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Title II — Enhancing Flood Insurance Affordability and Accessibility

S. 1313 · 115th Congress · Jun 7, 2017 · Lineage

II Enhancing Flood Insurance Affordability and Accessibility

Sec. 201 Use of premium surcharges

Chapter I of the National Flood Insurance Act of 1968 (42 U.S.C. 4011 et seq.) is amended—
(1)
in section 1308A (42 U.S.C. 4015a)—
(A)
by redesignating subsection (c) as subsection (d);
(B)
by inserting after subsection (b) the following:

“(c) Use of surcharges—The Administrator shall use any surcharge imposed and collected under subsection (a) to help fund flood mitigation programs, including the program established under section 1366.”

(C)
in subsection (d), as so redesignated, by striking “Subsections (a) and (b)” and inserting “Subsections (a) through (c)”; and
(2)
in section 1310A(c) (42 U.S.C. 4017A(c)), by striking paragraph (4).

Sec. 202 Disclosure with respect to the affordability standard

Section 1308(j) of the National Flood Insurance Act of 1968 (42 U.S.C. 4015(j)) is amended, in the second sentence, by inserting “and shall include in the report the number of those exceptions as of the date on which the Administrator submits the report and the location of each policyholder insured under those exceptions, organized by county and State” after “of the Senate”.

Sec. 203 Flood risk disclosure

(a)
In general— Not later than 2 years after the date of enactment of this Act, the Administrator shall promulgate regulations for the disclosure of flood risk hazards with respect to any residential or commercial property that is offered for sale or lease.
(b)
Requirements— The regulations promulgated under subsection (a) shall require that, before a purchaser or lessee is obligated under any contract to purchase or lease a property, the seller or lessor, as applicable, shall—
(1)
provide the purchaser or lessee with a flood risk information pamphlet produced by the Administrator;
(2)
disclose to the purchaser or lessee the available flood risk profile of the property, including—
(A)
information available to the seller or lessor regarding any past—
(i)
flood damage to the property; or
(ii)
claim for loss with respect to the property under—
(I)
the National Flood Insurance Program; or
(II)
private flood insurance;
(B)
information known to the seller or lessor regarding any designation of the property as—
(i)
a repetitive loss structure; or
(ii)
a severe repetitive loss structure;
(C)
any elevation certificate obtained with respect to the property that is available to the seller or lessor; and
(D)
any requirement that the property be covered by flood insurance because the property owner, on the date on which the property is sold or leased, or a previous owner, obtained any form of disaster assistance under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.); and
(3)
establish a 10-day period (or a period of a different length of time if mutually agreed upon by the parties) during which the purchaser or lessor may review options for managing or mitigating flood risk with respect to the property.
(c)
Compliance assurance— The regulations promulgated under subsection (a) shall require that, when a seller or lessor has entered into a contract with an agent to sell or lease a unit of target housing, the agent shall, on behalf of the seller or lessor, ensure compliance with this section.

Sec. 204 Increased cost of compliance

(a)
Increase in limitation on liability— Not later than 180 days after the date of enactment of this Act, the Administrator shall amend the Standard Flood Insurance Policy to—
(1)
increase the limitation on liability relating to “Coverage D—Increased Cost of Compliance” from $30,000 to $75,000; and
(2)
provide that 50 percent of the amount described in paragraph (1) shall be available to the insured without regard to whether making that amount available to the insured would exceed the overall policy limit of the insured.
(b)
Premiums; coverage limits— Section 1304(b) of the National Flood Insurance Act of 1968 (42 U.S.C. 4011(b)) is amended—
(1)
in paragraph (3), by striking “compliance with the land use and control measures.” and inserting “the implementation of such measures; and”;
(2)
in paragraph (4), by redesignating subparagraphs (A) through (D) as clauses (i) through (iv), respectively, and adjusting the margins accordingly;
(3)
by redesignating paragraphs (1) through (4) as subparagraphs (A) through (D), respectively, and adjusting the margins accordingly;
(4)
in the matter preceding subparagraph (A), as so redesignated, by striking “The national” and inserting the following:

“(1) In general—The national”

(5)
by striking the flush text following paragraph (1)(D)(iv), as so redesignated, and inserting the following:

“(2) Premiums—The Administrator shall charge a premium on each insured of not more than $75 per policy to provide cost of compliance coverage in accordance with the provisions of this subsection.

