OCEAN CITY — An apparent error in federal flood zone mapping has left some oceanfront properties facing hundreds of thousands of dollars in flood insurance premiums and is threatening real estate property values in the resort, town officials learned this week.
Last July, the Federal Emergency Management Agency (FEMA) issued new flood insurance rate maps for the Town of Ocean City that correctly recognized the value of the dune system constructed by the Army Corps of Engineers as part of the ongoing beach replenishment project by locating the VE Flood Zone, or the most onerous flood insurance rate designation, “seaward of the landward toe of the primary frontal dune system.” In layman’s terms, FEMA concluded the eastern edge of the long-established dune line should be the line of demarcation of sorts for the higher flood insurance rates and any properties west of the primary dune would fall into a lesser flood zone designation.
However, in a few areas of the resort, particularly along condo row from 93rd and 123rd streets, FEMA has determined through its new maps an existing secondary dune, built in front of several oceanfront properties in the early 1980s is now the standard by which the VE Flood Zone is determined. As early as 1983, the town mandated certain new oceanfront projects construct a dune in front of the properties to protect them somewhat from storms, coastal flooding and beach erosion.
Years later, the primary dune was constructed through the beach replenishment project. As a result, the primary dune is out in front of older secondary dune with a fenced alleyway of sorts about 10 feet wide in most cases separating the two. However, FEMA’s newest maps in many cases along condo row are now designating the seaward side of the secondary dune as the line marking the VE Flood Zone.
As a result, numerous oceanfront buildings now find themselves partially in the VE zone, some by as few as five feet. Because federal policy states if any portion of a building is located within the VE zone, the entire building is subject to the flood insurance requirements. For some individual property owners, the flood insurance rates in the VE zone run as high as $22,000 annually. For at least one oceanfront property used as an example, the flood insurance premium for the entire building approached half a million dollars. City Engineer Terry McGean outlined the apparent snafu and the associated exorbitant insurance rates for the Mayor and Council on Tuesday.
“Because federal policy states that if any portion of a building is located within a flood zone, the entire building is considered in the zone,” he said. “These buildings are being quoted flood insurance premiums many times higher than their oceanfront neighbors even though they are all protected by the same dune system.”
McGean said many of the affected property owners and condo associations have battled with FEMA on their own to have the maps redrawn to no avail. He said because it is such a town-wide issue with much at stake, including north-end oceanfront property values, it was time the town intercede on the property owners’ behalf with a more unified approach.
McGean said ironically, the properties affected most by the spiraling flood insurance rates are among the most protected in the entire town. Because of the Army Corps’ primary dune and the older secondary dune mandated by the town decades ago, many of the affected properties in the high rise condo stretch of beach from 93rd to 123rd streets are essentially protected by two dunes.
“Essentially, this is penalizing a property for having more dune in front of it,” he said. “There’s really no other way to put it.”
Nonetheless, FEMA has thus far refused to acknowledge the apparent mistake in the flood zone maps and has not backed down from the imposition of the staggering flood insurance premium rates. McGean said his office has been in constant communication with FEMA but the agency will not unilaterally change the maps, nor will they give an official endorsement of the city’s findings the buildings are well outside the VE zone based on the location of the dune created by the Army Corps.
The only remedy FEMA will consider is for the city to officially apply for a Letter of Map Revision (LOMR), but that comes with a price. Collecting the data and conducting the appropriate modeling exceeds the capabilities of the city to do the work in-house, requiring a consultant be hired. The consultant is requesting a $15,000 retainer to conduct the work, with a total cost of $65,000, which would be paid only if the application was successful in getting the flood maps changed.
After considerable debate on Tuesday, the Mayor and Council agreed to fund the $15,000 retainer for the consultant and the entire $65,000 for the application process if it is successful in getting FEMA to change the maps. City officials also agreed to fire off a strongly worded letter to its representatives in the U.S. Senate and House asking them to intercede with FEMA on the town’s behalf.
“We are asking for your help to have FEMA immediately recognize the official U.S. Army Corps of Engineers project line as the correct VE zone boundary for all of Ocean City,” the letter reads. “There is no reason to force the city and affected property owners to pay for huge data collection and analysis efforts to determine where the toe of the dune that was built by the Army Corps of Engineers is located, when it is already clearly defined in the Corps’ design documents that are used to this day to determine the very same dune.”
Should the consultant be successful in getting FEMA to reconsider the flood zone maps, the process could take several months, leaving the affected properties with little choice but to pay the exorbitant flood insurance premiums.
“FEMA also stated that their review of the LOMR could take six months or longer to complete,” the letter reads. “In the meantime, these property owners will be forced to pay hundreds of thousands of dollars in unnecessary flood insurance premiums.”
McGean said the town only became aware of the subtle, but critically important map changes when the property owners started getting their flood insurance premium notices.
“In January, we received a call from an insurance agency telling us how a potential property owner in the Rainbow had been told they are now in the V-zone and would have to purchase flood insurance,” he said. “When you look at the new maps, it becomes very evident what has happened. This is impacting a good portion of condo row.”
Delmarva Condominium Management Association President Joe Groves told the Mayor and Council it was first believed just a couple of properties were affected, but it is now coming to light the issue is far more widespread.
“It’s not just condos, some hotels are affected,” he said. “When FEMA first did the mapping, everyone was told they were in the ‘X’ zone. Now they’re saying, oops, our mistake, these buildings are now in the higher zone.”
Groves said with Rainbow condo situation illustrated the hypocrisy of the flood map snafu. The Rainbow was one of a new generation of high rises to be required to build a protective dune on its oceanfront side. A decade or so later, the Army Corps came in and constructed the large primary dune in front of the older dune. Now, the Rainbow and similarly situated condos are essentially protected by two dunes, but are getting hit the hardest with flood insurance premiums.
“They were mandated by the town in 1983 to build their own dune,” he said. “They essentially have a double dune and are double protected, but somehow they are in the higher zone.”
Groves urged the city to intercede on behalf of the affected property owners, pointing out the potential implications on resort’s real estate market across the board.
“Again, this is not a condo issue,” he said. “This is a serious town issue and it needs to be corrected or else the oceanfront real estate market is done.”
Reese Cropper III, owner of Insurance Management Group, said the town and many of the property owners were somewhat blindsided by the map changes and the associated insurance rate hikes despite FEMA taking a year to develop the maps.
“When FEMA does mapping, it does so after a one-year study period,” he said. “We went a year without knowing about this faux pas. We could have been on the offensive for a year instead of the defensive.”
After considerable debate, the Mayor and Council agreed to fund the consultant’s retainer for beginning the LOMR process and the total $65,000 should it be successful. The elected officials also agreed to send the letter to its representatives in Congress for support.
“We’ll do whatever we can and as fast as we can to fix this,” said Mayor Rick Meehan. “This is a city problem and we’re going to address it.”