02-28623. Agency Information Collection Activities: Submission for OMB Review; Comment Request

ACTION:

Notice and request for comments.

SUMMARY:

The Federal Emergency Management Agency has submitted the following proposed information collection to the Office of Management and Budget for review and clearance in accordance with the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3507).

Title: Inspection of Insured Structures by Communities.

Type of Information Collection: Revision of a currently approved collection.

OMB Number: 3067-0275.

Abstract: The purpose of the inspection procedure and need for the community inspection report is to:

(1) To help the communities of Monroe County, City of Marathon, the Village of Islamorada, Florida, and any other community in Monroe County that incorporates after January 1, 1999, verify and document that post-FIRM structures in their communities comply with the community's floodplain management ordinance; and

(2) To ensure that property owners pay flood insurance premiums commensurate with their flood risk due to the increased exposure to flood damages.

The final rule (published in the Federal Register on June 27, 2000, 65 FR 39726) and the interim final rule (published in the Federal Register on March 8, 2002, 67 FR 10631) established an inspection procedure in Monroe County, City of Marathon, the Village of Islamorada, Florida and any other community in Monroe County that incorporates after January 1, 1999, that would be built around the flood insurance policy renewal process. The requirement that a building be inspected by the community, as a condition of renewing the flood insurance policy on the building, would only apply to NFIP insured buildings in Special Flood Hazard Areas that are identified as possible violations by the community in which the property is located. The Special Flood Hazard Areas (SFHA) is an area that is based on a flood that would have a 1-pecent chance of being equaled or exceeded in any given year, referred to as the 100-year flood.

Policyholders that have a flood insurance policy with a renewal effective date on and after the implementation date of the pilot inspection procedure would receive, along with their policy renewal notice, an endorsement established in appendices (A)(4), (A)(5), and (A)(6) of 44 CFR part 61. The endorsement would provide that an inspection by the community may be required before a subsequent renewal of the flood insurance policy. Policies issued as new policies after the effective date for implementing the pilot inspection procedure would also contain the endorsement established in appendices (A)(4), (A)(5), and (A)(6). The endorsement amended all flood insurance policies (pre-FIRM and post-FIRM) on buildings in Monroe County, City of Marathon, and the Village of Islamorada, Florida (there are approximately 28,771 flood insurance policies in these communities at the time of this submission). Pre-FIRM insured buildings are included for the endorsement since there may be some policies within this category that should be rated post-FIRM because they were misrated or substantially improved after the effective date of the community's FIRM. A notice describing the purpose of the inspection procedure would accompany the new endorsement to the Standard Flood Insurance Policy regarding the inspection procedure.

Monroe County, City of Marathon, and the Village of Islamorada would identify possible violations and forward the list to FEMA. There are an estimated 2,000-4,000 number of insured buildings within the three communities that may be subject to an inspection based on the identification as possible violations. This estimate was reported to FEMA from the communities. Based on FEMA's review of floodplain development in these communities, FEMA is comfortable with this estimate. Monroe County, City of Marathon, and the Village of Islamorada would identify possible violations through a review of the pre-FIRM and post-FIRM flood insurance policies provided by FEMA and from a visual street inspection of the building, from tax records, and through a review of other documents on file in the community pertaining to the property and through other community procedures. For buildings identified by Monroe County, City of Marathon, and the Village of Islamorada as possible violations, the insurer of the flood insurance policy would send a notice to policyholders approximately six months before the policy expiration date. This notice would state that the policyholder must obtain an inspection from the community and submit the results of the property inspection as part of the renewal of the flood insurance policy by the end of the renewal grade period (30 days after date of the policy expiration). The insurer would send a reminder notice to the policyholder with the renewal notice about 45 to 60 days before the policy expires.

The policyholder would be responsible for contacting the community to arrange for an inspection. The community would inspect the building to determine whether it complies with the community's floodplain management ordinance and document its findings in an inspection report. The community would provide two copies of the inspection report to the policyholder.

If the policyholder obtained a timely inspection and sent the community's inspection report and the renewal premium payment to the insurer by the end of the renewal grace period, the insurer would renew the flood insurance policy whether or not the building has been identified as a violation by the community. The insurer would review the insurance policy for rerating upon review of the community inspection report. If the building was not properly rated to reflect the building's risk of flooding, the policy would be rerated to reflect that risk. If the community's inspection found a violation, the community would undertake an enforcement action in accordance with its floodplain management ordinance.

If the policyholder did not obtain an inspection and submit an inspection report with the renewal premium payment by the end of the renewal grace period (30 days after date of expiration), the flood insurance policy would not be renewed. The insurer would send a notice to the insured that the flood insurance policy expired and cannot be re-issued without the community inspection report.

The communities will not be using a FEMA designed form in documenting the inspection of an insured structure. FEMA consulted with local officials from the communities participating in the inspection procedure on the type of existing building inspection reports they use to implement their floodplain management ordinance and we determined that the current community inspection documents could be used for purposes of implementing the inspection procedure and for purposes of determining whether the building's flood insurance policy needs to be rerated by insurer.

The community inspection report is critical to the effective implementation of the inspection procedure. Without the inspection procedure, the Village of Islamorada, City of Marathon, and Monroe County would continue to have limited ability to inspect properties for illegal enclosures that violate their floodplain management ordinance and as a result, both communities would be unable to undertake appropriate actions to remedy the violations. There are several potential serious consequences if these structures continue to be in violation of the community's floodplain management ordinance.

