this time. And certainly that's not a good
thing for the people in this community or for the State of
Michigan.
This remapping will only increase the amount we pay with
little or no return to our constituents. Again, the water
levels are down. Having read several scientific journals on
this issue, some believe that the historic high levels that we
have reached in the past will not be reached in the future.
I believe that you've asked government to look into this
trend under the Bluewater Bridge, that there is reason to
believe that water levels are not going to return to historic
highs but, certainly, I think the big effect is money flowing
out of Michigan. We all know that we are in a very difficult
economic situation here in the State of Michigan.
Our government should be examining ways to alleviate
financial hardship on your families and businesses, not
strapping them with unnecessary costs and regulations.
You see, people are leaving the State of Michigan because
we are experiencing a one-State recession. Unemployment levels
are high. Our economy is suffering and these types of
burdensome fees and hidden taxes are a disincentive for people
to live in Michigan. Millions are taken away from Michigan
families when they cannot afford it.
The impact goes on beyond just having more people purchase
insurance and subsidizing Federal programs with hard-earned
dollars.
You yourself, Madame Chair, made note of this earlier this
year when you stated on the floor of the U.S. House of
Representatives since 1978, that was the year Michigan actually
opted into the program, the people of Michigan have paid $138
million, and in that same time FEMA has paid out claims
totaling less than $38 million.
I may not know everything there is to know about the job
that FEMA does, but what I know for sure is this: If we were on
the board of directors of a corporation and we did not give our
stockholders a fair return on the shares that they bought in
our company, we would be fired. FEMA is a broken-down company
that is not giving shareholders their fair return.
Mr. Manos has suggested and believes that there is
certainly a rule or a law that perhaps Michigan should opt out
of this program.
I believe he pointed out to me that there are several
States that are not part of the program. I think it would be
far better for us to have some self-insurance program here in
the State of Michigan and keep the dollars here in Michigan.
I guess the thing that really upsets me is that we send
these dollars, never to return to Michigan and, of course, we
need more economic activity in Michigan.
One other point I would like to make, in addition to a
House resolution, there was a Senate resolution that we passed,
I think, in the fall of last year. Mr. Manos came up and
testified at a Banking and Insurance Committee and passed
unanimously, asking FEMA not to go ahead with these proposed
increases in elevations, and it also passed the Senate
unanimously.
Thank you.
[The prepared statement of Mr. Gilbert follows:]
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Mrs. Miller. Thank you very much. We appreciate that.
Our final witness on our first panel is Supervisor of Clay
Township, Jon Manos. Mr. Manos has served a total of five
different terms as supervisor beginning in 1974. So he has
considerable expertise in regards to the flood insurance
program and water levels around the area as well. He served as
township supervisor here during both high-water periods in the
1970's and 1980's again.
He also was very involved in administering the original
Corps of Engineers flood program called Self-help and Operation
Foresight.
He served as the State of Michigan's first floodplain
manager and was a participant in a high-water symposium called:
A Look at the Land Side Lake Levels held in Grand Rapids.
Supervisor Manos, we appreciate your gracious hospitality
hosting this hearing and we look forward to your testimony. The
floor is yours.
STATEMENT OF JON MANOS
Mr. Manos. I thank you for coming to Clay Township, and
Representative Turner, to put a different spin, I guess, a
different perspective on the technical data sector. What we
like to deal with is how does this thing affect the actual
people that live here. I think that is very important.
I would like to present for the record, I have a petition
signed by over 2,250 residents, property owners, area property
owners, opposing any elevation change, I have additional
supportive information, and I also have comparison data, the
2006 100-year floodplain Rules and Regulations as they relate
to the 500-year regulation.
Mrs. Miller. Without objection those will be entered into
the congressional record of this hearing as well.
Mr. Manos. Thank you. This is their most recent from Macomb
County--that the 2006 100-year Floodplain Regulation which will
be placed for people to read, since they are in there, and this
reflects what the 500-year floodplain regulations are. At the
same time many of our residents will be put under that status.
Mrs. Miller. Thank you.
Mr. Manos. I'm going to touch for just a second on this
type of a headline, and it isn't something new. I think we all
know this. It's in the Detroit papers, it's in Washington
papers, etc.
FEMA has a number of problems, but that isn't the main
issue at this time. This is what I would like to really point
out to you very briefly, again; lake levels keep falling. This
data is being put forth many, many times over, every time we
pick up the newspaper, where is the water going, why is Lake
Superior 6 years now running below it's long-term average, and
it's a regulated lake. I don't want to get into this lake up-
and-down issue but nevertheless, this is falling.
Here is a map of the United States showing the policy,
growth percentage change for FEMA, produced by FEMA.
As you can see, all the yellow States, including Michigan,
California, some of bigger States, all have a negative growth
rate. That means revenues which sustain FEMA, and it's quoted
in their own words, that they exist on premiums. The whole
program is designed for that. These are all negative States
with growth.
I even went through and outlined in red for you the ones
under 2 percent growth, which is nothing. How can you sustain
FEMA with a negative revenue stream? You can't do it.
FEMA went broke. Here it is in U.S.A. Today, put out--it
was on CNN, FEMA halts flood insurance payments. They told 96
paying agents don't pay legitimate claims. We have no money to
back you up. They went to Congress and Congress approved, I
believe, it was something like a loan of $21 or $23 billion to
go to FEMA.
If you have a reduced revenue stream at all going down, how
do you intend to make mortgage payments that are in excess of
what revenues that are coming in?
Real brief again, I'm trying to be as brief as I can, FEMA
takes in $2 million a year nationally.
When it equates over the period of 27 years, it's about a
half a billion a year that is spent for actual claims. Where
does the other billion and a half go? You know where it goes?
It goes to administer the program. So you have a great amount
of money and those premiums that's leaving serves no purpose
for claims. That's a serious thing.
Now, if you borrow $23 billion, where--how did you pay that
back? Where does the money really go? Does it go to help people
that need to have their claims replenished? No. It goes to
administration. I just want to show you this.
There is no question about it, FEMA is going out of
business. The only way they can bring it back is increase the
floodplain elevation, get into the higher--the 500-year
floodplain areas where the homes have been built for 30 years.
Now, I would like to read our statement as quickly as I
can, and we will answer any questions.
On behalf of the many affected property owners, and not
only within Clay Township but within St. Clair County and State
of Michigan, the township wishes to express its appreciation
for this opportunity given by the congressional subcommittee to
hear testimony from concerned property owners, State, county,
and area-elected officials concerning the impact of FEMA's
proposed elevation changes and the historic value of the
national flood insurance program to Michigan since its
inception.
Proposed dramatic increases in the 100-year floodplain
elevation level have prompted the questions of the real intent
of such an action. There isn't any doubt that updating the
format of the old paper map using state-of-the-art digital
technology will bring about major benefit to the property
owners, as well as the lending institutions and involved
government agencies.
Present elevation levels remain constant for 25 years and
are reflective of two record flooding periods.
What has surfaced is information from FEMA records that
indicate the primary reason for raising elevation is to bolster
declining premium revenues needed to feed the program's growing
administrative cost.
The cost-benefit ratio throughout Michigan is ridiculous
and it has made Michigan a perpetual donor State. I'm not going
to read FEMA facts, we already did that with the State, what
have you, what the value is to Clay Township property owners.
FEMA has been quoted as saying adding more policy holders
will keep right the flood program financially. All FEMA records
indicate that the program is broke.
