Flooded homeowners face steep costs to rebuild

Emily Ervin and her husband, Robert, spent the first week after Houston's Memorial Day floods dragging furniture, appliances and photographs from their Meyerland home - items imbued with memories of their first family home and three children - now soaked in nearly 15 inches of flood water.

The Ervins, like so many of their neighbors in the subdivision hit hardest by the storm, must determine how to repair their unlivable home - and whether they can afford to do so.

The city of Houston has notified roughly 1,000 homeowners in floodplains, including along Brays Bayou in Meyerland, that the damage to their homes appears to be so severe that they will need to rebuild rather than repair.

For some homeowners, rebuilding will mean having to elevate the house to meet modern floodplain regulations. City officials will determine which houses must be raised, a decision based on the home's value before the flood and the cost to restore it to that condition. Houses that fall into the "substantial damage" category set by city code, where the cost to restore exceeds half of the house's value, must be elevated.

Homeowners who fall into this category will need to raise their first floor one foot above "base flood elevation." In Meyerland - which was built in the 1950s, decades before floodplain rules were implemented - officials estimate that would require an increase of two to six feet.

These regulations are not specific to flood damage; they apply whenever old homes are substantially renovated or razed and replaced with new builds in the "100-year" floodplain, which refers to areas deemed to have a 1 percent chance of flooding in any given year.

Mortgage-holders in this floodplain are required to buy flood insurance, but payouts under the federal program account only for flood damages, not the cost of rebuilding, and are capped at $250,000. Homeowner's insurance does not cover flood damage.

This likely will leave many residents with hefty out-of-pocket costs, particularly if they must elevate their homes - a six-figure expense, experts say - and particularly in areas like Meyerland, where the median value of flooded properties is $550,000. About 125 of those flooded properties have senior property tax exemptions, suggesting many victims may be on fixed incomes.

It's unclear whether the Ervins, now living with family in Pearland, will need to raise their home, but they are bracing for a steep price tag.

Emily Ervin, 37, said she is angry the flood insurance she must carry likely will not meet her needs.

"This is going to be financially devastating for so many families, even though they've done exactly what they were supposed to do: Gotten their flood insurance, paid their taxes," she said. "I'm happy to tear down and rebuild because I don't ever want to live through this again. But we need to be able to afford it."

Fear of misinformation

City officials lament the volume of misinformation ricocheting around affected neighborhoods, and urge residents to speak with authorities before proceeding with repairs.

Department of Public Works and Engineering senior assistant director Carol Haddock said likely less than one-fourth of all flooded homes - about 5,000 residents have filed flood insurance claims - will need to be elevated. Still, she acknowledged that is no comfort to those who will have to rebuild.

"It's for their protection, to keep people from putting themselves straight back into harm's way," she said. "But it's seen by a lot of people as overly far-reaching by the government."

The roughly 1,000 homeowners to receive letters from the city were identified by inspectors in vehicles, said Public Works deputy director Mark Loethen. That method is used to quickly inform owners that they may face additional requirements before beginning repairs, he said, but may have included homes with minor damage.

"Come and talk to us," Loethen said. "Social media is killing us. There's so much bad information floating out there. 'Oh, the government's sending me a letter, this can't be good. My life is over, the universe has ended.' We're trying to combat that with facts."

About 100 of the 1,000 owners have responded, he said. Encouraging owners to respond is motivated not only by a desire to enforce permitting rules, Loethen, said, but because the letter flags the address in city records and could impede a future sale of the property or another flood insurance claim.

Starting repairs without the proper permits also could trigger penalties, including doubled permit fees or citations, Mayor Annise Parker said.

"For those who are substantially damaged in Meyerland, I can almost guarantee that if you just go get a new appraisal of pre-flood value, you shouldn't have any problem," Parker said. "You just need to work with us. But the more we say, 'Come in and talk to us, we want to help,' the more they try to hide. It's just a frustrating process."

Loethen stressed that city officials want to limit the number of "substantially damaged" homes that must be elevated.

Determining costs

There are two parts to the process: Establishing the pre-flood value of the house, and the cost to repair it to that condition.

The value of the house - not including the land under it - can be drawn from the Harris County Appraisal District or from a Federal Emergency Management Agency inspection, but Loethen said those with serious damage may want to seek a private appraisal. An appraiser likely will set a higher number, he said, potentially preventing the owner from having to elevate the home by driving the cost of repairs below the 50 percent "substantial damage" threshold.

A contractor or a FEMA inspection can provide the repair cost, but it will be reviewed by city staff, Loethen said. That's because a contractor's estimate may be too high given the high demand for repairs, he said, and because many owners try to undershoot the repair cost by saying they will do the work themselves.

Homeowners may qualify for resources in addition to flood insurance. Some could receive grants the city likely will seek from the state, Loethen said; owners often must match a quarter of the grant amount, and can use a flood insurance check to do so.

FEMA also offers individual assistance, and as of last week had approved nearly 3,900 such claims in Harris County; payments are capped at $32,900 per household. Homeowners also may be eligible for low-interest loans from the Small Business Administration, but, as Ervin noted, that money must be paid back.

Caroline Maida, an attorney who specializes in storm damage claims, said the prospect of elevating a house can leave some owners with the difficult decision of whether to stay or sell and start over. Indeed, some homeowners report repeated inquiries from developers looking to scoop up damaged properties at steep discounts.

"Do you spend $100,000 to raise the current house you have or do you spend another $200,000 to get a brand new house?" she said. "That's a difficult decision."

Councilwoman Ellen Cohen, who represents Meyerland, urged residents to speak with officials before assuming the worst.

"Every case is different," she said. "Even if it's the house next door, whatever they're being told by the authorities may not be the same information that's going to apply to you."

'It's not even up to us'

The Ervins' home, like those around them, is built on a slab, and contractors have told them the best option is to raze and rebuild. A damage estimate they received from an insurance adjuster totaled more than half of the home's value based on county appraisal data.

On Friday, the Ervins visited their home with kids Mia, 5; Tucker, 3; and 4-month-old Tessa in tow.

Emily Ervin's eyes filled up with tears as she walked from room to room: Carpet ripped from the floors, sheet rock removed from the walls. Not much is left of their life there, aside from a baby-blue wall lined with an alphabet applique in the children's playroom.

The street outside, known for squealing children and block parties, is quiet; many neighbors have been displaced. Ervin said she didn't just love her home, but the community.

"We want to stay, we want our house back. But can we afford it?" she said as her voice cracked. "We don't know where our lives are going to be in the next year, and the saddest part is it's not even up to us."