Editorial: Fund Sandy buyouts, not lost causes

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Many New Jersey victims of Superstorm Sandy have been victimized a second time by a dysfunctional, corrupted recovery process that has delayed or denied countless thousands of property owners the aid that should have been coming to them.

We’ve heard plenty of excuses from state and federal officials, and the exploitation has taken many forms. But the main impetus behind the abuses has been a debt-plagued National Flood Insurance Program (NFIP) under the auspices of the Federal Emergency Management Agency (FEMA), and the overly aggressive efforts to rein in that debt.

Instead of sticking it to policyholders, however, officials should be looking at other ways to assist them. Among the possibilities is creating more buyout incentives instead of continually rebuilding in flood plains where future destruction is all but inevitable.

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A new report by the Natural Resources Defense Council reveals that NFIP has been essentially wasting hundreds of millions of dollars to repeatedly repair and rebuild more than 3,000 “severe repetitive loss properties” in New Jersey. Those are properties that since 1978 have received at least four claims of more than $5,000 (with at least two in a 10-year period), or for which two payments exceed the value of the property.

Only Louisiana and Texas rank ahead of New Jersey in the number of these types of properties, which total 30,000 nationwide. New Jersey has accounted for $660 million of the $5 billion in related payments over that time.

The overriding problem is that the NFIP isn’t designed to adapt to buyouts. Instead, claims roll out toward rebuilding and elevation projects, the latter of which are particularly popular along the New Jersey coastline. While many property owners want to stay put regardless of the challenges, reluctant to give up a cherished location or in the belief that they shouldn’t quit the fight, many others are more than willing to take a buyout and move on — if they didn’t have to take a financial bath to do it.

From the government’s perspective, the long-term benefits of buying out flood-prone homes and getting them off insurance rolls should be obvious. Those homes won’t become meaningfully safer, regardless of enhanced flood protections. Rising sea levels will only exacerbate coastal flooding in the years ahead, and a pair of new scientific studies published Monday paint a dire picture, estimating the Earth will be nearly 4 degrees Fahrenheit warmer by the end of the century, with significant effects to be felt long before that.

As the NFIP nears reauthorization by lawmakers, the program reforms now under consideration must focus on helping policyholders, not making it more difficult for them to receive their rightful claims. Among the reforms should be a greater emphasis on buyouts that give owners more reason to want to pull up stakes.

Creating a more solvent and more efficient federal flood insurance program cannot rely on taking a harder line on claims. That’s what has happened after Sandy — and it’s been another disaster.