Allowing uses other than parking of vehicles, building access, or storage in the enclosed area below the Base Flood Elevation (elevation of the 100-year flood) significantly increases the flood damage potential to the area below the lowest floor of the elevated building. Improperly constructed enclosure walls and utilities can tear away and damage the upper portions of the elevated building exposing the building to greater damage. Improperly constructed enclosures can also result in flood forces being transferred to the elevated portion of the building with the potential for catastrophic damage. If a flood disaster occurs, the impact will go beyond the building itself. If the ground level enclosure is finished with living spaces, there is an increased risk to lives. Residents who live in these ground level enclosures may not be fully aware of the flood risk.

Furthermore, there is limited coverage in this area for elevated post-FIRM buildings, as provided for in the Standard Flood Insurance Policy (SFIP) under article 6—Property Not Covered. This provision of the SFIP, effective since October 1, 1983, limits coverage for enclosures, including personal property contained therein. FEMA does not cover such items as finished enclosure walls, floors, ceilings, and personal property such as rugs, carpets, and furniture. In 1983, FEMA limited the coverage for enclosed areas below elevated buildings due to the financial losses experienced in the NFIP when FEMA provided full coverage in these areas. Consequently, property owners and residents that may live in these lower enclosed areas may have significant uninsured losses in the event of a flood for finished items and contents below the lowest floor.

However, in spite of the limited coverage afforded for these enclosed areas, they do affect the rating of the policy. Because of the increase in flood damage potential to the building resulting from flood forces being transferred to the elevated portion of the building, the damage potential must be recognized in the rates by adding rate loadings based on the size of the enclosure. In addition, the rates must also reflect whether the enclosure contains essential building elements which are covered, namely, sump pumps, well water tanks and pumps, electrical junction and circuit breaker boxes, elevators, natural gas tanks, pumps or tanks related to solar energy, cisterns, stairways and staircases attached to the building, and foundation elements that support the building. The collection of information from the policyholder in the inspection procedure will ensure that the policyholders of buildings with enclosures are paying premiums commensurate with their flood risk.

Along with significant flood damages to the building and the potential for loss of life, the community, the State, and the Federal Government will be faced with costly outlays for flood fighting and rescue operations, response, and recovery as well as taxpayer funded disaster assistance.

Under the inspection procedure, the policyholder will be required to obtain an inspection in order to renew the policy. This will be a one-time collection of information during the period of time for which the inspection procedure is to be implemented. Since the primary purpose of the inspection is to provide communities with a mechanism to ensure compliance with the floodplain management ordinance and for FEMA to verify flood insurance rates, less frequent collection of the information through the inspection report is not possible.

Affected Public: Individuals or households and business or other for-profit.

Number of Respondents: 1,500.

Estimated Time per Respondent:

No. of respondents/type of response	Frequency of response	Burden hours	Total burden hours
4,000 policyholders to receive & read a notice that an inspection is required in order for the flood insurance policy to be renewed. These 4,000 policyholders will also receive a reminder notice about 45-60 days before the policy expires	1	15 minutes (total for both notices)	1000 hours.
4,000 policyholders contact respective community to arrange for an inspection of the property. Local official inspects the property with the policyholder or his/her designee. (Note: in any given year we expect several hundred policyholders to receive the notice and contact their community.) Compliant buildings should take less time to inspect compared to an insured building that is non-compliant	1	1-2.5 hours*	10,000 hours.
*FEMA has estimated that the amount of time to contact the community to arrange for the inspection and for the policyholder or his/her designee to be available to let the community official into the building to conduct the inspection will range from 1 hour to 2.5 hours.
4,000 policyholders submit a copy of the inspection report with the renewal premium payment	1	8 minutes	533 hours.
800 estimated no. of respondents that did not obtain an inspection These respondents will be sent a notice at time of policy expiration that their flood insurance policy expired. (FEMA estimates that less than 20% of the 4,000 respondents will not obtain an inspection and as a result their flood insurance policy will not be renewed.)	1	8 minutes	107 hours.

*Total number of Burden Hours to implement the inspection procedure over a multi-year period: 11,640.

Annual (one-time) total burden hours for each policyholder is approximately: 3 hours.

Total annual burden for approximately 500-700 inspections per year in Monroe County: 2,100 hours.

Total annual burden for approximately 200-400 inspections per year in the Village of Islamorada: 1,200 hours.

Total annual burden for approximately 200-400 inspections per year in City of Marathon: 1,200 hours.

Estimated Total Annual Burden Hours: 4,500 hours.

Frequency of Response: One time.

Comments: Interested persons are invited to submit written comments on the proposed information collection to the Desk Officer for the Federal Emergency Management Agency, Office of Information and Regulatory Affairs, Office of Management and Budget, Washington, DC 20503 within 30 days of the date of this notice.

FOR FURTHER INFORMATION CONTACT:

Requests for additional information or copies of the information collection should be made to Muriel B. Anderson, Chief, Records Management Branch, Information Resources Management Division, Information Technology Services Directorate, Federal Emergency Management Agency, 500 C Street, SW., Room 316, Washington, DC 20472. Facsimile number [phone], or email address: [e-mail].

Dated: October 21, 2002.

Edward W. Kernan,

Division Director, Information Resources Management Division, Information Technology Services Directorate.