A quote in U.S. News, government agency has run out of
funds to cover flood insurance claims and an unprecedented move
has stopped payment to policy holders.
FEMA maps showing this growth in the United States
demonstrates the declining premium base.
I will move on a little bit from that. We will go with,
there is an excess of $1.5 billion each program year as an
average nationally.
Even with the excess of revenue over claim payments the
program remains broke and now must pay back $23 billion it just
borrowed.
Only one alternative logically exists, and that is to
incorporate existing structures lying in the unrestricted 500-
year floodplain into the existing premium base.
Remember these structures have been outside the
jurisdiction the Army Corps of Engineers and FEMA regulations
for over 27\1/2\ years.
And now simply adjusting 20-year-old data to make the shoe
fit, FEMA gains needed revenue and the Corps now exercises
regulatory jurisdiction over thousands of properties previously
exempt. No practical justification can be given for either
agency to now.
After 30 years of granting unrestricted compliance to
thousands of properties, tell their owner to start paying flood
insurance and accept the fact their structures don't meet the
new floodplain building standards.
FEMA has, in effect, created the potential for Michigan
economic disaster. Who reaps the gain from the 100-year flood
elevations? Certainly not the homeowner.
By changing a structure from a conforming status to a
nonconforming status, the owner definitely becomes a loser. No
amount of icing by FEMA can change that fact. The owner may
have to stand the expense of purchasing flood insurance he
doesn't want.
The sale value and marketability of the property will
definitely be negatively affected. Septic tank fields, they
need to replaced and an entire structure may need to be
elevated after the incurrence of a casualty loss.
The cost of new construction will also increase, which may,
in fact, place the cost of owning a new home out of the reach
of many families.
Clay Township is well aware of the flooding of both the
1970's and 1980's. The township worked with the Army Corps in
administering the Self-Help and Operation Foresight Programs
and distributed over 200,000 sandbags.
The township is also aware of the many studies commissioned
by the International Joint Commission relating to the inflow
and outflow regulation of the Great Lakes.
What was not mentioned a few minutes ago by the Army Corps
of Engineers was a Great Lakes upper study plan begun in 2001
at a cost of somewhere around $50 million and is still ongoing
that deals with the subject matter and reflects numerous
variables which have to be incorporated into calculations used
to change 100-year floodplain levels.
Some of the noted variables: The dramatic increases in use,
global warming, channel dredging, re-evaluation of existing
divergence, re-assessing a plan, 1977-A, and Long Lake and
Ogoki diversion adjustments. The FEMA elevation change proposal
ignores these as important variables and puts hindsight ahead
of foresight.
The point to be made is simple, that the levels in the
Great Lakes are below long-term average, and Lake St. Clair has
been predicted to peak at 574.3, over 4 feet below the present
100-year floodplain level and close to 6 feet from the levels
proposed by FEMA.
In conclusion, Clay Township again expresses its
appreciation for this opportunity to request that FEMA place a
moratorium on any changes which will elevate the present
floodplain elevations. Thank you.
[The prepared statement of Mr. Manos follows:]
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Mrs. Miller. Thank you very much. We appreciate that.
Colonel Lauzon and the supervisor didn't want to get too
much into lake levels and the Army Corps of Engineers' impact
on some of those things. You and I have been working very
closely on an issue that I think might have some impact on this
whole concept of the mapping and what happens. Of course,
that's with trying to find funding for a 3-D model where you
would actually construct--the Corps, that they would actually
construct a 3-D model of the St. Clair River. Because there has
been a coastal engineering firm--very widely respected that
recently did a study, they are theorizing that because the St.
Clair River had extensive dredging in the mid-1970's--excuse
me, actually 1960's, 1962 to 1964, to open up the upper lakes
for shipping, because of that dredging, and subsequent
dredging, and subsequent erosion as well, that you have an
effect in the St. Clair River almost like a plug in a bathtub
has been pulled.
They are theorizing that the amount of water that is going
through the St. Clair River now because of that action
interpolates to approximately the size of Lake St. Clair being
diverted down the Erie Barge Canal out into the Atlantic Ocean
about every 18 months. We are not sure whether or not that's
so, but we are trying to get funding to build a 3-D model for
this.
I know the Corps has done a similar thing in the
Mississippi River. If it is so--I won't go into all of the
other theorems about why the lake levels do fluctuate, but do
you think if we were able to get the 3-D model and show that
theorem is correct, that model would have some impact on FEMA
and the flood insurance rates for the entire region here?
Colonel Lauzon. Congresswoman, good question. The study
that you are referring to is, the Upper Lakes Plan Study, and
the other report that you're referring to is the Bared Report
that was commissioned by the Georgian Bay Association with
regard to lower lake levels. In fact, it had--the report stated
that increased dredging north of--actually, through the Lake
St. Clair or St. Clair River had an impact on water levels
flowing out at a considerable rate throughout the basin.
That report is under review. There are many aspects of that
report that were not discussed. One is static rebounds, because
the lakes were formed on a glacier, the lack of rainfall and
precipitation snowpack on Superior. There are many factors that
are impacting the water levels, not just the increased
dredging.
With regard to your 3-D model, we have a one-dimensional
model right now that we are using. It's primarily focusing on
sediment transfer. But as you and I spoke earlier, that 3-D
model I think would be very beneficial, not only for the lake
levels as determined by sediment transfer, but also for all
aspects of how we determine flows of water through the basin,
where the floods potentially might happen with greater
fidelity. So we welcome that report. I'm sorry, we welcome that
model, if we can get funding. I think we have authorization but
no appropriation, as you are aware. If we can get that
appropriation, that would be very beneficial.
If I can just add one other additional thing with regard to
that. With your leadership, ma'am, the study that you
introduced before the House Committee Transportation and
Infrastructure, I think could be also a very good tool that we
can use.
As you are aware it did get approved, authorized. That
could be a tool. In fact, I just have some notes here. But it
takes a look at--it takes a look at the Corps to conduct a
study for protection, environmental restoration and protection
for recreation and related purposes for the Clinton River and
Anchor Bay watershed. So that would be a great tool as well if
we can have--continue to have Congress's support to push that
forward. I think that would be a very big benefit to the local
communities as well, ma'am.
Mrs. Miller. I appreciate that.
Ms. Odeshoo, if I could ask you, you testified that you
thought--you were looking at a proposal from FEMA to raise base
flood elevations, put levels at about 6 feet above current lake
levels in--excuse me, in Lake St. Clair as well, to finish up
what Colonel Lauzon was just mentioning about snow pack up in
Lake Superior, and a number of other factors that go into the
dynamics of why lake levels fluctuate. But for the lake levels
to raise 6 feet, what did you think would actually have to
happen to raise a lake level 6 feet?
Ms. Odeshoo. Congresswoman Miller, I don't know what would
have to happen to raise the lake level 6 feet. I can tell you
that that we do know lake levels are--the Great Lakes levels
are cyclical. They have risen tremendously high. Right now they
are at a historic low.
FEMA understands that the issue right now, because the lake
levels are low, FEMA's responsibility under the National Flood
Insurance Program is to consider the actual risk. And there is
an actual risk if those lake levels go up, and it's expected
they will go up.
