- Associated Press - Monday, March 24, 2014

VALLEY CITY, N.D. (AP) - There’s a pretty view of the Sheyenne River from the top floor of Brandon Nadeau’s two-story home, where he lives with his wife and two kids.

But that view is getting more expensive for the Nadeaus, who pay $2,800 a year in flood insurance. That’s up 17 percent from 2013, which came after a 14 percent jump in 2012.

Congress passed a law in 2012 to cut into the National Flood Insurance Program’s $24 billion debt, which accrued over decades of low premiums and high payouts. To do so, 1.1 million subsidized policyholders were going to have to start paying rates based on the true flood risk and others, including the Nadeaus, would have to start paying up to 20 percent higher premiums each year.

Congress revisited the issue after nationwide complaints, and recently reworked parts of the law, which President Barack Obama signed Friday. For the Nadeaus and other owners of single-family properties, the cap on annual increases will be 18 percent.

That’s small consolation to Brandon Nadeau. His family has been in the eastern North Dakota house for three years, none of which have brought flooding to their home, but the rising premiums could push them out.

“At some point, if it just keeps climbing, I’m just going to put the house up for sale,” said Nadeau, 31, who works in construction management.

According to FEMA data analyzed by The Associated Press, Valley City had 275 properties covered by subsidized premiums that’ll face increases - about 70 percent of policies in the town.

Statewide, 14 percent of the nearly 14,000 policyholders will see premium increases. Those with policies on businesses and second homes will see rates increase 25 percent annually until the owner drops out of the subsidy program and gets a new rate based on the actual risk of flooding.

In Grafton, a town north of Grand Forks with 4,300 residents, nearly 90 percent of its flood insurance policyholders will have to pay higher premiums. And in Lisbon, 80 properties - or about 62 percent of policyholders in the city - will be coping with increased premiums.

Dave Andersen, the building and fire inspector for Valley City, said many people will be tempted to move out of the flood plains.

“Their income isn’t going up that fast,” he said. “They’ll walk.”

But that may not be so easy. The rising rates will drive down home values, Valley City insurance agent Steve Ondracek said.

“Those homes in the flood plain are just not going to be that desirable to purchase for a younger couple,” he said.

Valley City Mayor Bob Werkhoven said the city hopes permanent dikes can eventually help by effectively moving protected land from flood plain status. But it’ll be years - and need an estimated $70 million in state and local funding - before most residents have such protection.

For now, Nadeau said he knows the federal government has to reduce the debt, but it’s tough to see rates rise so quickly so fast: “At what point is it too much?”