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The Federal Emergency Management Agency’s role in our government is to be responsible for coordinating, preparing for, preventing, responding to, and recovering from domestic disasters, whether natural or man-made. As to the efficacy of FEMA, one merely needs to look at Hurricane Katrina and New Orleans. Its response to one of the nation’s biggest disasters was plagued with mismanagement, lack of preparation, failure to implement an evacuation plan, ordering residents to shelters without any provisions for food, water, security, or sanitary conditions and a lot of deaths, the largest number of which occurred in New Orleans, Louisiana after the levees failed, an event, considered to be the greatest civil engineering disaster in the Unites States. As a result, 80% of the city was flooded and the polluted storm waters lingered for weeks. The worst property damage occurred in coastal areas where the rogue flood waters reached as far as 12 miles inland. When it was all over 1833 people died and countless other lives were ruined forever. What went wrong?
FEMA’s origins can be traced back to the 1960s and 1970s after a number of disasters led to more federal government involvement in national disasters. In 1968, the National Flood Insurance Act created the Federal Insurance Administration, making flood insurance available, for the first time, to homeowners. Five years later, the Flood Disaster Protection Act altered course and made the purchase of flood insurance mandatory for the protection of property located in what the government determined to be "Special Flood Hazard Areas," a designation many consider to be a curse. In 1974, President Nixon passed the Disaster Relief Act, firmly establishing the process of Presidential disaster declarations and on April 1, 1979, President Jimmy Carter signed the executive order that created FEMA.
According to its mandate: "FEMA’s mission is to support our citizens and first responders to ensure that as a nation we work together to build, sustain and improve our capability to prepare for, protect against, respond to, recover from and mitigate all hazards."
On November 23, 1988, Public Law 100-707 was signed into law, amending the Disaster Relief Act of 1974, creating the current system wherein a presidential disaster declaration of an emergency triggers financial and physical assistance through FEMA. Everything changed on September 11, 2001 and nothing has been the same since. In 2002, in response to 9/11, the government adopted the Homeland Security Act establishing the Department of Homeland Security. The primary mission of the Department is to:
A. prevent terrorist attacks within the United States;
B. reduce the vulnerability of the United States to terrorism; and
C. minimize the damage, and assist in the recovery, from terrorist attacks that do occur within the United States."
According to the Act, "Notwithstanding any other provision of this Act, the Federal Emergency Management Agency shall remain the lead agency for the Federal Response Plan established under Executive Order No. 12148 (44 Fed. Reg. 43239) and Executive Order No. 12656 (53 Fed. Reg. 47491). . . . Not later than 60 days after the date of enactment of this Act, the Director of the Federal Emergency Management Agency shall revise the Federal Response Plan to reflect the establishment of and incorporate the Department."
Osama bin Laden’s attack on the United States also gave birth to the Transportation Security Administration (TSA), another agency theoretically responsible for the safety and security of the traveling public. Originally created under the Aviation and Transportation Security Act of November 2001, the TSA was moved to the Department of Homeland Security on March 9, 2003. Not surprisingly, and akin to FEMA’s massive failure to do its job, the TSA has done little to capture terrorists. They are far better at harassing travelers, conducting inappropriate body searches, groping people, sexually abusing citizens, thievery, and other outrageous acts. As offensive as these things are, they still pale in comparison to the abuse homeowners are being subjected to under FEMA where 6 million policies are in force with a total insured value of $1.3 trillion.
In fiscal year 2014, under the Homeland Security Grant Program (HSGP), FEMA informs us the "National Preparedness System’s objective is to support the building, sustainment, and delivery of core capabilities essential to achieving the National Preparedness Goal (the Goal) of a" secure and resilient Nation." The FY 2014 HSGP supports "core capabilities" Prevention, Protection, Mitigation, Response, and Recovery based on allowable costs. The State Homeland Security Program (SHSP) had funds in the amount of $401,346,000 in fiscal year 2014 while $587,000,000 was made available to FEMA under The Urban Areas Security Initiative (UASI) program fund which addresses the unique risk driven and capabilities-based planning, organization, equipment, training, and exercise needs of high-threat, high-density Urban Areas. As of April, 2014, FEMA boasts of 14,844 employees, a veritable army of bureaucrats.
