U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2250 Mail: Stop SSOP, Washington, DC 20402–0001

31–182 PDF 2007

FEMA’S FLOODPLAIN MAP MODERNIZATION: A

STATE AND LOCAL PERSPECTIVE

HEARING

BEFORE THE

SUBCOMMITTEE ON REGULATORY AFFAIRS

OF THE

COMMITTEE ON

GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

MAY 8, 2006

Serial No. 109–205

Printed for the use of the Committee on Government Reform

(

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html

http://www.house.gov/reform

(II)

COMMITTEE ON GOVERNMENT REFORM

TOM DAVIS, Virginia, Chairman

CHRISTOPHER SHAYS, Connecticut

DAN BURTON, Indiana

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

JOHN L. MICA, Florida

GIL GUTKNECHT, Minnesota

MARK E. SOUDER, Indiana

STEVEN C. LATOURETTE, Ohio

TODD RUSSELL PLATTS, Pennsylvania

CHRIS CANNON, Utah

JOHN J. DUNCAN, JR., Tennessee

CANDICE S. MILLER, Michigan

MICHAEL R. TURNER, Ohio

DARRELL E. ISSA, California

JON C. PORTER, Nevada

KENNY MARCHANT, Texas

LYNN A. WESTMORELAND, Georgia

PATRICK T. MCHENRY, North Carolina

CHARLES W. DENT, Pennsylvania

VIRGINIA FOXX, North Carolina

JEAN SCMIDT, Ohio

——— ———

HENRY A. WAXMAN, California

TOM LANTOS, California

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

DANNY K. DAVIS, Illinois

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

CHRIS VAN HOLLEN, Maryland

LINDA T. SANCHEZ, California

C.A. DUTCH RUPPERSBERGER, Maryland

BRIAN HIGGINS, New York

ELEANOR HOLMES NORTON, District of

Columbia

———

BERNARD SANDERS, Vermont

(Independent)

DAVID MARIN, Staff Director

LAWRENCE HALLORAN, Deputy Staff Director

TERESA AUSTIN, Chief Clerk

PHIL BARNETT, Minority Chief of Staff/Chief Counsel

SUBCOMMITTEE ON REGULATORY AFFAIRS

CANDICE S. MILLER, Michigan, Chairman

CHRIS CANNON, Utah

MICHAEL R. TURNER, Ohio

LYNN A. WESTMORELAND, Georgia

JEAN SCHMIDT, Ohio

STEPHEN F. LYNCH, Massachusetts

WM. LACY CLAY, Missouri

CHRIS VAN HOLLEN, Maryland

EX OFFICIO

TOM DAVIS, Virginia HENRY A. WAXMAN, California

ED SCHROCK, Staff Director

ERIK GLAVICH, Professional Staff Member

BENJAMIN CHANCE, Clerk

(III)

C O N T E N T S

Page

Hearing held on May 8, 2006 ................................................................................. 1

Statement of:

Odeshoo, Janet, Deputy Regional Director, Federal Emergency Management Agency [FEMA]; Lieutenant Colonel Donald Lauzon, member,

Corps of Engineers; Judson Gilbert II, Michigan State Senator, 25th

District; and Jon Manos, supervisor, Clay Township ................................ 11

Gilbert Judson ........................................................................................... 35

Lauzon, Lieutenant Colonel Donald ........................................................ 23

Manos, Jon ................................................................................................. 41

Odeshoo, Janet .......................................................................................... 11

Wilson, Chris, city manager of Algonac; Manfred (Whitey) Simon, president, Harsens Island, St. Clair Flats Association; and John Collison,

owner, Sterling Real Estate Co., representing Michigan Association

of Realtors ...................................................................................................... 60

Collison, John ............................................................................................ 73

Simon, Manfred ......................................................................................... 67

Wilson, Chris ............................................................................................. 60

Letters, statements, etc., submitted for the record by:

Collison, John, owner, Sterling Real Estate Co., representing Michigan

Association of Realtors, prepared statement of .......................................... 76

Gilbert, Judson, II, Michigan State Senator, 25th District, prepared statement of ........................................................................................................... 37

Lauzon, Lieutenant Colonel Donald, member, Corps of Engineers, prepared statement of ........................................................................................ 26

Manos, Jon, supervisor, Clay Township, prepared statement of .................. 45

Miller, Hon. Candice S., a Representative in Congress from the State

of Michigan, prepared statement of ............................................................. 6

Odeshoo, Janet, Deputy Regional Director, Federal Emergency Management Agency [FEMA], prepared statement of ............................................ 14

Simon, Manfred, president, Harsens Island, St. Clair Flats Association,

prepared statement of ................................................................................... 69

Wilson, Chris, city manager of Algonac, prepared statement of .................. 63

(1)

FEMA’S FLOODPLAIN MAP MODERNIZATION:

A STATE AND LOCAL PERSPECTIVE

MONDAY, MAY 8, 2006

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON REGULATORY AFFAIRS, COMMITTEE ON GOVERNMENT REFORM, Clay Township, MI.

The subcommittee met, pursuant to notice, at 9 a.m., at the Clay

Township Offices, in Clay Township, MI, Hon. Candice S. Miller

(chairman of the subcommittee) presiding.

Present: Representatives Miller and Turner.

Staff present: Ed Shrock, staff director; Erik Glavich, professional staff member; and Benjamin Chance, clerk.

Mrs. MILLER. It’s 1 minute after 9. We are going to start this

hearing on time, here. I certainly want to say good morning to all

of you. We certainly appreciate all of you for coming.

As you know, I’m Congresswoman Candice Miller. I’m going to

call our Subcommittee on Regulatory Affairs to order and welcome

you all here.

This is a very excellent turnout. We see a number of people in

the audience who are at different levels of government and everyday citizens and people who are involved in this issue and have

had a great consternation about the issue and how it’s impacting

our entire State, quite frankly.

We have titled our hearing, ‘‘FEMA Floodplain Map Modernization, a State and Local Perspective.’’ I’m going to make an opening

statement that will hopefully lay out the groundwork a bit about

the issue and what it means. We are going to be hearing testimony

from Supervisor Jon Manos in just a moment. Let me thank him

personally so much for really being the squeaky wheel in many

ways, a principal advocate of this particular issue and bringing it

to our attention, and Mike Pellerito, our township clerk, who joins

us also, has met with us here in the boardroom and talked about

this issue, and we have our township trustees and county commissioners who are here as well. So we appreciate the hospitality for

all of us.

We are holding this hearing to examine the State and the local

impact of floodplain remapping. This is an effort currently underway by FEMA, the Federal Emergency Management Administration. Actually, it’s happening nationwide but they are currently in

our State right now.

FEMA issues flood maps that delineate areas within the 100-

year flood zone and uses the maps to determine flood insurance

rates.

2

A 100-year flood, also known as the base flood elevation, is the

calculation that represents a level of flood that has 1 chance in 100

of occurring in a given year.

Areas surrounding a potential flood source that are below this

base flood elevation are included in the 100-year flood zone. If a

property sits in the floodplain, then the owner is required by law

to purchase flood insurance if he or she has a federally backed

mortgage. And if an owner does not purchase the required insurance, then the mortgage lender is required to purchase it, and it

adds, of course, the cost and the applicable fees to the mortgage.

The National Flood Insurance Program, in my opinion, has all

kinds of inequities. First of all, States with very little risk for experiencing flooding are funding the program at astronomical rates, at

huge rates, while States that we see are flooded repeatedly year

after year are essentially using FEMA, if I could categorize it this

way, almost as their own personal ATM machines.

As you can imagine, changes in the flood flap can have a dramatic affect on homeowners. FEMA is currently engaged in a

project to update the flood maps around the Nation and convert

them into a digital format.

Before they began this project, just about every flood map in the

United States was on paper and most of the maps were very, very

outdated.

Effective maps typically do not reflect changes in topography or

real estate growth that has taken place over the last 30 years, of

course.

FEMA, and then Congress, both realize the need for modern digital maps. We do want to have the best maps, let’s face it. And Congress is currently providing $200 million per year to FEMA for its

modernization initiative.

And St. Clair County FEMA expects to have new maps in effect

by the end of next year. Everyone here, I think can agree that the

floodplain maps are outdated.

Here in Clay Township, the current flood maps became effective

in 1982 and certainly a lot has changed in the past 25 years.

It is important that the flood maps that communities rely on for

local planning, for local building ordinances, etc., and used by

homeowners and mortgage lenders to determine flood insurance requirements, that these maps do reflect the growth that has taken

place during that time. But I think FEMA is proposing to do something that has everybody in our area sort of scratching our heads

here a bit, because they want to raise the base flood elevation an

additional 14 inches.

According to FEMA, the reason for this proposal is to ensure that

the area flood maps, again, accurately reflect the area’s risk of

flooding.

The proposal is based on an 1988 study on water levels in the

Great Lakes which was conducted by the U.S. Army Corps of Engineers.

We are not going to be here today to debate the science behind

that study, but the last year the data used by the Corps for the

study was 1986, which we all remember was a year that the Great

Lakes hit their historic high.

3

I was a township supervisor at the time in Harrison Township

down in Macomb County. I remember those high water levels very

vividly.

FEMA’S proposal seems to contradict what everybody around

here has witnessed over the past 20 years, and that is that Lake

St. Clair has dropped almost 3 feet since 1986. It is now almost 5

feet below the current base flood elevation.

If FEMA goes ahead with the proposal, the new base flood elevation will be 6 feet above the current lake level, even though the

lake has been below its historic level since 1998. Over the past 20

years the lake’s average level has dropped 11 times.

Furthermore, in the last 88 years, the Army Corps has been

tracking lake levels for the last 88 years. The lake levels have

changed an average depth of less than 6 inches per year.

This is why so many of our local residents are very upset in that

FEMA’s proposal would be reasonable, perhaps, if this area was actually prone to all kinds of flooding every year.

There are two tables of information on display here, and you

might take a look at those. The table on your left, my right, I

guess, includes statistics indicating the amount of money different

States have paid into the flood insurance program between 1978

and 2002 and how much they have actually taken out. And, of

course, these are the figures that were before the recent hurricanes

that the Gulf area of our Nation experienced.

Between 1978 and 2002 there were 10 States that received more

in claims than they paid in premiums. These States received over

$1.5 billion more from the program than they paid. Yet the average

premium in those States was only $223.

Michigan, on the other hand, paid almost $120 million more into

the program than we have received. Yet the average premium for

Michigan policy holders was almost $260. Quite a difference there.

Obviously, we ask the question of ourselves, how can this possibly be? If you think about the nature of insurance, people that

do not experience losses typically subsidize those that do. But, certainly, I think if a private insurance company decided to charge

significantly higher premiums for policy holders with little or no

history of claims, they would probably be hauled in front of our

State insurance commissioner to answer the question of why that

is all happening.

The chart on your right, my left, I hope I’m pointing in the right

direction, outlines data that is recent through the end of February

of this year.

In four States that are seemingly hit with hurricanes every year,

the premiums per policy that will be paid to each of those States

is an average of $175 below the rate that is paid by Michigan policy holders.

You know, if you think about that just for a second, Michigan

residents are paying on average 51 percent higher premiums than

five Gulf States: Louisiana, Mississippi, Florida, Alabama, and

Texas, which seems to me to be patently unfair.

Obviously, we all watched the terrible events of Katrina, and

some of the other hurricanes that hit Florida. And we are all Americans before everything else. We are Americans first, and we are

4

a compassionate Nation, and we certainly feel for the people in

those areas.

However, if you look at the floodplains claims again in recent

years, there is only two ways they can increase the fund into this

flood insurance program. They either have to raise the premiums

or force more people into the program. And to the residents of St.

