By: Beth Daley
New England Center for Investigative Reporting
Listen to the radio version of this story by WGBH/NECIR Reporter Rupa Shenoy
SCITUATE - Over and over again, the Atlantic has taken aim at 48 Oceanside Drive. Almost four decades ago, it slammed the house clear off its foundation. Thirteen years later, seawater poured through the roof during a nor’easter. So often has the sea catapulted grapefruit-sized rocks through the vacation home’s windows that a former owner installed bulletproof-glass.
At least nine times the property has sustained significant flood damage from coastal storms. And each time, the federal government helped owners rebuild with National Flood Insurance Program payouts. It has subsidized insurance premiums at the property and in 2005, granted one owner $40,000 to elevate the home.
Now, the current owner of the $1.2 million vacation house is applying for what construction experts say could be $80,000 or more from the federal government to raise the house again.
Forty-eight Oceanside Drive’s tortured history with the sea – and the questionable incentives the government has given over decades there – has created a mammoth problem as Congress debates flood insurance reform: What should the U.S. do with properties the sea relentlessly tries to reclaim?
“We always knew it was unsustainable there," said Dr. David Cooney, 75, a Maryland oncologist who sold the house after the 1991 Perfect Storm severely damaged it.
The saga of 48 Oceanside Drive and the sea is repeated across the U.S. There are 534 properties in New England alone that are considered Severe Repetitive Loss properties, according to the Federal Emergency Management Agency, which manages the insurance program. Often, these NFIP-insured properties have had four significant flood claims – two within one decade. Nationwide there are about 12,000.
Scituate has 112 of them. Over the years, such properties have accounted for 689 losses. The total in claims: $21.3 million, according to FEMA.
All of this occurs without any inquiry into whether the homeowners are wealthy, poor, or in between: FEMA’s flood insurance was designed to help all flood-prone properties regardless of economic status.
The insurance program, which began in 1968 after private insurers largely abandoned flood insurance because of the recurrent risks, was initially designed to pay for itself. But a series of punishing storms starting with Hurricane Katrina in 2005 has meant premiums have not kept pace with payouts. Today, the program is about $24 billion in debt and taxpayers are now left holding the bill.
That shortfall is expected to widen in coming years as sea levels rise and storms are projected to become more intense from man-made climate change. Atlantic waters from north of Boston to Cape Hatteras, North Carolina are rising three to four times faster than globally, according to federal scientists. Billions of dollars worth of homes are on the front line.
Homeowners, like those at 48 Oceanside Drive, have every right to take advantage of legal government programs to protect property. The question is whether, in a time of rising tides and soaring deficits, the flood insurance program creates incentives that contravene both public policy and common sense.
Such concerns led Congress in 2012 to phase out subsidies and boost premiums to reflect the true risks of living in flood-prone homes.
But even as the law took hold, new federal flood plain maps raised insurance rates for hundreds of thousands of U.S. homeowners. The double-hit created a political backlash with many politicians, including those in New England who initially voted for the new law, supporting its delay or rollback.
The Senate is expected to pass a House-approved bill this week that would still raise premiums, but not as steeply as the 2012 law. While second homes and properties that are repeatedly hit would experience greater increases, their owners would still be eligible for sizable grants to elevate and fortify homes and there remains no limit on the number of times a property can collect.
“It’s like a boat with a hole in the side of it, the (National Flood Insurance Program) needs bailing out,’’ said Seth Kaplan, vice president for policy and climate advocacy at the Conservation Law Foundation, a Boston-based legal non-profit. “It only stays afloat as long as the government is willing to put taxpayer money into it.”
FEMA says the identities of those who have received subsidies, claim payouts and grants to protect their homes are confidential. The New England Center for Investigative Reporting (NECIR) was able to reconstruct much of the history of 48 Oceanside Drive by combing through town building permits, conservation commission minutes, town archives and in interviews with the home’s previous and current owners. While owners were unable or unwilling to share premium information or exact payouts, the total claim and grant payout for the property over the past 35 years likely exceeds $750,000 according to NECIR estimates.
Massachusetts state Sen. Marc Pacheco, a Taunton Democrat, filed a bill in January offering an alternative approach: Create a fund to buy back properties from willing owners. While there is no funding mechanism yet, Pacheco says he is committed to figuring one out.
“There is a lot to be said for not rebuilding in areas,’’ he said.
HOLDING BACK THE SEA
Harold Cooney, a successful Arlington, Mass. accountant never learned to swim but always wanted an ocean view. In the mid-1950s, he bought a five-bedroom second home in Scituate for his wife and four children, according to David Cooney, one of his sons and land records.
The house was rebuilt once after being destroyed by fire. David bought the home after his father died. A year later it was destroyed along with 188 others in town, a casualty of the Blizzard of ’78.
Cooney received a federal claim payment although he can’t recall the dollar amount. He then built a two-winged home – he hoped it would be his retirement house - overlooking the Atlantic. He fortified the house with secure shutters and design elements to let water flow freely under it. Still, in 1991 it was severely damaged and Cooney came to the conclusion the house was going to be hit again and again. He sold.
