In response to former President Obama's Executive Order 13690 and the Federal Flood Risk Management Standard (FFRMS), HUD proposed a problematic rule to expand its floodplain management oversight on Oct. 28, 2016.
According to the proposal, single-family homes that are within the 100-year floodplain and using FHA mortgage insurance would have to be elevated an additional two feet when they are built or substantially improved.
Multifamily builders would face the added burden of the new two-foot elevation requirement when using FHA mortgage insurance for new construction or substantial rehabilitation projects both within the 100-year floodplain and also in a horizontally expanded FFRMS floodplain area for which maps do not even exist.
HUD's new flood risk measures would also apply unnecessary and expensive elevation and flood-proofing requirements to projects that use federal grants, such as the HOME and Community Development Block Grant programs.
Why It Matters
HUD's proposal threatens access to FHA mortgage insurance for single-family home buyers and multifamily builders and will jeopardize affordable housing opportunities for countless working class families.
The rule will increase construction costs and project delays for single-family homes targeted for purchase using FHA programs intended to serve low- to moderate-income buyers.
Additional elevation and flood-proofing requirements for multifamily properties using FHA mortgage insurance programs could make many projects infeasible, due to increased construction costs and the inability to offset these costs through higher rents. In either case, the rule would prevent delivery of much-needed rental housing during the current affordable housing crisis.
Making matters worse, multifamily members will not know if they must comply with the new floodplain rules because maps of the expanded floodplain don't exist.
Further, the draft rule is inconsistent with FEMA regulations under the National Flood Insurance Program and creates unnecessary and expansive flood mitigation requirements beyond those established by FEMA, the agency with the expertise, funding and statutory directive to administer flood insurance and floodplain mapping programs.
Equally problematic, the proposal lacks a grandfathering provision for projects that are in the pipeline and will generate surprise expenses and delays for single-family and multifamily projects that are already underway.
- Revoke Executive Order 13690 and the FFRMS via a new executive order.
- Launch a federal regulatory review process similar to that used following both the Bush and Obama presidential transitions, in which HUD's proposal is withdrawn and President Trump's appointees and designees have the opportunity to review, revise or disapprove it.
- If Executive Order 13690 is not revoked or HUD's proposal is not withdrawn, at a minimum HUD should limit application of the FFRMS to federally funded projects as intended by the order itself. The FFRMS should not apply to federally insured projects.