“(3) Coverage limits—Any amount of coverage that is provided under this subsection with respect to a property is in addition to, and shall not be considered for the purposes of, any limitation on coverage that is applicable to the property under section 1306(b).”

Sec. 205 Property risk data

Chapter I of the National Flood Insurance Act of 1968 (42 U.S.C. 4011 et seq.) is amended by adding at the end the following:

“1326. Premium credit for submitting property risk data

“(a) In general—Subject to subsection (b), the Administrator may offer a policyholder under the national flood insurance program a premium credit of not more than $500 if the policyholder submits data and information that is necessary for the Administrator to determine the level of risk of flood with respect to the property covered by the policy as of the date on which the policyholder submits the data and information to the Administrator.

“(b) Limitation—The Administrator may offer a premium credit under subsection (a) only once with respect to any building.”

Sec. 206 Mitigation provisions

(a)
Mitigation strategies— Section 1361(d)(1) of the National Flood Insurance Act of 1968 (42 U.S.C. 4102(d)(1)) is amended—
(1)
in subparagraph (A), by striking “and” at the end;
(2)
in subparagraph (B), by striking “and” at the end; and
(3)
by inserting after subparagraph (B) the following:

“(C) with respect to buildings in dense urban environments, methods that can be deployed on a block or neighborhood scale; and

“(D) elevation of mechanical systems; and”

(b)
Mitigation credit— Section 1308(k) of the National Flood Insurance Act of 1968 (42 U.S.C. 4015(k)) is amended—
(1)
by striking “shall take into account” and inserting “shall—

“(1) take into account”

(2)
in paragraph (1), as so designated, by striking the period at the end and inserting “; and”; and
(3)
by adding at the end the following:

“(2) offer a reduction of the risk premium rate charged to a policyholder in an amount that is not less than 10 percent of that rate if the policyholder implements any mitigation method described in paragraph (1).”

(c)
Coverage for cooperatives—
(1)
In general— Section 1306 of the National Flood Insurance Act of 1968 (42 U.S.C. 4013) is amended by adding at the end the following:

“(e) Cooperatives

“(1) Definition—In this subsection, the term cooperative building has the meaning given the term in section 1312(d).

“(2) Equal treatment with condominiums—Notwithstanding any other provision of law, an owner of a share of a cooperative building shall be eligible to purchase flood insurance coverage under the national flood insurance program on the same terms as a condominium owner.”

(2)
Payment of claims— Section 1312 of the National Flood Insurance Act of 1968 (42 U.S.C. 4019) is amended—
(A)
in subsection (c)—
(i)
in the subsection heading, by inserting “and cooperative” after “condominium”;
(ii)
by inserting “or owners of a share of a cooperative building” after “condominium owners”; and
(iii)
by inserting “or cooperative association” after “condominium association” each place that term appears; and
(B)
by adding at the end the following:

“(d) Definitions—In this section, the terms cooperative association and cooperative building have the meanings given the terms by the Administrator.”