Clair County and, in fact, the entire State of Michigan, it seems obvious. They are trying to force more people into the program knowing they will not have to pay us back in the form of claim payments.

Municipalities in St. Clair County that would be directly impacted by Lake St. Clair pay nearly $700,000 more in flood insurance premiums than they can expect to receive in an average year.

For the county as a whole, here in St. Clair, residents will pay

close to $1 million in premiums. But in 28 years, the county has

received only $2.7 million from FEMA in the form of claims. And

that means that in St. Clair County alone, this county has made

more than $8.1 million to FEMA than it has gotten back in claims.

What would FEMA’s proposal do specifically to raise a floodplain

here in Clay Township? Well, the average premium, again, for

township is roughly $500, and local officials estimate that a minimum of 700 homes would be brought into the flood insurance program if this proposal, as is currently constructed, is finalized.

This means in Clay Township alone, residents here would pay an

extra $350,000 per year, or over $770,000 total. In 3 years Clay

Township will pay more to FEMA than it received in flood-loss

claims over the life of the program.

We can think about what that actually means as far as driving

up property values and the potential impact on this area. And I’m

afraid, and I think many of us fear, that FEMA perhaps is not taking all of these consequences in its proposal into account.

In Congress, we feel that we need to take a very good look, obviously, at how the flood insurance program is run. It needs to be reformed in order to fix the inequities that are inherent in it. Until

that time, though, residents need to be assured that the program

is run fairly. And I truly hope that this is the case.

I want to thank all of our witnesses who I will introduce in just

a moment as they begin their testimony for this morning’s very important hearing.

I will tell you that it is extremely unusual to have a congressional field hearing, as we call it a field hearing, leaving Capitol

Hill and going out into the community.

I had initially thought about doing this hearing in Washington,

because it is easy on many of the witnesses that we would have

wanted to have there. However, this is an issue that impacts this

area so dramatically, as I discussed with my other colleagues, we

did decide to bring Washington out to Clay Township and into St.

Clair County.

I think it’s an appropriate thing. Based upon the amount of participation we have this morning, I tell you sincerely, I’m glad you

are all here. You will be able to hear this testimony. We will not

be taking any specific action today. This is for us to gather information. Then we will be digesting it and we will let you—we will

5

keep you up to date on exactly how the entire process is proceeding.

Before we go to the witnesses, let me welcome another member

of our subcommittee, introduce him to all of you, this is representative Mike Turner, who is an outstanding Member of Congress. He

and I came into the Congress at the same time. We said we ran

for office because we wanted to be freshmen again. We were freshmen in Congress for a short period of time.

But Congressman Turner is from Ohio, our neighboring State of

Ohio. He has been a former mayor of Dayton, OH. As I mentioned

to the supervisor, he is very well familiar with local issues, planning issues, and ordinances and how things like this can impact a

community or a city or a township.

He serves with me on the Government Reform Committee, the

subcommittee is under the Government Reform Committee, which

is a committee that I am very proud to serve on, as is Congressman

Turner. We both like to think of ourselves as reformers of government. And we have been very involved in a number of various

issues, and I appreciate him taking the time to come from Ohio

today. We will both be back in session tomorrow in Washington. I

want to welcome Congressman Turner to the hearing.

[The prepared statement of Hon. Candice S. Miller follows:]

6

7

8

9

10

Mr. TURNER. Thank you. Thank you, Chairman Miller. I appreciate you having me here for this hearing. I think having a field

hearing is always important because it gives us the opportunity to

expand the congressional record on a particular issue.

By coming out to this community and having this hearing, Chairman Miller has really taken to Washington all of the testimony and

all of the input that will occur here today as an attempt to impact

this overall issue. So many times if you have a hearing in Washington, it’s just one of many other hearings where you have input on

Federal issues. But when you take it to a local perspective and you

get the local view, and you can marry it to the processes of this

committee and you can take it back to Washington, you can enhance your effectiveness.

Chairman Miller, by bringing this here, has helped highlight this

issue and will make a big difference when she takes this information back to the committee and back to Washington.

I know you are all very proud of your Congresswoman. I am a

big fan of hers. As you know, with her background serving on the

State level or the local level, being an individual who knows how

to get in and run things and understand the importance of issues

and how they impact people’s lives, she is a great advocate for you

in Washington. She is a great advocate for personal liberties and

for personal responsibility.

I served with her also on the Armed Services Committee, in addition to serving on the Government Reform Committee, where she

is a strong advocate there for your local community.

I know she played a big role in the outcome of the BRAC in this

area and making certain that the facilities that you had here had

a strong voice. And as I’m certain many of you know, she has been

a national voice on the issue of the impact of illegal aliens on both

the number of congressional districts that are awarded to States on

the electoral college. She came to Ohio and testified before the Ohio

House on the important issue of our census counting illegal aliens

for allocating States, congressional representatives, based on the

resident illegal aliens in their State. It’s an issue in an inequity

both to Ohio and, I believe, to Michigan. It’s wonderful that she

has brought national attention to an issue that concerns fairness.

This is an issue of fairness also. And it’s great that Congresswoman Miller, as her chairmanship of this committee, is reviewing

the issues of FEMA and of the floodplains and as they relate to insurance, and the economic impact to your community.

We all know, as we have seen in the Katrina catastrophe, we

need to take a closer look at how our Federal agencies operate. And

it’s all a part of Congresswoman Miller doing that to make certain

that, on the local level, people are served by what occurs on the

Federal level.

People are always very disappointed when they look at States’

programs and find that their donors to programs that perhaps are

benefits to others. And the only way to make certain that we have

that equity is to have strong voices like Chairman Miller. I appreciate being here. I look forward to the testimony and I look forward

to the additional input from FEMA.

Mrs. MILLER. Thank you very much. Because the Government

Reform Committee is the only committee in the House that has

11

subpoena authority, it is always the process of the committee to

swear in any of our witnesses who are going to testify. If you will

all rise, please, and raise your right hands. If there is—not everybody in the audience because you won’t all be testifying, just our

witnesses here that will speak.

Although I could swear you all in, who knows what you would

say.

[Witnesses sworn.]

Mrs. MILLER. Thank you very much. I appreciate that.

And you will see these lights, as do our witnesses that go on

here. Obviously, the red light, when we get—we try to keep the testimony within about a 5-minute timeframe, but I’m not going to cut

you right there. Just to sort of keep the flow of it, you will see

these lights on, when the red light goes up there, that has been 5

minutes.

Our first witness this morning is Janet Odeshoo. Am I pronouncing that correctly?

Ms. ODESHOO. Odeshoo.

Mrs. MILLER. She is the Deputy Regional Director for the Federal Emergency Management Agency [FEMA], at the regional office

in Chicago. She has been there for 10 years. She’s currently responsible for the implementation of disaster response and recovery activities and oversight of FEMA’s prevention activities and preparedness activities for the States of Illinois, Indiana, Michigan,

Minnesota, Ohio and Wisconsin. She has worked for FEMA for over

25 years. During that time, she was the Director of the National

and Technological Hazards Division, which was responsible for administration of the National Flood Insurance Program, the Earthquake Hazards Reduction Program, the Chemical Stockpile Emergency Preparedness Program and the Hazardous Material Program

as well.

She has been overseeing programs, including the National Flood

Insurance Program, trying to assist communities in reducing or

eliminating the effects of disasters on people and property.

We certainly welcome her to the hearing this morning. We appreciate you taking the time to travel to Clay Township. The floor is

yours. We look forward to your testimony.

STATEMENTS OF JANET ODESHOO, DEPUTY REGIONAL DIRECTOR, FEDERAL EMERGENCY MANAGEMENT AGENCY [FEMA];

LIEUTENANT COLONEL DONALD LAUZON, MEMBER, CORPS

OF ENGINEERS; JUDSON GILBERT II, MICHIGAN STATE SENATOR, 25TH DISTRICT; AND JON MANOS, SUPERVISOR, CLAY

TOWNSHIP

STATEMENT OF JANET ODESHOO

Ms. ODESHOO. Thank you. Good morning, Chairman Miller. I am

Janet Odeshoo. I’m Deputy Director of the U.S. Department of

Homeland Security Federal Emergency Management Agency Region V Office in Chicago.

As Chairman Miller said, I have been with FEMA for over 25

years. I’m a career FEMA employee, and all of my 25 years of government have been with FEMA. I have a lot of experience in emergency management.

12

I appreciate the opportunity to appear before the Subcommittee

on Regulatory Affairs. I will highlight some of the information in

my written testimony for your consideration.

I am aware of the controversy concerning our remapping of flood

risk in St. Clair County and recently received a copy of Michigan

House Resolution 158 urging FEMA not to remap flood risk in several Michigan counties.

Michigan House Resolution 158 discusses an economic hardship

that must be born by those required to buy flood insurance. It is

our belief, based on prior experience, working firsthand with flood

disaster victims, that uninsured flood damage causes far greater

economic hardship.

Many of the Nation’s flood risk maps need to be updated, St.

Clair County’s maps included.

Most communities in the county that have voluntarily joined

NFIP have flood risk data that is more than 25 years old.

In 2003, FEMA launched the congressionally mandated Flood

Map Modernization Program called Map Mod to update and modernize the Nation’s flood insurance rate map over a 6-year period.

St. Clair County—is part of the national Map Mod efforts.

Identifying flood risk is very important and FEMA uses the best

information available when we prepare new maps.

The base flood elevations [BFEs], for waterways in the Great

Lakes system that have shown on the existing flood insurance rate

maps were derived from data compiled by the U.S. Army Corps of

Engineers in 1977.

In 1988, the Corps updated their earlier work and published a

report entitled Phase I Revised Report on Great Lakes Open Coast

Flood Levels. The Corps published a Phase II report that revised

BFEs for the St. Clair River and other connecting waterways.

Since the Anchor Bay portion of Lake St. Clair has different dynamics, the State of Michigan contracted with the Corps to do a

separate study on expected flood elevations on Anchor Bay. That

report was completed in 1989.

Lack of funding prevented us from updating the flood insurance

rate maps for communities at that time to reflect this new flood

risk data. However, these reports represent the best available data

that we have for the Great Lakes region, and with map modernization, that new data is being incorporated into the digital flood hazard map we are now producing for all counties in the Great Lakes.

Clay Township officials have referenced a report from the International Joint Commission that they interpret as refuting Phase I

and II reports.

It is our understanding that the Corps will address the technical

merits of these reports in more detail.

A common theme in the IJC and Phase I and II reports is the

cyclical nature of the Great Lakes water level. A building constructed in the floodplain of a Great Lakes system waterway is

likely to exist through a number of high and low-water level cycles.

Lake level may be cyclically low now, but they will rise.

The GIS format Flood Insurance Rate Maps [FIRMS], have not

yet been compiled, but Macomb County, which is adjacent to St.

Clair County, is further along with the remapping process and can

serve as an example of our mapping in this area.

13

The display FIRM provides examples of the old and revised floodplain delineations in the St. Clair shore area. We have added information on the revised map to make it easier for you to compare the

limits of the old and new floodplain boundaries.

The revised map identifies the floodplain based upon data and

the Corps’ Phase I report. Please note, although the floodplain now

includes some structures that were not located in the floodplain before, many structures that have previously been identified in the

floodplain—I’m sorry, let me repeat that. Please note, although the

floodplain now includes some structures that were not located in

the floodplain before, using better topographic data provided by the

county has allowed us to remove many structures that had previously been identified in the floodplain. The Macomb County

FIRM will become effective on September 29th of this year.

The decision to map or not to map flood risk zones cannot be

based on the perceived economic impact of the cost of flood insurance. It must be based on risk and risk must be based upon

science.

Valid scientific methods and the best-available data were used in

the 1988 Phase I and II, as well as the Anchor Bay reports.

