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HomeMy WebLinkAbout0169.091February 2B, 1991 Honorable City Council Palo Alto, California Members of the Council: Attaebed i8 a copy of the report prepare.d by our consultant on the FEMA i.sua. Clyde Pearce, the consultant's representative on this aatter, will join us on lionday night to review the report and answer questions. You may recall that the assignment 'liven to the consultant was very li.1 ted. They were instructed to conduct a preliminary inquiry into the relative merits of the various alternatives. That 16, they vere eng8ged to review alternatives and suggest 'Which ones were worthy of further pursuit. We entered into this process knowing full well tr~t, after assessinq the likelihood of success for anyone ot the alternatives, Council might choose not to pursue any of them:. The consultant's report assesses the merits of seven possible courses of action. Of these, the option of constructing flood protection facilities appears to be the most straightforward and least problematic~ Council discussed this matter in June 1990 but deoided to take no position on const.uction of the outboard levy {saltwater flooding) or improvement to San Fral"lcisquito Creek ~freshwater flooding).. A rediscussion of this option wou.ld now appear to be in order. Respectfully sub~itted, Consultant's Report CMR:169:91 , , • 1 t ............ t. ... "' .. 'e.u:. .... I!.. ... ",!!~6 0". 'a .• ) 11(1.1-)-000 ...... ~I.I ;JS"-l:n..J olQ 000."'" ........... 1..1: ,T .. ctT c .... c ... GO, ... ee.60Z-2:150' /l't) ~.t-."eoo ........ ~"l"1 ~.z l" t R1VKiN. RADLER, BAYH. HART & KREMER 1575 E.'fE. $T~s:.CT. t .. ,W WASkl"'lGTON. o. c. 20005 -HO 5 120Z) 19-9-S6C:O RBPOII.'1' FOil CI2"t or 'ALO AL'l'O I.. UlTRODUC"tIOlf I''!. ", .. t,,~~_,.. ""I;."'''~ ..II: ... YO"" ..... 'oe'15 ",=,. rz,z', .. :!! .. -'S!I'!!o ~ .. " :., ... :' .lI .. ' . ., .... itO .... CE-.. ~u,., ........ 1;.""" co!;. ""'Ole!:!>. CA .ooe7·.l .... J' 'co II $n.u:~ .. eo .:'~ ' .. eo", 'So" • .,-" "OOS",":" '!IoS"()I''''''O .. :~::)1, S"-601l ~ ... (7'0'" 5"'<I"'~S Upon complEtion of the appropriate procurement p~ocess, the City of Palo Alto, {II'City")1 enqaqed Rivkin: Radler, Ba)"h, Hart , Kremer, C-Firm"), of New York, Chicago, Washington, D.C., and calif~rnia to provide legal consulting services concerninq the City's relationship with the Federal Emergency Management Agency (-YEMA-), and the National Flood Insurance Program, (~NFIpn)~ The Firm -was directed to analyze legislative and regulatory options available to the City and to offer judgments and recommendations thereon. Since the City's staff has previously set forth an extensive recitation of the history of the problems confronting the City over issues wit-~ FEMA, a reiteration is not made herein~ In its simplest terws, the City is faced with a considerable portion of its citizenry ovning property and living in homes which lie within a FEMA-aefined -flood plain.-Because the property in the flood plain is threatened by both salt ~ater and fresh yater flooding~ the City cannot grant building permits for nev houses or for ·substantial 1~provements· to existing houses unless the houses are elevated aboVe the flood line. Alternatively, the City can renedy the problem by improving the means ot protection against the projected flood hazards according to F~-A-prescribed standards. If such improvements were ma~e, areas of the City would be removed from the flood zone. Consistent with problems which defy easy solution, the instant problem comprises coEplexities and nuances which involves issues that are tec~~ical~ legal, political, legislative and regulatory in nature. This report does not treat the technical issues. which have been discussed previously with the council by staff. :II. LEGAL AND REGULATORY BJ\CKGRQUND The Federal National Flood Insurance Act of 19~8, 42 U.S.C. 4001-4128, provides that flood insurance shall not be sold or renewed under the program, ·unless the community bas adopted adequate flood plain Danagement regulations consistent with • - 2 - Federal criteria~· 44 C.F~R4 section 60.1. The regulations define Rflood plain-as -any land area 5usceptible to being inundated by water from any source.