On March 21, 2014, President Obama signed the Homeowner Flood Insurance Affordability Act into law, following a large number of complaints from taxpayers and inquiries into the issue of flood insurance. The legislation repealed and modified certain provisions of the Biggert-Waters Flood Insurance Reform Act enacted two years earlier. That law, which is currently being phased in, extends the National Flood Insurance Program for five years while requiring "significant" program reform including changes to all major components of the program including, but not limited to flood insurance, claims handling, flood hazard mapping through the use of digital flood information rate maps, remapping, studying the construction of levees and dams, and better management of floodplains. The act also requires owners of properties located in flood zones to pay their "fair share" according to their risk of flooding, a requirement that in reality, has resulted in a gross disparity of the cost of premiums for many property owners. FEMA will continue to identify and publish special flood hazards and flood risk zones as authorized and required by Congress. As a side note, the country’s flood mapping agency presently runs a deficit north of $24 billion.
NBC Investigation Reveals FBI Inquiry
A recent report by NBC television revealed a widespread inquiry by the Federal Bureau of Investigation into the unprecedented modification of Flood Insurance Rate Maps (FIRMs) wherein large ocean front condominium developments, many with a well-documented history of flooding, were removed from historic flood zones. Under this extraordinary procedure, flood prone properties, once considered a high risk, were removed from mapped flood zones while others were placed in areas previously excluded, resulting in an extraordinary reduction of insurance premiums for those who saw their lines changed. In addition to the questionable map adjustments, many of these newly mapped properties are the result of obvious mapping mistakes, mistakes the federal government has no interest in fixing as legions of helpless homeowners are being forced to pay premiums for properties nowhere near a flood zone. In many instances, these new "flood prone" properties are located hundreds of feet above or away from any possible flood zone. NBC documented more than 500 instances wherein high risk properties were removed by map modifications saving the owners as much as 97 percent on the premiums. A
detailed map can be found at: http://mediamaps.esri.com/flood-zone-changes/
NBC also reported that on February 18 of this year, FEMA moved a number of flood zone lines to benefit hundreds of wealthy oceanfront condominium buildings along with numerous million-dollar homes. The unprecedented changes shifted the financial burden for natural disasters like floods, hurricanes, and tsunamis to taxpayers and other homeowners. In the twin resort towns of Gulf Shores and Orange Beach, Alabama, where 70 coastal buildings have benefited, the map adjustments have cost FEMA more than $5 million a year in premiums and, in a single day, one of FEMA’s managers removed 25 condominium buildings from the highest-risk flood zone simply by redrawing a few lines.
NBC reported that after the Island Tower’s condominium project maps were adjusted, their flood insurance premiums went from $143,190 a year to $8,457. The nearby Royal Palms property previously collected $58,230 for damages resulting from Hurricane Katrina and another $889,730 from Hurricane Ivan also benefited from the government’s munificence. After the alteration of its flood zone lines, their annual premium went down to $6,845 a year from $218,484. It was not the first time that FEMA redrew maps for properties that have repeatedly filed flood loss and as many local municipalities learned, if they disagree with FEMA’s efforts, FEMA will still consider the remapping applications, even if local officials oppose the changes.
The investigation also revealed that many of the revisions were processed by a West Palm Beach Florida company called Flood Zone Correction (floodzonecorrection.com). Founded by its president, Dan Freudenthal, FZC has saved its clients millions of dollars by "correcting" inaccurate federal flood maps. FZC has filed successful applications for map changes on behalf of more than one hundred condominium developers in Alabama, Florida, Texas, South Carolina and Georgia. Freudenthal says his firm is able to get buildings remapped from the highest-risk flood zones by using "newer surveys" to counter errors on FEMA’s flood maps. "We’re the ones saving property owners money. We’re Robin Hood!" he said, adding "We’re helping people correct errors on the flood map where it’s appropriate. If FEMA just fixed the problems in their flood mapping and their rates, we’d be out of business." Interestingly, FZC does not work for private homeowners.
In Orange Beach, Alabama, one of the two Turquoise Place towers, spectacular developments, the first soaring 24 stories and the other 30, stand high above the Gulf of Mexico, luxurious residences featuring gulf facing balconies with outdoor grills and sparkling hot tubs, was located just inside a FEMA-mapped flood zone line, a line so important it translated into more than half a million dollars a year for flood insurance. Three engineers told property owner Larry Wireman that the underlying map did not qualify for a change as that segment of the gulf was too exposed and obviously flood prone. In discussing the proposed map modification, local engineer Vince Lucido, an expert in flood plain matters replied, "There’s no way in hell that’s going to happen." In spite of his protestations, the map nonetheless was changed.