Although we anticipate little change in expected flood elevations,

we have asked the Detroit district to validate the 1989 Anchor Bay

analysis to incorporate recent engaged data to determine impact on

expected flood levels in St. Clair County.

To conclude, FEMA remapping uses the best science available to

model the risk and present that information to communities so

they can use it to guide development and protect their citizens.

It is important to understand that FEMA will continue to accept

and consider any technical or scientific data or information on flood

risks. Data supporting a map revision may be submitted at any

time.

As technically valid data is developed, new digital mapping format will allow us to easily revise the maps to incorporate new modeling that meets NFIP Guidelines and Specifications.

Ignoring or minimizing flood risk serves no use or purpose. Our

communities and citizens benefit from knowing the valuable information they need to make responsible risk management decisions.

Congress has mandated that we update our maps to more accurately identify flood risk. We remain committed to providing the

best available flood risk data using the financial resources provided

and the congressional support of Map Mod to produce the best

maps we can.

Thank you for providing the opportunity to share these views

today. I will be happy to answer any questions that you may have.

Mrs. MILLER. Thank very much. We appreciate the testimony.

[The prepared statement of Ms. Odeshoo follows:]

14

15

16

17

18

19

20

21

22

23

Mrs. MILLER. Our next witness is Lieutenant Colonel Lauzon,

who actually is one of our neighbors. He lives at Selfridge Air National Guard Base. He is going to be retiring unfortunately—I

think very unfortunately, is it the end of June.

Colonel LAUZON. July, ma’am.

Mrs. MILLER. July. He has done a remarkable job as a member

of the Corps of Engineers and for our community, in particular.

Previous assignments include service as chief operations with the

Defense Mapping School in Virginia. He is a resident engineer at

Fort Dix in New Jersey, a company commander of the 299th Engineer Battalion at Fort Carson, CO, and also Oklahoma. He was

also Deputy Chief of Engineers at the Army Corps of Engineers

headquartered in Washington. We have worked together over the

years and he has served here in our area on a number of issues

that have had a huge impact for our immediate community here.

He was very responsible in assisting with the dredging of the St.

Clair River, as well as out into Lake St. Clair freighter channels.

He has worked with us on dredging assignments throughout the

area on environmental management activity that is happening for

the St. Clair River basin and out into Lake St. Clair as well. So

certainly we have appreciated his services. He spent quite a bit of

time in Iraq, and certainly for all Americans, appreciate this great

patriot and the floor is yours, Colonel Lauzon. We look forward to

your testimony.

STATEMENT OF LIEUTENANT COLONEL DONALD LAUZON

Colonel LAUZON. Good morning, Chairman Miller and Congressman Turner.

I first like to thank both you for your leadership roles on the

Armed Services Committee. Thank you for your service to the Nation.

My name is Lieutenant Colonel Donald Lauzon, 52nd Commander of the Detroit District of the U.S. Army Corps of Engineers.

I appreciate the opportunity to appear today before the Subcommittee on Regulatory Affairs. It is an honor to be able to testify

on such an important topic.

The Detroit district, which faithfully served the Great Lakes region in the Nation since 1841, covers 82,000 square miles of land

and has over 4,000 miles of Great Lakes shoreline.

The district’s major mission is to investigate, plan, design, construct, operate and maintain congressionally authorized water resource projects throughout the Great Lakes basin.

The district also operates and maintains the world famous Soo

Locks, as wells as 94 harbors throughout the Great Lakes.

In support of the Nation, the U.S. Corps of Engineers often provides technical support to other government agencies, including the

Federal Emergency Management Agency.

Over the years, the Corps has done a variety of work for FEMA,

and this has included the determination of 100-year flood elevations for the Great Lakes.

This testimony provides a summary of the Great Lakes flood levels studies that were done. It is being provided in response to reVerDate 11-MAY-2000 10:59 Jan 29, 2007 Jkt 000000 PO 00000 Frm 00027 Fmt 6633 Sfmt 6633 D:\DOCS\31182.TXT HGOVREF1 PsN: HGOVREF1
24

cent concerns about FEMA’s remapping of flood risk in St. Clair

County.

In 1974, FEMA contracted the Corps of Engineers to investigate

methods and determine the 100-year flood levels for the U.S. shoreline of the Great Lakes.

Based on these investigations and subsequent reviews from the

Great Lakes States and other Federal agencies, a procedure was

adopted. Using this procedure, the Corps of Engineers derived flood

levels for the Great Lakes and their connecting channels with certain probabilities of occurring.

The results were provided to FEMA in 1977 in a report entitled

Report on Great Lakes Coast Flood Levels. It was the flood levels

from this report that FEMA used to map the original 100-year

floodplains.

In the mid-1980’s, the Great Lakes experienced record high levels which resulted in significant flooding and damages. In some locations, the reported water levels equaled or exceeded the 100-year

flood levels published in the 1977 reports.

In 1987, FEMA contracted the Corps of Engineers to update the

1977 report. This update retained the basic approach utilized in

the 1977 report and incorporated additional water level data

through 1986. The methodology and the resulting flood levels received considerable State and Federal agency review.

The revised flood levels were provided to FEMA in 1988 in a report entitled Revised Report Great Lakes Open Coast Flood Levels.

The method adopted in both the 1977 and the 1988 reports analyzed peak levels recorded at water level gauges each year.

Based on the number of years in the gauge record, and the number of times levels were exceeded, water levels with certain probabilities of being exceeded were determined.

The 100-year flood level represents an event that has a 1 percent

chance of being equaled or exceeded in any given year.

All the water level gauges on the Great Lakes and the connecting

channels, with at least 10 years of records, were used in the 1977,

as well as the 1988 reports.

The highest instantaneous water levels recorded each year were

used in these analyses. These water levels include both the still

water level of the lake and the wind set-up at the gauge location.

Wave run-up caused by storm waves meeting the shore was not

considered in the 1977, nor the 1988, report.

For communities bordering Lake St. Clair, flood levels determinations were made using water levels recorded at St. Clair—at

the St. Clair Shores gauge. At this gauge, the 100-year flood elevation increased 13 inches from the 1977 report to the 1988 report.

The Anchor Bay portion of the Lake St. Clair has a different dynamic than the open lake. Strong winds often push water higher

in the bay than on the lake’s open coast. For that reason in 1989,

the State of Michigan contracted the Corps of Engineers to do a

special study to determine the 100-year flood elevations in Anchor

Bay. Wave run-up was not included.

The Anchor Bay study resulted in a 100-year flood elevations

that are 2 to 5 inches higher than the level for the open coast in

the 1988 report.

25

FEMA is using the flood levels from the 1988 Great Lakes open

coast to update the flood maps for the open coast of the Great

Lakes and their connecting channels.

For Anchor Bay, FEMA is using the elevations from the 1988,

1989 special study contracted by the State of Michigan.

During the 12 years following the record high levels of 1986, the

Great Lakes continued to be well above average.

In the late 1990’s, very dry conditions across the Great Lakes

basin, coupled with the mild winter and very little snow or ice

cover, caused a rapid decline on water levels on Lake St. Clair.

By 1999, the level of Lake St. Clair was below its long-term average. In the 6-years since then, the level of St. Clair has remained

at or below its long-term average.

What effect adding these 19 years on both high and lower levels

would have on flood frequencies is not clear and would need to be

evaluated.

Water level fluctuation on the Great Lakes is driven by weather.

The Great Lakes have been in existence for thousands of years but

water levels have only been recorded for a relatively short portion

of that time.

It is very likely that lakes may reach higher and lower levels

than those that have been recorded. Flood levels statistics only predict the probability that certain levels could occur. They cannot

predict future floods.

There have been questions concerning a 1993 report completed

by the International Joint Commission, the report referred to as

the Levels Reference Study, Great Lakes and St. Lawrence River

Basin. This study was conducted in response to record high waters

in the mid-1980’s. One part of the study looked at water level statistics for decisionmaking. The Levels Reference Study did not determine probable flood levels, but did develop methods for looking

at lake level probability for an evaluating proposed regulations

plans.

In conclusion, there are many techniques and factors that can be

considered in determination of probable flood levels. The methodologies used in the 1988 Great Lakes Open Coast Report and the

1989 Anchor Bay Special Study were reviewed by multiple agencies

and are considered to be valid approaches for determining probabilities along the Great Lakes and the Lake St. Clair—St. Clair

shorelines.

With more data, the numbers will change. The magnitude of

these changes would not be expected to be great, but evaluation

would be needed to quantify them. Adding more years of data and

looking at more detailed analysis would always be the preferred option.

Again, thank you for allowing me the opportunity to speak with

you today, and I will be happy to answer any of your questions.

Thank you.

[The prepared statement of Lieutenant Colonel Lauzon follows:]

26

27

28

29

30

31

32

33

34

35

Mrs. MILLER. Thank you very much. We appreciate that. And our

next witness is a good friend of this community, long time—lived

here many, many years and represented this area as well, and that

is State Senator Jud Gilbert. We appreciate his attendance here

and how involved he has been for the State level. In fact, before

he testifies, I notice there are a couple of your colleagues out in the

audience as well. Let me just recognize them quickly. This has

been every level of government working together at the Federal,

the State, the local level. I see State Representative Phil Pavlov is

in the audience. We appreciate your attendance, Representative.

I see some county commissioners. No one gave me a list. I hope

I’m not going to miss anybody. I see Pam Wall, County Commissioner Pam Wall, and Terry Lundon is with us as well, and Jeff

Blum I see out in the audience, also and Wally Evans, I saw a little

bit earlier. So hopefully I have seen all of our county commissioners. We appreciate everybody’s interest in attendance. I hope I

didn’t miss anyone.

Senator Gilbert has represented this area, as I said, very well in

a number of different capacities over the years. Right now, as some

of you may know, he is the chairperson of Senate Committee on

Transportation. We have worked together on a lot of road projects,

funding for the Bluewater Bridge Plaza and many other kinds of

issues relating to transportation as well. He also serves as vice

chair for the Senate Committee on Agriculture, Forestry and Tourism. He has been very, very involved in a number of different community organizations here, Optimist Club Youth for Christ, the

Algonac Rotary Club, etc. We appreciate the Senator’s attendance

here. The floor is yours, sir. We look forward to your testimony.

STATEMENT OF JUDSON GILBERT

Mr. GILBERT. Good morning, Madame Chair and Representative

Turner. I would like to welcome you to my 25th Senate District and

my hometown. I have not only lived here many years, it’s been all

my life. It’s even longer than that.

Mrs. MILLER. Even longer than many years.

Mr. GILBERT. Well, many of the points that I want to make were

touched upon in your opening statement and other testimony, and

I’m sure Jon Manos will hit on those again. The fact that this map

will be changed 14 inches I think is significant. Those of us who

live in the area can’t remember that water levels have been so low

for such a long period of time.

One of the things that I believe is a great injustice is the fact

that what we are dealing with, on the increased floodplain levels,

is 20-year-old data. People have made their decisions on elevations

for their homes, decided where they are going to move and all of

a sudden, by administrative fiat, they are going to be put in this

floodplain at considerable expense.

The point has been made that there is more premiums paid in

than claims; that we are a donor State. Many of my constituents

have felt because of FEMA’s financial problems, they are coming to

Michigan where there’s very low risk and coming in trying to bail

out FEMA at this time. And certainly that’s not a good thing for

the people in this community or for the State of Michigan.

36

This remapping will only increase the amount we pay with little

or no return to our constituents. Again, the water levels are down.

Having read several scientific journals on this issue, some believe

that the historic high levels that we have reached in the past will

not be reached in the future.

I believe that you’ve asked government to look into this trend

under the Bluewater Bridge, that there is reason to believe that

water levels are not going to return to historic highs but, certainly,

I think the big effect is money flowing out of Michigan. We all

know that we are in a very difficult economic situation here in the

State of Michigan.

