Spring is rapidly approaching. As proof of the arrival of spring, it rained all day and dropped a foot of snow. I bet we have more rain in the forecast (sounds like a recipe for flooding). Let’s take a look at some things every realtor and real estate professional should understand when it comes to floodplains.
Which flood is it?
In 1968, the U.S. Congress established the National Flood Insurance Program (NFIP), which is managed by the Federal Emergency Management Agency (FEMA). The short version is that if a community participates in the NFIP and adopts / enforces a floodplain management ordinance, then the Federal Government will make flood insurance available to property owners in that community. With this program came the need for a national standard. Using a magic wand and possibly some complicated math, the 100-year flood came into existence. Obviously, a national standard this important should have multiple names:
- 100-year flood;
- 1% annual chance flood;
- base flood;
- special flood hazard area.
Unfortunately, the “100-year flood” terminology has been difficult to understand. People think that this flood should happen once every hundred years. It actually means that there is a 1-in-100 chance that a flood this size will happen in a given year.
The 500-year flood is also known as the 0.2% annual chance flood.
Is my structure in the floodplain?
Once the national standard was determined, Flood Insurance Rate Maps (FIRM) were created. Basically, these maps show the:
- Flood zones, which describe the land area in terms of its risk of flooding;
- Community name and other pertinent details;
- Elevation information.
As a realtor, you will want to know if the property you are helping a client purchase / sell is in the floodplain. You do this by checking out the FIRM. To do this, use a paper FIRM or look up your property online.
Each physical, paper FIRM, when unfolded, takes up half of a table. Thanks to the internet, you can now download the FIRM you need using the FEMA Map Service Center (see my resources page). You can also zoom in and create a customized “FIRMette” for your property.
We are also fortunate to have the Indiana Floodplain Information Portal (INFIP) that the Indiana Department of Natural Resources (IDNR) manages for us (I also have a link on my resources page). It allows you to zoom into your property, obtain some basic elevation data, and ask the IDNR for additional information.
How many letters exist in a FIRM?
Everyone lives in a flood zone. However, that risk varies greatly from low to high. The flood zone designations that you typically care about in Southern Indiana:
- Zone A: Areas with approximate information only. No detailed study;
- Zone AE: Areas with a detailed study of the floodplain;
- Zone AH: Areas subject to shallow flooding / ponding. Usually 1-3 feet;
- Zone X: Areas of minimal flood hazard;
- Protected By Levee: Self explanatory.
Floodplain insurance isn’t free.
If the structure is shown on the FIRM as being in floodplain, it will require flood insurance if it has a federally backed mortgage. Otherwise, flood insurance can be purchased at the owner’s discretion. If a structure is in the 500-year floodplain, a lender may require that the property owner purchase a flood preferred risk policy. This is a less expensive option as compared to the flood full risk policy. Due to the controversial Homeowner Flood Insurance Affordability Act of 2014, flood insurance rates will be rising. It will be a staggering increase for some property owners over the next decade.
There are some options to try and get the structure out of the floodplain. I will discuss this in later articles.
Who you gonna call?
You have some questions about your property, but have no idea where to turn. Each community is different, but this is how some communities operate with regards to flooding and drainage problems:
- Building Commissioner or Planning and Zoning office handles floodplain administration through the local ordinance;
- Drainage, Street, or Highway Department manages local flooding issues by replacing pipes, cleaning grates;
- Engineering Department or Surveyor works to solve infrastructure issues through design and reviews;
- Drainage Board approves drainage component of proposed construction.
As a real estate professional, you do not have to know all the details about floodplains (you have too many other things to worry about). However, having some basic knowledge will allow you to assist your clients with making wise decisions. No one wants to make an offer on a property, be at the closing and find out flood insurance is required. Do your homework ahead of time and everyone can go home happy…or at least on the same page.
I hope that this article helped explain some of the basics. I will be posting more articles that will provide details on these topics.