Mrs. Miller. You know, we were also talking about some of
the various factors that impact, and I know, perhaps, FEMA
doesn't take this into consideration, but I guess I can ask you
whether or not you think you might. For instance, talking about
wave run-up and some of the different things that are not
considered; the Coast Guard, I think is a doing an
extraordinary job now of really doing some of the ice cutting
capabilities that they have along the St. Clair River. We see
them out during the year.
Do you use any of those kinds of factors when you think
about raising the base of the flood elevation either?
Ms. Odeshoo. We use the best data that is available to us.
And right now the best data is that available to us is the 1988
and 1989 Corps studies. I need to emphasize as strongly as I
can that FEMA will accept and consider any technical,
scientific or any other data that is provided to us. And it's
very important that if there is data out there, that we need to
consider that it be provided to us.
Mrs. Miller. Senator Gilbert, if a company, an insurance
company that is licensed to do business in the State of
Michigan, AAA, or State Farm, or one of the larger insurance
agencies, if a situation or a scenario was brought forward to
you, or to the insurance commissioner, some of the details and
facts that have been pointed out to us today about the
difference in the amount of claims that are being paid out as
opposed to the amount of premiums that are being paid in by a
group of the insured.
What do you think the response from the State officials
would to be a private company having this?
Mr. Gilbert. Well, I see a great disparity between premiums
and claims because of the regulatory body we have here in the
State of Michigan. Those premiums will be rolled back and I
assume since that has not happened necessarily since I've been
in the legislature that perhaps some money would be refunded to
those payment premiums. I think that points out very clearly
what's wrong with this program, that those of us here are very
little risk have been confronted with additional insurance
premiums by increasing the flood zone.
And, again, I think the fact--I don't believe there is
anybody on the Federal level, other than congressional
oversight, that is regulating this particular federally agency
so--but at the State level, there's mechanisms to correct that.
Mrs. Miller. Ms. Odeshoo, I'm not certain whether any
particular State has ever opted out of the Federal Flood
Insurance Program. I'm not sure that we in Michigan are
prepared to do that either, although I will say it's an option
that we have had a lot of discussion on and are exploring. And
part of the purpose of this hearing here today is for us to
continue to get input and determine whether or not we would
want to make a recommendation like that to our State Senator,
make a recommendation like that to the State.
Are you aware of any other States that have opted out, and
if I could, I don't know if you can answer this question, but
if a State was to opt out of the Flood Insurance Program, and
perhaps self-insure, would that preclude the State from
availing itself of other Federal disaster moneys? I don't know
if you could answer that question.
First of all, if you are aware of any other States that
have opted out or are considering opting out? Again, since this
is happening nationwide. I know I have talked to some of my
colleagues in the coastal States, North Carolina, Florida, have
seen similar articles that we have seen in our Detroit papers
are being written by other areas as well as this remapping
process is happening nationwide.
Ms. Odeshoo. One moment.
Mrs. Miller. If you would like to ask her to come up to the
table to testify.
Ms. Odeshoo. She didn't swear herself in. I think she can
help me with this. There have never been States that opted out
of the program. There have been communities that have opted out
in terms of self-insurance. That would only apply to State
agencies. Self-insurance would not apply to individual
homeowners.
Our concern with any community opting out of the program,
I'm sure you are very well aware of repercussions of that, just
to name a few things. Flood insurance will no longer be
available and no Federal grants or loans for building in the
identified areas. Disaster assistance would be omitted, except
in the case of emergencies and temporary housing and that is a
huge issue right there in terms of not being able to get
certain kind of disaster assistance. Federal mortgage insurance
requires flood insurance. If flood insurance is unavailable,
Federal mortgage insurance through the FHA, VA, Farmers Home,
others, would not be available.
I would advise communities to be very, very cautious about
opting out of the Flood Insurance Program because of many
things that would become--many types of assistance that would
become unavailable to them.
Mrs. Miller. Thank you.
Just a final question before I turn to my colleague,
Representative Turner, for his questions as well.
I would like to ask the supervisor, since we were both
supervisors in 1986 when we had the high water, I know the
kinds of things we were putting in place in Macomb County, and
some of the areas. I know it was happening all the way up the
shoreline. What kinds of things have happened in Clay Township,
just as example for--as you have done your planning, as people
have come in to even putting on additions onto their homes or
raising elevations for new building, is there much more
cognizance of high-water levels and what kind of negative
impact? If you could talk from a local perspective about that.
Mr. Manos. I think the Corps of Engineers should recognize
how many thousands and thousands of seawalls have been put into
service that are elevated above the 500 or 100-year floodplain
and what effect they would have over the years, permits had to
be granted in the floodplain area to fill in properties. Those
things have all been done in this area.
There has been a tremendous amount of effort by the people
to construct at higher levels than what our 100-year
floodplain--our building inspectors told me that they require
right now to get that elevation up. But that was based upon the
established level for the last 27 years that our people have
built to.
I have a list, which I have given you in our record that
was just given to me for the Bluewater Isle. They have
somewhere around $165 million worth of structure value alone.
Those areas are basically in the B-zone. They were not required
and were not restricted in any way. And a lot of those homes
have been built there in the last 27 years and built according
to the rules and regulations applied by the Corps of Engineers
and FEMA, and they were not required and they went in and did
this and now we are going to come back and tell them, hey, your
house is not conforming, so on, so forth. We have taken steps.
I think it's part of the reason between the 1970's and the
1980's that were weren't as many claims that came through here
in the 1980's than there were, basically, in the 1970's for the
flood damage. And these things are records that are on file.
I don't know why we are sitting here right now and we are
back talking about this technical data from the Corps of when
the set-up and what is happening. That is static level in the
lake, and the Corps knows it as well as I know it. I have gone
back and I have added the data and it's in those reports.
And what we did also was submitted to me for Bluewater Isle
probably about 20 or 30 LOMAs that have been issued in those
areas over the last several years. Those people now are out of
the floodplain. They are not required to have mortgages. And we
have run those elevations and 85 percent of those people that
just got out are going to be put right back in. And that was
verified by our building department. It doesn't seem fair. They
did whatever they had to do. Evaluate, surveys, etc., and all
of a sudden now, we are going to tell them that 14 inches is
going to destroy the LOMAs you just got.
I don't know how we can stand on something that is 27 years
old, that we have allowed people to build in those areas and
now we are not protecting the shoreline at all. We should have
protected the shoreline if we were going to do that some-27
years ago, when the Corps said they had this technical data and
they held it in their pockets when we didn't have funds to
implement it.
Wait a minute, you put a heck of an economic situation on
to the poor homeowner that maybe just met a base--just basely
qualified for that mortgage.
I have talked to some of the people from our local banks
and they tell me flat out, some people barely make it, and they
have a mortgage and they are not in a floodplain. They were
told they weren't in it. Just going along fine. All of a sudden
now, this 14-inch elevation will change that and they will now
be required to come up with this extra money to pay for the
flood insurance and I, again, don't believe there is
justification. And that's what we have done locally to do that,
but as far as--that is an issue that can open the door, and I
would be happy to do that at another time with the Corps of
Engineers because I understand what happens at the static level
and IJC studies will relate to that. They don't want to admit
it, but it isn't the Corps of Engineers that controls anything
in the Great Lakes. It's the International Joint Commission.
They control how much water, how many gates are open up in Lake
Superior, what the flow will be coming down this way. And in
1985, in November I believe it was, they opened up everything
that they had up there. There was an unprecedented amount of
water. I believe it was 136,000 feet of cubic water a second
that came down into this basin.