Today, town officials say patches of oceanfront in Scituate should probably never have been developed. Geography and bad luck have left the coast perpendicular to the ocean with few barriers offshore to slow advancing storm waves. When those waves come, they slam into seawalls and jettison water – along with boulders – up and onto land, says Richard W. Murray, a Scituate selectman and professor of Earth and Environment at Boston University.
“It’s why people have steel shutters on their windows,’’ said Murray. “There are foot-long boulders flying around down there in some key locations.”
Joseph Pizziferri, the home’s next owner, says he put $155,000 worth of repairs into the damaged house, including steel beams. “I tried everything,’’ he said, but still got hit three times. Because flood claims are usually restricted to $250,000 or less per storm per building and don’t cover everything, Pizziferri said he often had to put in his own funds to repair damage.
Tired of constant rebuilding, he sold the property in 1999 for $465,000 to Donald F. Craig Jr., a Quincy accountant, and his wife. Craig was initially billed close to $12,000 in flood insurance premiums, but said he was able to almost halve the amount because the structure was grandfathered – built to code based on flood maps in effect at the time of construction.
Craig also remembers collecting insurance claims two or three times. He decided to elevate, expand and protect the house: He used 2x8s in the ocean-facing walls for strength and even installed three-quarter inch high-impact bulletproof glass to stop the ocean. While he paid for the expansion, the federal government chipped in for the elevation: Just shy of $40,000 according to government documents obtained by NECIR.
The history of subsidies at 48 Oceanside Drive is unclear because owners did not remember or declined to disclose them. However insurance specialists say it is likely, after the 2005 expansion, the home no longer paid a subsidized rate.
Economic studies show that every dollar spent to elevate or protect buildings from flooding reduces future losses $4 or more. But the elevation Craig built to – higher than what the federal government and town required – wasn’t high enough: Since he sold it to Gary and Margaret Motyl of Florida in 2007 for $1.2 million, it’s been hit twice by storms, most recently in early 2013 which caused $160,000 in damage, according to a town building permit application.
Today, Margaret Motyl is waiting to see if the federal government will pay to elevate the vacation house again. Motyl said she and her late husband had paid more than $50,000 of their own money to fix the sea wall behind her home, which also protects the town road and other properties. She was concerned if the house was in a news story, it could jeopardize her FEMA application.
Motyl’s late husband, Gary, was chief investment officer of the Templeton Global Equity Group and president of Templeton Investment Counsel. Federal flood insurance is not means-tested.
UNDOING A LEGACY
Not all properties that have severe and repeated losses or are second homes are owned by the wealthy. It is these homeowners who have little wiggle room to pay for the large premium increases arising from the 2012 law and new floodplain maps. Without relief – or help to elevate properties – they have few options, they and some politicians say. It is these homeowners that have sparked most of the call for delay in Washington.
Those who own second homes meanwhile, say they are merely availing themselves of a government-promoted program.
Doris Privitera’s second home at 121 Turner Road, which pays a subsidized insurance rate, is being elevated with a FEMA grant that will pay 90 percent of the cost. She and her husband bought the house 45 years ago.
Doris Crary on the details of the flood program and its benefits. (Rupa Shenoy/NECIR)
Flood insurance “is controversial’’ she said, noting her neighbor had questioned why FEMA was giving her elevation funds until he too applied. “Should the taxpayers pay? It’s a difficult thing to say as an owner,” she said, noting the elevation would save on future payouts.
Some coastal experts say incentives need to change to encourage people to leave homes that will continually get hit; perhaps by giving tax breaks for leaving, denying insurance after a certain number of losses or pursuing voluntary buyouts. While FEMA has bought out 20,000 properties in the U.S. since 1993, it has not been a popular program along the coast.
Rachel Cleetus, senior climate economist for the Union of Concerned Scientists, a Cambridge-based research and advocacy group, said the flood insurance law the Senate is likely to vote on this week takes important steps to bring insurance premiums in line with the risk of severe repetitive loss properties. She suggested that the addition of a means-tested voucher program -- reduced premiums for people with lower incomes --could help soften the financial blow for families that can’t afford a rate increase.
“You see these properties becoming a bigger and bigger problem going forward, especially as sea levels rise,’’ Cleetus said. “We can’t change the past, but there is an opportunity to do better going forward.”
Click on a county to see how many subsidized National Flood Insurance Program (NFIP) policies existed prior to the start of a new federal flood insurance law. The 2012 law was designed to charge homeowners for the true risk of living in a floodplain, but portions of it have since been delayed.*
* Subsidized properties are homes that were built before floodplain rate maps existed in its community. Does not include properties that are grandfathered, or built to code at the time of construction that may be paying premiums below actuarial rates.
The New England Center for Investigative Reporting is a nonprofit investigative reporting newsroom based at Boston University and WGBH TV/radio and supported in part by New England news outlets. NECIR interns Michael Bottari and Amanda Ostuni helped research and prepare this report. Follow Beth Daley on Twitter @bethbdaley
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