Government Flood Assistance - What's Fair?

[CaptainYooh]

I don't pretend to know what's right. I suspect that there is no 100% correct way of doing this right either. But the discussion could be interesting.

What's right? There were $5M+ homes in Rideau/Roxboro that have been severely damaged by flood. Their restoration costs would be in the many $100K's range plus the expensive damaged property of their wealthy homeowners. There are small older homes in Bowness with restoration costs well under $100K and the damaged property valued at a lot less money. Also, take the range of damaged homes in High River and, say Siksika nation for the breadth of the problem. The burden of restoring a $200K damage for a wealthy person's home is likely much less devastating to them than restoring a $25,000 damage for someone on minimum wage. That's a given. So, what's fair? How should the Government approach its contemplated flood assistance? 100% for everyone? Based on wealth and personal impact? Based on the amount of damage in pro-rata to some hypothetically approved basic amount? Based on one same amount approved for everyone across the Province? Based on the residual amount after whatever one's insurance has approved? Based on making a portion of the restoration expense tax deductible? Remember, most of the assistance money will have to be funded by the taxpayers (municipal, provincial and federal). Opinions, please.

[undercoverbrother]

Based on Taxes paid.......

There is no good answer to this. All those that are no covered by insurance will suffer losses great than what the disaster assistance program will pay.

Also this is a good place for those affect to start:

http://www.aema.alberta.ca/disaster_manual_home.swf

[photon]

What did they use in 2005? I remember getting a cheque that didn't cover the damages (ignoring that we ended up having to do mold remediation that the previous owner didn't disclose), but I can't remember how they came to that $ amount.. I don't think they sent someone out to look, but I can't remember for sure.

[jar_e]

It would make sense to have it percentage based, based on home and land value.

[Table 5]

I have no idea what's fair for this go around, but for the future, I would like to see the city/province assign some sort of risk factor to each piece of property. Some sort of 1-10 Scale (ie, some house in High River that's always flooded is a 9, a house on top of a hill in say Arbour Lake is a 1). And then inversely base any sort of funding assistance on this Risk Factor #.

I think it's only fair that if you buy property in a risky area, you should be willing to take on some of the risk. I know this was considered an extremely rare occurrence, but I have a feeling something similar will happen sooner than we think... and it's not really fair to keep asking the province to keep covering the same costs over and over.

That or create some sort of provincial overland-flood insurance, and home owners in these risky areas would have the option to buy it to mitigate their risk. You didn't buy insurance and there's a flood? Sorry charlie.

[MelBridgeman]

tents for the less fortunate, trailers for the rich

[HOOT]

Originally Posted by Table 5

That or create some sort of provincial overland-flood insurance, and home owners in these risky areas would have the option to buy it to mitigate their risk. You didn't buy insurance and there's a flood? Sorry charlie.

This is what they do for earthquake here on the coast. It is normally an exclusion but you can buy the coverage for a cost. I don't know how much they would need to charge for flood coverage in a place like Calgary but Earthquake coverage is NOT cheap.

On the island it almost doubles your insurance costs at about $100-120 per $100,000 coverage, plus you have a 5-10% deductible for the coverage. With a 10% deductible people could be looking at $50,000+ easily.

That's right now and I have heard rumbling that the cost could even get higher in this region because companies are leaving the BC are to go to Washington St. where they are getting closer to double the premium (10.2 cents/$100 vs 19.8 cents/$100) for basically the same risk of earthquake.

If you opt out of earthquake coverage and an earthquake hits and your home is destroyed the government will give zero help. The only reason flood is covered by the government is because there is no option to buy that coverage for a regular homeowner. People will be lucky to get anything of use from the government compared to the damage they received by the flood. Hopefully banks are willing to help people out with cash flow to get them back on their feet.

[undercoverbrother]

Originally Posted by HOOT

Hopefully banks are willing to help people out with cash flow to get them back on their feet.

I have been hearing TD ads on the radio for this, waiving fees for early cashing of savings, etc..

[HOOT]

Originally Posted by undercoverbrother

I have been hearing TD ads on the radio for this, waiving fees for early cashing of savings, etc..

My biggest hope is they would allow for lower interest for those who can prove flood damage. Would 'cost' them nothing and would be a great help to those who just want to save their homes. Not to mention great advertising.

I'm trying to find the article from a flood that happened up island about 7 years ago and people who had their homes destroyed who were only getting ~$50,000 pay outs from the government. I believe it was one of the credit unions who were giving people loans at cost to help these people.