In the lower end, if they remember, perhaps they forgot,
but they shot one of the locks down in the Whelan Canal. At the
same time that water was coming down, they did some adjusting
on the Detroit--compensating works down in Livingstone Channel.
They added another, I believe, 2 feet onto that 2,000-foot wall
to further restrict the water, keeping it up into our basin.
Those are facts that they can't deny.
I have a picture of a barge that was left in Lake Erie for
2 years that was sunk, and they didn't get it out of there. And
they can tell you how many inches it raised and backed up the
water into your system.
All we are saying is there is extenuating circumstances
that happened to bring those waters as high as they were. And
then we have a little wind set-up, or something else, in that
static level, and we are not taking into consideration the new
studies that deal with consumptive use in the last 20 years, I
believe, is almost equivalent of what goes out of the Whelan
Canal.
Mrs. Miller. All right. Thank you very much, Supervisor
Manos. We appreciate that information and I turn to my
colleague, Representative Turner, for his line of questioning
for the witnesses.
Mr. Turner. Thank you very much. I want to thank you again
for holding this hearing and the importance of diving into this
issue, looking at the data points, what is the impact
economically on the local community, and how are these programs
working and how are they serving.
I note from the information that you have given me that the
impact on Ohio, as in Michigan, is significant. Total premiums
paid in Ohio from the period you have identified from 1978 to
2002 is $204 million. The payments received were $118 million.
The total net benefit is a negative $85 million compared to--
you were identifying Michigan's negatives as $120 million.
Premiums in Michigan average $257. Premiums in Ohio average
$259. The issues appear to be very similar of the net donor
State status that we have both with Ohio and Michigan.
You have given me the numbers from my district itself. Here
in St. Clair County, you have 1,800 total policies in force
which of course increases if the remapping program goes
forward.
In the 3rd District of Ohio, which represents four counties
that I represent, we have 2,500 policies in effect. It's
certainly an issue that has great ramification beyond this
local area.
The type of testimony you are receiving is the type of
testimony nationally that can be used to raise the types of
questions that we need in order to be able to make decisions as
to how these programs should go forward.
Ms. Odeshoo, I have a question for you, and I also first
want to make a positive statement about FEMA. For an
organization that has received such negative scrutiny as a
result of its lack of most recent performance, we all do know
that FEMA has been an organization in the past that has
operated with the highest intent of making certain that people
are safe and that it has personnel that are focused in
responding to emergencies.
It's certainly unfortunate the agency has come under such a
high-level of scrutiny with the lack of performance that we saw
with Katrina and Rita.
But I'm assuming that with all organizations that come on
to a critical point, we look only to an increase in emergency
management response that we learned from this process and the
agency can be improved. So I do want to thank you for your many
years of services and for that of FEMA.
I do want to ask you--an opportunity to answer a positive
question, even though we see this data information and its
impact locally, and the negative impacts that it can have,
certainly there are some positive aspects of having flood
insurance and you highlighted this a little bit in your opening
statement. I would like to give you an opportunity to reflect
on that again.
I will give you a scenario: if I'm an individual that lived
across the street from someone and I am not considered to be in
the flood area and my neighbor across the street is considered
to be in a flood area, if a flooding situation should occur,
could you please tell me what the impact would be on me and
what the impact would be on my neighbor?
Ms. Odeshoo. Thank you very much, Representative Turner,
for your nice comments. We don't get a lot of those lately. So
a pat on the back every so often feels good.
The person that has flood insurance, obviously, will have a
lot more benefit than the person who does not, because not
every flood disaster, in fact the majority of flooding does not
result in a Federal declaration. So the only assistance that
many people will get is their flood insurance policies.
So if you are the person living across the street from the
person that has flood insurance and both of you flood,
obviously the person with the flood insurance policy is at the
greater advantage.
I might also point out to you that you, being that person
across the street who doesn't have flood insurance, could still
purchase flood insurance. Just because you are not designated
in an identified floodplain, you can purchase flood insurance
at the lower premium because the risk is lower.
One thing that I would like to clarify in terms of those
1988 and 1989 studies, I need to make it very clear that local
communities were sent a letter by FEMA with copies of those
studies. And although we didn't have the money at the time to
revise the maps, the communities were advised to use that
current information in their future--you know, in all future
floodplain-management decisions. I want to clarify that. This
is a very important point to make.
Did I answer your question? Is there anything further?
Mr. Turner. Yes, you did. In looking at the numbers we were
provided, clearly the flood insurance program appears to be
broken and is not set up to cover its costs. From the
information we have here, Hurricanes Rita and Katrina alone
will result in an estimated $23 billion in payments. For the
entire United States, 2006 premiums total just over $2.2
billion.
Obviously, if we both require that premium be paid in and
then send the difference of the bill to the general taxpayers,
those that are both paying premiums and don't have a loss are
paying twice. They are paying both, one, for the premiums they
are being hit with and where they have not had a loss and,
second, when the overruns are sent to the general taxpayers at
large.
I think that there is an issue of equity and fairness that
Chairman Miller has certainly identified. I don't think we
would expect--in any insurance program, there would be hopes
that the premiums paid in exceed the losses. But here we have a
situation where the losses exceed the premiums paid in, except
for in certain local or geographic areas that are bearing the
weight. That seems to me to be unfair.
Are you aware of any reviews that are occurring in FEMA, as
in looking at the issue of the failure of the program to pay
for itself, and the inequities that are occurring between
States?
Ms. Odeshoo. I'm sorry, I really don't have that
information available. But I would be happy to look into that
and get back to you for the record.
My guess is, yes, that's being very closely looked at. And
I recognize--we all recognize the fact that--I know the numbers
are clear, we are not denying the numbers, Michigan has paid
more into the flood insurance program than they have gotten
back, at least to this point.
I think I can make an analogy here. First of all, this is
not revenue producing, most insurance companies are not.
I think I can make a similar analogy just using myself, or
yourself. I'm betting that you have paid way more into your
homeowners than you have taken out of it. The same thing for
your car insurance.
We don't need the insurance when we don't need it but when
we do, hopefully it's there to pay our claims.
I feel very strongly the risk here in Michigan, it's just a
matter of time until there is flooding here and those people
that have paid the premiums in the National Flood Insurance
Program will get back as much or more, perhaps, as they paid
in. It's just a matter of time, it happens that way.
I don't know that for a fact, but I believe in the case of
Louisiana, they--up until Katrina, they paid way more into the
Flood Insurance Program than they ever got back in claims. So
that's something to think about as you consider this issue.
Excuse me, it was New Orleans, it was the city of New Orleans,
not the State.
Mr. Turner. The State had not--Louisiana was not a donor
State up until at that point?
Ms. Odeshoo. I don't believe so, the city was. I misspoke.
Mr. Turner. The analogy there doesn't fit with homeowner's
insurance because with homeowner's insurance, I pay with an
expectation if I have a loss, then I will receive a claim, but
I expect that the total amount of premium that I'm paying will
be managed by the insurance company to cover the loss spread
across everyone.
In this instance, only a small group of people are paying
premiums. The insurance company here runs into the red and then
sends the bill to everyone. That isn't the same analogy with
homeowner's insurance. But I can understand certainly that you
pay a premium and not everyone experiences a loss.
But at the same time, this is a program that clearly is not
being run equitably.
