LTC 139-2021 Follow-up to March 17, 2021 Commission Meeting Item R9 Q-Addressing Flooding in Our Community FEMA Risk Rating 2.0, State Resilience Funding, and FEMA Preliminary Flood InsuranceOocuSign Envelope ID: BD659C16-563-4 AEC-BA5D-E2086138469C
MIAMI BEACH
OFFICE OF THE CITY MANAGER
NO. LTC # 139-2021 LETTER TO COMMISSION
TO: Mayor Dan Gelber and Members of the City Commission
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DATE: April 1, 2021 ·as3os24ors2s4s.
SUBJECT: Follow-up to March 17, 2021 Commission Meeting Item R9 Q-Addressing
Flooding in Our Community: FEMA Risk Rating 2.0, State Resilience Funding, and FEMA
Preliminary Flood Insurance Rate Map
At the March 17, 2021 Commission Meeting, information was requested through discussion Item
R9 Q- Addressing Flooding in Our Community, sponsored by Commissioner Steinberg. The
discussion was heard with Item R9 O. Concerns were raised regarding flood insurance rates and
a request was made to pursue State of Florida resilience funding for Miami Beach. Additionally,
this memorandum is a timely opportunity to provide an update on the preliminary FEMA Flood
Insurance Rate Map (FIRM).
Miami Beach has been proactive through planning and projects to reduce the risk of flooding;
however, our geographic location and elevation makes Miami Beach vulnerable to storms and
sea level rise. Under the current FEMA Maps, 93% of all buildings are in the Special Flood Hazard
Area, requiring flood insurance for federally backed mortgages. The Administration has been
following the issues included in this memorandum closely, and these items are State and Federal
Legislative priorities.
National Flood Insurance Program Risk Rating 2.0
The City Commission requested the City direct the federal lobbyist to follow and advocate
regarding potential cost increases associated with the National Flood Insurance Program's new
program calculations. The new approach to risk rating, not yet implemented, is referred to as
Risk Rating 2.0.
Risk Rating 2.0, according to FEMA, "will incorporate a broader range offload frequencies. FEMA
will be pairing state-of-the-art industry technology with the NFIP's mapping data to establish a
new risk-informed rating plan. Catastrophe models, in combination with the ability to leverage the
NFIP's mapping data, will provide a better and more comprehensive understanding of risk at both
the national and local level." A full overview of the approach is provided in Attachment 1.
With respect to the costs of flood insurance premiums, FEMA has stated "Risk Rating 2.0 will
comply with existing statutory caps on premium increases. Risk Rating 2.0 will prevent significant
premium increases by offering a glidepath discount to existing policyholders and new
homeowners buying homes from existing policyholders."
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According to FEMA, policy holders in Florida will see the following rate changes (Attachment 2):
Risk Rating 2.0 in Florida
Immediate Decreases
342.142 Policies
On Average, $0 - $10 Per Month
($0- $120 Per year) Increases
1.178.074 Policies
On Average, $10 - $20 Per Month
($120-$240 Per Year) Increases
134.572 Policies
4%
On Average, Greater Than $20 Per
Month ($240 Per Year) Increases
73,113 Policies
https://www.fema.gov/sites/default/files/documents/fema_florida-state-profile_03-2021.pdf
Miami Beach has an overall high rate of flood insurance coverage, with 80% of units carrying
NFIP policies. The City conducted an analysis of coverage in 2018, to help obtain credit for the
Community Rating System (CRS). However, this analysis does not include private flood
insurance as this information is not readily available. The City has targeted communication efforts
to encourage flood insurance coverage over several years.
Miami Beach pursued an aggressive goal to improve its CRS ranking from a Class 6 to a Class 5
and was officially awarded the new score in 2019. With this score improvement, the city receives
a 25% discount, that totals $8.2 million in savings annually. This helps offset increasing federal
rates.
Any adverse effect of flood insurance legislation and cost is a priority for our federal lobbyists,
and they have advised that there will be a delay in the rollout of Risk Rating 2.0. The City's federal
lobbyists are working closely with our members of Congress. They have confirmed that both
Senators Scott and Rubio will continue to push to not have the rates change in a manner adverse
to Florida's coastal residents. They have communicated the City's concerns about this issue
directly with Congresswoman Salazar's office and will continue to do so. They have also advised
that FEMA has stated that there will not be a rate change for existing policy owners until April
2022 at the earliest.
