Image: The Turquoise Place condominium buildings rise above Orange Beach, Alabama, before sunrise. John Brecher / NBC News

Why Taxpayers Will Bail Out the Rich When the Next Storm Hits

GULF SHORES, Ala. — As homeowners around the nation protest skyrocketing premiums for federal flood insurance, the Federal Emergency Management Agency has quietly moved the lines on its flood maps to benefit hundreds of oceanfront condo buildings and million-dollar homes, according to an analysis of federal records by NBC News.

The changes shift the financial burden for the next destructive hurricane, tsunami or tropical storm onto the neighbors of these wealthy beach-dwellers — and ultimately onto all American taxpayers.

In more than 500 instances from the Gulf of Alaska to Bar Harbor, Maine, FEMA has remapped waterfront properties from the highest-risk flood zone, saving the owners as much as 97 percent on the premiums they pay into the financially strained National Flood Insurance Program.

NBC News also found that FEMA has redrawn maps even for properties that have repeatedly filed claims for flood losses from previous storms. At least some of the properties are on the secret “repetitive loss list” that FEMA sends to communities to alert them to problem properties. FEMA says that it does not factor in previous losses into its decisions on applications to redraw the flood zones.

And FEMA has given property owners a break even when the changes are opposed by the town hall official in charge of flood control. Although FEMA asks the local official to sign off on the map changes, it told NBC that its policy is to consider the applications even if the local expert opposes the change.

“If it’s been flooded, it’s susceptible to being flooded again. We all know that,” said Larry A. Larson, director emeritus of the 15,000-member national Association of State Floodplain Managers. “FEMA is ignoring data that’s readily available. That’s not smart. And it puts taxpayer money at risk.”

Image: A map shows 530 waterfront properties that have been moved out of the highest-risk flood zones. NBC News

See a map from NBC News linking to public records for the 533 rezoned properties along the U.S. coast.

The Gulf Coast experience

The neighboring resorts of Gulf Shores and Orange Beach on the South Alabama coast include a stretch of beach that was flooded by Hurricanes Erin and Opal in 1995, Danny in 1997, Georges in 1998, Ivan in 2004, and Katrina in 2005. The map changes here offer a vivid example of the risks that come with such reclassifications.

The direct hit by Ivan was the worst, bringing not gently rising floodwaters but a 14-foot wall of water that leveled buildings and flooded more than a mile inland. That’s why flood maps show most of this beach as a “coastal velocity wave zone,” the area with the highest risk of damage from storm surge.

But nearly all of the condominium towers are no longer in that high-risk zone, including a 17-story condominium built where the old Holiday Inn was wiped away by Ivan’s winds and waves, and another where the McDonald’s was a total loss. From 2011 through 2013, FEMA granted applications remapping 66 out of 72 waterfront condo towers in Gulf Shores to lower-risk flood zones or off the flood maps entirely. Four others have applications pending. Just two applications have been denied. And next door in Orange Beach, the map lines have been redrawn around four high-rise condo buildings.

On a single day, Oct. 25, 2012 — a day when FEMA was closely monitoring Hurricane Sandy as it barreled toward the Atlantic Coast — a FEMA manager issued a document reclassifying a full mile of the coastal property in Gulf Shores. That document, just one of the 533 cases found nationwide by NBC News, redrew the lines to exclude 25 condo buildings from the highest-risk flood zone.

This beachfront condo, the Island Tower, collected $11,562 for its damage from Katrina, and more than $250,000 from Ivan.

Image: the Phoenix All Suites Hotel, left, and the Island Tower condominium building in Gulf Shores, Ala. John Brecher / NBC News
The Island Tower condominium building, right, and the Phoenix All Suites Hotel, left, rise above the beach in Gulf Shores. FEMA remapped both into lower-risk flood zones.

The Island Tower’s condo association was paying $143,190 a year into the National Flood Insurance Program. Now that it’s been reclassified into a lower-risk flood zone, its premium is $8,457 a year, a saving of 94 percent, according to records examined by NBC News.

Just down the beach is the Royal Palms. It collected $58,230 for damages during Katrina, and $889,730 from Ivan. The Royal Palms was paying $218,484 a year, but after being changed to a lower-risk flood zone, now pays only $6,845, saving 97 percent.

The map changes in just these two towns resulted in at least $5 million a year in lost revenue to the flood insurance program, according to records examined by NBC News. All of these changes were approved by FEMA despite opposition from the city officials in charge of floodplain management.

Image: A map shows condominium projects on the Gulf Coast. NBC News

See a map from NBC News with details of the condominium projects in Gulf Shores and Ocean Beach. Some of the condo projects have multiple buildings, making more than 60 buildings in all.

Elsewhere in Gulf Shores, homeowners are paying as much as $12,000 a year in flood insurance premiums for their single-family homes, according to insurance records. These homeowners are paying as much as several large condo buildings combined.

Properties from Alaska to Maine

Because waterfront properties are expensive, and it costs thousands of dollars to hire an engineer to press a case with FEMA, the remapped properties tend to be luxurious, either the first or second homes of industrialists, real estate developers and orthopedic surgeons.

The 533 properties include a $4 million home in the Hamptons resort on Long Island, N.Y., owned by a married couple who direct Wall Street investment firms.

In Miami, the beneficiaries include the twin 37-story condos at ritzy Turnberry Isle in Sunny Isles Beach, and also the Regalia, “the most luxurious building in South Florida.”

Image: The $19 million house shown at left in Naples, Florida, has been moved out of the highest-risk flood zone by FEMA Courtesy of Pictometry International Corp.
The Naples, Fla., home of Robert A. Watson, at left, was moved in 2013 out of the highest-risk flood zone, while its neighbors continue to pay higher rates for flood insurance.

In Naples, Fla., a $19 million home was remapped last year out of the high-risk zone. The owner, Robert A. Watson, former president and CEO of units of Westinghouse Electric and Transamerica, said his property is protected by a floodwall, and he sought the map change last year not to save money but because FEMA has changed the map elevations in that area so many times. He said he wanted to know for sure that a guesthouse would be permitted. (He called mandatory flood insurance “a massive scam on the American people.”)

In New York, FEMA granted the Mamaroneck Beach & Yacht Club’s request to be remapped from the high-risk flood zone in August 2012 — just two months before the club was damaged and its outbuildings destroyed by Hurricane Sandy, which stacked up yachts at its docks like pick-up sticks. The club told NBC that its engineering study showed that FEMA’s map was wrong.

“Sandy was a once in a millennium event, and therefore cannot be the sole determination for planning,” said Eric L. Gordon, attorney for the yacht club.

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