I'm curious what would happen if someone didn't get enough money from the government but also couldn't afford another loan to make up the cost difference to fix their home. Would they have to go bankrupt and walk away?

[Nage Waza]

I don't mind helping and I don't mind taxes helping, but what if this happens again next year? Or next week? The people taking the risk should be the ones carrying the majority of the load.

I was in perhaps ten flooded homes this week and each one was a flooded basement resulting in a complete gut job. I know there are homes that are worse off as well, I just don't know the numbers. Were there significant numbers of main floor flooding as well?

If there are (and I am making up all the numbers) 8,000 homes impacted and each received $50,000, that works out to $400 million. If there are 2 million taxpayers in Alberta, that works out to $200 per person.

Another issue is how much does it cost to hand out $50,000? What does the bureaucracy eat up? There has to be a simple efficient way to get the money out and do we care what the home owner uses the money for?

I would be more than happy to pay into some disaster fund and people that live in areas prone to disasters paying more.

[Devils'Advocate]

I think a lot of the relief money will be coming from the federal government.

And hopefully sooner than later:
http://www.thestar.com/opinion/edito...editorial.html

Personally, I think, given the lack of flood insurance, the governments of all levels should cover most of the expenses. I don't think people should be driven into financial ruin because of a natural disaster. When people are buying homes if a flood is not in recent memory, people forget about that factor. If they weighed that factor and decided to build there anyway, then yeah, I have less sympathy. But if you are a young couple just starting a family and don't remember a flood, you are looking at factors like whether there is a good school nearby, a safe community, affordability, access to work, features of the house, state of the home.... there is no land surveyor that comes and tells the new homebuyer that there is a significant chance of flood. It wasn't something I thought of when I bought my first home. It was only AFTER the neighborhood was flooded that I thanked my lucky stars that I was at the TOP of the hill unlike my poor neighbours at the bottom of the hill that had to throw out EVERYTHING in their basements. It was only by complete and pure LUCK that I happened to buy at the top of the hill.... I hadn't given one thought to the possibility of flooding. So I can certainly sympathize with those that have been devastated by this disaster.

[SeoulFire]

If insurance is available for this kind of thing, I don't think the government should do anything.

[Rathji]

Originally Posted by SeoulFire

If insurance is available for this kind of thing, I don't think the government should do anything.

The only reason that this discussion is happening is that insurance isn't available.

[Kavvy]

Originally Posted by Rathji

The only reason that this discussion is happening is that insurance isn't available.

Correct me if I am wrong, but wouldn't the Slave Lake fires disprove your point?

[Nage Waza]

Perhaps some rules need changing. For example, right now if a house is for sale there must be full disclosure if it was a grow op.

No more excuses for not knowing the flood risk.

[Devils'Advocate]

Originally Posted by Kavy

Correct me if I am wrong, but wouldn't the Slave Lake fires disprove your point?

How does the existence of fire insurance prove the existence of flood insurance?

[Kavvy]

Originally Posted by Devils'Advocate

How does the existence of fire insurance prove the existence of flood insurance?

I might be confused.

I thought he was stating that we wouldn't have a discussion about government aid for flood victims if flood insurance was available?

Didn't Slave Lake get government money for their fires? As we all know, fire insurance does exist.

[burn_this_city]

I'm tired of us high ground suburbanites subsidizing these inner city floodplain dwellers. They really ought to start paying for their fair share if they want that lifestyle.

[Devils'Advocate]

Originally Posted by Kavy

I might be confused.

I thought he was stating that we wouldn't have a discussion about government aid for flood victims if flood insurance was available?

Didn't Slave Lake get government money for their fires? As we all know, fire insurance does exist.

Ah, gotcha. So I checked that out on wikipedia and, yes, the Alberta government did spend $250 million in Slave Lake after the fire, of which $15 million went to people who didn't have ADEQUATE fire insurance to cover all their costs. And there was some money that went to pay people for expenses that they incurred because of the government mandated evacuation. Compared to this disaster, the money given to residents for rebuilding was really small because most people did have adequate fire insurance. Compared to this case where nobody has insurance, much less adequate insurance.

[SebC]

Originally Posted by Rathji

The only reason that this discussion is happening is that insurance isn't available.

So the government should provide insurance. It should have premiums and an uncapped, percentage deductible.

Simply providing insurance for free distorts the market in favour of the floodplain dwellers. Having said that, if the floodplain dwellers are net subsidizers despite their free insurance, then you charging them insurance premiums would increase the market distortions that favour suburbia... which means you need to eliminate both the suburban subsidy and the floodplain subsidy together.