-44 C.F.R. section S9.1(b). That same section defines -flood plain manaqement requlations· lUI! zoning ordinances I subdivision regulations, building codes# health regulations, special purpose ordinances, (such as flood plai~ ordinance l grading ordinance and erosion control ordinance}, and other applications of police power. The term descri~es such state or local regulations I in any combination thereof, which provide standards for the purpose of flood damage prevention and reduction. I,g. Communjt!es in the National Flood Insurance Program, including Palo Alto, have adopted the flood plain management regulations required by the Federal qover.nment~ There are provisions for variances in the regulations but recent FEMA guidance indica~es that variances cannot be granted because of econoaic hardship. Indeed, it i5 difficult to imagine a situation where a variance could meet FEMA's quidelines. Since FEHA is not a regulatory agency, its sole -enforcement-power is to prohibit a munici~l!ty from obtaining federal flood insurance, cr to cancel or revoke existing eliqlbility. In the event the City should be beld to have failed to comply with the required minimum standards, it miqht face a problem maintaining eliqibility for federal flood insurance. A community which fails to properly enforce flood plain manaq~ment regulations ·shall be subject to probation.-44 C.P.R. section 59.24(b). -Probations shall represent notification to the community that the Administrator regaras the community's flood plain management program as not compliant ~ith [national flood insurar.ce proqramJ criteria~· ~~ Prior to imposing probation, however~ the Administrator will effor~ the cOaDunity an opportunity to correct deficiencies. Probation may continue for up to one year af.ter the community correc~s deficlencies~ If a eommunity fails to correct d~ficiencies during probation, the Administrator will inform the community of its loss of eliqibility for acquirinq flood insurance~ Additionally, the regulations explain that a community which repeals its flood plain management regulations or allows them to lapse will similarly be suspended~ The community's eligibility ·shall only be reinstated by the Administrator upon his receipt of (measures] t -3 - reaffirming the community's formal intent to adequately enforce flood plain management requlations together with evidence of actions taken by the community to corre~t program d.ficiencies ••• • 44 C.F.R. section 59.24(c}. If a community does not participate in the program, it lose& its eligibility for federal finance proqrams unde:t" the Federal Housinq Administration and the veterans AdDi~istration. It also loses eliqibility for Community Development Block Grants. III. SIARCHING FOR A SOLUTIQN Against this backqround~ we have spoken with key people at FEMA and the conqress, looking for a solution to the plight of Palo Alto h01l'.~ovners. We have considered it important to discuss these matters discreetly and not to attribute any particular position to the City of Palo Alto. We have learnea a great deal about the Flood Insurance Program and attitu4&s towards it in thi s process. First, congress will be dealing with the NFIP this year. ConqresSlnan Ben Erdreich CD-ALA.) r Chairman of the House Bankinq Co~itteers SUbcommitte~ on policy, Research and Insurance will introduce a flood insuranc.::e bill in the near future witb the intentio~ of moving it through his subcommittee ~bis spring. The bill will then come before the full Banking Committee and, in all likelibood f will be approved in the form presented by the subcommittee. This type of bill usually receives prompt consideration by the House without much ~ebate. The key members of the Senate on these matters are Senator Alan cranston (D-CA) and Senator. pat Moynihan {O-~~). Senator Cranston is Chairman of the Senate Banking comnittee's Housing and Urban Affairs subcommitt~e. The Subcommittee can exercise jurisdiction over insurance issues and will get involved if the House passes the flood insu~ance bill. According to staff. Senator cranston does nut plan to move until the~e is House action. Senator Moynihan is Chairman of the Wate~ Resources, Transportation and Infrastructure SUbcommittee of the Senate Environment and Public Works committee. Senator Moynihan has not started drafting legislation on F~A matters, but be is interested 4 It is likely that he will pick up the issue soon4 It should be noted that the Flood I,Tlsurance proqram is not one of the most pressinq issues facing Congress at thi5 time. There are only a taw members ~nd staff who ·.·ork in this area alnd understand the program. The only widaspread concern on the Hill is that after the problems with FSLIC and the rOle, steps should be taken to make certain that all feQ~ral insurance programs are ------------ -4 - aa rinanclally sound ae possible. However, this mood is very aignlticant tor our purposes. Ther$ 1. no draft ot the Erdreich legialatlon available at this writinq, but we are informad ~hat the bill viII address several major points. l~ ~t vill ~eplenish the insurance fund which took severe losses after hurricane. Hugo. 2. It will attempt to improve enforcement and compliance~ which Erdreich believes have been lax in some cOmlD-.J.nities. 