In some cases, FZC has won appeals despite the objections of local officials responsible for reducing flood damage and protecting the public. In Orange Beach and neighboring Gulf Shores, FEMA asked city flood officials for their support of the proposed map changes. When that support did not come, FEMA simply approved the modifications.
"These changes are absurd," said Landon K. "Lannie" Smith, the floodplain administrator for the city of Orange Beach after refusing to sign off on the Turquoise Place application. "It’s shifting the burden to single-family homeowners." After the modification was approved, the condominium owners enjoyed a savings of up to 97 percent on their annual insurance premiums.
FZC appeared on the scene in 2010 when it began signing up gulf-fronting condominium associations to apply to FEMA for changes to the underlying flood maps. Under this commission based arrangement, the condominium owners pay nothing for Freudenthal’s participation. If successful, he receives half of the amount he saves the property owner in the first year. As an added incentive, more money is made available because FEMA permits owners to receive a refund of premiums for the current year as well as the previous year. The arrangement is quite profitable as a single building in a high-risk zone can pay as much as $4 million a year for flood insurance.
In explaining his methodology, Freudenthal said that his map change applications are based on "fresh data and surveys." When he commented on the FIRM maps, Freudenthal replied, "The flood maps are old, outdated, based on old crappy data [and] we found, based on more accurate recent data, that the map should look different." Whenever a local floodplain administrator or engineer refuses to sign off on the proposed modification Freudenthal said he goes "over" the administrator’s head "to the mayor." Many building officials and flood plain administrators were shocked to learn that FEMA would approve a map modification without their approval. A FEMA spokesman said it considers the application whether it has local approval or not.
Part of Freudenthal’s success is–by his own admission–attributed to his connections at FEMA. In 2011, his flood insurance company, CRIO, (Convert Risk into Opportunity) was chosen by FEMA as the national insurance agency of the year. He is also the president of Premiere Elevation Certificate Network, Inc. Little information is available on their website as to what they do and who does it. (premierelevationcertificates. com) Freudenthal also touts, with great pride, his relationship with the man who worked for him as the engineer on the Gulf Coast map changes, informing his clients, "We are extremely lucky that the head of our Coastal Department is the ex-director for FEMA’s Coastal Mapping Department so we are able to leverage his relationships to overcome many of the obstacles that pop up as he has managed to keep his relationships within the current FEMA infrastructure very friendly." His department head, Nader Mahmoudpour, became a consultant for Flood Zone Correction in 2011, after working on FEMA’s flood maps. According to NBC, FEMA relied on Mahmoudpour’s engineering certification on the Gulf Coast applications, despite the fact that that he had never seen the properties. According to Freudenthal, "There is no requirement to actually go to the site or do anything like that."
Although FEMA would not make any official available for the NBC interview on the record, and would not comment on specific map changes, press secretary Dan Watson issued this statement:
"In order to ensure the public knows their flood risk and insurance is priced accurately, FEMA works with communities and property owners to incorporate the best available data into the nation’s flood maps. Individuals can request amendments and changes to the maps, but those requests must meet regulatory as well as scientificallyestablished, technical requirements…FEMA takes its responsibility for administering the National Flood Insurance Program seriously and is reviewing the cases presented by NBC to ensure they were properly processed."
One big question regarding the map changes is whether or not FEMA decides to issue new ones in the future. If they do, will they override these one-at-a-time map changes. If so, will they create more work for Flood Zone Correction and other companies? FEMA’s spokesman stated that they will be decided one case at a time.
After commencing work on this article, twenty inches of rain fell in Alabama and Florida on April 29 and gulf tides ran high by two feet
. Pensacola, Florida recorded 16 inches of rain in one day, the largest amount since officials began recording rainfall records 131 years ago. Whether it be rain or shine, the FBI investigation continues and FEMA goes about its business–whatever it is they do while hardworking taxpayers continue paying their bills.
Michael Pallamary, PS, is the author of several books and numerous articles. He is a frequent lecturer at conferences and seminars and he teaches real property to attorneys and other members of the legal profession. He has been in the surveying profession since 1971.
A 4.258Mb PDF of this article as it appeared in the magazine—complete with images—is available by clicking HERE