Colonel Lauzon, my next question is for you. In looking at
the information we have, it talks about base level being
raised, and in your testimony, you talk about the wind-
generated waves, the wave run-up caused by the storms. I know
we are not getting into technical discussion here, but that
intrigued me. It sounds like even if you add in the issue of
the new understanding of wave run-up and wind-generated waves,
you still have a substantial increase in the overall base level
that is expected of the flood level; is that correct?
Colonel Lauzon. Yes, sir. It's the same study. But a good
point to point out, in a 1977 study, there was only 22 years of
data. We produced the data for a frequency analysis and brought
in the 1988 data, which had 34 years. That's why you saw the
growth because the spike was clearly in 1986, and the spike in
1986 went up to--it actually went up to a--in 1986 it put the
IGLD over 577, back in 1986.
So I think the 1977 report was accurate with the data that
we had up to that point. It's hard to dispute the fact that in
1986 we had some considerable water levels and some serious
flooding. That's the difference there between those two.
Mr. Turner. Senator Gilbert, Chairman Miller made an
excellent point on the economic impact of the loss of being a
donor State and Mr. Manos did a great description of impact on
individuals, their individual budget of receiving a bill,
specifically of people that had built in an area that was not a
flood area but now are being placed in a flood area.
Chairman Miller has made the point of Michigan being a
donor State of $120 million having been--having left the State
compared with the numbers that she's provided to me, in Ohio
it's a negative net of $85 million.
I was wondering if you might talk for a moment about the
issue of--it seems to me this is greater than just an issue of
economic loss of net dollars of the premiums and even a greater
issue than just those individuals who currently live in flood
areas. Doesn't this have a negative impact overall on
development? As we all compete for economic dollars and
investment in our communities, how does that impact the overall
area's ability to attract investment?
Mr. Gilbert. Anytime you raise the cost of people moving,
in this case I think--economic development, that certainly has
a negative aspect. If you look at Michigan--49 States are doing
quite well. We are doing quite poorly exactly.
And I think every little area we can help improve and make
Michigan more attractive is very important. This is an area
that I think needs to be addressed as well. So, I mean, I think
that's what we need to do is look at this and I think the case
has been made that this is patently unfair, not only to
individuals, but to the State of Michigan. And if we can
correct this, this will certainly encourage economic
development in the area and the State in general.
Mrs. Miller. Thank you. I certainly want to thank our first
panel of witnesses. We are going to have a second panel. And I
would say, as well, I also want to thank FEMA.
I know you are under the gun here today. You are used to
that. You have done great work in the past. I think as we all
watched Katrina--and I also wanted to mention that, Colonel
Lauzon, I know you spent quite a bit of time down with Katrina
and he came back and told us stories of being there. It's
difficult for any of us--unless you have been there. I have not
been there personally, but I have heard many stories of
colleagues, Members of Congress that represent that area,
people that have been down there--I know the Governor of
Mississippi, for instance, was telling me 67,000 homes in
Mississippi were gone. If you can even think about. It's very
difficult for us to comprehend how devastating all of that was.
On the other hand, I will also say this, I don't mean not
to be compassionate but, in Michigan, we look down at the
water. We don't look up at the water. As the levees--and amount
of money that we are going to be undertaking as a Nation to
rebuild those levees, and I know the Corps of Engineers is
doing what they can, but sometimes, God, I think, will not
allow man to do certain things to overcome his will and mother
nature.
And I hope, as we have investing as a Nation in rebuilding
in the Gulf, that the next generation there will not curse us
for allowing them to live under the sea level there. But at any
rate, we are concerned--we have to approach those kinds of
things. I think, in my approach, and I think most Members of
Congress, we approach that with our hearts but we also have to
approach it with our heads.
As we look at the inequities that we see in the Flood
Insurance Program, many of us feel that we are being billed for
somebody's choice to live looking up at the water.
When you see the city of New Orleans only about 20
percent--I'm not sure of the correct figure, 20 percent of the
structures in the city of New Orleans didn't have flood
insurance, because the other 80 percent wouldn't take the risk,
yet we are paying for the risk. I think, again, it's an issue
of basic fairness.
At this time, we will take a very brief recess. We want to
put the second panel in place, and we will excuse the first
panel and appreciate all of your testimony this morning.
Thank you very much.
[Recess.]
Mrs. Miller. We will call the second panel, subcommittee
hearing back to report.
The first witness is Chris Wilson, who has been the city
manager for Algonac since 2004. And prior to coming to Algonac,
he worked for the city of Grosse Pointe. He has a Bachelor's
degree in geography, a Master's degree in political science and
also a public administration Master's from Wayne State
University.
We are certainly delighted to have you with us and the
floor is yours. We look forward to your testimony.
STATEMENTS OF CHRIS WILSON, CITY MANAGER OF ALGONAC; MANFRED
(WHITEY) SIMON, PRESIDENT, HARSENS ISLAND, ST. CLAIR FLATS
ASSOCIATION; AND JOHN COLLISON, OWNER, STERLING REAL ESTATE
CO., REPRESENTING MICHIGAN ASSOCIATION OF REALTORS
STATEMENT OF CHRIS WILSON
Mr. Wilson. I would like to thank Madame Chairperson Miller
and Representative Turner for allowing----
Mrs. Miller. You can use the mic.
Mr. Wilson. Given the significant impact these proposed
measures will have, not only on Algonac or St. Clair County,
but eventually the entire State of Michigan, as a matter of
basic equity and fairness it is critical that specific issues
be considered before such action is taken.
Primary among these considerations should be whether the
economic demands being placed on property owners by the Federal
Government through compulsory purchase of flood insurance is an
adequate and fair representation of the corresponding level of
economic risk posed by their decision to locate in a given
area. It is the position of the city of Algonac that any
increase in current floodplain levels would cause undue and
unjustifiable economic harm to the city and its residents.
Undue hardships that would be placed on the city of Algonac
as a municipality would be related but not confined to its
impact on current building codes. An increase in base flood
elevation would not only impact residents and developers
seeking to build new structures in the city, existing
structures that were built in accordance with current elevation
levels, levels that were developed, approved and sanctioned by
the Corps of Engineers, would be considered nonconforming. This
would make additions to or extensive rehabilitation of such
properties more expensive and less attractive to home and
business owners. I would like to remind the committee that it
will become the responsibility of the city of Algonac, as well
as all other municipalities across the State of Michigan to
enforce these new regulations. I would not wish upon any
building or zoning official the day which they must inform an
enterprising small business owner or a father of a growing
family of the hardships now enforced upon them because their
property, which they took care to develop according to
guidelines established by the Federal Government through the
Corps of Engineers, is now labeled as nonconforming. Again, it
is the position of the city of Algonac that in accordance with
principles of basic and fundamental fairness, such measures be
taken when, and only when, clear and irrefutable evidence
exists providing adequate justification.
Economic hardships will not be limited to owners of new or
remodeled structures. Algonac has a high number of senior
citizens. These individuals are likely to own their own home.
Further, this structure is likely to be the most valuable asset
in their possession. By adjusting the base flood elevation
level and classifying their homes as nonconforming, FEMA will
be adversely impacting the single most valuable possession of
thousands of elderly homeowners throughout Michigan. The impact
of this is little different than if the Federal Government were
to suddenly withdraw a portion of a worker's 401(k) portfolio.
Again, it is the position of the city of Algonac that before
such actions are taken, FEMA must assure all involved that the
economic justifications exist to do so.
