Katrina renews calls for change in rebuilding rules

DAUPHIN ISLAND, Ala. -- This island's website couldn't be blunter: "Dauphin Island is in a precarious position of being a barrier island, in essence an overgrown sandbar. This gives us a potential of being a disaster in the making. We have been hit by numerous hurricanes, Ivan, Frederic, Georges, Danny and many more!"

Hurricane Katrina was the latest storm to punish this 14-mile-long island of 1,400 residents. Yet nearly two years after Katrina wiped out 350 homes and dislodged 1.5 miles of land, new and bigger homes are rising. A 9-foot-high sand dune was built with about $3.4 million in federal funds to prevent flooding. But it's already been breached by the Gulf of Mexico's waters.

So why are people rebuilding on such a vulnerable island? The answer lies in a maze of emotions and financial incentives that encourage them to rebuild again and again. Residents point to government-subsidized flood insurance, repairs made to roads and other aid that arrives after storms. They also cite the island's serenity and its sugary white sand.

It's "paradise," says Carol Clark, owner of a bed-and-breakfast that's been damaged six times in 17 years. "The Gulf, all the fresh fish — it's the kind of place you never want to leave."

All that romance aside, Katrina's impact here and in other beach communities on the Gulf Coast has revitalized a debate over whether federal, state and local governments should do more to discourage rebuilding in areas particularly vulnerable to hurricanes, earthquakes and flooding.

The magnitude of Katrina's destruction — and concern that people will rebuild in the same way, in the same precarious places — have sparked calls for new regulations on a range of matters, including flood insurance and the funding of coastline restoration.

Such efforts, though, have foundered, largely over resistance from developers and politicians who fear that such changes would stem coastal development and the revenue it brings, says Oliver Houck, an environmental law professor at Tulane University.

Meantime, thanks to government help, "You'd be a fool not to live on the beach," he says. "We're building highways to them, causeways to them, sewage-treatment plants to them. We're paying their (flood) insurance to live there."

In risky areas, many homeowners enjoy artificially low flood insurance rates — a legacy of the government's effort to prod communities to join the federal flood insurance program, which began in 1968. Properties initially developed before their community joined the program are eligible for discounted flood insurance.

Thanks to the subsidies, a high-risk property — such as one on Dauphin Island — might pay $990 to $1,646 a year for the first $100,000 of coverage on a property and $30,000 on its contents. Without subsidies, the rate would more than double, according to federal data. Communities also get flood insurance discounts for educating residents about flood risks or requiring them to build more safely.

Through the years, properties that have suffered repeated damage have claimed a rising share of flood insurance payouts. And in years when the typical $2.2 billion to $2.5 billion in premiums collected from policyholders can't cover payouts, the program has borrowed from the government to cover the losses.

Proposals to end insurance subsidies or flood coverage for such properties have yet to gain momentum. Meantime, a 2004 federal law that lets flood insurance rates rise sharply if homes with repeated flood damage aren't moved or elevated hasn't taken effect because the government is still ironing out details of how to implement it.