Sec. 207 Home structure values

(a)
Study and report—
(1)
Study— The Administrator shall conduct a study, the purpose of which shall be to—
(A)
evaluate best practices in the insurance industry for risk rating and classification, including practices that consider replacement cost value when estimating premium rates; and
(B)
with respect to the estimates made by the Administrator under section 1307(a)(1) of the National Flood Insurance Act of 1968 (42 U.S.C. 4014(a)(1)), as in effect on the day before the date of enactment of this Act—
(i)
assess options, methods, and strategies for including replacement cost value in the estimates;
(ii)
identify recommendations for including replacement cost value in the estimates;
(iii)
identify an appropriate methodology by which replacement cost value could be incorporated into the estimates; and
(iv)
develop a feasible implementation plan and projected timeline for including replacement cost value in the estimates.
(2)
Report— Not later than 18 months after the date of enactment of this Act, the Administrator shall submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a report that contains—
(A)
the results of the study conducted under paragraph (1) (referred to in this paragraph as “the study”);
(B)
an analysis of the recommendations made by the study and the impacts that those recommendations would have on the National Flood Insurance Program, including cost considerations;
(C)
a description of actions taken by the Administrator to implement the recommendations made by the study;
(D)
a list of any recommendations made by the study that, as of the date on which the Administrator submits the report, the Administrator has deferred or upon which the Administrator has not acted; and
(E)
an explanatory statement with respect to each recommendation described in subparagraph (D).
(b)
Implementation—
(1)
In general— Section 1307(a)(1)(A) of the National Flood Insurance Act of 1968 (42 U.S.C. 4014(a)(1)(A)) is amended—
(A)
in clause (i), by striking “and” at the end;
(B)
in clause (ii), by striking “, and” and inserting “; and”; and
(C)
by adding at the end the following:

“(iii) the replacement cost value of an insured structure when determining underinsurance loading factors, consistent with the requirements of section 1308(e) and taking into account the results of the study conducted under section 206(a)(1) of the Flood Insurance Affordability and Sustainability Act of 2017; and”

(2)
Effective date— The amendments made by paragraph (1) shall take effect on the date that is 1 year after the date on which the Administrator submits the report under subsection (a)(2).

Sec. 208 Affordability vouchers

Chapter I of the National Flood Insurance Act of 1968 (42 U.S.C. 4011 et seq.), as amended by section 205 of this Act, is further amended by adding at the end the following:

“1327. Affordability vouchers

“(a) Definitions—In this section—

“(1) the term area median income means, with respect to an area, the area median income for the area, as defined for the applicable year by the Secretary of Housing and Urban Development;

“(2) the term eligible household means an owner-occupied household—

“(A) that has a total household income that is less than 165 percent of the area median income for the area in which the household is located;

“(B) for which the cost of flood insurance premiums, surcharges, and fees in a year would result in excess costs for the household for that year; and

“(C) that—

“(i) renews an existing flood insurance policy under the national flood insurance program for building coverage for a property that is in an area having special flood hazards; or

“(ii) purchases a flood insurance policy under the national flood insurance program for building coverage for an existing structure that was owned and occupied by the household before the date on which the building was determined to be located in an area having special flood hazards due to a revision of, or an update to, a floodplain area or flood risk zone that is identified, delineated, or established by the Administrator;

“(3) the term excess costs means—

“(A) for a household that has a total household income that is greater than 80 percent of the area median income for the area in which the household is located, the amount by which—

“(i) the sum of—

“(I) the total amount of premiums, surcharges, and fees paid by a household in a year with respect to a flood insurance policy provided under this title; and

“(II) the housing expenses incurred by the household in that year; exceeds

“(ii) 40 percent of the total household income for the household in that year; and

“(B) for a household that has a total household income that is not greater than 80 percent of the area median income for the area in which the household is located, the amount by which the flood insurance premiums, surcharges, and fees for a flood insurance policy provided under this title in a year for the household exceeds 1 percent of the coverage limit of that flood insurance policy under section 1306(b); and

“(4) the term housing expenses means, with respect to a household, the total amount that the household spends in a year on—

“(A) mortgage payments;

“(B) property taxes; and

“(C) homeowners insurance.

“(b) Vouchers—The Administrator shall, when the Administrator determines appropriate, provide a voucher to an eligible household in accordance with subsection (c) to use toward the payment of flood insurance premiums, surcharges, and fees incurred by the household in the year for which the voucher is provided.

“(c) Calculation

“(1) In general—Subject to paragraph (2), the Administrator shall provide a voucher to an eligible household as follows:

“(A) An eligible household that has a total household income that is not greater than 80 percent of area median income shall receive a voucher in an amount that is equal to 100 percent of the excess costs incurred by the household for the year preceding the year in which the eligible household receives the voucher.