Our government should be examining ways to alleviate financial

hardship on your families and businesses, not strapping them with

unnecessary costs and regulations.

You see, people are leaving the State of Michigan because we are

experiencing a one-State recession. Unemployment levels are high.

Our economy is suffering and these types of burdensome fees and

hidden taxes are a disincentive for people to live in Michigan. Millions are taken away from Michigan families when they cannot afford it.

The impact goes on beyond just having more people purchase insurance and subsidizing Federal programs with hard-earned dollars.

You yourself, Madame Chair, made note of this earlier this year

when you stated on the floor of the U.S. House of Representatives

since 1978, that was the year Michigan actually opted into the program, the people of Michigan have paid $138 million, and in that

same time FEMA has paid out claims totaling less than $38 million.

I may not know everything there is to know about the job that

FEMA does, but what I know for sure is this: If we were on the

board of directors of a corporation and we did not give our stockholders a fair return on the shares that they bought in our company, we would be fired. FEMA is a broken-down company that is

not giving shareholders their fair return.

Mr. Manos has suggested and believes that there is certainly a

rule or a law that perhaps Michigan should opt out of this program.

I believe he pointed out to me that there are several States that

are not part of the program. I think it would be far better for us

to have some self-insurance program here in the State of Michigan

and keep the dollars here in Michigan.

I guess the thing that really upsets me is that we send these dollars, never to return to Michigan and, of course, we need more economic activity in Michigan.

One other point I would like to make, in addition to a House resolution, there was a Senate resolution that we passed, I think, in

the fall of last year. Mr. Manos came up and testified at a Banking

and Insurance Committee and passed unanimously, asking FEMA

not to go ahead with these proposed increases in elevations, and it

also passed the Senate unanimously.

Thank you.

[The prepared statement of Mr. Gilbert follows:]

37

38

39

40

41

Mrs. MILLER. Thank you very much. We appreciate that.

Our final witness on our first panel is Supervisor of Clay Township, Jon Manos. Mr. Manos has served a total of five different

terms as supervisor beginning in 1974. So he has considerable expertise in regards to the flood insurance program and water levels

around the area as well. He served as township supervisor here

during both high-water periods in the 1970’s and 1980’s again.

He also was very involved in administering the original Corps of

Engineers flood program called Self-help and Operation Foresight.

He served as the State of Michigan’s first floodplain manager

and was a participant in a high-water symposium called: A Look

at the Land Side Lake Levels held in Grand Rapids.

Supervisor Manos, we appreciate your gracious hospitality

hosting this hearing and we look forward to your testimony. The

floor is yours.

STATEMENT OF JON MANOS

Mr. MANOS. I thank you for coming to Clay Township, and Representative Turner, to put a different spin, I guess, a different perspective on the technical data sector. What we like to deal with is

how does this thing affect the actual people that live here. I think

that is very important.

I would like to present for the record, I have a petition signed

by over 2,250 residents, property owners, area property owners, opposing any elevation change, I have additional supportive information, and I also have comparison data, the 2006 100-year floodplain

Rules and Regulations as they relate to the 500-year regulation.

Mrs. MILLER. Without objection those will be entered into the

congressional record of this hearing as well.

Mr. MANOS. Thank you. This is their most recent from Macomb

County—that the 2006 100-year Floodplain Regulation which will

be placed for people to read, since they are in there, and this reflects what the 500-year floodplain regulations are. At the same

time many of our residents will be put under that status.

Mrs. MILLER. Thank you.

Mr. MANOS. I’m going to touch for just a second on this type of

a headline, and it isn’t something new. I think we all know this.

It’s in the Detroit papers, it’s in Washington papers, etc.

FEMA has a number of problems, but that isn’t the main issue

at this time. This is what I would like to really point out to you

very briefly, again; lake levels keep falling. This data is being put

forth many, many times over, every time we pick up the newspaper, where is the water going, why is Lake Superior 6 years now

running below it’s long-term average, and it’s a regulated lake. I

don’t want to get into this lake up-and-down issue but nevertheless, this is falling.

Here is a map of the United States showing the policy, growth

percentage change for FEMA, produced by FEMA.

As you can see, all the yellow States, including Michigan, California, some of bigger States, all have a negative growth rate. That

means revenues which sustain FEMA, and it’s quoted in their own

words, that they exist on premiums. The whole program is designed for that. These are all negative States with growth.

42

I even went through and outlined in red for you the ones under

2 percent growth, which is nothing. How can you sustain FEMA

with a negative revenue stream? You can’t do it.

FEMA went broke. Here it is in U.S.A. Today, put out—it was

on CNN, FEMA halts flood insurance payments. They told 96 paying agents don’t pay legitimate claims. We have no money to back

you up. They went to Congress and Congress approved, I believe,

it was something like a loan of $21 or $23 billion to go to FEMA.

If you have a reduced revenue stream at all going down, how do

you intend to make mortgage payments that are in excess of what

revenues that are coming in?

Real brief again, I’m trying to be as brief as I can, FEMA takes

in $2 million a year nationally.

When it equates over the period of 27 years, it’s about a half a

billion a year that is spent for actual claims. Where does the other

billion and a half go? You know where it goes? It goes to administer the program. So you have a great amount of money and those

premiums that’s leaving serves no purpose for claims. That’s a serious thing.

Now, if you borrow $23 billion, where—how did you pay that

back? Where does the money really go? Does it go to help people

that need to have their claims replenished? No. It goes to administration. I just want to show you this.

There is no question about it, FEMA is going out of business.

The only way they can bring it back is increase the floodplain elevation, get into the higher—the 500-year floodplain areas where

the homes have been built for 30 years.

Now, I would like to read our statement as quickly as I can, and

we will answer any questions.

On behalf of the many affected property owners, and not only

within Clay Township but within St. Clair County and State of

Michigan, the township wishes to express its appreciation for this

opportunity given by the congressional subcommittee to hear testimony from concerned property owners, State, county, and areaelected officials concerning the impact of FEMA’s proposed elevation changes and the historic value of the national flood insurance program to Michigan since its inception.

Proposed dramatic increases in the 100-year floodplain elevation

level have prompted the questions of the real intent of such an action. There isn’t any doubt that updating the format of the old

paper map using state-of-the-art digital technology will bring about

major benefit to the property owners, as well as the lending institutions and involved government agencies.

Present elevation levels remain constant for 25 years and are reflective of two record flooding periods.

What has surfaced is information from FEMA records that indicate the primary reason for raising elevation is to bolster declining

premium revenues needed to feed the program’s growing administrative cost.

The cost-benefit ratio throughout Michigan is ridiculous and it

has made Michigan a perpetual donor State. I’m not going to read

FEMA facts, we already did that with the State, what have you,

what the value is to Clay Township property owners.

43

FEMA has been quoted as saying adding more policy holders will

keep right the flood program financially. All FEMA records indicate

that the program is broke.

A quote in U.S. News, government agency has run out of funds

to cover flood insurance claims and an unprecedented move has

stopped payment to policy holders.

FEMA maps showing this growth in the United States demonstrates the declining premium base.

I will move on a little bit from that. We will go with, there is

an excess of $1.5 billion each program year as an average nationally.

Even with the excess of revenue over claim payments the program remains broke and now must pay back $23 billion it just borrowed.

Only one alternative logically exists, and that is to incorporate

existing structures lying in the unrestricted 500-year floodplain

into the existing premium base.

Remember these structures have been outside the jurisdiction

the Army Corps of Engineers and FEMA regulations for over 271⁄2

years.

And now simply adjusting 20-year-old data to make the shoe fit,

FEMA gains needed revenue and the Corps now exercises regulatory jurisdiction over thousands of properties previously exempt.

No practical justification can be given for either agency to now.

After 30 years of granting unrestricted compliance to thousands

of properties, tell their owner to start paying flood insurance and

accept the fact their structures don’t meet the new floodplain building standards.

FEMA has, in effect, created the potential for Michigan economic

disaster. Who reaps the gain from the 100-year flood elevations?

Certainly not the homeowner.

By changing a structure from a conforming status to a nonconforming status, the owner definitely becomes a loser. No amount

of icing by FEMA can change that fact. The owner may have to

stand the expense of purchasing flood insurance he doesn’t want.

The sale value and marketability of the property will definitely

be negatively affected. Septic tank fields, they need to replaced and

an entire structure may need to be elevated after the incurrence of

a casualty loss.

The cost of new construction will also increase, which may, in

fact, place the cost of owning a new home out of the reach of many

families.

Clay Township is well aware of the flooding of both the 1970’s

and 1980’s. The township worked with the Army Corps in administering the Self-Help and Operation Foresight Programs and distributed over 200,000 sandbags.

The township is also aware of the many studies commissioned by

the International Joint Commission relating to the inflow and outflow regulation of the Great Lakes.

What was not mentioned a few minutes ago by the Army Corps

of Engineers was a Great Lakes upper study plan begun in 2001

at a cost of somewhere around $50 million and is still ongoing that

deals with the subject matter and reflects numerous variables

44

which have to be incorporated into calculations used to change 100-

year floodplain levels.

Some of the noted variables: The dramatic increases in use, global warming, channel dredging, re-evaluation of existing divergence,

re-assessing a plan, 1977-A, and Long Lake and Ogoki diversion

adjustments. The FEMA elevation change proposal ignores these as

important variables and puts hindsight ahead of foresight.

The point to be made is simple, that the levels in the Great

Lakes are below long-term average, and Lake St. Clair has been

predicted to peak at 574.3, over 4 feet below the present 100-year

floodplain level and close to 6 feet from the levels proposed by

FEMA.

In conclusion, Clay Township again expresses its appreciation for

this opportunity to request that FEMA place a moratorium on any

changes which will elevate the present floodplain elevations. Thank

you.

[The prepared statement of Mr. Manos follows:]

45

46

47

48

49

50

51

Mrs. MILLER. Thank you very much. We appreciate that.

Colonel Lauzon and the supervisor didn’t want to get too much

into lake levels and the Army Corps of Engineers’ impact on some

of those things. You and I have been working very closely on an

issue that I think might have some impact on this whole concept

of the mapping and what happens. Of course, that’s with trying to

find funding for a 3-D model where you would actually construct—

the Corps, that they would actually construct a 3-D model of the

St. Clair River. Because there has been a coastal engineering

firm—very widely respected that recently did a study, they are

theorizing that because the St. Clair River had extensive dredging

in the mid-1970’s—excuse me, actually 1960’s, 1962 to 1964, to

open up the upper lakes for shipping, because of that dredging, and

subsequent dredging, and subsequent erosion as well, that you

have an effect in the St. Clair River almost like a plug in a bathtub

has been pulled.

They are theorizing that the amount of water that is going

through the St. Clair River now because of that action interpolates

to approximately the size of Lake St. Clair being diverted down the

Erie Barge Canal out into the Atlantic Ocean about every 18

months. We are not sure whether or not that’s so, but we are trying to get funding to build a 3-D model for this.

I know the Corps has done a similar thing in the Mississippi

River. If it is so—I won’t go into all of the other theorems about

why the lake levels do fluctuate, but do you think if we were able

to get the 3-D model and show that theorem is correct, that model

would have some impact on FEMA and the flood insurance rates

for the entire region here?

Colonel LAUZON. Congresswoman, good question. The study that

you are referring to is, the Upper Lakes Plan Study, and the other

report that you’re referring to is the Bared Report that was commissioned by the Georgian Bay Association with regard to lower

lake levels. In fact, it had—the report stated that increased dredging north of—actually, through the Lake St. Clair or St. Clair River

had an impact on water levels flowing out at a considerable rate

throughout the basin.

