Recently, the City of Cayce decided to annex the Green Diamond flood plain, located in lower Richland County for development. The timing, and hurried nature, of the decision is related to a window of time in which the area will be legally amenable to development. As part of an effort to modernize and make sustainable the National Flood Insurance Program (NFIP), FEMA, who is in charge of administering the NFIP, has been updating flood maps. The most recent map of the Green Diamond area has been thrown out by a federal court, not due to inaccuracy, but rather to administrative miscues in creating the map (imagine that, administrative miscues from FEMA).
The result of the court's decision to throw out the recent flood map is a window of opportunity for developers who have been salivating over the Green Diamond tract for some time now. They now have a limbo period in which development of the Green Diamond flood plain is not restricted by its flood map status. As FEMA works to put out a new flood map of the area, which will undoubtedly render the Green Diamond flood plain uninsurable, the developers, apparently in conjunction with Cayce's mayor and city council, are working to build on the flood plain.
One major facet of the project will be flood "protection" afforded the area by a levee system. One might think that only 2 years after the devastation caused by the breech of New Orleans' levees, that our collective memory might dissuade the development of flood-prone areas. But no, the technological hubris that has characterized our great nation for so long still prevails. Development of the flood plain moves forward.
The aforementioned "window of opportunity" for the development has little to do with federal property controls (at least overtly) and everything to do with insurance. Long ago the NFIP was created by the federal government because private insurers would not insure properties in flood prone areas. The private insurers cited essentially market-based concerns as to why they would not insure the properties. In order for the insurance companies to retain the ability to deal financially with a catastrophic flood event, the actuarially sound rate that would be passed to the homeowner would be unaffordable.
Enter the NFIP, the insurer of the uninsurable. The effect of providing flood insurance to low-lying, flood prone areas has been marked. Development of coastal areas and river flood plains has increased exponentially. In the process populations in those areas have grown rapidly. The result is an unsustainable insurance time bomb on nearly every beach that is susceptible to hurricane events and riverbanks around the country. Because of the federal policy of encouraging development of flood prone areas the NFIP has become a money pit. Congress has expressly admitted (see H.R. 3121, pending legislation entitled "The National Flood Insurance Program Reform and Modernization Act") that the NFIP, in its current form, is completely unsustainable and unable to deal with catastrophic events such as the 2004 and 2005 hurricane seasons. The pending legislation proposes to phase-in actuarially sound rates for some (mostly commercial properties and second homes) properties in flood plains and to add wind damage to the federally subsidized insurance coverage. The list of criticisms of the NFIP and the proposed reform is too long and complicated to post here, but I have an extensively researched academic paper for any who are interested.
The point of this post is to expose the true nature of Cayce's hurried annexation of the Green Diamond flood plain. If the development occurs between flood maps, then all of those properties will be insurable at the discount NFIP rates. The problem for those of us who will not benefit from the Green Diamond development is that when the area eventually floods, an event that would be severely exacerbated by a levee system and subsequent breech thereof, the cost of insuring the losses incurred will be passed directly to the taxpayer. In the meantime, the cost of bearing the risk of flood for the Green Diamond area will be borne by the insured (those people with property interests in the development) and the insurer (the federal government and, by extension, the taxpayer).
There are more criticisms of the Green Diamond development, which I plan to post when I have the time, but the biggest issue by far, as evinced by the rush to annex and develop the area, is insurance.
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