State of Florida Resilience Funding
The City Commission also asked for an update on State activity with respect to funding for
resilience. Senate Bill 1954 and House Bill 7019 address Statewide Flooding and Sea-level Rise
Resilience. As of March 31, 2021, both bills have passed their committees of reference and are
now available to be heard by the full house and senate.
A leadership priority this Session of both the House and Senate, this comprehensive bill focuses
on resiliency, flooding, sea level rise, and features local governments as a key component of a
statewide approach. This legislation establishes statewide resiliency programs that will assess
and address inland and coastal flooding and sea level rise. The bill creates:
• The "Resilient Florida Grant Program" within the Department of Environmental Protection
(DEP) that provides funding, subject to appropriation, to local governments for the costs of
resilience planning such as vulnerability assessments and new plans or policies.
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• The "Comprehensive Statewide Flood Vulnerability and Sea-Level Rise Data Set and
Assessment," to be updated every three years. DEP must:
o Develop a statewide data set necessary to determine the risks to inland and coastal
communities, including statewide sea level rise projections; and
o Develop a statewide assessment, based on the statewide data set, that identifies
vulnerable areas and infrastructure, including "critical assets" as defined in the bill.
• The "Statewide Flooding and Sea-Level Rise Resilience Plan." DEP must annually submit a
plan proposing up to $100 million in funding for projects that address risks from flooding and
sea level rise. Local governments and regional entities may submit projects, water
management districts must evaluate projects and annually submit lists to DEP, and DEP must
implement a scoring system for assessing projects for inclusion in the plan.
Additional components of the bill:
• Authorizes local governments to form regional resilience coalitions to assist with community
resilience efforts, including utilization of the programs created by the bill. DEP is authorized,
subject to appropriation, to provide funding to regional resilience coalitions.
• Requires the University of South Florida to create a hub to coordinate and lead statewide
efforts for research and innovation regarding flooding and sea level rise.
• Requires the Office of Economic and Demographic Research to add an analysis of flooding
issues to its annual assessment of Florida's water resources and conservation lands.
Note that the Chief Resilience Officer and Director of Grants and Intergovernmental Affairs are
already working with the interdepartmental READY Team to strategically plan for projects within
these anticipated funding streams.
FEMA Preliminary Flood Insurance Rate Map (FIRM)
FEMA has provided Miami-Dade County and municipalities with copies of the Preliminary Flood
Insurance Rate Map (FIRM) and Flood Insurance Study (FIS) for review and comments. Staff
has obtained the digital information, met with the Miami-Dade County lead, and is analyzing the
information and comparing the noticeable changes to the prior maps issued in 2009. This begins
a long process to move the products from preliminary to effective.
The City will provide questions and comments to FEMA with respect to the accuracy of maps,
and advocate to address any inaccuracies that result in an adverse effect on the City. The
accuracy of information is important from an economic and risk perspective. The FIRM
information is currently a data source in determine the cost of flood insurance premiums and will
be one of the data sources for Risk Rating 2.0. The map is also important from the perspective
of our land use regulations and construction requirements. The City's ordinances (2016-4009
and 2016-4010) for a higher freeboard, grade elevations, and height were a positive move that
may save policy holders on premiums and avoided risk.
A virtual Consultation Coordination Officer (CCO) Meeting will be held April 27th, 2021 for Miami-
Dade County, cities, and stakeholders. At the meeting, FEMA will discuss revised flood hazard
information, ordinance adoption, and other frequently asked questions. The State of Florida and
FEMA Region IV will be available to answer questions. After the meeting, there will be a 90-day
appeal period. Miami-Dade County will make the map available through an on-line application to
the public for review. FEMA will address comments/ appeals, and initiate final preparation of the
FIRM, which will become effective seven to ten months later.
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For an uestion or comments, please contact me or Amy Knowles, Chief Resilience Officer at
am ov.
Attachment 1: FEMA Risk Rating 2.0
Attachment 2: FEMA Florida - Risk Rating 2.0
Risk R ating 2.0
https ://www. fe ma .gov/flood-insura nce/work-with-nfip/risk-rating
The National Flood Insurance Program (NFIP} is redesigning its risk rating by
leveraging industry best practices and current technology, FEMA will deliver rates that
are fair, make sense, are easier to understand and better reflect a property's unique
flood risk. FEMA calls this effort Risk Rating 2.0.
Risk Rating 2.0 implementation has been deferred To October 1, 2021.
While the agency initially announced that new rates for all single-family homes would
go into effect nationwide on October 1, 2020, some additional time is required to
broaden the agency's analyses of the proposed rating structure across its entire book
of business, to include its relationship to communities behind levees. Therefore, FEMA
decided to adjust implementation of Risk Rating 2.0 by one year to October 1, 2021.