That report is under review. There are many aspects of that report that were not discussed. One is static rebounds, because the

lakes were formed on a glacier, the lack of rainfall and precipitation snowpack on Superior. There are many factors that are impacting the water levels, not just the increased dredging.

With regard to your 3-D model, we have a one-dimensional model

right now that we are using. It’s primarily focusing on sediment

transfer. But as you and I spoke earlier, that 3-D model I think

would be very beneficial, not only for the lake levels as determined

by sediment transfer, but also for all aspects of how we determine

flows of water through the basin, where the floods potentially

might happen with greater fidelity. So we welcome that report. I’m

sorry, we welcome that model, if we can get funding. I think we

have authorization but no appropriation, as you are aware. If we

can get that appropriation, that would be very beneficial.

If I can just add one other additional thing with regard to that.

With your leadership, ma’am, the study that you introduced before

52

the House Committee Transportation and Infrastructure, I think

could be also a very good tool that we can use.

As you are aware it did get approved, authorized. That could be

a tool. In fact, I just have some notes here. But it takes a look at—

it takes a look at the Corps to conduct a study for protection, environmental restoration and protection for recreation and related

purposes for the Clinton River and Anchor Bay watershed. So that

would be a great tool as well if we can have—continue to have

Congress’s support to push that forward. I think that would be a

very big benefit to the local communities as well, ma’am.

Mrs. MILLER. I appreciate that.

Ms. Odeshoo, if I could ask you, you testified that you thought—

you were looking at a proposal from FEMA to raise base flood elevations, put levels at about 6 feet above current lake levels in—excuse me, in Lake St. Clair as well, to finish up what Colonel

Lauzon was just mentioning about snow pack up in Lake Superior,

and a number of other factors that go into the dynamics of why

lake levels fluctuate. But for the lake levels to raise 6 feet, what

did you think would actually have to happen to raise a lake level

6 feet?

Ms. ODESHOO. Congresswoman Miller, I don’t know what would

have to happen to raise the lake level 6 feet. I can tell you that

that we do know lake levels are—the Great Lakes levels are cyclical. They have risen tremendously high. Right now they are at a

historic low.

FEMA understands that the issue right now, because the lake

levels are low, FEMA’s responsibility under the National Flood Insurance Program is to consider the actual risk. And there is an actual risk if those lake levels go up, and it’s expected they will go

up.

Mrs. MILLER. You know, we were also talking about some of the

various factors that impact, and I know, perhaps, FEMA doesn’t

take this into consideration, but I guess I can ask you whether or

not you think you might. For instance, talking about wave run-up

and some of the different things that are not considered; the Coast

Guard, I think is a doing an extraordinary job now of really doing

some of the ice cutting capabilities that they have along the St.

Clair River. We see them out during the year.

Do you use any of those kinds of factors when you think about

raising the base of the flood elevation either?

Ms. ODESHOO. We use the best data that is available to us. And

right now the best data is that available to us is the 1988 and 1989

Corps studies. I need to emphasize as strongly as I can that FEMA

will accept and consider any technical, scientific or any other data

that is provided to us. And it’s very important that if there is data

out there, that we need to consider that it be provided to us.

Mrs. MILLER. Senator Gilbert, if a company, an insurance company that is licensed to do business in the State of Michigan, AAA,

or State Farm, or one of the larger insurance agencies, if a situation or a scenario was brought forward to you, or to the insurance

commissioner, some of the details and facts that have been pointed

out to us today about the difference in the amount of claims that

are being paid out as opposed to the amount of premiums that are

being paid in by a group of the insured.

53

What do you think the response from the State officials would to

be a private company having this?

Mr. GILBERT. Well, I see a great disparity between premiums

and claims because of the regulatory body we have here in the

State of Michigan. Those premiums will be rolled back and I assume since that has not happened necessarily since I’ve been in the

legislature that perhaps some money would be refunded to those

payment premiums. I think that points out very clearly what’s

wrong with this program, that those of us here are very little risk

have been confronted with additional insurance premiums by increasing the flood zone.

And, again, I think the fact—I don’t believe there is anybody on

the Federal level, other than congressional oversight, that is regulating this particular federally agency so—but at the State level,

there’s mechanisms to correct that.

Mrs. MILLER. Ms. Odeshoo, I’m not certain whether any particular State has ever opted out of the Federal Flood Insurance Program. I’m not sure that we in Michigan are prepared to do that either, although I will say it’s an option that we have had a lot of

discussion on and are exploring. And part of the purpose of this

hearing here today is for us to continue to get input and determine

whether or not we would want to make a recommendation like that

to our State Senator, make a recommendation like that to the

State.

Are you aware of any other States that have opted out, and if

I could, I don’t know if you can answer this question, but if a State

was to opt out of the Flood Insurance Program, and perhaps selfinsure, would that preclude the State from availing itself of other

Federal disaster moneys? I don’t know if you could answer that

question.

First of all, if you are aware of any other States that have opted

out or are considering opting out? Again, since this is happening

nationwide. I know I have talked to some of my colleagues in the

coastal States, North Carolina, Florida, have seen similar articles

that we have seen in our Detroit papers are being written by other

areas as well as this remapping process is happening nationwide.

Ms. ODESHOO. One moment.

Mrs. MILLER. If you would like to ask her to come up to the table

to testify.

Ms. ODESHOO. She didn’t swear herself in. I think she can help

me with this. There have never been States that opted out of the

program. There have been communities that have opted out in

terms of self-insurance. That would only apply to State agencies.

Self-insurance would not apply to individual homeowners.

Our concern with any community opting out of the program, I’m

sure you are very well aware of repercussions of that, just to name

a few things. Flood insurance will no longer be available and no

Federal grants or loans for building in the identified areas. Disaster assistance would be omitted, except in the case of emergencies

and temporary housing and that is a huge issue right there in

terms of not being able to get certain kind of disaster assistance.

Federal mortgage insurance requires flood insurance. If flood insurance is unavailable, Federal mortgage insurance through the FHA,

VA, Farmers Home, others, would not be available.

54

I would advise communities to be very, very cautious about opting out of the Flood Insurance Program because of many things

that would become—many types of assistance that would become

unavailable to them.

Mrs. MILLER. Thank you.

Just a final question before I turn to my colleague, Representative Turner, for his questions as well.

I would like to ask the supervisor, since we were both supervisors in 1986 when we had the high water, I know the kinds of

things we were putting in place in Macomb County, and some of

the areas. I know it was happening all the way up the shoreline.

What kinds of things have happened in Clay Township, just as example for—as you have done your planning, as people have come

in to even putting on additions onto their homes or raising elevations for new building, is there much more cognizance of highwater levels and what kind of negative impact? If you could talk

from a local perspective about that.

Mr. MANOS. I think the Corps of Engineers should recognize how

many thousands and thousands of seawalls have been put into

service that are elevated above the 500 or 100-year floodplain and

what effect they would have over the years, permits had to be

granted in the floodplain area to fill in properties. Those things

have all been done in this area.

There has been a tremendous amount of effort by the people to

construct at higher levels than what our 100-year floodplain—our

building inspectors told me that they require right now to get that

elevation up. But that was based upon the established level for the

last 27 years that our people have built to.

I have a list, which I have given you in our record that was just

given to me for the Bluewater Isle. They have somewhere around

$165 million worth of structure value alone. Those areas are basically in the B-zone. They were not required and were not restricted

in any way. And a lot of those homes have been built there in the

last 27 years and built according to the rules and regulations applied by the Corps of Engineers and FEMA, and they were not required and they went in and did this and now we are going to come

back and tell them, hey, your house is not conforming, so on, so

forth. We have taken steps. I think it’s part of the reason between

the 1970’s and the 1980’s that were weren’t as many claims that

came through here in the 1980’s than there were, basically, in the

1970’s for the flood damage. And these things are records that are

on file.

I don’t know why we are sitting here right now and we are back

talking about this technical data from the Corps of when the setup and what is happening. That is static level in the lake, and the

Corps knows it as well as I know it. I have gone back and I have

added the data and it’s in those reports.

And what we did also was submitted to me for Bluewater Isle

probably about 20 or 30 LOMAs that have been issued in those

areas over the last several years. Those people now are out of the

floodplain. They are not required to have mortgages. And we have

run those elevations and 85 percent of those people that just got

out are going to be put right back in. And that was verified by our

building department. It doesn’t seem fair. They did whatever they

55

had to do. Evaluate, surveys, etc., and all of a sudden now, we are

going to tell them that 14 inches is going to destroy the LOMAs

you just got.

I don’t know how we can stand on something that is 27 years old,

that we have allowed people to build in those areas and now we

are not protecting the shoreline at all. We should have protected

the shoreline if we were going to do that some–27 years ago, when

the Corps said they had this technical data and they held it in

their pockets when we didn’t have funds to implement it.

Wait a minute, you put a heck of an economic situation on to the

poor homeowner that maybe just met a base—just basely qualified

for that mortgage.

I have talked to some of the people from our local banks and they

tell me flat out, some people barely make it, and they have a mortgage and they are not in a floodplain. They were told they weren’t

in it. Just going along fine. All of a sudden now, this 14-inch elevation will change that and they will now be required to come up

with this extra money to pay for the flood insurance and I, again,

don’t believe there is justification. And that’s what we have done

locally to do that, but as far as—that is an issue that can open the

door, and I would be happy to do that at another time with the

Corps of Engineers because I understand what happens at the static level and IJC studies will relate to that. They don’t want to

admit it, but it isn’t the Corps of Engineers that controls anything

in the Great Lakes. It’s the International Joint Commission. They

control how much water, how many gates are open up in Lake Superior, what the flow will be coming down this way. And in 1985,

in November I believe it was, they opened up everything that they

had up there. There was an unprecedented amount of water. I believe it was 136,000 feet of cubic water a second that came down

into this basin.

In the lower end, if they remember, perhaps they forgot, but they

shot one of the locks down in the Whelan Canal. At the same time

that water was coming down, they did some adjusting on the Detroit—compensating works down in Livingstone Channel. They

added another, I believe, 2 feet onto that 2,000-foot wall to further

restrict the water, keeping it up into our basin. Those are facts

that they can’t deny.

I have a picture of a barge that was left in Lake Erie for 2 years

that was sunk, and they didn’t get it out of there. And they can

tell you how many inches it raised and backed up the water into

your system.

All we are saying is there is extenuating circumstances that happened to bring those waters as high as they were. And then we

have a little wind set-up, or something else, in that static level, and

we are not taking into consideration the new studies that deal with

consumptive use in the last 20 years, I believe, is almost equivalent

of what goes out of the Whelan Canal.

Mrs. MILLER. All right. Thank you very much, Supervisor Manos.

We appreciate that information and I turn to my colleague, Representative Turner, for his line of questioning for the witnesses.

Mr. TURNER. Thank you very much. I want to thank you again

for holding this hearing and the importance of diving into this

issue, looking at the data points, what is the impact economically

56

on the local community, and how are these programs working and

how are they serving.

I note from the information that you have given me that the impact on Ohio, as in Michigan, is significant. Total premiums paid

in Ohio from the period you have identified from 1978 to 2002 is

$204 million. The payments received were $118 million. The total

net benefit is a negative $85 million compared to—you were identifying Michigan’s negatives as $120 million. Premiums in Michigan average $257. Premiums in Ohio average $259. The issues appear to be very similar of the net donor State

status that we have both with Ohio and Michigan.

You have given me the numbers from my district itself. Here in

St. Clair County, you have 1,800 total policies in force which of

course increases if the remapping program goes forward.

In the 3rd District of Ohio, which represents four counties that

I represent, we have 2,500 policies in effect. It’s certainly an issue

that has great ramification beyond this local area.

