If the prospect of hugely increasing insurance rates is not dialed back, many residents in St. Charles Parish are anticipating a flood of a different kind – that of local residents abandoning their homes and subsequently emptying out storefronts.
If the flood rate increases as expected, parish residents will go from paying $8 million in insurance premiums to $49 million. That’s a lot of money that residents will no longer have to spend in the local economy.
The potential flood insurance rate increases have Rose Marie Gainey, the co-owner of Zydeco’s Restaurant in Boutte, thinking about the future of both her business and her life in the parish.
Zydeco’s has been in business since 2009 and pays $80,000 to $100,000 a year in parish taxes.
"Both our business and home we are currently in are an X zone. We have never flooded in over 100 years," she said. "(If that zone changes) we could possibly have to close our doors in the future."
Shane Matherne, owner of Maison Décor just west of Zydeco’s on Highway 90, said although he anticipates his flood insurance premiums will not rise much, he expects his business to be affected should the rate increases be put in place.
"After 13 years of being here, we finally have a good customer base that will directly be affected if this goes through," he said.
Given that Maison Décor specializes in luxury items, Matherne said his chances of surviving a post-insurance rate hike would be slim.
"My business is selling things people want, but don’t necessarily need," he said. "When people’s insurance goes from $200 a year to $10,000 a year they aren’t going to have that extra income to buy a fountain or a statute or other decorative items."
Matherne blames lax regulations on developers who destroyed local wetlands. He said the people who bought homes in those areas should not be punished for lack of oversight by government on all levels.
"This is something FEMA allowed to happen," he said. "They’ve caused the problems. Who said the developers could come in here and do this? And then we are stuck with picking up the pieces."
Barry Majoria is co-owner of Majoria’s Supermarket on Highway 90 in Boutte as well as surrounding commercial real estate housing a variety of small businesses.
Majoria’s Supermarket is one of the longest running family-owned businesses in the parish.
"We’ve been here since 1964 when my father bought the land, cleared it and built the grocery store. Later, we added on to it," he said.
Unlike Matherne, Majoria is in the business of providing necessities, however, his main fear for both the supermarket and the commercial property owned by the family is that their customer base will be decimated.
"If people can’t afford to live and work here we will become a ghost town," he said. "We’re fortunate we have most of our leases long-term or at least current, but if we don’t have customers we don’t have tenants either."
In fact, Majoria said his family owns a piece of commercial property in Paradis and the prospect of developing that parcel of land is null until the fears caused by the FEMA maps and provisions of the Biggert-Waters Act are alleviated.
"If there is any optimism about the future it is on hold," he said.
Majoria said although the FEMA maps and the large increases in insurance rates stemming from provisions in the Biggert-Waters Act do not seem like they will have an immediate effect on their commercial property holdings, they are already affecting his employees.
"We have one guy who is working here who lives in Paradis. His insurance is going to go up over $5,000. He told me ‘I can’t afford it, I don’t know what I am going to do,’" he said.
Earl Matherne, the coastal zone manager for St. Charles Parish, said he could see residents, especially in some of the worst hit parts of the parish, leaving. That would have an immediate effect on local industrial plants.
"The bigger issue with the plants – if people can’t afford to live near it, where are they going to get employees? So it is an issue," E. Matherne said. "It’s not something they are going to be crazy about."
Even though rising insurance rates would be introduced over a five-year period, E. Matherne said the effect of higher insurance premiums would be pronounced in the local business sector.
"We do not have the commercial charts yet. I know historically business has always been higher and I will also tell you that Biggert-Waters, if you read it, some of the first stuff to kick in are the (rate increases on the) businesses," he said.
Despite not knowing the proper rates, E. Matherne said insurance on businesses in problem areas will undoubtedly go up.
"Any business built before 1983, those (rate increases) are kicking in probably in October of this year," he said. "Remember, that’s without a map change – that happens regardless."
The River Region Chamber of Commerce released a resolution to all members of the Louisiana congressional delegation, all state representatives and senators and Gov. Bobby Jindal last week concerning the potential harm to the local economies affected by flood insurance rate hikes.
In part, the resolution read that the River Region economy would be adversely affected by both changing flood maps and Biggert-Waters together.
"Tax revenues, jobs and economic conditions could be detrimentally affected should these unreasonable premiums go into effect," the resolution said.
The Chamber has also put their name behind an effort to have Congress amend the Biggert-Waters Act to slow flood insurance increases, review the proposed rates and adjust them to reflect the removal of the catastrophic failure of flood control structures, allow all grandfathering policies to transfer and delay new map adoption by local jurisdictions until the new maps can be properly vetted.
The Chamber’s resolution said the rates were expected to rise 25 percent per year on businesses, whereas residential rates were expected to rise from anywhere from 10 to 20 percent each year.
"The fact is businesses are probably paying considerably more than residential already, so I don’t know if it is going to be a corresponding percentage or a corresponding dollar amount," E. Matherne said. "If it is a corresponding dollar amount it might not be that bad for them, but if it is a corresponding percentage it could be devastating."
In addition to commercial property rates going up, E. Matherne said since the beginning of the year higher flood insurance premiums could be assessed on the parish’s landlords.
"If you own an older house that you are not living in 80 percent of the time, it is going to apply to you. In January it already started," he said.
One landlord already approached the planning and zoning office when he was told his insurance rate was going to go from around $400 to nearly $3,000. Although that landlord was able to decrease his insurance rate due to holding an elevation certificate, E. Matherne is afraid other landlords in similar situations will drop their policies altogether.
"If you own a rental house and you don’t pay any money on it and aren’t required to pay flood insurance on it, you aren’t going to pay a number like $3,000 per year," he said. "I am concerned we are going to end up with a lot of people who are uninsured because they don’t have to be."