Additionally, this extension also allows for all National Flood Insurance Program
(NFIP} policies - including, single-family homes, multi-unit and commercial properties
- to change over to the new rating system at one time instead of a phased approach,
as originally proposed.
Over the course of the next year, FEMA will continue to actively engage with Congress
and other key stakeholders to ensure transparency and visibility as we work to
transform the NFIP.
Have questions? Please send us an email.
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Why FEMA is Undertaking Risk Rating 2.0
FEMA is focused on building a culture of preparedness by closing the insurance gap.
FEMA is transforming the NFIP into one that people value and trust and that best
serves the nation. This requires FEMA to change the way it has historically viewed
flood risk and priced flood insurance.
Risk Rating 2.0 aims to accomplish this by leveraging industry best practices and
current technology, FEMA will deliver rates that are fair, make sense, are easier to
understand and better reflect a property's unique flood risk.
Through these efforts, FEMA's goal is to make flood insurance significantly easier for
agents to price and sell policies, and in turn, help customers better understand their
flood risk and the importance of flood insurance.
Demand for change has been building for a long time, and Risk Rating 2.0 will be the
culmination of a multi-year effort.
Changes Under Risk Rating 2.0
Risk Rating 2.0 will fundamentally change the way FEMA rates a property's flood risk
and prices insurance. The current rating methodology has not changed since it was
first developed in the 1970s. But since then, technology has evolved and so has FEMA's
understanding of flood risk.
Additionally, the current rating methodology is heavily dependent on the 1-percent-
annual-chance-event, while Risk Rating 2.0 will incorporate a broader range of flood
frequencies. FEMA will be pairing state-of-the-art industry technology with the NFIP's
mapping data to establish a new risk-informed rating plan. Catastrophe models, in
2
combination with the ability to leverage the NFIP's mapping data, will provide a better
and more comprehensive understanding of risk at both the national and local level.
FEMA is building a new rating engine to help agents easily price and sell policies. It will
also allow policyholders to better understand their property's flood risk and how it is
reflected in their cost of insurance.
New rates for all NFIP-insured properties will go into effect nationwide on October
1, 2021.
Risk Rating 2.0 will comply with existing statutory caps on premium increases. Risk
Rating 2.0 will prevent significant premium increases by offering a glidepath discount
to existing policyholders and new homeowners buying homes from existing
policyholders.
R atin g C h aracteristic s
The new risk rating plan will use easier-to-understand rating characteristics for each
property, such as:
• Distance to the coast or another flooding source
• Different types of flood risk
• The cost to rebuild a home
By reflecting the cost to rebuild, the new rating plan will also aim to deliver fairer
rates for owners of lower-value homes.
Benefits Of Risk Rating 2.0
The NFIP is developing Risk Rating 2.0 to deliver the following key benefits to
policyholders, communities, and the flood insurance industry:
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• C r e a t e s a n in d iv id u a l iz e d p ic t u r e o f a p ro p e rt y 's r is k
• P ro v id e s r a t e s t h a t a r e e a s ie r t o u n d e r s t a n d fo r a g e n t s a n d p o lic y h o ld e r s
• R e fl e c t s m o r e t y p e s o f fl o o d r is k in r a t e s
• U s e s t h e la t e s t a c t u a r ia l p r a c t ic e s t o s e t r is k -b a s e d r a t e s
• R e d u c e s co m p le x it y fo r a g e n t s t o g e n e r a t e a q u o t e
Answers To Common Questions About Risk Rating
2.0
What data sources is FEMA using for this initiative? Where are the
data coming from?
FEMA is using a combination of models to support the development of rates. We are
pairing state-of-the-art industry technology (e.g. catastrophe [CAT] models) with the
NFIP's mapping data to establish a new risk-informed rating plan. Combined data
from CAT models and NFIP mapping data will provide a better and more
comprehensive understanding of risk at both the national and local level.
FEMA is using data from multiple sources, such as:
• FEMA: Existing mapping data, NFIP policy and claims data;
• Other Federal Government Agencies: U.S. Geological Survey (USGS) publicly-
available data;
• National Oceanic and Atmospheric Administration (NOAA) Sea, Lake, and Overhead
Surges from Hurricanes (SLOSH) data;
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• U.S. Army Corps of Engineers {USACE) data sets; and
• Third-party sources: Commercially-available structural and replacement cost data
and catastrophe flood models.