2. It will raise policy limits. 4. It will (hopefully) establish a qrant program to assist comaunities whiCh are in compliance with the program to mitigAte conditions that contribute to the ri$ks of flooding~ In discussing these matters with key people on both sides of capitol Rill, it is clear that there would be great resistance to 50difying the ·sUbstdntial improvements. rule. There is a perception that this rule is already being abused in many communities and must be tightened. There is little understanding of variance procedures employed ~y FENA, but t~ere is concern that nothing be done to p6rmit variances to become a ~ajor loophole in the rules. Not su~risinqly, there is more sympathy~ particularly among the Democrats, for the hardships the regulations work on people in poor communities than f~r the homeowners living in ·upscale­ communities. There is also a strong belief that strict flood insurance regulations are necess3ry to prOTect the health and safety of the people as well as to save the federal treasury losses trom claims. In this regard, there appears to be Congressional support for FEMA's practice of defining flood plains accor~ing to the worst po9sible 5cenario~ rather than the Dore restrictive approach of the Corps in its cost benefit analyses. OfficialS at FEMA and the Federal Insurance Administration de.onstrate little flexibility on issues of interest to Palo Alto. In their mlnds, the 50\ rule b~s be~n in effect for a long time and there is no nead to change it4 While they are perfectly willing to grant map amendments -{or property ovners who present speclric evidence that their property should not be in the flood plain, they do not believe a variance should be qiven for buildinq on property in the flood plair. no matter what the hardship. High FIA officials do not know about 4ny qui dance that .,.",...,---~,.,.----~~--.. -.. --------~--II,III I • -5 - has been issued on vftriances. They only kr.ow that they do not want to see any YarianCe5 granted --ever. Furth.r l insurance officials believe that water damage is water damaqe and there should be no different treatment of risks arisinq with respect to property Which might be subject to r~s~n9 water in a flood comp~red to property which might be swept away by a raqing river. On the other hand, they claim they are willing to work with comm\L~ities to determine which steps are necessary tor mitiqation~ althouqh these decisions are always ba5ed on technical enqineering data and judgments. IV. ANALYSIS AND DISCUSSION OF OPTIONS There are several options tor the City to consider. Since FEMA has such broad discretion. most of them could be accomplished without leqislation if FEHA was aqreeable. Ho~ever6 the chances that FEMA will voluntarily provide meaningful relief are s.all. A considerable amount of Congressional support will be n9ceasary to encourage FEMA to move administratively or to aZDend the statute if FEHA will not modify its regulations or practices. It is important that legislation on flood insurance wl1l be considered this year for several reasons. First# it is easier to get Members of Conqress to focus when a specific piece of legislation is before them. Second# the flood insurance bill will provide a relevant vehicle to amend, if legislation i$ a feasible alternative. It is very difficult to pass a bill that is a small reform in a federal program as a separate, -free­ standinq-piece of leqislation. Tbird~ FEMA will become very involved in the legislative process and will probably try to accommodate congress with administrative changes as a way of avoiding statutory ch~nges if there is strong congressional support on various issues. We have Eet with Congressman Tcm campbell and members of his staff on this issue. congressman Campbell is ~ell-informed about the problem, has worked closely with the City and will do whatever he can to assist in a solution. Unfortunately, there is no california representation on the relevant subcommittee in the House. Nonetheless, it is possible that California Members of Conqress could help Palo Alto convince subcommittee members of the need for a solution to its FEMA prOblem$~ Since its neighbQrinq communities have similar problems, Palo Alto may wish to enlist other jurisdictions in the effort and thus broaden the base of support in the california congressional delegation. On the Senate side, senator Cranston will certainly be willing to • ---------------~_1Iilll ..•. : ~ . · _~_,,,,,",,,.#uli_ • ! I I -6 - listen to a CAlifornia community and to asai~t in ways which are ·substantively sound.