The type of testimony you are receiving is the type of testimony

nationally that can be used to raise the types of questions that we

need in order to be able to make decisions as to how these programs should go forward.

Ms. Odeshoo, I have a question for you, and I also first want to

make a positive statement about FEMA. For an organization that

has received such negative scrutiny as a result of its lack of most

recent performance, we all do know that FEMA has been an organization in the past that has operated with the highest intent of

making certain that people are safe and that it has personnel that

are focused in responding to emergencies.

It’s certainly unfortunate the agency has come under such a

high-level of scrutiny with the lack of performance that we saw

with Katrina and Rita.

But I’m assuming that with all organizations that come on to a

critical point, we look only to an increase in emergency management response that we learned from this process and the agency

can be improved. So I do want to thank you for your many years

of services and for that of FEMA.

I do want to ask you—an opportunity to answer a positive question, even though we see this data information and its impact locally, and the negative impacts that it can have, certainly there are

some positive aspects of having flood insurance and you highlighted

this a little bit in your opening statement. I would like to give you

an opportunity to reflect on that again.

I will give you a scenario: if I’m an individual that lived across

the street from someone and I am not considered to be in the flood

area and my neighbor across the street is considered to be in a

flood area, if a flooding situation should occur, could you please tell

me what the impact would be on me and what the impact would

be on my neighbor?

Ms. ODESHOO. Thank you very much, Representative Turner, for

your nice comments. We don’t get a lot of those lately. So a pat on

the back every so often feels good.

The person that has flood insurance, obviously, will have a lot

more benefit than the person who does not, because not every flood

disaster, in fact the majority of flooding does not result in a FedVerDate 11-MAY-2000 10:59 Jan 29, 2007 Jkt 000000 PO 00000 Frm 00060 Fmt 6633 Sfmt 6633 D:\DOCS\31182.TXT HGOVREF1 PsN: HGOVREF1
57

eral declaration. So the only assistance that many people will get

is their flood insurance policies.

So if you are the person living across the street from the person

that has flood insurance and both of you flood, obviously the person

with the flood insurance policy is at the greater advantage.

I might also point out to you that you, being that person across

the street who doesn’t have flood insurance, could still purchase

flood insurance. Just because you are not designated in an identified floodplain, you can purchase flood insurance at the lower premium because the risk is lower.

One thing that I would like to clarify in terms of those 1988 and

1989 studies, I need to make it very clear that local communities

were sent a letter by FEMA with copies of those studies. And although we didn’t have the money at the time to revise the maps,

the communities were advised to use that current information in

their future—you know, in all future floodplain-management decisions. I want to clarify that. This is a very important point to

make.

Did I answer your question? Is there anything further?

Mr. TURNER. Yes, you did. In looking at the numbers we were

provided, clearly the flood insurance program appears to be broken

and is not set up to cover its costs. From the information we have

here, Hurricanes Rita and Katrina alone will result in an estimated $23 billion in payments. For the entire United States, 2006

premiums total just over $2.2 billion.

Obviously, if we both require that premium be paid in and then

send the difference of the bill to the general taxpayers, those that

are both paying premiums and don’t have a loss are paying twice.

They are paying both, one, for the premiums they are being hit

with and where they have not had a loss and, second, when the

overruns are sent to the general taxpayers at large.

I think that there is an issue of equity and fairness that Chairman Miller has certainly identified. I don’t think we would expect—in any insurance program, there would be hopes that the

premiums paid in exceed the losses. But here we have a situation

where the losses exceed the premiums paid in, except for in certain

local or geographic areas that are bearing the weight. That seems

to me to be unfair.

Are you aware of any reviews that are occurring in FEMA, as in

looking at the issue of the failure of the program to pay for itself,

and the inequities that are occurring between States?

Ms. ODESHOO. I’m sorry, I really don’t have that information

available. But I would be happy to look into that and get back to

you for the record.

My guess is, yes, that’s being very closely looked at. And I recognize—we all recognize the fact that—I know the numbers are clear,

we are not denying the numbers, Michigan has paid more into the

flood insurance program than they have gotten back, at least to

this point.

I think I can make an analogy here. First of all, this is not revenue producing, most insurance companies are not.

I think I can make a similar analogy just using myself, or yourself. I’m betting that you have paid way more into your homeVerDate 11-MAY-2000 10:59 Jan 29, 2007 Jkt 000000 PO 00000 Frm 00061 Fmt 6633 Sfmt 6633 D:\DOCS\31182.TXT HGOVREF1 PsN: HGOVREF1
58

owners than you have taken out of it. The same thing for your car

insurance.

We don’t need the insurance when we don’t need it but when we

do, hopefully it’s there to pay our claims.

I feel very strongly the risk here in Michigan, it’s just a matter

of time until there is flooding here and those people that have paid

the premiums in the National Flood Insurance Program will get

back as much or more, perhaps, as they paid in. It’s just a matter

of time, it happens that way.

I don’t know that for a fact, but I believe in the case of Louisiana, they—up until Katrina, they paid way more into the Flood Insurance Program than they ever got back in claims. So that’s something to think about as you consider this issue. Excuse me, it was

New Orleans, it was the city of New Orleans, not the State.

Mr. TURNER. The State had not—Louisiana was not a donor

State up until at that point?

Ms. ODESHOO. I don’t believe so, the city was. I misspoke.

Mr. TURNER. The analogy there doesn’t fit with homeowner’s insurance because with homeowner’s insurance, I pay with an expectation if I have a loss, then I will receive a claim, but I expect that

the total amount of premium that I’m paying will be managed by

the insurance company to cover the loss spread across everyone.

In this instance, only a small group of people are paying premiums. The insurance company here runs into the red and then

sends the bill to everyone. That isn’t the same analogy with homeowner’s insurance. But I can understand certainly that you pay a

premium and not everyone experiences a loss.

But at the same time, this is a program that clearly is not being

run equitably.

Colonel Lauzon, my next question is for you. In looking at the

information we have, it talks about base level being raised, and in

your testimony, you talk about the wind-generated waves, the wave

run-up caused by the storms. I know we are not getting into technical discussion here, but that intrigued me. It sounds like even if

you add in the issue of the new understanding of wave run-up and

wind-generated waves, you still have a substantial increase in the

overall base level that is expected of the flood level; is that correct?

Colonel LAUZON. Yes, sir. It’s the same study. But a good point

to point out, in a 1977 study, there was only 22 years of data. We

produced the data for a frequency analysis and brought in the 1988

data, which had 34 years. That’s why you saw the growth because

the spike was clearly in 1986, and the spike in 1986 went up to—

it actually went up to a—in 1986 it put the IGLD over 577, back

in 1986.

So I think the 1977 report was accurate with the data that we

had up to that point. It’s hard to dispute the fact that in 1986 we

had some considerable water levels and some serious flooding.

That’s the difference there between those two.

Mr. TURNER. Senator Gilbert, Chairman Miller made an excellent point on the economic impact of the loss of being a donor State

and Mr. Manos did a great description of impact on individuals,

their individual budget of receiving a bill, specifically of people that

had built in an area that was not a flood area but now are being

placed in a flood area.

59

Chairman Miller has made the point of Michigan being a donor State of $120 million having been—having left the State compared

with the numbers that she’s provided to me, in Ohio it’s a negative

net of $85 million.

I was wondering if you might talk for a moment about the issue

of—it seems to me this is greater than just an issue of economic

loss of net dollars of the premiums and even a greater issue than

just those individuals who currently live in flood areas. Doesn’t this

have a negative impact overall on development? As we all compete

for economic dollars and investment in our communities, how does

that impact the overall area’s ability to attract investment?

Mr. GILBERT. Anytime you raise the cost of people moving, in

this case I think—economic development, that certainly has a negative aspect. If you look at Michigan—49 States are doing quite well.

We are doing quite poorly exactly.

And I think every little area we can help improve and make

Michigan more attractive is very important. This is an area that

I think needs to be addressed as well. So, I mean, I think that’s

what we need to do is look at this and I think the case has been

made that this is patently unfair, not only to individuals, but to the

State of Michigan. And if we can correct this, this will certainly encourage economic development in the area and the State in general.

Mrs. MILLER. Thank you. I certainly want to thank our first

panel of witnesses. We are going to have a second panel. And I

would say, as well, I also want to thank FEMA.

I know you are under the gun here today. You are used to that.

You have done great work in the past. I think as we all watched

Katrina—and I also wanted to mention that, Colonel Lauzon, I

know you spent quite a bit of time down with Katrina and he came

back and told us stories of being there. It’s difficult for any of us—

unless you have been there. I have not been there personally, but

I have heard many stories of colleagues, Members of Congress that

represent that area, people that have been down there—I know the

Governor of Mississippi, for instance, was telling me 67,000 homes

in Mississippi were gone. If you can even think about. It’s very difficult for us to comprehend how devastating all of that was.

On the other hand, I will also say this, I don’t mean not to be

compassionate but, in Michigan, we look down at the water. We

don’t look up at the water. As the levees—and amount of money

that we are going to be undertaking as a Nation to rebuild those

levees, and I know the Corps of Engineers is doing what they can,

but sometimes, God, I think, will not allow man to do certain

things to overcome his will and mother nature.

And I hope, as we have investing as a Nation in rebuilding in

the Gulf, that the next generation there will not curse us for allowing them to live under the sea level there. But at any rate, we are

concerned—we have to approach those kinds of things. I think, in

my approach, and I think most Members of Congress, we approach

that with our hearts but we also have to approach it with our

heads.

As we look at the inequities that we see in the Flood Insurance

Program, many of us feel that we are being billed for somebody’s

choice to live looking up at the water.

60

When you see the city of New Orleans only about 20 percent—

I’m not sure of the correct figure, 20 percent of the structures in

the city of New Orleans didn’t have flood insurance, because the

other 80 percent wouldn’t take the risk, yet we are paying for the

risk. I think, again, it’s an issue of basic fairness.

At this time, we will take a very brief recess. We want to put

the second panel in place, and we will excuse the first panel and

appreciate all of your testimony this morning.

Thank you very much.

[Recess.]

Mrs. MILLER. We will call the second panel, subcommittee hearing back to report.

The first witness is Chris Wilson, who has been the city manager

for Algonac since 2004. And prior to coming to Algonac, he worked

for the city of Grosse Pointe. He has a Bachelor’s degree in geography, a Master’s degree in political science and also a public administration Master’s from Wayne State University.

We are certainly delighted to have you with us and the floor is

yours. We look forward to your testimony.

STATEMENTS OF CHRIS WILSON, CITY MANAGER OF

ALGONAC; MANFRED (WHITEY) SIMON, PRESIDENT,

HARSENS ISLAND, ST. CLAIR FLATS ASSOCIATION; AND

JOHN COLLISON, OWNER, STERLING REAL ESTATE CO., REPRESENTING MICHIGAN ASSOCIATION OF REALTORS

STATEMENT OF CHRIS WILSON

Mr. WILSON. I would like to thank Madame Chairperson Miller

and Representative Turner for allowing——

Mrs. MILLER. You can use the mic.

Mr. WILSON. Given the significant impact these proposed measures will have, not only on Algonac or St. Clair County, but eventually the entire State of Michigan, as a matter of basic equity and

fairness it is critical that specific issues be considered before such

action is taken.

Primary among these considerations should be whether the economic demands being placed on property owners by the Federal

Government through compulsory purchase of flood insurance is an

adequate and fair representation of the corresponding level of economic risk posed by their decision to locate in a given area. It is

the position of the city of Algonac that any increase in current

floodplain levels would cause undue and unjustifiable economic

harm to the city and its residents.

