Message from Jim
Sitting quietly within the National Flood Insurance Program (NFIP) is the flood zone determination process, a lender requirement for any federally-backed loan of $5,000 or more in a NFIP-participating community, to determine if the improvements being used for loan collateral horizontally scale in a Special Flood Hazard Area (SFHA). The determination is supposed to be made using only the current Flood Insurance Rate Map, which is available through the FEMA Flood Map Service Center.
Typically, the determination is made by a third-party vendor on behalf of the lender, at a relatively low cost ($10 - $20) likely due to the quick turnaround time of using an automated web-based system that only requires the input of a physical address. Many Flood Zone Determination (FZD) companies actually boast that they can produce a determination within seconds! Land surveyors also make flood zone determinations, but often go to the subject parcel and visually observe the relationship between the improvements and any nearby watercourse, in addition to using the effective FEMA flood map. The different processes used to create determinations are seldom acknowledged unless conflicting results arise.
Last week, we made a flood zone determination from a paper FIRM which was different than a FZD Company’s result. When this occurs, we first review our efforts and confirm the accuracy of our determination. Our next step is to review the digital flood layer available in a Geographic Information Systems (GIS) platform to identify which product was possibly used by the FZD Company to make their determination.
The first consideration is FEMA’s Q3 flood layer produced from 1996-2000. It was the NFIP’s first attempt in providing a paper Flood Insurance Rate Map on a GIS platform. Accuracy is limited, so caution should be used in using Q3 maps. Per the Maine Floodplain Management Program website, "a Q3 flood map should not be used without confirmation from the official printed map." In other words, it is still required to use the effective Flood Insurance Rate Map to perform a determination.
Another important aspect to consider is flood map revisions. To compound the problem of the above-mentioned flood zone determination, a map revision occurred which changed the shape of the SFHA around the subject dwelling. Per FEMA’s Standard Flood Hazard Determination Form (Form 086-0-3), a flood determination requires a NFIP Map Number, Community-Panel Number, and Effective/Revised Date. This required information allows the lender to easily determine if the most current map was used. We found the revision was not reflected on the Maine Q3 Flood Hazard Map, perhaps due to limited funding. This may be one cause for the different determinations for the same subject dwelling.
Other GIS platforms which may include a flood layer include Google Earth, municipal GIS, and state GIS. None of these platforms should be used for a flood zone determination or for rating a flood insurance policy, even if they claim to use FEMA flood hazard layers. Preliminary Digital FIRMs also should not be used for a flood zone determination, but a community can utilize it for regulation.
The National Flood Hazard Layer (NFHL) is another platform worthy of discussion. It is a tool for community officials and members looking to view effective regulatory flood hazard information in a GIS application. It is a digital database, but is appropriately qualified that it must meet horizontal accuracy standards. Currently, the only FEMA resource that meets this specification is the FEMA GeoPlatform coupled with the FEMA/USGS base map. This should be confirmed prior to use.
Regardless of the method a FZD Company implements, I remain hopeful that it would welcome useful input from a licensed land surveyor, or other qualified professional, who actually visits the site. Years ago, we could send input to them for review and they would change their determination, but this has not occurred for many years. The National Flood Hazard Determination Association states in its common dispute resolution practices that FZD Companies should work with other companies to attempt to reach a consensus, and that they “embrace the dispute resolution process which ultimately benefits the company itself, its clients and others." We would be delighted to see this occur more often.
An incorrect flood zone determination can have a huge impact. In the above-mentioned flood zone determination example, we also determined the subject dwelling would not be a candidate for mandatory flood insurance removal since the lowest adjacent grade was comfortably below the Base Flood Elevation; meaning actual risk of damage from a flood is much higher. The buyer terminated their contract to purchase. Based solely on the FZD Company determination, this buyer may have purchased a higher risk home without flood insurance.
From the opposite perspective, we have also removed many structures (using a Letter of Map Amendment) that a FZD Company determined to be in a high-risk SFHA, which we found should not have horizontally scaled in. Attempts to discuss our findings with the FZD Companies all failed.
Though the cost is low for an automated flood zone determination, the impact of an incorrect flood determination can greatly impact a real estate transaction and value, since improper risk and/or premiums would exist. This process would greatly benefit from increased collaboration with other professionals, especially those who have physically visited the site and invested more than a few seconds to make their determination.