“(B) An eligible household that has a total household income that is greater than 80 percent of area median income and not greater than 120 percent of area median income shall receive a voucher in an amount that is equal to 80 percent of the excess costs incurred by the household for the year preceding the year in which the eligible household receives the voucher.

“(C) An eligible household that has a total household income that is greater than 120 percent of area median income and less than 165 percent of area median income shall receive a voucher in an amount that is equal to 60 percent of the excess costs for the year preceding the year in which the eligible household receives the voucher.

“(2) Limitation—The Administrator may not provide a voucher to an eligible household in an amount that is more than the total amount that the eligible household paid in premiums, surcharges, and fees for a flood insurance policy provided under this title during the year preceding the year in which the voucher is provided.”

Sec. 209 Coverage limits

(a)
In general— Section 1306 of the National Flood Insurance Act of 1968 (42 U.S.C. 4013) is amended—
(1)
in subsection (b)—
(A)
in the matter preceding paragraph (1), by striking “In addition to any other terms and conditions under subsection (a), such regulations” and inserting “The Administrator”;
(B)
in paragraph (2)—
(i)
by striking “shall be made” and inserting “may be made”; and
(ii)
by striking “$250,000” and inserting “the baseline amount”;
(C)
in paragraph (3)—
(i)
by striking “shall be made” and inserting “may be made”; and
(ii)
by striking “$100,000” and inserting “50 percent of the baseline amount”; and
(D)
in paragraph (4)—
(i)
by striking “shall be made” each place that term appears and inserting “may be made”; and
(ii)
by striking “$500,000” each place that term appears and inserting “200 percent of the baseline amount”; and
(2)
by adding at the end the following:

“(e) Definition

“(1) In general—Subject to paragraph (2), in this section, the term baseline amount, with respect to a property, means the maximum original principal obligation of a conventional mortgage that may be purchased by the Federal National Mortgage Association in the area in which the property as located, as established under section 302(b)(2) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1717(b)(2)).

“(2) Clarification—If, after the date of enactment of this subsection, the baseline amount, as defined in paragraph (1), decreases as compared with the baseline amount in effect on the day before the date of enactment of this subsection, the baseline amount that was in effect on the day before the date of enactment of this subsection shall be deemed to be the baseline amount for the purposes of paragraphs (2), (3), and (4) of subsection (b).”

(b)
Authority of Administrator To sell policies— The Administrator may sell a policy for flood insurance under the National Flood Insurance Program that meets the requirements of paragraphs (2), (3), and (4) of section 1306(b) of the National Flood Insurance Act of 1968 (42 U.S.C. 4013(b)), as amended by subsection (a), without regard to—
(1)
section 61.6 of title 44, Code of Federal Regulations, as in effect on the day before the date of enactment of this Act; or
(2)
any other provision of law.

Sec. 210 Monthly installment payment of premiums

Section 1308(g) of the National Flood Insurance Act of 1968 (42 U.S.C. 4015(g)) is amended—
(1)
by striking “With respect to” and inserting the following:

“(1) Annual or monthly option—Subject to paragraph (2), with respect to”

(2)
by adding at the end the following:

“(2) Monthly installment—With respect to a policyholder that opts under paragraph (1) to pay premiums on a monthly basis, the Administrator may charge the policyholder an annual fee of not more than $15.

“(3) Exemption from rule making; pilot program—During the period beginning on the date of enactment of this paragraph and ending on the date on which the Administrator promulgates regulations carrying out paragraph (1), the Administrator may, notwithstanding any other provision of law—

“(A) adopt policies and procedures to carry out that paragraph without—

“(i) undergoing notice and comment rule making under section 553 of title 5, United States Code; or

“(ii) conducting regulatory analyses otherwise required by statute, regulation, or Executive order; or

“(B) carry out that paragraph by establishing a pilot program that gradually implements the requirements of that paragraph.”