This article was originally featured on our sister site BUILDER.
Although greater flood resilience in vulnerable areas is a goal we can all support, a pending HUD proposal is ill-advised, would drive up the cost of housing, and could even prevent the construction of much needed affordable housing. It also would disrupt the housing market’s sensitive recovery.
HUD has proposed that new and substantially rehabilitated FHA-financed multifamily housing located within an expanded flood plain as defined by the new Federal Flood Risk Management Standard (FFRMS) be elevated 2 feet above the 100-year base flood elevation (the highest level water would reach in a 100-year flood event). HUD is also applying the same elevation requirement to new and substantially rehabilitated single-family homes within the currently defined flood plain through revisions to its minimum property standards.
HUD issued the proposal in response to an executive order establishing the FFRMS and exhorting federal agencies to take actions to reduce the risk of flood loss and minimize the impact of flooding on taxpayer-funded structures and facilities.
As expected, HUD is applying the new flood risk management requirements to its HOME and Community Development Block Grant programs, but, arguably, the FHA mortgage insurance programs should be beyond the direct intent of the executive order, and there is no requirement for HUD to establish such a measure for those activities. There are also numerous flaws in its proposal, not the least of which is that the single-family component is inconsistent with the requirements of FEMA’s National Flood Insurance Program. In essence, HUD is acting outside its area of expertise and second-guessing the experts at FEMA who have the knowledge, funding, and tools to best address flood risk.
Complicating the situation, existing flood maps will be inadequate for the purpose of applying the new HUD standards to multifamily properties. And HUD’s suggestion to use Google Earth to determine if a property is within the FFRMS flood plain is ill-considered and will lead to inaccuracies, delays, and increased project costs. Moreover, FEMA cautions that map services like Google Earth “do not necessarily meet its standards for base map accuracy.”
Elevating the housing affected by the HUD proposal will increase construction costs and may result in higher prices and rents or make construction infeasible. As many of these properties are affordable housing, increasing housing costs for these homeowners and tenants is surely a disservice. Historically, agencies such as the Department of Veterans Affairs, USDA, and GSEs Fannie Mae and Freddie Mac have followed HUD’s lead in such matters. As such, this misguided set of requirements could quickly become the market standard.
The HUD proposal is bad policy and bad governance. The agency’s time and effort would be better spent identifying ways to improve housing affordability and devising cost-effective ways to ensure that the nation’s housing is more flood resilient—that’s what NAHB will tell HUD in its formal comments. The comment period ends Dec. 27, and I encourage members who will be affected by this requirement to submit comments as well.