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Updated Mar 24, 2014 - 10:07 am

Thousands in Arizona face increases in flood policies

FLAGSTAFF, Ariz. — In one of Arizona’s oldest cities, Bisbee residents
live with a threat of flooding that doesn’t come from major lakes or rivers.
When the storm clouds hover, rain can send water rushing through dry washes,
gulches and streets into homes built in low-lying areas of the hilly community.

Residents in the southeastern Arizona town who have mortgages are required to
buy flood insurance that can be costly. Home buyers tend to avoid areas of town
in flood plains for that reason, said longtime Bisbee real estate agent Rosalie
Butler.

For years the federal government subsidized flood insurance on homes and
businesses built in the days before flood zones were created, including for
dozens of policies in Bisbee. But premiums collected haven’t covered the
payouts, sending the National Flood Insurance Program $24 billion in debt.

President Barack Obama on Friday signed a relief bill that erases the immediate
pain of dramatic flood insurance hikes included in a 2012 bill passed by
Congress that was meant to reflect the true risk of flooding and end subsidies.
Still, policyholders are facing large, repeated rate hikes over the years.

“It’s sure not going to help the real estate market,” said Butler, who has
been in the business for 45 years. “It’s been tough in Bisbee, harder than a
lot of areas. That’s not going to help at all.”

An Associated Press analysis found that the increases for subsidized insurance
will hit as many as 1.1 million policyholders across the country, including more
than 6,000 in Arizona, based on 2012 figures. Of Arizona policyholders, 1,370
business and second-home owners will see increases of about 25 percent per year,
and 4,635 homeowners will see increases of up to 18 percent annually.

In Bisbee, 69 percent of policyholders with subsidized rates — 69 homeowners,
and 20 businesses and second-home owners — will be affected.

Butler said she hasn’t run into a situation yet where sellers are hesitant to
put their home on the market because of the higher premiums, but she said buyers
likely will offer less for homes as a result.

Other policyholders facing graduated increases in flood insurance premiums are
spread throughout the state, including nearly 840 in Tucson, about 200 in
Flagstaff, 110 in Prescott, nearly 360 in Scottsdale and 1,455 in Phoenix.

The old copper mining town of Miami in Gila County has the highest percentage
of policyholders in Arizona facing increases at 92 percent, affecting 24
business and home policies.

Gila County chief engineer Darde de Roulhac said many of the old homesteads in
the county are located near creeks and now dry washes that can flood during
times of heavy rain. Flood maps for the county didn’t go into effect until the
mid-1980s, he said.

De Roulhac said people slowly are becoming aware of the increased flood
insurance premiums.

“A lot of people refinancing or selling property, they’re starting to check in
areas they didn’t check before,” he said.

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