Undue hardships that would be placed on the city of Algonac as

a municipality would be related but not confined to its impact on

current building codes. An increase in base flood elevation would

not only impact residents and developers seeking to build new

structures in the city, existing structures that were built in accordance with current elevation levels, levels that were developed, approved and sanctioned by the Corps of Engineers, would be considered nonconforming. This would make additions to or extensive rehabilitation of such properties more expensive and less attractive

to home and business owners. I would like to remind the committee

that it will become the responsibility of the city of Algonac, as well

61

as all other municipalities across the State of Michigan to enforce

these new regulations. I would not wish upon any building or zoning official the day which they must inform an enterprising small

business owner or a father of a growing family of the hardships

now enforced upon them because their property, which they took

care to develop according to guidelines established by the Federal

Government through the Corps of Engineers, is now labeled as

nonconforming. Again, it is the position of the city of Algonac that

in accordance with principles of basic and fundamental fairness,

such measures be taken when, and only when, clear and irrefutable

evidence exists providing adequate justification.

Economic hardships will not be limited to owners of new or remodeled structures. Algonac has a high number of senior citizens.

These individuals are likely to own their own home. Further, this

structure is likely to be the most valuable asset in their possession.

By adjusting the base flood elevation level and classifying their

homes as nonconforming, FEMA will be adversely impacting the

single most valuable possession of thousands of elderly homeowners throughout Michigan. The impact of this is little different

than if the Federal Government were to suddenly withdraw a portion of a worker’s 401(k) portfolio. Again, it is the position of the

city of Algonac that before such actions are taken, FEMA must assure all involved that the economic justifications exist to do so.

As to whether such justification currently exists, significant work

has been performed by local officials to analyze the risk posed by

flooding in the greater Algonac area. Further analysis was performed to determine if this risk justifies any change in the manner

and amount of compensation by local property owners. Thorough

analysis of the best available data justifies a lessening of such burdens as opposed to increasing them. This is not to argue with the

scientific principles behind the Corps’ analysis of base flood elevations nor the principle behind the establishment of a floodplain.

The concept of personal responsibility demands that individuals

who choose to locate in a particular area where flooding poses a

risk, pay a fair and reasonable amount of compensation to protect

themselves and others against this risk. However, while the science

behind the establishment of base flood elevations is sound, it does

appear that FEMA is using good science to implement bad policy.

The tremendous discrepancies between the amount of policy premiums paid by residents of Michigan for FEMA flood insurance

and the corresponding amount of flood-related claims points strongly to such a policy failure. In particular, we feel that FEMA should

more closely evaluate and analyze the risk posed by homes that are

constructed in an area that is protected by a levee as opposed to

those that have no such protection. In the calculation of a level of

a 100-year floodplain, the goal is to appropriately designate such

areas that have a 1 percent chance each year of being inundated

by an adjacent body of water. Current base flood elevation levels

may accurately reflect such levels of risk. However, it is the position of the city of Algonac that the manner in which these measurements are utilized by FEMA in establishing premium rates does

not accurately take into account the fundamental differences in

economic risk posed by the construction of structures in areas protected by levees.

62

While it is possible that areas around the Great Lakes will flood,

it is inevitable that structures protected by a levee will flood. Further, the nature and scope of flooding that occurs in areas behind

a levee is far greater and more severe than what would occur in

an area where no levees exist. By treating both areas with and

without levees relatively equally when it comes to the calculation

of flood insurance premiums, FEMA is creating a situation where

a significant portion of property owners are paying rates far higher

than their accompanying level of risk would demand. Accordingly,

others with a high risk of economic loss from flooding in terms of

quantity and scope, are not paying their share relative to their

level of risk. When the providers of an essential or required product in the private sector unfairly manipulate the price of their

goods or services to the detriment of the greater good, we call it

price-gouging. I am not sure if such a label is appropriate when the

same activity is carried out by a Federal agency. What I am certain

of is that both practices are equally reprehensible and both should

be prevented whenever possible.

I would like to ask the committee to seriously consider all the adverse impacts that an increase in the current base flood elevation

will have on residents of Algonac and the surrounding areas. Before any such attempts as the proposed efforts at ecological redlining are attempted, it is imperative the Congress use its oversight

function to ensure that such actions are fair, equitable and necessary. We feel that close examination of the greater Algonac area

will raise significant questions as to the fairness, equity and necessity of such actions. Thank you.

Mrs. MILLER. Thank you very much. We appreciate that.

[The prepared statement of Mr. Wilson follows:]

63

64

65

66

67

Mrs. MILLER. Our next witness is Whitey Simon, president of the

Harsens Island St. Clair Flats Association. For 30 years Mr. Simon

was a staff development engineer for General Motors. He was also

a software engineer at the Bendix Industrial Controls Division and

field engineer for the missile division as well. He’s also served our

Nation proudly in the armed services.

From the mid to late 1950’s, he was the U.S. Air Force Staff Sergeant, where he was an instrument flight trainer specialist, sort of

a remarkable career, Mr. Simon, and today you are talking about

a subject that strays a bit from that. I know you have a lot to tell

us about. We look forward to your testimony, sir.

STATEMENT OF MANFRED SIMON

Mr. SIMON. Thank you, Chairman Miller. And first of all, thank

you for allowing me to speak on this matter that will affect all of

us. More importantly, I’m very glad and thankful that you came

down to this area to hear from people like ourselves.

I will not belabor the points that you so eloquently made regarding the economic impact. Our Senator and Mr. Manos and Mr. Wilson, again, indicated what will happen economically to this area.

So I would rather look at what I heard here from FEMA and from

the Corps.

I have also heard from both of these organizations that the IJC

study may or may not be germane. What I would like to review for

you is the fact that the IJC study clearly indicated that several

measures which have been identified by the Joint Study Commission that could mitigate these high levels were never implemented.

And the reason they were not implemented was that it would cause

an economic hardship of some agency activity or individuals.

Well, FEMA has decided who will bear the burden and the hardship. Namely, the taxpayers and homeowners of this area.

Additionally, the young lady from FEMA indicated that we are

interested in risk management, and the risk models clearly indicate that we are supposed to be paying high premiums.

Unfortunately, if you also look at numbers that indicate what the

risks have been over the past few years, it clearly shows that we

pay a disproportionate amount of premiums as to the benefits that

accrue to us.

Second, she indicated that she really didn’t want to hear perhaps

about our economic hardships but would be only too happy to look

at scientific data.

Well, why in the world won’t you, the subcommittee, please fund

FEMA to go and look at the data to support our contention that

we probably will not see another high level as we have seen before.

Similarly, the Corps of Engineers clearly indicated that there are

techniques and technologies available that would improve their

ability to predict what might happen and certainly we all know—

I hope we all know studies are designed quite often to yield a desired result. That’s No. 1.

And No. 2, quite often the data that is collected and used can

then support the study. And certainly when looking at the numbers, it does not appear that the models have been validated by recent 1980, 1990 and 2000 empirical data to give us who will bear

68

the burden, the added confidence that FEMA as an agency is, in

fact, also looking out for our benefits.

I thank you very much for allowing me to address those points

and obviously my letter to you in its entirety is a part of this

record. Thank you.

Mrs. MILLER. Thank you. Without objection, we will enter your

letter into the congressional record as well. Mr. Simon, we appreciate that.

[The prepared statement of Mr. Simon follows:]

69

70

71

72

73

Mrs. MILLER. And our final witness today is John Collison, who

is representing the Michigan Association of Realtors.

Mr. Collison has been licensed as a real estate salesperson for 21

years, as a broker for 17 years and as an appraiser for 14 years.

He is currently the owner and broker of Sterling Real Estate Co.

and he is an owner of Aarmont Appraisal Co. and Group as well.

He also has served on the Board of Directors for the National Association of Relators and, of course, the Michigan Associational of

Relators. He also serves on the board of directors for the Metropolitan Association of Relators and is the chairperson of the Michigan

Council of Real Estate Appraisers, which is appraisal section of the

Michigan Association of Realtors.

We appreciate Mr. Collison coming today. I might add as well,

he also grew up on the banks of the Clinton River and has watched

water levels fluctuate for many, many years, his entire life. I appreciate you coming, Mr. Collison, and appreciate your testimony,

sir.

STATEMENT OF JOHN COLLISON

Mr. COLLISON. Thank you, Chairman Miller, and I like to thank

you Representative Turner for this opportunity to—what I’m going

to basically speak about is two issues that were sort of alluded to,

on but not really totally described, and this is the cost to the owner

or the property owner above and beyond the cost of the FEMA insurance.

Obviously, if someone is in a flood zone and they need to have

FEMA insurance, it’s a good investment and it’s there as a security

for the lender to make sure the house doesn’t float away and they

lose their investment.

However, if it’s just there as an arbitrary number, the elevation,

that really isn’t serving its purpose.

The State of Michigan is a seller disclosure State, where if you

own a piece of property and you want to sell your house and a majority of the States in the United States—I think if not all of them,

probably at least 90 percent have disclosure requirements. If you

are owner of a property and you want to sell it, you have to tell

the potential buyer the condition of the property.

In the Michigan seller disclosure statement, it has two questions

regarding the septic field. And one of things, speaking with Mr.

Manos, and getting information from Clay Township, a number of

septic fields that were built in the 500-year plain will be out of

compliance and nonconforming if the change goes into effect and—

on the seller disclosure statement, it asks two questions about the

septic tank and drain field. First of all, if it’s working, which no

matter what the floodplain says, if it working, it’s working.

However, under No. 5, question No. 5, it also says, the septic

tanks and drain field condition, if known.

If the homeowner knows, and I would assume pretty much everybody here would know if their septic field was built for the 500-

year plain or the 100-year plain, if they know it’s out of compliance,

they have to state that in the seller disclosure statement.

The typical buyer seeing that, and I can’t guarantee this will

happen all of the time, but they probably will request—they would

probably back out of the transaction or request that it be upgraded

74

to compliance. That’s the normal thing that happens in a real estate transaction.

The seller states: I have this house but it’s not really complying

in what is happening in the current market. The buyer will say,

yes, that’s fine. I will still pay the same amount of money I’m going

to pay you and bring it into compliance please. Now depending on

the situation, that could run into thousands of dollars in costs.

The second area I’m going to address as an appraiser, I won’t

make any statement as far as market value because each property

is unique, every situation is different. I can’t say with any kind of

accuracy whether the change will affect the market value of any

particular piece of property, however, I can say that—I have included the most up to date, what they call uniform residential appraisal report in my written testimony. It’s the Fannie Mae form.

It’s typically used for single-family or residential appraisals.

Under the section improvements they asked me the question as

a appraiser, are there any physical deficiencies or adverse condition

that affect the livability, soundness or structural integrity of the

property?

And, yes, is no problem—I mean, yes, is a problem. If I hit no,

there is no problem, but if I hit yes, I have to describe the situation.

If I know as an appraiser that any part of property is not built

according—not according to current building codes, I have to state

that in the report in that area.

An example would be, say, a home built in 1920 that has steam

heat, maybe they have asbestos wrapping insulating the pipes. I

look in the basement, asbestos is only a problem if it’s deteriorating. It’s all wrapped tight and covered, it’s not problem, I still have

to state that in the report, there appears to be asbestos in the

house.

If I know that for a fact that the septic field is out of compliance,

whether it’s operable or not, I have to state that in the report. Now

this would be with a purchase or possibly a refinance, anybody

looking to get a loan, it may or may not be federally insured.

The question would be, what happens then? That would be beyond my scope, that would be the bankers, underwriters and people

like that would talk about. But I can tell you from experience that

normally when properties are out of compliance, it does—it may or

may not adversely affect the person looking for refinancing or just

purchasing a home, and this has nothing to do with the cost of insurance. It has to do with the cost of bringing the property into

compliance.