As to whether such justification currently exists,
significant work has been performed by local officials to
analyze the risk posed by flooding in the greater Algonac area.
Further analysis was performed to determine if this risk
justifies any change in the manner and amount of compensation
by local property owners. Thorough analysis of the best
available data justifies a lessening of such burdens as opposed
to increasing them. This is not to argue with the scientific
principles behind the Corps' analysis of base flood elevations
nor the principle behind the establishment of a floodplain. The
concept of personal responsibility demands that individuals who
choose to locate in a particular area where flooding poses a
risk, pay a fair and reasonable amount of compensation to
protect themselves and others against this risk. However, while
the science behind the establishment of base flood elevations
is sound, it does appear that FEMA is using good science to
implement bad policy.
The tremendous discrepancies between the amount of policy
premiums paid by residents of Michigan for FEMA flood insurance
and the corresponding amount of flood-related claims points
strongly to such a policy failure. In particular, we feel that
FEMA should more closely evaluate and analyze the risk posed by
homes that are constructed in an area that is protected by a
levee as opposed to those that have no such protection. In the
calculation of a level of a 100-year floodplain, the goal is to
appropriately designate such areas that have a 1 percent chance
each year of being inundated by an adjacent body of water.
Current base flood elevation levels may accurately reflect such
levels of risk. However, it is the position of the city of
Algonac that the manner in which these measurements are
utilized by FEMA in establishing premium rates does not
accurately take into account the fundamental differences in
economic risk posed by the construction of structures in areas
protected by levees.
While it is possible that areas around the Great Lakes will
flood, it is inevitable that structures protected by a levee
will flood. Further, the nature and scope of flooding that
occurs in areas behind a levee is far greater and more severe
than what would occur in an area where no levees exist. By
treating both areas with and without levees relatively equally
when it comes to the calculation of flood insurance premiums,
FEMA is creating a situation where a significant portion of
property owners are paying rates far higher than their
accompanying level of risk would demand. Accordingly, others
with a high risk of economic loss from flooding in terms of
quantity and scope, are not paying their share relative to
their level of risk. When the providers of an essential or
required product in the private sector unfairly manipulate the
price of their goods or services to the detriment of the
greater good, we call it price-gouging. I am not sure if such a
label is appropriate when the same activity is carried out by a
Federal agency. What I am certain of is that both practices are
equally reprehensible and both should be prevented whenever
possible.
I would like to ask the committee to seriously consider all
the adverse impacts that an increase in the current base flood
elevation will have on residents of Algonac and the surrounding
areas. Before any such attempts as the proposed efforts at
ecological redlining are attempted, it is imperative the
Congress use its oversight function to ensure that such actions
are fair, equitable and necessary. We feel that close
examination of the greater Algonac area will raise significant
questions as to the fairness, equity and necessity of such
actions. Thank you.
Mrs. Miller. Thank you very much. We appreciate that.
[The prepared statement of Mr. Wilson follows:]
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[GRAPHIC] [TIFF OMITTED] T1182.034
Mrs. Miller. Our next witness is Whitey Simon, president of
the Harsens Island St. Clair Flats Association. For 30 years
Mr. Simon was a staff development engineer for General Motors.
He was also a software engineer at the Bendix Industrial
Controls Division and field engineer for the missile division
as well. He's also served our Nation proudly in the armed
services.
From the mid to late 1950's, he was the U.S. Air Force
Staff Sergeant, where he was an instrument flight trainer
specialist, sort of a remarkable career, Mr. Simon, and today
you are talking about a subject that strays a bit from that. I
know you have a lot to tell us about. We look forward to your
testimony, sir.
STATEMENT OF MANFRED SIMON
Mr. Simon. Thank you, Chairman Miller. And first of all,
thank you for allowing me to speak on this matter that will
affect all of us. More importantly, I'm very glad and thankful
that you came down to this area to hear from people like
ourselves.
I will not belabor the points that you so eloquently made
regarding the economic impact. Our Senator and Mr. Manos and
Mr. Wilson, again, indicated what will happen economically to
this area. So I would rather look at what I heard here from
FEMA and from the Corps.
I have also heard from both of these organizations that the
IJC study may or may not be germane. What I would like to
review for you is the fact that the IJC study clearly indicated
that several measures which have been identified by the Joint
Study Commission that could mitigate these high levels were
never implemented. And the reason they were not implemented was
that it would cause an economic hardship of some agency
activity or individuals.
Well, FEMA has decided who will bear the burden and the
hardship. Namely, the taxpayers and homeowners of this area.
Additionally, the young lady from FEMA indicated that we
are interested in risk management, and the risk models clearly
indicate that we are supposed to be paying high premiums.
Unfortunately, if you also look at numbers that indicate
what the risks have been over the past few years, it clearly
shows that we pay a disproportionate amount of premiums as to
the benefits that accrue to us.
Second, she indicated that she really didn't want to hear
perhaps about our economic hardships but would be only too
happy to look at scientific data.
Well, why in the world won't you, the subcommittee, please
fund FEMA to go and look at the data to support our contention
that we probably will not see another high level as we have
seen before.
Similarly, the Corps of Engineers clearly indicated that
there are techniques and technologies available that would
improve their ability to predict what might happen and
certainly we all know--I hope we all know studies are designed
quite often to yield a desired result. That's No. 1.
And No. 2, quite often the data that is collected and used
can then support the study. And certainly when looking at the
numbers, it does not appear that the models have been validated
by recent 1980, 1990 and 2000 empirical data to give us who
will bear the burden, the added confidence that FEMA as an
agency is, in fact, also looking out for our benefits.
I thank you very much for allowing me to address those
points and obviously my letter to you in its entirety is a part
of this record. Thank you.
Mrs. Miller. Thank you. Without objection, we will enter
your letter into the congressional record as well. Mr. Simon,
we appreciate that.
[The prepared statement of Mr. Simon follows:]
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Mrs. Miller. And our final witness today is John Collison,
who is representing the Michigan Association of Realtors.
Mr. Collison has been licensed as a real estate salesperson
for 21 years, as a broker for 17 years and as an appraiser for
14 years. He is currently the owner and broker of Sterling Real
Estate Co. and he is an owner of Aarmont Appraisal Co. and
Group as well.
He also has served on the Board of Directors for the
National Association of Relators and, of course, the Michigan
Associational of Relators. He also serves on the board of
directors for the Metropolitan Association of Relators and is
the chairperson of the Michigan Council of Real Estate
Appraisers, which is appraisal section of the Michigan
Association of Realtors.
We appreciate Mr. Collison coming today. I might add as
well, he also grew up on the banks of the Clinton River and has
watched water levels fluctuate for many, many years, his entire
life. I appreciate you coming, Mr. Collison, and appreciate
your testimony, sir.
STATEMENT OF JOHN COLLISON
Mr. Collison. Thank you, Chairman Miller, and I like to
thank you Representative Turner for this opportunity to--what
I'm going to basically speak about is two issues that were sort
of alluded to, on but not really totally described, and this is
the cost to the owner or the property owner above and beyond
the cost of the FEMA insurance.
Obviously, if someone is in a flood zone and they need to
have FEMA insurance, it's a good investment and it's there as a
security for the lender to make sure the house doesn't float
away and they lose their investment.
However, if it's just there as an arbitrary number, the
elevation, that really isn't serving its purpose.