- The most. difficlJlt task is devisinq ana crafting an administrative gr legislative solution which is helpful to Palo Alto but does not raise the fear of .asBive federal insurance losses in Palo Alto or elsewhere in the next tlood~ We set out below several approa~hes which should be considered. We have request~ your staff to consider these and suggest others. a. The substantial improvements rule. An attempt could be made to chanqe the trigger for the substantial improvements rule to 75' of value rather than 50\. This could be done in the statute or regulations. Unfortunately, the rule as it stands has support Lrom key Congressmen and at FEMA. It is unlikely that enough support could be qenerat~ to torce FEMA to change its position or to amend the law over FEMAfs objection. b. A workable yariapc, process. Despite FEKAls aversion to variances, a strong argument can be made that the FEMA guidance on variances is incomprehensible and eliminates altogether a process which is in the regulations for a reason. There .ay be substantial intellectual sympathy with this position~ However, an alternative standard for variances ~culd have to be developed in such a way that it did not appear to open a significant loophole. Crafting such a standard so that it would be helpful to Palo Alto, but not~ in the minds of policy m~kers~ open up a Pandora1s box is the key. This would be difficult to do. c. Self-insurance. The statute could be amended to permit communities to withdraw from the program, underwrite insurance themselves, and not lose eligibility for other federal housing and community programs. This would be a radical step which would challenqe thC!se who hold the th~ory that the NF·rp is intenoed to protect the health ~nd sarety of people as well as the insurance fund. It would also lead to arguments that communities that opt out would not have the resources to pay the claims ariSing from a .ajar di54ster or repeated disasters. Nonethele$s~ this approach .iqht have appeal to some conservatives. If Administration support could be gained (which is unlikely given strong FENA opposition) it .iqht be worth pursuing. To have a chance at success, a coalition of communities that wish to self-insure would have to be developed. d. Make improvements using federal funds. The steps which need to be takan in order to remove various areas from the FEMA flood plain are costly and involve controversial environmental issues. We have not tried to analyze the desirability of taking these steps. If the council should decide it desires to make the ::.....:-. - 7 - t.provements required by FEMA, Palo Alto should explore the poosibility of federal fundi09. The recent study by the Corps of Engineers which recommends against fede~al funding because of an unfavorable cost/benefit ratio puts a significant hurdle in this path~ However, given the senior California representation on the House Public Works Committee, we would recommend that the city explore ways to revise the study and its recommendations. We stress that we have not raised this strategy with any members or staff of the Public works committ~e, but we believe it should not be ignored if Palo Alto decides to move forward with the flood control projects. In addition or in the alternative, if new legislation establishes a grant program for mitigation, Palo Alto may wish to apply for assistance under that program. e. Negotiating more moderate improvements. It is conceivable that Palo Alto1s t~chnical personnel could devise flood control improvem~nts which are less costly than those required by FEHA, but provide equal protection. We believe that FEMA would be willing to discuss such alternatives but the technical arquments would have to be quite strong to persuade it to cbanqe its view. f. A new study. Palo Alto could conduct a new hydrological study to prove the FEMA data is inaccurate. 9owever, we ar~ informed that the chances of deve10ping meaninqful new data are slim and the costs of such studies are hiqh. 9~ Recognition of variable risks. At least a preliminary ~ase can be made that communities with different flood problems should be treated differently under the insurance proqram. For exa~ple, damage from 8 flood in Palo Alto l where water would sim.ply rise and recede, is lik,e.ly to be significantly less than damage to a community on the Mississippi, where a raging river liould overflow its bal"Jc.s~ Unfortunately, FEMA offic:'als do not believe any distinction should he made. To them, floods are floods and water damaqe is water damage. Legislation would ~e necessary to qet them to recognize th~se distinetions~ COngressional support for such a change in the insurance program might ~e gained~ but an effort to do so would require developruent of a Significant amount of data on floods and 1osses. It ~ould also require the backing of other communities across the country if it was to tie taken serio1lsly. • .'