Flood insurance maps hamper Ocean City condo sales

Listen to this article

Flawed Federal Emergency Management Agency flood insurance maps are putting a damper on Ocean City’s condominium market.

The maps by the agency, which went into effect about a year ago, accidentally placed 15 condominium buildings and one hotel approximately between 93^rd and 123^rd streets in a higher hazard area than other beachfront properties. The issue was caused by FEMA drawing the line for its higher-risk zone in the wrong place along an older dune line closer to the properties.

As a result, flood insurance surged beyond what the condominium associations could afford to pay. Previously it cost about $22,000 a year to insure one of these properties through FEMA. As a result of the change in the flood maps the insurance cost surged to nearly $500,000 a year for the same building.

“All of a sudden people were having loans denied when people were trying to buy condos along the beach because the mortgage companies were saying condos were buying the wrong insurance,” Joe Groves, president of the Delmarva Condominium Manager’s Association, said.

Contrary to popular opinion the owners of these condominiums aren’t extremely wealthy people who can afford to simply pay the increased charges, Groves said. So as a result these buildings can’t sell their condos, creating a drag on the region’s real estate market.

“People can’t buy condos. They can’t buy condos in that area unless they come with cash because nobody will finance it and that’s a problem … if you can’t sell your property it’s worthless because you’re not going to get a lot of owners that are going to bring cash to buy a property,” Groves said.

In the meantime Ocean City is trying to work with the federal government to get the situation corrected as quickly as possible.

Terry McGean, the city’s engineer, said that he is confident that the situation will be fixed, but he acknowledged the process is more complicated and involves more red tape then officials and homeowners would like.

The city is working to send a letter of map revision application and trying to figure out what data the federal government needs as part of that process. The city contends the Army Corps of Engineers already has all the needed data to justify making the requested adjustments. Once the application is submitted — McGean said there’s not a time frame for doing so — it will require a 60-day comment period following the submission.

“Realistically we’re probably talking something like six months [before the maps are altered],” McGean said.

Recently Ocean City’s congressional delegation had started leaning on FEMA to resolve the issue as soon as possible. U.S. Sens. Barbara Mikulski and Ben Cardin sent a letter to FEMA Director Craig Fugate urging the agency to fix the errors in the map quickly.

“This section was mapped incorrectly, and does not follow the line established by the Corps. As a result, these properties’ owners now unfairly face exorbitant high flood insurance costs,” the senators wrote.

But to Groves the entire mess, especially after FEMA initially said it may take more than a year to get maps fixed, is an example of why many people are disillusioned with government.

“That’s why everybody is so upset with our government right now and half the people want to vote for (Democratic presidential candidate) Bernie (Sanders) and the other half want to vote for (presumptive Republican nominee Donald) Trump,” Groves said.