This is not a complete list of all data sets and FEMA may add additional data sets in
the future.
How does FEMA plan to encourage homeowners to maintain their
flood insurance coverage?
We believe that Risk Rating 2.0 will help close the insurance gap across the country.
We believe that fairer, more intuitive rates will help future and current policyholders
understand their risk, their premium, and their coverage options. FEMA plans to offer
mitigation credits to help incentivize risk reduction efforts and reduce the cost of
future flood events.
Risk Rating 2.0 will initially provide credits for three mitigation actions:
• Installing flood openings per the 44 CFR 60.3 criteria;
• Elevating onto posts, piles, and piers; and
• Elevating machinery and equipment above the lowest floor.
Do changes from this initiative require legislative action or
approval of Congress?
Since 1968, the National Flood Insurance Act has required FEMA to periodically review,
and if necessary, revise the way we set non-discounted premium rates. FEMA has
always followed the congressional mandate to set non-discounted premium rates
based on accepted actuarial principles. By leveraging modern technology and
advanced actuarial practices, Risk Rating 2.0 is helping FEMA better meet the
objectives already laid out by Congress.
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What percentage of policyholders would expect to see increases in
premiums? What percentage would see premiums go down?
FEMA is completing an actuarial analysis and does not have this information at this
time. FEMA is committed to implementing Risk Rating 2.0 in a transparent way and will
continue to communicate information as it becomes available.
Last updated July 18, 2020
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Flo rid a - R is k R a tin g 2 .0
With the implementation of Risk Rating 2.0, FEMA delivers rates that more accurately
reflect flood risk and ensure the National Flood Insurance Program will be here for this
generation and generations to come.
National Flood Insurance Program in Florida
NFIP Policies in Force by County in Florida A significant part of FEMA's NFIP Transformation is Risk Rating 2.0,
which will fundamentally change the way FEMA prices insurance and
determines an individual property's flood risk.
Risk Rating 2.0 is equity in action. With Risk Rating 2.0, individuals
will no longer pay more than their share in flood insurance premiums
based on the value of their homes. Roughly two-thirds of policyholders
with older pre-FIRM homes will see a premium decrease.
Pollcles In Force
musso ..s
FEMA will reduce disaster-related suffering and disaster-related costs
in Florida through insurance and the mitigation of flood risks by
leveraging advances in industry best practices, technology, and flood
risk modeling.
FEMA's core mission and programs continue to emphasize purchasing flood insurance and pursuing mitigation
options to achieve resiliency. While there are many policies in force in Florida, there are still opportunities to
increase participation in the program to improve resilience, as shown in the table below.
NFIP Policies in
Force in FL
1,727,900
Properties in FL Not
Covered by NFIP Policy
5.9 million
Average NFIP Claim Payout
in the Past 10 Years
$28,100
Average Individual Assistance Claim
Payout in the Past 10 Years
$5,100
Risk Rating 2.0 in Florida
Immediate Decreases
342,142 Policies
On Average, $0 - $10 Per Month
($0-$120 Per year) Increases
1,178,074 Policies
On Average, $10-$20 Per Month
($120-$240 Per Year) Increases
134,572 Policies
4%
On Average, Greater Than $20 Per
Month ($240 Per Year) Increases
73,113 Policies
FEM A
March 2021 1
Under the current methodology , all NFIP policyholders have been subject to premium increases every year. Risk
Rating 2.0, fro m a premium increase perspective, does not deviate significantly from the current methodology
except annual increases will eventually stop under Risk Rating 2.0 once the full-risk rate is realized. Premium
increases will also be subject to the 18% per year cap set by Congress fo r most policies.
96% of current policyholders' premiums will either decrease or increase by $20 or less per month under Risk
Rating 2.0.
What can you do? Mitigate to Reduce Rates in Florida
NFIP Policies in Force in FL by Rate Class
Pre -FIRM Subsidized
• Preferred Risk Policy
• Newly Mapped
• High Risk Coastal
Zones
• Full Risk
The chart to the left identifies policyholders in Florida
who may need the most help to reduce flood insurance
rates. They will be paying their true flood risk rate
under Risk Rating 2.0, and by implementing mitigation
measures while on a glidepath to their full risk rate,
they can help reduce their costs.
The state plays a key role in leading those mitigation
efforts through coordination and collaboration with
communities. States, local communities, tribes,
territories, and individuals should prioritize mitigation
projects, mitigation planning, and the adoption or
strengthening of builing codes and zoning regulations
to improve resilience and reduce flood insurance rates.