One other example quickly before I finish, the example would be

if you have a well—you have a private well, but there is city water

at the street. Quite often the mortgage company will require purchaser to tie—even though the well is perfectly fine, there is no

problem with the water, they will require someone, normally the

purchaser, to pay the tie-in fees, pay the cost for putting the pipe,

and all that, just because it makes the home more secure. They

may or may not require someone to upgrade their septic system in

the same way for the loan.

Or they may deny the loan or charge higher interest or do any

number of things. It depends on the underwriting decision and

75

guidelines of a particular lender. That’s basically what I want to

say. Thank you very much.

[The prepared statement of Mr. Collison follows:]

76

77

78

79

80

81

82

83

84

85

Mrs. MILLER. Thank you. I appreciate all of your testimonies

here today. Because of the airplane schedule, I’m going to ask Representative Turner to ask his question at this time.

Mr. TURNER. Again, I want to thank you for an excellent hearing,

both the first panel and second panel and certainly the community

participation you have. This is certainly a great hearing you have

put together focusing on an issue that is truly important.

So many times when we talk about FEMA and their performance, we talk about the issue of emergency preparedness but this

is one that goes to economics of so many communities.

The first panel, the Senator who was here testified as to the economic impact but, certainly, in this panel we have heard the additional economic impacts beyond just the premium, beyond just the

fact that people will look to an area for investment that does not

have the addition of this requirement.

The upgrade that might be required is certainly an additional

economic burden that I think many times people don’t consider.

One of the things I would like to focus on, and all of the briefings

that we received, and I hear it in each of the statements that we’re

hearing today is that part of, I think, the response to this, and the

concern is, that this shifts it to a mandatory program, whereas people in the 500-year area still have the option of participating.

I would like, if you would, to speak to each of you for a moment

about the fact that individuals do have the option and the difference between the mandatory designation and the option availability to—if anyone would like to comment on that. Mr. Simon.

Mr. SIMON. I used to pay flood insurance until I finally had to

upgrade my septic system, at which time I needed an elevation certificate. That elevation certificate took me out of the 100-year zone

and put me above the current level. At that time I was no longer

required to pay flood insurance. Until that time, because of my

lender’s desire not to lose my house, I had to pay this insurance

and started to increase to the numbers that you see out here as

stated as annual premiums.

Additionally, however, I now do not have it because I’m above.

My son just moved down the street. As a requirement of his mortgage, he has to have flood insurance. If at any time the lender

thinks that the purchaser has defaulted on that payment, he gets

a nice letter from the bank indicating that they have initiated the

purchase of flood insurance for him and unless he can demonstrate

that he has flood insurance, they will take care of it.

My son received a statement for $3,200 and some dollars in flood

insurance. And when he contacted his insurance agent, he obviously took care of it immediately and it was reduced to under $300.

So there are some of the requirements that hurt us tremendously

economically when you fall into that arena where you have to—and

my son can hardly wait until he can do away with that. Thank you.

Mr. TURNER. You were talking about the upgrades, the difference

between 500-year and 100-year. In 500-year you still had the option of having the insurance and at the same time not undertaking

all of the upgrades, is that——

Mr. COLLISON. I don’t really want to speak on requirements. As

an appraiser and a real estate broker, I deal with both companies

86

that are covered by federally insured loans and private investors,

and everybody has different guidelines.

What Fannie Mae guidelines, federally insured or Freddie Mac,

they have the guidelines where it might be optional, where a private investor, you know, can do whatever they want. It’s their

money. And there are a number of people more and more today—

I’m sure you hear on the radio all the time, advertisements for

mortgage companies. We are the best mortgage company. We do

did this. We do that.

A lot of those mortgage companies are not federally funded or

backed. They are just private investors selling bonds on the market. They are companies that are using private money and they

have their own guidelines and every company has different guidelines.

Mr. TURNER. Chairman Miller, I want to thank you for highlighting this important issue and for having me. It was great being

here. You do have a beautiful area and I can see why you are so

proud.

Mrs. MILLER. Thank you very much. Have a safe flight and we’ll

see you in session tomorrow in Washington, DC.

Let the Representative excuse himself, and I have a couple more

questions for the witnesses before we conclude here.

Mr. Collison, I’m aware that the National Association of Relators

has been quite critical of FEMA’s management of the Flood Insurance Program. Do you have any thoughts about what they might

do to make it more actuarially sound or to make it more fair, particularly for States like Michigan?

As been pointed out, it’s not just Michigan. I think that’s perhaps

why your national association has made some comments about it.

If you think the entire Great Lakes basin, Representative Turner

represented Ohio but I have heard from others of my colleagues

from New York and Illinois and Minnesota, etc., other States as

well, do you have any comment on what the national association’s

position has been?

Mr. COLLISON. They have been supportive of the remapping because the old maps are quite frankly, you know, they are completely, totally out of date. But, again, they want to make sure

that, you know, things are done in a fair and equitable manner.

One of the things—I mean, one of my personal concerns is that

so much of the flooding that we might experience in the Great

Lakes States is controlled.

I mean, as was stated in earlier testimony, it depends how much

water is—if somebody wants to let more water out of Lane Superior, we flood down here. Or if they to want to tie it up farther

down the line, we back up here. And where I think the intent of

FEMA was, to me, as an individual, is to prevent—insure people

against natural disasters. When you have massive flooding on the

Mississippi River and it overflows and goes over the levees when

it’s below sea level or below river level. They artificially created

land where it wasn’t before.

And here in Michigan, what happens is a Federal agency or some

government group decides, well, we are going to turn off the water

here or there, that creates a flood situation as opposed to natural

87

occurrence. I think FEMA doesn’t consider that. And I think it’s

definitely—that’s their main problem that I have with them.

Mrs. MILLER. Mr. Wilson, can you talk specifically about what

you might envision as city engineer here for the Township of Clay,

or all the municipalities I suppose along here, if FEMA’s proposal

is actually finalized, what kind of things you might see happening

here.

Mr. WILSON. Chairman Miller, as I alluded to in my comments,

it is ultimately the responsibility of the municipalities to enforce

the regulations that are passed down from FEMA and Corps of Engineers.

I have great sympathy for the building inspectors who will be

forced now to visit people’s properties. Somebody wants to put in,

say, an addition to their house, and they did take care to build

their property in accordance with the base elevation level that has

been in place, Mr. Manos said, for over 271⁄2 years now. Now we

have to go and tell them their property is not complying, or you’re

going to have to raise your addition higher than the rest of your

house or you aren’t going to be able to do it. All of these regulations

fall back on the municipality to enforce and that is a tremendous

burden and real hidden cost. We have no control over how the base

level elevation is set.

I appreciate the opportunity to testify to bring out the importance of this matter, decisions that are made at levels higher than

the local level, how much of an impact that has upon us, we will

be the ultimate enforcer of that, not the Corps or FEMA. It places

a tremendous burden. Code enforcement and building code enforcement is not the most popular job in the world anyway. We don’t

need any help making ourselves unpopular from outside Federal

agencies.

Mrs. MILLER. I appreciate that having, again, been involved at

the township level for many years. That is absolutely true.

Mr. Simon, I understand you are on the homeowner association—

I don’t know if it’s the larger but certainly one of the largest homeowner associations——

Mr. SIMON. We claim to.

Mrs. MILLER. I believe it to be so because you are under oath.

We will hold you to that.

Have you—as we said, it just doesn’t impact this immediate area,

it’s impacting waterfronts and municipalities and homeowner associations around the basin, all over the Nation. I’m just wondering

if you have had any conversation with some of the other homeowner associations around the area, or wherever, about how it

might impact them.

This is a very vocal group here but it’s not just us, it’s not just

particularly inherent to us. It is impacting other people. Have you

had conversations with other people, other associations?

Mr. SIMON. I have had conversations with individuals that have

properties in other areas along the shoreline of the State but our

real concern has been the item. We are a delta. We understand

that we are surrounded by water but, unfortunately, we also sit in

an area where probably high water that could reach flood stage

level doesn’t impact us until either we got an ice jam or a freighter

88

comes by and churns up the water in addition to that, and those

then are impacts that FEMA does not really insure.

So, our concern is, just that we are, as was indicated by everyone

here, we are only donating money.

I have attempted to find out and nobody apparently keeps

records down to detail how much money has been paid out in ZIP

48028. And I can’t find out. But there are individuals on the island

who claim to have submitted a claim to FEMA and were denied

any payments. So, I don’t know anyone who—even in 1986 did, in

fact, get any payment because the water level only came up to just

below the floor joists.

Mrs. MILLER. Before we conclude here, sometimes I’m not sure

which questions to be asking, and you all have your area of expertise. If there is any questions of myself or the panel has not asked,

if you want to have any other input for the congressional record

here as we take this testimony back to Washington, please feel free

to comment openly if there is something that we need to be made

aware of.

Mr. WILSON. Thank you, Madame Chairman. I did find your comments about the fact here in Michigan we do look down at the

water very insightful. As you begin to analyze the actual levels of

risk that are in effect here in Michigan as opposed to other areas

of the country, our level is quite low. And I alluded to it in my testimony. There needs to be strong consideration by FEMA given to

the nature and scope of flooding that will occur in areas that are

protected by a levee.

If water elevations here—whatever the base level is, assume

house level, that’s eclipsed by 1 foot, you are going to have maybe

6 inches of water in someone’s home.

If a 20-foot levee gets eclipsed by 1 foot, you will have 19 feet

of water in somebody’s home. There is a fundamental difference in

flooding risk in areas that are protected.

I would like the committee to take—and FEMA to take further

care to analyze risk accordingly. Thank you.

Mrs. MILLER. OK. Thank you.

Mr. SIMON. I would only add to that comment, this risk analysis

and the risk model I do not believe has been updated with empirical data and I would like to ask the committee clearly to extend

the time before FEMA makes that decision so that you can include

the latest data, namely the numbers between 1988 and 2006 so

that they become part of both the Corps’ models and FEMA’s models.

Unfortunately, I have seen too many models, and the examples

abound where studies have been used by various agencies, and it’s

in my report to you, where 1 day, we are told smoking is bad for

you. The next day we are told smoking is good for you. One day

we are told the pills are good for you and the next day the pills

are bad. I would request that you appoint someone realistically to

look at and evaluate the studies both of the Corps and the of

FEMA. Thank you.

Mrs. MILLER. Thank you. Mr. Collison.

Mr. COLLISON. I would like to see—my final comment is, I would

like to see FEMA go more to the typical insurance model where the

89

people in the highest risk areas pay the highest premiums and people in the lower risk areas pay lower premiums.

Where we are getting back maybe 10 cents on the dollar, maybe

20 cents on the dollar, possibly just in general the premiums in

this area could be reduced by 80 percent. Then where you have

areas of repetitive loss, every 5 years they have to file a claim, obviously I believe they should be paying greater—it’s just like with

car insurance. If you are in an area where half the people in the

city get their cars stolen, you will pay higher fees than if you are

in an area where it never happens. I think the same model could

be put to the FEMA program.

Mrs. MILLER. I certainly appreciate all of your testimony today.

We know everybody has a busy schedule. Again, we appreciate the

hospitality of Clay Township for hosting the subcommittee today.

It really has been, I thought, very, very interesting testimony. I

have been trying to follow this issue closely. I certainly have

learned a lot today and I have a lot to think about. I know Representative Turner does as well, and we will discuss it with the full

committee when we go back to Washington.

Let me thank my subcommittee staff who orchestrated this entire event, and then put it all together. Erik Glavich was a resident

of Michigan until he moved out to Washington, DC. He had no

trouble coming back for this hearing today. He was happy to come

back to Michigan for today. I appreciate everybody’s attendance

very much, and with that the committee will be adjourned.

[Whereupon, at 11:15 a.m., the subcommittee was adjourned.]

[Additional information submitted for the hearing record follows:]

90

Æ