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Rising Waters

Fixed for Failure: How flood insurance keeps dangerous homes standing in SC

Secret records reveal crushing cycle of disaster and repair

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Flooded homes in the Rosewood neighborhood in Socastee on Friday, Sept. 28, 2018. File/Andrew Whitaker/Staff

Kristopher Fowler thought he found a place he could settle down when he purchased his first home in 2013. 

The inspection on the property, in an attractive James Island neighborhood about 5 miles from downtown Charleston, showed nothing abnormal.

But after heavy rain submerged his bedroom floor nearly two years later, he learned something startling: Fowler's first flood was the home's sixth.

The federal government offered him money to restore the house. So he rebuilt.

Then, Hurricane Matthew hit in 2016, flooding it again and leaving him with the prospect of rebuilding a second time. 

“It was pointless to keep doing this," Fowler said. "It’s going to happen year after year."

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Flooding outside of Kristopher Fowler's former home on James Island. Fowler purchased the property in 2013. It flooded twice before he sold it. Kristopher Fowler/Provided

Flooding caused by rising tides, hurricane-force winds and rain deluges, has left a glut of damaged properties in South Carolina’s real estate market, specifically in cities along the coast.

Homeowners might get days of advanced warning that a storm is coming or walk outside to see the water rapidly rising as they did in the Charleston region on Wednesday. The end result is the same: houses get flooded and federal privacy laws hide the exact addresses of those properties from the public.

But data obtained by The Post and Courier allowed reporters for the first time to pinpoint about a third of South Carolina's most vulnerable and water-damaged properties, a revealing disclosure for a state that is near the top in flood insurance payouts from the federal government.

Records obtained from the federal government through an open records request show the claims history of specific addresses, which are usually kept secret from all but the owners. They include a multi-million dollar home near Charleston's Battery sea wall that has maxed out its $250,000 policy coverage and modest homes that received more money in insurance claim payments than their value in county property assessments.

That includes a home in Charleston's West Ashley community that has flooded at least 10 times and has received $165,000 for building damage — $44,000 more than its appraised value. And another, in Charleston's Shadowmoss neighborhood, that received $212,000 from the federal government before the city purchased it and tore it down.

This list led reporters to people like Fowler, stuck in a crushing cycle of disaster and repair. His former home was one of roughly 800 repetitively flooded properties in South Carolina that have received more than $100,000 in damage claims from the federal government.

Federal and state efforts to lift or move these repeatedly flooded houses have lagged behind the pace of damage that was exacerbated by a recent four-year stretch of destructive weather in the state.

That has left homeowners with few options other than to rebuild and wait for the next flood or put their at-risk properties on the market with no requirement, until recently, to let potential buyers know about past damage history. 

The existing flood insurance system leaves them with a lack of alternatives, and quickly provides payments to rebuild, even in the face of likely future disasters. In high-demand housing markets like the Charleston region, moving into a comparable home isn't always financially possible. 

Troubled safety net

From its inception in 1968, the National Flood Insurance Program was built on the premise that floods were not a chronic problem, but random and infrequent disasters that could be weathered with a little financial help.

That premise has been challenged as sea levels rise, storms get stronger, and development decisions put more properties in harm's way.

Flooding has long been a mathematical nightmare for private insurers. Homeowner insurance policies don't cover flooding as a matter of course, because the disaster is one that's presumed to simultaneously affect many properties in a large area. That raises the chance that an insurer breaks the bank by paying out several claims at the same time.

“The (national) program was needed to make it affordable for people who couldn’t afford the full risk of living in risky places," said A.R. Siders, a University of Delaware researcher who's an expert on coastal management and retreat policy. 

In providing financial protection for people in flood-prone places, the program has ultimately created an incentive for them to stay and for new people to add more development, Siders said, "because they’re not bearing that full risk.”

While policy holders do pay premiums, the program is heavily subsidized: it's more than $20 billion in debt, according to a recent report from the Congressional Research Service. The program has piled on loans without paying off past ones since Hurricane Katrina in 2005, which the government estimates is the most expensive disaster in U.S. history.

The Federal Emergency Management Agency announced last year it was going to make the rates more reflective of risk, but past attempts to do so have been met with strong political opposition. 

Government data shows that, as of 2019, claims for property paid out in South Carolina totaled more than $920 million, the 10th-highest amount among the 50 states. The Charleston region accounted for a third of the state's payouts.

And while the program is in continual need of financial support, it's also unable to cull out properties that flood over and over again, as private insurance carriers can. 

The federal government paid $5.5 billion to repair and rebuild properties between 1978 and 2015 that had been damaged before, according to an analysis of flood insurance data by the Natural Resources Defense Council. Those properties had flooded five times each on average. 

