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Groton Town Mayor Rita Schmidt saw her annual flood-insurance rates rise from $2,800 to $3,400 this year, despite the fact that her home on Bank Street in Mystic is up on a hill and not near the water.
"I'm a senior. I'm not able to generate extra income," Schmidt said Monday. "There are many people in my situation."
Numbers generated by The Associated Press show that 31 percent of Groton property owners requiring flood insurance face higher costs this year, despite a bill in Congress that sought to lessen the impact of higher rates. In Groton Long Point, a section of waterfront property particularly vulnerable to storm damage, an even more dramatic effect was evident, with 69 percent of properties seeing insurance cost increases.
But Groton, which had the third-highest number of homes in the region with insurance-premium increases of 25 percent or more, is hardly alone. Fifty-five percent of Stonington and New London homes in flood zones are paying more in flood insurance this year than last, and in landlocked Sprague the percentage is close to a state high at 72 percent.
"We have two rivers and a lot of brooks," said Cathy Osten, Sprague's first selectman and a Democratic state senator from the 19th District.
Osten said several people in town have told her they are contesting the flood-zone designation given the fact that their houses were built 20 to 30 feet above ground level - so high up that damage to the home from water would be highly improbable.
Osten said rate increases she had heard of were in the $1,000 to $2,000 range.
"No one can absorb that kind of increase," she said.
The three towns in southeastern Connecticut with the highest number of homes seeing dramatic flood-insurance increases were Stonington, Old Saybrook and Old Lyme. Municipalities in which at least a quarter of flood-insurance policies are seeing higher rates included those towns plus North Stonington, Waterford, New London, Lyme, Bozrah, East Lyme, Montville and Norwich.
Increased federal flood-insurance rates were mandated by Congress, which passed a bill two years ago to phase out subsidies and make the program self-sufficient after an onslaught of disasters, including Hurricane Irene. Advocates said it was time to make owners of properties in flood zones more responsible for the true cost of living near the water to help pay down the program's debt, currently estimated at $24 billion.
But there were unintended consequences of the legislation, which would have resulted in sudden, draconian increases in flood-insurance bills, sticking some people with huge premium increases they couldn't afford and making it very difficult to sell properties. So Congress earlier this month approved the Homeowner Flood Insurance Affordability Act, co-sponsored in the House by U.S. Rep. Joe Courtney, D-2nd District, that prohibits a property sale or lapse in coverage from triggering a rate increase, grandfathers in some properties built to code and limits premium increases in new flood hazard areas.
Mandy Panik, business development coordinator for Smith Insurance in Niantic and the agency's leading expert on flood insurance, said the changes won't take effect right away. In the meantime, many people may be stuck with homes they cannot sell, she said.
"It's making it increasingly hard for people selling homes," she said. "Some places are really unmarketable."
She cited one client in New London who declined to pay $4,500 for flood insurance last year and inquired about the cost of a new full-risk policy this year that turned out to cost $25,000.
"It's definitely an issue," said Liz Viering, president of Stonington Real Estate and an agent who works with sellers and buyers of shoreline properties. "We've seen a lot of repercussions already."
Last October, she said, an offer for a property on Groton Long Point came in low based on the projected cost of insurance, which killed one deal and led the buyer to make an offer on another waterfront home in Old Lyme that was on higher ground without the insurance problems.
Another buyer, she said, restructured a deal on Groton Long Point when the cost of flood insurance quoted was too high. That deal went through in an all-cash transaction rather than a previously arranged mortgage so the owners could avoid paying for flood insurance - a risk Viering said others seem willing to take as well, at least until the congressional fix becomes more clear.
Viering said existing owners of flood-zone properties are grandfathered in with lower rates. The problem occurs when the property is sold to a new owner, who has to pay the new full-priced rates, unless a policy is transferable.
"It is affecting people as far as where they are looking," Viering said. "It's now one of the top questions I hear."
It also may be affecting whether people go out and look for a vacation home, but Viering said it's hard to determine whether the low level of activity is directly related to the flood-insurance problem. She noted that there appears to be more activity in the second-home market this year than last, but suspects there might have been a major increase were it not for insurance questions.
Flood-zone uncertainties also may account for why some people have apparently held up building expensive new homes near the water, said Groton City Mayor Marian Galbraith. She said planning and zoning officials in town have heard that some proposed tear-downs of existing homes might have been held up as owners worried about the effect of flood-insurance increases.
"It's a concern here," she said.