Participate in the Com munity Rating System (CRS)
Communities will continue to earn National Flood Insurance Program rate discounts
of 5%-45% based on the Community Rating System classification. The discount will
be uniformly applied to all policies throughout the participating community,
regardless of whether the structure is in the Special Flood Hazard Area (SFHA).
Currently, policyholders in CRS communities save an average of $162, or 15%, per
year on their flood insurance policy. To date, there are 24,500 communities that
participate in the Community Rating System.
As of 0ct. 1, 2020, 259 communities in Florida participate in the Community Rating
System. To view the list of participating communities and their current class rating,
visit www.fema.gov/community-rating-system.
flit
Learn more at fema.gov March 2021 2
Apply for Hazard Mitigation Assistance Grants
H a za rd M itig ation As sista nce (H M A ) gra nts are available for pre-d isaster and post-disaster m itigation projects. As of
O cto b er 1, 2 0 2 1 fo r ne w policyholde rs and April 1, 20 2 2 fo r existing policyholders, pro jects involving installing flood
ope n ing s per 4 4 C FR 6 0 .3 criteria, elevating structures, and elevating m achinery and equipm ent above the first floor
(i.e . ho t w ater he ate rs) m ay reduce rates both inside and outside SFHA s. For detailed inform ation, refer to the "C ase
fo r Ch an g e - Ris k Rating 2.0" fact sheet.
H M A Prog ra m Program Inform ation
F lo o d M itig atio n As sistance (FM A ) • Pre-D isaster grant pro gram
• O bligations of $1.4 billion from 2004 to 2021
• M ore inf orm ation : htt ps://w w w .fema .gov/gr ant s/m itigation /floods
Bu ild ing R e silie nt Infrastructure
an d C o m m u nities (B R IC )
• Pre-disaster grant program
• Obligations of $1.2 billion from 2020 to 2021
• M ore inform ati on: http s://ww w .fema.g ov/gr ant s/mi ti gation /b uildi ng-
resilient-infrastructure-com m unities
H a za rd m itig atio n Assistance • Post-disaster grant progra m
G ra nt Program (H M G P ) and H M G P Obl ig ations of $1 5.3 billion from 1990 to 2021
Post Fire •
I • M o re inf orm ation htt ps://ww w .fem a.gov/gr ants/m itigation /h azard-
m itigati on and htt ps://ww w.fema .gov/gr ant s/mi ti gation / post-fire
L
Take Action to Reduce Flood Risk
States, trib e s, te rritories, local com m unities, and ind ividua ls can all take m itigation actions to reduce their flood risk
and po tentia lly red u ce their flood insurance prem ium s.
STATES/TRIBES/TERRITORIES
• Pro m o te/expedite pre-disaster H M A grant applications fo r FM A and BRIC .
• Prio ritize , pla n fo r, and take advatanage of H M G P funding aft er a disaster occurs.
• O ff e r tax cred its fo r flo od m itigation.
■Estab lish and m aintain a revolving loan fund fo r flood risk reduction pro jects.
■Pro m o te higher regulatory standards for developm e nt.
Learn more at fema.gov March 2021 3
LO C A L CO M M U N ITIE S
• Participate in the Community Rating System .
• Prioritize mitigation grants for owners of Severe Repetitive Loss and Repetitive Loss properties .
•
•
Apply for Hazard Mitigation Assistance grants through the state .
Adopt and enforce building codes and zoning regulations .
P R O P E R TY O W N ER S
• Buy flood insurance.
• Install flood openings or elevate the home, and elevate all machinery and equipment to a higher floor such as
hot water heaters.
• After a flood, NFIP policyholders in the SFHA should consider using Increased Cost of Compliance (ICC) coverage
to access up to $30,000 to help cover the cost of elevating, relocating, or demolishing substantially damaged
structures.
o For a structure to qualify as being substantially damaged, the total cost of repairs must be 50% or more of
the structure's pre-flood market value. Non-residential buildings may choose flood proofing as an option in
addition to elevation, relocation, or demolition.
• Severe Repetitive Loss and Repetitive Loss homeowners should contact their local floodplain manager and State
Hazard Mitigation Officer to learn how up to 100% of mitigation project costs may be covered.
Additional Information
For more information on ICC and substantial damage, visit:
• https://www.fema.gov/floodplain-management/financial-help/increased cost-compliance; and
• https://www.fema.gov/press-release/20201016/fact-sheet-substantial-damage-what-does-it-mean.
Learn more at fema.gov March 2021 4