Rob Moore, director of the water and climate team at the NRDC, said insurance claims are paid out quickly, while efforts to lessen future flood damage can take years. That encourages homeowners to restore their damaged properties without addressing their vulnerability.

“Rebuilding is the first and highest priority, even though we know that’s not what we should be doing in every instance,” Moore said.

In South Carolina alone, the federal government's flood insurance program has paid out more than $185 million to repair homes in the state that have flooded multiple times. That includes more than $45 million paid for properties that the government flagged as frequently flooding, or receiving high claims amounts.

Breaking the cycle

After the first flood, Fowler didn't know his options. 

He started with the state's hazard mitigation officer and was referred from public employee to public employee. Ultimately, he reached a Charleston County building official, but the county wasn't coordinating buyouts to demolish problem properties. 

In many cases, homeowners who need financial help to move on from flooded houses are at the mercy of their local governments. Cities and counties can apply for FEMA-funded voluntary buyouts, but the process is competitive. The city of Charleston has used federal money for buyouts, but Charleston County has no record of pursuing similar grants, county spokesman Shawn Smetana said.

Part of Fowler's James Island former street was located in the city. But his home was in the county. 

Without a buyout option, Fowler took a big risk — buying a new house before selling his old property. Paying two mortgages was a strain, and he knew it might end up in foreclosure, but better than trying to rebuild, he thought. 

He decided to be frank about the problem on the property. He left a 2-foot gap where soggy drywall was ripped from the inside of the house. 

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Water pooled inside the master bathroom of Kristopher Fowler's former home. Fowler said he found out about the flooding history of the James Island property only after he looked through the stack of closing documents he had skimmed through before purchasing it. Kristopher Fowler/Provided

In a stroke of luck, a buyer acquired the flood-damaged home. That person tore down the house and built a new, higher one.

Others, like Melissa Krupa, have been less fortunate. 

Krupa bought her home in Rosewood Estates, a middle-class neighborhood near Myrtle Beach, in 2013. The development, on the Atlantic Intracoastal Waterway, had flooded before, but she didn't initially buy insurance because she wasn't in one of FEMA's mapped flood-prone zones. 

In 2015, flooding from a record-breaking deluge across the state brought water within 5 feet of her doorstep. A year later, Hurricane Matthew swelled rivers in a huge swath of the Carolinas' border belt, and 3 feet of water rose inside her house.

One flood was enough to convince her to sell. In the interim, she bought flood insurance and started renovating the house, but she wasn't finished when Florence arrived in 2018, submerging her home in 5 feet of water.

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The second flood convinced her to seek a buyout. Rebuilding seemed unlikely: shortly after Florence, Krupa's mother had a heart attack, and she moved up to Pennsylvania to care for her. Flood insurance money was used for rent in Krupa's new home, not repairing her old one. 

"Even if I did fix it up, how do I sell it to innocent people knowing that it's flooded a few times?" Krupa said. “I would not want anybody to go through what I (went) through."

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Flooded homes in the Rosewood neighborhood in Socastee on Friday, Sept. 28, 2018. File/Andrew Whitaker/Staff

Others caught in a similarly desperate situation may not take the same direction: until recently, homeowners had the ability to patch up the house they're selling and say little about its flood history. 

The federal Privacy Act stops potential buyers from looking up flood insurance claim histories of a house they might purchase. But late last year, South Carolina's Real Estate Commission made homesellers start documenting the number of federal flood claims on their properties in a standard disclosure form. 

Sellers still don't have to include the amount of those claims, a key indicator of a flood's severity. S.C. Realtors Association Chief Executive Officer Nick Kremydas, who pushed for the change, said it's a stopgap as the state waits on the federal government to take more decisive action. 

“We’re holding out hope for the next Congress," he said. 

Meanwhile, Krupa has been seeking a home buyout, and the wait has been a long one. Like Charleston County, Horry County did not have a buyout program. Recently, the state said it would use $30 million in federal Housing and Urban Development money to buy out Horry County homes.

Krupa arranged for a real estate investor to view the stripped-to-the-studs home in Horry County. But the viewing was cut short in February when another, less severe round of flooding hit Rosewood, sending water feet from her property and scaring the investor away.

Robust programs lacking

The four-year spate of flooding along South Carolina's coast has spurred discussions of how to avoid future damage caused by a rising sea, but there are few long-running efforts in place to remove homes from harm's way. 

An exception is an initiative in Greenville County that began in 2007. There, heavy rains overloaded creeks and overflowed into nearby neighborhoods and homes. The solution was a continuous buyout program that is funded with about $2 million in annual stormwater fees, said Paula Gucker, an assistant administrator. The county sees it as a good investment: Fewer flooded homes mean fewer emergency rescues, and less infrastructure to maintain. 

