A discrepancy of 25 feet is making life difficult for Breakers Point Homeowners Association.

When the owner of one of its units applied for a refinance, the association discovered something troubling: Two of its 19 buildings – units 55 and 65 – had been rezoned so that they were suddenly situated in a Federal Emergency Management Agency-designated “velocity zone.”

In these zones, flood insurance is mandatory.

“We do not have the option to withdraw,” said Bruce Francis, property manager at Breakers Point Homeowners. “The government is telling us we have to pay this amount of money.”

Funny thing is, the federal government messed up.

Map trap

Since FEMA drew up the original maps of Cannon Beach flood and velocity zones back in 1978, all of the Breakers Point properties had been classified as an area with minimal risk of flood hazard. With all but two of its buildings, the association still has the option of self-insuring or not insuring at all.

The abrupt rezoning occurred by accident when local Geographic Information System cartographer, Mark Scott, decided to overlay the city’s new aerial photographs with the existing FEMA maps, which had been updated in 2010.

The idea was to make a definitive FEMA map for the area, one that was easier to read and more user-friendly by combining the best of both images – the definitive flood lines of the FEMA maps with the sharp definition of the GIS photos. The property lines on the 1978 FEMA maps had always been unclear anyway, so updating them with modern high-resolution imaging seemed like a logical move.

“We assumed, this is great: We’ll take FEMA’s data, and we’ll put it on our maps. We’ll have this great system,” Cannon Beach City Planner Mark Barnes said.

But FEMA’s data did not sit right on Cannon Beach’s GIS map.

“We did not know it was going to turn out this way,” Barnes said. “At least in some places, there seems to be an offset.”

This is the very offset that has pushed the two Breakers Point units into the velocity zone and is now forcing the housing association to pay for flood insurance.

“That makes you wonder where else it’s screwed up,” Barnes said.

Why don’t the images match up?

Scott explained that Oregon is the only state in the U.S. that uses a unit of measurement called an “international foot,” which is slightly shorter than the standard foot. The FEMA consultants in Georgia did not realize this and so, as one gets farther away from the maps origin point, what began as a tiny discrepancy becomes larger and begins to add up.

“It’s like compound interest,” Scott said. “This adds multiple feet by the time you reach the place you’re interested in.”

Places like, say, Breakers Point, where the GIS overlay is shifted roughly 25 feet north, landing the two Breakers Point units squarely – and wrongly – in a velocity zone.

In short, Cannon Beach used one measurement, FEMA assumed the city was using a different one, and now the city is stuck with an overlay projection that does not fit and is presently costing Cannon Beach property owners a lot of money.

Cannon Beach is the only town on the North Coast affected by FEMA’s mistake, Scott said.

“This is a problem with their section of the data,” Scott said, assigning blame to the FEMA consultants who processed the city’s GIS information.

“We have not been able to resolve that yet,” Barnes said.

The fallout

The consequence is that homeowners, property owners, business owners and others now in velocity zone will see two things.

First, as with Breakers Point, their flood insurance becomes mandatory rather than optional. Second, once FEMA’s Flood Insurance Reform Act of 2012 goes into effect in January 2014, the insurance itself will skyrocket.

“I don’t think people are really becoming aware of this problem because it’s only really triggered when you get a refinance, or buy a condominium, or sell a condominium or buy flood insurance,” Francis said. “A new policy will trigger it.”

FEMA’s reform act calls for phasing out subsidized flood insurance. Since Congress created the National Flood Insurance Program in 1968, the risk of flooding on many properties continued to climb over the years. Still, existing homes and businesses were “grandfathered” into discounts that did not reflect the “true risk.”

Not anymore.

With the spike in national disasters over the past few years and FEMA going broke, the old model is “no longer sustainable,” according to the reform act. The agency is now shifting to “risk-based” rates for most properties.

This will happen gradually, with new rates increasing by 20 percent every year for five years. Secondary residences in a Special Flood Zone Area – such as Breakers Point Homeowners’ units 55 and 65 – will see a 25 percent increase annually until rates finally reflect the true risk.

This last part went into effect in January, so the Breakers Point association is already paying for the defective GIS overlay. The association’s present flood insurance premium was almost $42,000 per annum. Under the new rates, this will rise to $80,000 to $100,000 over the next five years.

“We’re not going to be able to afford it,” Francis said.

The same may be true for the average residential homeowner, whose premium is likely to jump from $450 per year to $1,800. “That’s getting people’s attention,” Francis said.

“With the premium subsidy disappearing, people are seeing their insurance change, so people who would not normally care about this are suddenly interested because their insurance bills are higher,” Barnes said. “Now it’s the first year that commercial prices start to bite on people who buy flood insurance.”

Public outreach

Francis brought his concerns to the Cannon Beach City Council at its Sept. 3 meeting, to make the council and the public aware that the erroneous GIS map threatens to hurt the financial lives of property owners throughout Cannon Beach.

“When the general public finds out about it, people who do not have the prerogative of canceling their flood insurance and have to pay the high rates, they will be in a very litigious kind of mood because they’re being forced to pay something that maybe they shouldn’t have to,” he said after the meeting.

To be sure, Francis does not contest the premium hike itself.

“We understand premiums are going up. We’re not fighting that issue. That’s a FEMA rule,” he said.

What he’s fighting is the GIS overlay of the 1978 information, which, though well intentioned, “has inaccuracies in it that make it compulsory for us to comply.”

“If the government is going to force you to buy insurance ... it had better be correct facts that allow them to make you buy insurance,” he continued.

Looking to the future

The next step, Francis said, should be to arrange a meeting with the state GIS, city planners, insurance vendors, realtors and property managers.

“We’ll have a head-to-head discussion about the perceived problem,” he said.

Because the National Flood Insurance Program is a partnership between city municipalities and FEMA, a public hearing must be held whenever there’s a zoning change. So far, there has not been one in Cannon Beach.

“As far as I’m concerned, we’re still using the 1978 information ’cause that was the last time we had a public hearing,” Francis said. “Seaside had a public hearing and people protested.”

Barnes said that the city of Cannon Beach can only address two problems related to the new flood insurance premiums.

One, it can deal with the “map registration problem,” namely, getting the FEMA lines to project correctly onto the GIS map so that the “fine-grained decisions” of zoning regulation can be made correctly.

And two – something that is unique to Cannon Beach – the city can continue to participate in the FEMA Community Rating System, which helps residents lower their premiums if the city scores high enough. However, “the loss of the subsidy dwarfs the 5 percent break on premiums,” Barnes said.

As for the higher rates, “there’s little to nothing the city can do on those points,” he added.

Scott has made an effort to make FEMA aware of its blunder.

“I told them over and over again, on the phone and via email. Whether they’ve made it a priority, I don’t know,” Scott said. “I’m one of the very few people who can say, ‘Hey, there’s a problem with the data.’”

Meanwhile, Francis will work to get the word out.

“We need to at least make people ‘in the know’ ... and not just let the error lay there costing a number of people large sums of money,” Francis said. “We can’t put up with that.”

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