Peggy Molloy was elated.
"It means I get to keep my house," the Point Pleasant woman said Monday after a bill scaling back huge premium increases faced by more than 243,000 New Jersey homeowners in flood-prone areas cleared Congress.
The legislation, reversing reforms of the federally subsidized flood insurance program, is expected to be signed by President Obama.
First introduced by Sen. Robert Menendez (D-N.J.), the proposal rolls back changes in the National Flood Insurance Program that were implemented in 2012 — just before Hurricane Sandy struck — and meant to make the program more financially stable. The reforms, which called for rates reflecting true flood risk, have led to huge premium increases for policyholders who complain they could be forced out of their homes.
The bill now on the president's desk would cap annual rate increases and repeal provisions that eliminated any subsidy for flood insurance on existing properties for homebuyers at the time of sale.
Menendez, who introduced the measure in October on the one-year anniversary of Sandy, said the intended reforms brought unintended consequences and would have "crushed thousands of families under the weight of skyrocketing flood insurance rates."
George Kasimos, an organizer of Stop FEMA Now, said the insurance premium rollbacks will buy time, and will keep some out of foreclosure. Among them was George Kasimos, whose Toms River home was damaged by Sandy. He said he will now see his flood insurance rates rise by $1,500 instead of $9,000.
"It gives us some breathing room," said Kasimos, who founded the group Stop FEMA Now to protest the federal government's response to the storm and has been helping lead the charge against the flood insurance hikes.
The legislation caps annual rate increases at an average of 15 percent, with a maximum of 18 percent for primary homeowners. Secondary homeowners can still see their premiums rise by 25 percent a year.
Because his home was damaged by the storm, Kasimos said his rates will go up $500 a year, but said that is better than the huge increase he was facing next year, had Congress not acted.
"It's great we passed the bill," Kasimos said. But rates will continue to go up over time. "It's a good start. It will delay foreclosure for some people."
Molloy, who worried the cost of flood insurance on her home in Point Pleasant would skyrocket from $800 to as much as $10,000 to $14,000, was relieved at the rollback.
"I could not afford the new insurance premiums and my house would have been unsellable," she said. "It means I don't have to walk away. It's a huge relief."
Menendez said the expected flood insurance increases, due to take effect next year, would have further threatened the state's recovery from Sandy and jeopardized the financial security of thousands of residents.
"Residents had come to me in tears, saying they were afraid they'd lose their homes," Menendez said.
A spokesman for Gov. Chris Christie said the administration was still looking at the final version of the bill, which was approved 306-91 last week in the House, and passed 72-22 late Thursday in the Senate.
The the governor had urged congressional leaders to delay the insurance premium increases — noting that the devastating impacts of Hurricane Sandy were "simply unknown" when the flood reforms were passed.
Still, some criticized the undoing of changes in the National Flood Insurance Program, which was hard hit by storms such as Sandy and Hurricane Katrina. The National Association of Mutual Insurance Companies called it a move down the wrong path.
"It forces the vast majority of flood insurance policyholders to pay a little more so that those with subsidized rates can continue to pay less than what they should, whether they need assistance or not, and it wipes out important reforms that would ensure that the National Flood Insurance Program will be able to pay claims from future storms without a taxpayer-funded bailout," said Jimi Grande, senior vice president of federal and political affairs for NAMIC.
Environmentalists also questioned the continued subsidy for those living on the Jersey Shore at the expense of other taxpayers.
"What we're doing is putting more people in harm's way and subsidizing their insurance," said Jeff Tittel, director of the New Jersey chapter of the Sierra Club.
Tittel said a delay in the planned premium increases would make sense if the plan was to buy time to figure out what to do about the coast — including rules on elevating structures, remapping flood zones, and homeowner buyouts.
"But we're not doing that," he said. "I understand people living on the coast don't want the shock. Nobody does.
"But should someone in Newark subsidize those living on the shore?"
RELATED COVERAGE
• Menendez to urge Congress to delay increases in flood insurance premiums
• Federal lawmakers, officials discuss role rising flood insurance costs play in Sandy recovery
• Higher flood insurance rates in store for thousands of New Jerseyans
• U.S. lawmakers push delay to flood insurance hikes
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