A stunning federal decision is leaving residents of a Florida county that was devastated by one of the nation’s most destructive hurricanes without an insurance discount that has saved them hundreds of millions of dollars.
The Federal Emergency Management Agency revoked the discount it gave to 125,000 property owners in Lee County who have FEMA flood insurance after warning local officials about unsafe rebuilding efforts in the wake of Hurricane Ian in 2022.
The decision shocked officials in one of the nation’s most flood-prone counties and serves as a warning to communities nationwide to follow FEMA’s requirement that homes being rebuilt after floods must be protected from future disasters.
The agency’s unusual move comes as growing flood damage due to climate change and ongoing real estate development in storm-prone areas has put a spotlight on communities that redevelop flooded areas without adding new protection, such as elevating homes.
Under President Joe Biden, FEMA has prioritized protecting the nation from weather-related disasters by pouring billions of dollars into projects to reduce damage from flooding, storms and wildfire.
Lee County officials assailed FEMA at a Board of County Commissioners meeting Tuesday and vowed to challenge the decision.
“It’s almost like revenge politics,” commissioner Cecil Pendergrass said. “Our citizens and taxpayers are being held hostage here and having to pay more.”
They said FEMA’s decision blindsided them.
“At no time were we notified that we were in jeopardy of being retrograded. It was, if you failed to comply with an information request, you could face a retrograde,” Lee County Attorney Richard Wesch said.
FEMA had requested nearly 600 building permits from the county in a Dec. 6, 2023, letter that the agency gave to E&E News. The letter says, “Failure to provide this information will lead to enforcement action,” including a loss of insurance discounts.
“We are committed to helping these communities take appropriate remediation actions … and work towards future policy discounts,” FEMA spokesperson Lea Crager said in a statement Tuesday.
The discount in Lee County had reduced the cost of each FEMA flood insurance policy by about $370 annually on average, according to an E&E News analysis of agency data.
FEMA sells most of the nation’s flood coverage through its National Flood Insurance Program and provides communitywide discounts for areas that take extra steps to reduce flood damage. A small number of communities receive the discounts, provided through FEMA’s Community Rating System.
In unincorporated Lee County and four of its municipalities, property owners received discounts of 20 percent to 25 percent — some of the largest in the nation.
This year alone, the discounts are cutting $35 million to $40 million off flood insurance premiums in Lee County, according to the E&E News analysis. The discounts have been in place since 2007 and will be removed at the end of the federal fiscal year, on Sept. 30.
County officials also were outraged that FEMA officials said the decision was not subject to appeal. The agency told the county about its decision Friday.
“Last time I checked, we do not live in a dictatorship,” Wesch said. “The comment that this decision is final, there’s no appeal — that’s not our system of government.”
Hurricane Ian made landfall in Lee County in southwestern Florida, where it obliterated tens of billions of dollars of property before sweeping across the state to become the third-costliest natural disaster in U.S. history.
Lee County, with 835,000 residents, is still rebuilding homes with grants from FEMA and other federal agencies, and with payments from the federal flood insurance program.
The insurance program has long required that if an insured property sustained “substantial damage,” it must be elevated above local flood levels during repair or reconstruction. The requirement applies to properties that sustained damage equal to at least 50 percent of the property’s value.
The substantial damage requirement has been a financial burden that property owners and communities have sought to avoid by skipping damage assessments entirely or ensuring that the damage estimate was under the 50 percent threshold.
FEMA first warned Lee County about the elevation requirement in a letter Feb. 15, 2023, that said, “Failure to enforce these regulations may result in sanctions against the community, including retrograde of Community Rating System” discounts.
FEMA’s Dec. 6 letter asked the county to provide by Jan. 12 extensive documents relating to building permits that would show the county was complying with the substantial damage requirement.
During the commission meeting Tuesday, Assistant County Manager Marc Mora acknowledged that county inspectors going house to house did not initially assess whether properties were substantially damaged.
Some time later, when residents began applying for building permits, the county assessed whether properties were substantially damaged “if a resident wanted us to do it” or “at the time of permitting,” Mora said.
“There was a process we used to determine if there was 50 percent damage,” Mora said.
The county’s method did not result in damage assessments for residents who rebuilt homes without a building permit.
After FEMA released three letters it sent to the county between February 2023 and December 2023, the county released 51 pages of correspondence with FEMA between February 2023 and March 12 of this year.
The correspondence includes long strings of friendly emails between FEMA officials based in Atlanta and Lee County Floodplain Manager Billie Jacoby. The emails reveal FEMA’s ongoing requests for building records and Jacoby’s effort to understand the requests and to comply.
“Thank you for the clarification and additional information. This is helpful to know,” Jacoby wrote to FEMA on March 12 in the final email released by Lee County.