The State of Michigan is a seller disclosure State, where
if you own a piece of property and you want to sell your house
and a majority of the States in the United States--I think if
not all of them, probably at least 90 percent have disclosure
requirements. If you are owner of a property and you want to
sell it, you have to tell the potential buyer the condition of
the property.
In the Michigan seller disclosure statement, it has two
questions regarding the septic field. And one of things,
speaking with Mr. Manos, and getting information from Clay
Township, a number of septic fields that were built in the 500-
year plain will be out of compliance and nonconforming if the
change goes into effect and--on the seller disclosure
statement, it asks two questions about the septic tank and
drain field. First of all, if it's working, which no matter
what the floodplain says, if it working, it's working.
However, under No. 5, question No. 5, it also says, the
septic tanks and drain field condition, if known.
If the homeowner knows, and I would assume pretty much
everybody here would know if their septic field was built for
the 500-year plain or the 100-year plain, if they know it's out
of compliance, they have to state that in the seller disclosure
statement.
The typical buyer seeing that, and I can't guarantee this
will happen all of the time, but they probably will request--
they would probably back out of the transaction or request that
it be upgraded to compliance. That's the normal thing that
happens in a real estate transaction.
The seller states: I have this house but it's not really
complying in what is happening in the current market. The buyer
will say, yes, that's fine. I will still pay the same amount of
money I'm going to pay you and bring it into compliance please.
Now depending on the situation, that could run into thousands
of dollars in costs.
The second area I'm going to address as an appraiser, I
won't make any statement as far as market value because each
property is unique, every situation is different. I can't say
with any kind of accuracy whether the change will affect the
market value of any particular piece of property, however, I
can say that--I have included the most up to date, what they
call uniform residential appraisal report in my written
testimony. It's the Fannie Mae form. It's typically used for
single-family or residential appraisals.
Under the section improvements they asked me the question
as a appraiser, are there any physical deficiencies or adverse
condition that affect the livability, soundness or structural
integrity of the property?
And, yes, is no problem--I mean, yes, is a problem. If I
hit no, there is no problem, but if I hit yes, I have to
describe the situation.
If I know as an appraiser that any part of property is not
built according--not according to current building codes, I
have to state that in the report in that area.
An example would be, say, a home built in 1920 that has
steam heat, maybe they have asbestos wrapping insulating the
pipes. I look in the basement, asbestos is only a problem if
it's deteriorating. It's all wrapped tight and covered, it's
not problem, I still have to state that in the report, there
appears to be asbestos in the house.
If I know that for a fact that the septic field is out of
compliance, whether it's operable or not, I have to state that
in the report. Now this would be with a purchase or possibly a
refinance, anybody looking to get a loan, it may or may not be
federally insured.
The question would be, what happens then? That would be
beyond my scope, that would be the bankers, underwriters and
people like that would talk about. But I can tell you from
experience that normally when properties are out of compliance,
it does--it may or may not adversely affect the person looking
for refinancing or just purchasing a home, and this has nothing
to do with the cost of insurance. It has to do with the cost of
bringing the property into compliance.
One other example quickly before I finish, the example
would be if you have a well--you have a private well, but there
is city water at the street. Quite often the mortgage company
will require purchaser to tie--even though the well is
perfectly fine, there is no problem with the water, they will
require someone, normally the purchaser, to pay the tie-in
fees, pay the cost for putting the pipe, and all that, just
because it makes the home more secure. They may or may not
require someone to upgrade their septic system in the same way
for the loan.
Or they may deny the loan or charge higher interest or do
any number of things. It depends on the underwriting decision
and guidelines of a particular lender. That's basically what I
want to say. Thank you very much.
[The prepared statement of Mr. Collison follows:]
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Mrs. Miller. Thank you. I appreciate all of your
testimonies here today. Because of the airplane schedule, I'm
going to ask Representative Turner to ask his question at this
time.
Mr. Turner. Again, I want to thank you for an excellent
hearing, both the first panel and second panel and certainly
the community participation you have. This is certainly a great
hearing you have put together focusing on an issue that is
truly important.
So many times when we talk about FEMA and their
performance, we talk about the issue of emergency preparedness
but this is one that goes to economics of so many communities.
The first panel, the Senator who was here testified as to
the economic impact but, certainly, in this panel we have heard
the additional economic impacts beyond just the premium, beyond
just the fact that people will look to an area for investment
that does not have the addition of this requirement.
The upgrade that might be required is certainly an
additional economic burden that I think many times people don't
consider.
One of the things I would like to focus on, and all of the
briefings that we received, and I hear it in each of the
statements that we're hearing today is that part of, I think,
the response to this, and the concern is, that this shifts it
to a mandatory program, whereas people in the 500-year area
still have the option of participating.
I would like, if you would, to speak to each of you for a
moment about the fact that individuals do have the option and
the difference between the mandatory designation and the option
availability to--if anyone would like to comment on that. Mr.
Simon.
Mr. Simon. I used to pay flood insurance until I finally
had to upgrade my septic system, at which time I needed an
elevation certificate. That elevation certificate took me out
of the 100-year zone and put me above the current level. At
that time I was no longer required to pay flood insurance.
Until that time, because of my lender's desire not to lose my
house, I had to pay this insurance and started to increase to
the numbers that you see out here as stated as annual premiums.
Additionally, however, I now do not have it because I'm
above. My son just moved down the street. As a requirement of
his mortgage, he has to have flood insurance. If at any time
the lender thinks that the purchaser has defaulted on that
payment, he gets a nice letter from the bank indicating that
they have initiated the purchase of flood insurance for him and
unless he can demonstrate that he has flood insurance, they
will take care of it.
My son received a statement for $3,200 and some dollars in
flood insurance. And when he contacted his insurance agent, he
obviously took care of it immediately and it was reduced to
under $300. So there are some of the requirements that hurt us
tremendously economically when you fall into that arena where
you have to--and my son can hardly wait until he can do away
with that. Thank you.
Mr. Turner. You were talking about the upgrades, the
difference between 500-year and 100-year. In 500-year you still
had the option of having the insurance and at the same time not
undertaking all of the upgrades, is that----
Mr. Collison. I don't really want to speak on requirements.
As an appraiser and a real estate broker, I deal with both
companies that are covered by federally insured loans and
private investors, and everybody has different guidelines.
What Fannie Mae guidelines, federally insured or Freddie
Mac, they have the guidelines where it might be optional, where
a private investor, you know, can do whatever they want. It's
their money. And there are a number of people more and more
today--I'm sure you hear on the radio all the time,
advertisements for mortgage companies. We are the best mortgage
company. We do did this. We do that.
A lot of those mortgage companies are not federally funded
or backed. They are just private investors selling bonds on the
market. They are companies that are using private money and
they have their own guidelines and every company has different
guidelines.
Mr. Turner. Chairman Miller, I want to thank you for
highlighting this important issue and for having me. It was
great being here. You do have a beautiful area and I can see
why you are so proud.
Mrs. Miller. Thank you very much. Have a safe flight and
we'll see you in session tomorrow in Washington, DC.
Let the Representative excuse himself, and I have a couple
more questions for the witnesses before we conclude here.
Mr. Collison, I'm aware that the National Association of
Relators has been quite critical of FEMA's management of the
Flood Insurance Program. Do you have any thoughts about what
they might do to make it more actuarially sound or to make it
more fair, particularly for States like Michigan?