It also can do what the federal government can't: buy homes quickly. It takes the county about six months to a year to buy out a homeowner. The federal government can often take five years.

In one neighborhood, along Del Norte Road, the county has removed at least 68 houses, the majority through the local program. 

One single-family home in the neighborhood flooded 11 times with damage totaling just over $62,500, according to the records obtained by The Post and Courier. The county bought it for $140,000 in 2010.

County officials also stepped up their efforts, buying properties that were offered on the open market because the owner owed delinquent taxes. The goal was to buy flood-prone homes before people do.

“We’re trying to be proactive and buy everything out pre-disaster,” Gucker said. “When you’re reactive, the emotional costs from the poor citizens that are living there and the work we have to do is much harder."

Greenville County isn't the only place that's built a robust buyout program after disaster. Some states have built their own programs. In North Carolina, the state's Office of Recovery and Resilience has identified 22 zones affected by Matthew and Florence. Staff there are asking homeowners whether they're prepared to sell and plan to buy homes with money from the U.S. Department of Housing and Urban Development.

"In a lot of instances, people are waiting on us to offer the buyout program," said Laura Hogshead, the chief operating officer of the North Carolina office.

Like most buyout programs, the state offers the pre-flood value of the home to sellers. But it also asks the people relocating to identify the next home they want to buy, and offers up to $50,000 to cover the difference, if needed. There are further incentives if the sellers stay in the same county or the state.

Not all homeowners are eager to take one. Some may suspect it's really an attempt to gentrify an area. To combat suspicions like this and ease the transition, Hogshead said North Carolina is working to build affordable housing near historic communities like Princeville, in the eastern part of the state. The town was incorporated by freed enslaved people in 1885. 

"We want you to stay in the same community, we just want you to be on higher ground," Hogshead said.

Still, the ties to home remain strong for some, even if flood damage has been persistent.

Robert Mundy, a Charleston resident in West Ashley, has had minor flooding in his home at least eight times since he bought it in 1974. The soakings are not the most costly, totaling just over $40,700 in all, but they have been persistent: stranding him on his property at times and repeatedly ruining flooring.

After several entreaties to the city of Charleston, he's not confident that the problem will be fixed any time soon. The city, for its part, is trying to complete a drainage project, but has been stymied by a telephone utility's underground transmission lines, which are in the way of the work. The utility only recently told Charleston that it would move the line and is working on getting permits now.

Mundy doesn't carry flood insurance anymore. Despite the continued flooding, Mundy doesn't plan to sell. The Vietnam War veteran said he was determined to hold on to his home and pass the asset on to his children one day.

Flooding: A destructive teacher

There's no replacement for living through a flood. 

Fowler said he found out about his former home's flooding history only after he looked through the stack of closing documents he had skimmed through before purchasing the property. He didn't make that mistake again before buying his current home, he said.

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Water inside the master bedroom of Kristopher Fowler's former home. He decided to buy a new house instead of rebuilding the James Island property after it flooded a second time. Kristopher Fowler/Provided

Charleston Realtor Leslie Turner said purchasing a home in the area is not just risky for first-time buyers. Everyone should find an agent who is knowledgeable about the specific neighborhood where they are looking, she said. Requesting an estimate on how much flood insurance will cost is also a good step to take before finalizing a deal.

"If that quote comes back really high, there’s a reason," she said.

Not all homebuyers have the means or desire to look for a new home. 

Timothy Brown was 58 when he purchased his first home in 2018 in North Charleston. He plans to stay there.

He wanted to escape the Charleston region's notoriously high rents. Spur Street, where he landed, was modest but quiet, dotted with one-story homes just off of Dorchester Road. 

But his section of the street fills up like a basin when the rain comes, and the open-cut drainage ditches do little to move water out. The ditch behind Brown's own backyard is uneven, and the opposite bank is 3 feet higher, effectively acting like a levee that pushes water onto his property. 

He did not know the extent of his home’s flooding before he purchased it, Brown said, and there was no indication of damage inside the house. Neighbors later said the previous owners had replaced the floor several times.

The property has flooded at least six times, the federal data shows, causing $83,635 in damage. The most recent was in September 2017. Brown has flood insurance but says he's hesitant to file new claims, because he doesn't want his premiums to rise

His home hasn’t flooded since he bought it, but rising waters have come close twice. When water starts to submerge his yard, "I leave, I come back, and I hope for the best," he said.

In the meantime, he has plastic sheeting to wrap the bottom 3 feet of the house and sandbags at the ready.

That’s kept the water out so far.

Bryan Brussee contributed to this report.

Reach Stephen Hobbs at 843-937-5428. Follow him on Twitter @bystephenhobbs.

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