As been pointed out, it's not just Michigan. I think that's
perhaps why your national association has made some comments
about it. If you think the entire Great Lakes basin,
Representative Turner represented Ohio but I have heard from
others of my colleagues from New York and Illinois and
Minnesota, etc., other States as well, do you have any comment
on what the national association's position has been?
Mr. Collison. They have been supportive of the remapping
because the old maps are quite frankly, you know, they are
completely, totally out of date. But, again, they want to make
sure that, you know, things are done in a fair and equitable
manner.
One of the things--I mean, one of my personal concerns is
that so much of the flooding that we might experience in the
Great Lakes States is controlled.
I mean, as was stated in earlier testimony, it depends how
much water is--if somebody wants to let more water out of Lane
Superior, we flood down here. Or if they to want to tie it up
farther down the line, we back up here. And where I think the
intent of FEMA was, to me, as an individual, is to prevent--
insure people against natural disasters. When you have massive
flooding on the Mississippi River and it overflows and goes
over the levees when it's below sea level or below river level.
They artificially created land where it wasn't before.
And here in Michigan, what happens is a Federal agency or
some government group decides, well, we are going to turn off
the water here or there, that creates a flood situation as
opposed to natural occurrence. I think FEMA doesn't consider
that. And I think it's definitely--that's their main problem
that I have with them.
Mrs. Miller. Mr. Wilson, can you talk specifically about
what you might envision as city engineer here for the Township
of Clay, or all the municipalities I suppose along here, if
FEMA's proposal is actually finalized, what kind of things you
might see happening here.
Mr. Wilson. Chairman Miller, as I alluded to in my
comments, it is ultimately the responsibility of the
municipalities to enforce the regulations that are passed down
from FEMA and Corps of Engineers.
I have great sympathy for the building inspectors who will
be forced now to visit people's properties. Somebody wants to
put in, say, an addition to their house, and they did take care
to build their property in accordance with the base elevation
level that has been in place, Mr. Manos said, for over 27\1/2\
years now. Now we have to go and tell them their property is
not complying, or you're going to have to raise your addition
higher than the rest of your house or you aren't going to be
able to do it. All of these regulations fall back on the
municipality to enforce and that is a tremendous burden and
real hidden cost. We have no control over how the base level
elevation is set.
I appreciate the opportunity to testify to bring out the
importance of this matter, decisions that are made at levels
higher than the local level, how much of an impact that has
upon us, we will be the ultimate enforcer of that, not the
Corps or FEMA. It places a tremendous burden. Code enforcement
and building code enforcement is not the most popular job in
the world anyway. We don't need any help making ourselves
unpopular from outside Federal agencies.
Mrs. Miller. I appreciate that having, again, been involved
at the township level for many years. That is absolutely true.
Mr. Simon, I understand you are on the homeowner
association--I don't know if it's the larger but certainly one
of the largest homeowner associations----
Mr. Simon. We claim to.
Mrs. Miller. I believe it to be so because you are under
oath. We will hold you to that.
Have you--as we said, it just doesn't impact this immediate
area, it's impacting waterfronts and municipalities and
homeowner associations around the basin, all over the Nation.
I'm just wondering if you have had any conversation with some
of the other homeowner associations around the area, or
wherever, about how it might impact them.
This is a very vocal group here but it's not just us, it's
not just particularly inherent to us. It is impacting other
people. Have you had conversations with other people, other
associations?
Mr. Simon. I have had conversations with individuals that
have properties in other areas along the shoreline of the State
but our real concern has been the item. We are a delta. We
understand that we are surrounded by water but, unfortunately,
we also sit in an area where probably high water that could
reach flood stage level doesn't impact us until either we got
an ice jam or a freighter comes by and churns up the water in
addition to that, and those then are impacts that FEMA does not
really insure.
So, our concern is, just that we are, as was indicated by
everyone here, we are only donating money.
I have attempted to find out and nobody apparently keeps
records down to detail how much money has been paid out in ZIP
48028. And I can't find out. But there are individuals on the
island who claim to have submitted a claim to FEMA and were
denied any payments. So, I don't know anyone who--even in 1986
did, in fact, get any payment because the water level only came
up to just below the floor joists.
Mrs. Miller. Before we conclude here, sometimes I'm not
sure which questions to be asking, and you all have your area
of expertise. If there is any questions of myself or the panel
has not asked, if you want to have any other input for the
congressional record here as we take this testimony back to
Washington, please feel free to comment openly if there is
something that we need to be made aware of.
Mr. Wilson. Thank you, Madame Chairman. I did find your
comments about the fact here in Michigan we do look down at the
water very insightful. As you begin to analyze the actual
levels of risk that are in effect here in Michigan as opposed
to other areas of the country, our level is quite low. And I
alluded to it in my testimony. There needs to be strong
consideration by FEMA given to the nature and scope of flooding
that will occur in areas that are protected by a levee.
If water elevations here--whatever the base level is,
assume house level, that's eclipsed by 1 foot, you are going to
have maybe 6 inches of water in someone's home.
If a 20-foot levee gets eclipsed by 1 foot, you will have
19 feet of water in somebody's home. There is a fundamental
difference in flooding risk in areas that are protected.
I would like the committee to take--and FEMA to take
further care to analyze risk accordingly. Thank you.
Mrs. Miller. OK. Thank you.
Mr. Simon. I would only add to that comment, this risk
analysis and the risk model I do not believe has been updated
with empirical data and I would like to ask the committee
clearly to extend the time before FEMA makes that decision so
that you can include the latest data, namely the numbers
between 1988 and 2006 so that they become part of both the
Corps' models and FEMA's models.
Unfortunately, I have seen too many models, and the
examples abound where studies have been used by various
agencies, and it's in my report to you, where 1 day, we are
told smoking is bad for you. The next day we are told smoking
is good for you. One day we are told the pills are good for you
and the next day the pills are bad. I would request that you
appoint someone realistically to look at and evaluate the
studies both of the Corps and the of FEMA. Thank you.
Mrs. Miller. Thank you. Mr. Collison.
Mr. Collison. I would like to see--my final comment is, I
would like to see FEMA go more to the typical insurance model
where the people in the highest risk areas pay the highest
premiums and people in the lower risk areas pay lower premiums.
Where we are getting back maybe 10 cents on the dollar,
maybe 20 cents on the dollar, possibly just in general the
premiums in this area could be reduced by 80 percent. Then
where you have areas of repetitive loss, every 5 years they
have to file a claim, obviously I believe they should be paying
greater--it's just like with car insurance. If you are in an
area where half the people in the city get their cars stolen,
you will pay higher fees than if you are in an area where it
never happens. I think the same model could be put to the FEMA
program.
Mrs. Miller. I certainly appreciate all of your testimony
today. We know everybody has a busy schedule. Again, we
appreciate the hospitality of Clay Township for hosting the
subcommittee today. It really has been, I thought, very, very
interesting testimony. I have been trying to follow this issue
closely. I certainly have learned a lot today and I have a lot
to think about. I know Representative Turner does as well, and
we will discuss it with the full committee when we go back to
Washington.
Let me thank my subcommittee staff who orchestrated this
entire event, and then put it all together. Erik Glavich was a
resident of Michigan until he moved out to Washington, DC. He
had no trouble coming back for this hearing today. He was happy
to come back to Michigan for today. I appreciate everybody's
attendance very much, and with that the committee will be
adjourned.
[Whereupon, at 11:15 a.m., the subcommittee was adjourned.]
[Additional information submitted for the hearing record
follows:]
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