The owners of million-dollar beach homes aren’t a particularly sympathetic political constituency. Conservatives deride them as (literal) coastal elites; progressives demand they fork over more in taxes. Both parties happily accept their campaign contributions, but few members of Congress shed tears for the plight of waterfront barons, and fewer still are willing to wage a public fight on their behalf.

Robert Menendez, the senior senator from New Jersey, is one of those brave lawmakers. Menendez is leading the opposition to a first-of-its-kind policy that would force homeowners with property closest to the water to pay more for federal flood insurance. The pricing scheme, known as Risk Rating 2.0, was first developed under the Obama administration, but the Trump administration delayed its implementation. Now it represents one of the most progressive changes that President Joe Biden can make without new approval from Congress: By overhauling premiums in the National Flood Insurance Program, the government can simultaneously price-in the risks posed by climate change and correct historic inequities in which millions of lower-income homeowners have essentially subsidized flood protection for their much wealthier neighbors.

At the center of the fight are the questions of who gets to live by the water, and who should shoulder the burden of costs that rise with the sea level. The estimated 13 million people who reside in the officially designated floodplain are divided between those who can buy pricey waterfront homes and those consigned to live in less desirable, low-lying areas because that’s all they can afford. Some of the people hardest-hit by major recent storms have been vulnerable communities in New Orleans; Port Arthur, Texas, outside Houston; and poor neighborhoods in the farthest reaches of New York City. The updated flood-insurance system is designed to help those populations, but in coastal communities across the country, uncertainty about the new prices is spreading fear that however well intentioned, the administration’s policy will exacerbate the inequality of beachfront living, pushing out homeowners most sensitive to climbing insurance rates.

Environmental and national real-estate and insurance industry groups have cheered the new system, which took effect in October for new insurance policies and will kick in next spring for renewals. It has drawn predictable criticism from Republicans in coastal states such as Florida, Louisiana, and Mississippi that are drenched annually by hurricanes and tropical storms. But the lawmakers fighting hardest to block the change are Democrats like Menendez who otherwise support combatting climate change and wealth inequality.

Under Risk Rating 2.0, nearly a quarter of the nation’s 3.4 million policyholders in single-family homes would pay less for flood insurance—the first time in the 53-year history of the federal program that the cost of any policies has actually gone down. The bulk of homeowners would see a modest increase—up to $10 a month—roughly equivalent to what they would have paid under the old system. The remaining 11 percent of customers would see more substantial increases that would compound over several years. Some homeowners would end up paying thousands of dollars more per year for flood insurance, and a higher percentage of them live in states such as New York and New Jersey, where coastal properties are more expensive.

“What we’re going to have is rate shock,” Menendez told me in a phone interview. “That is going to drive policyholders out of the program, and insurance is about spreading risk over the widest pool of people.” The third-term senator has, along with a bipartisan coalition of lawmakers from coastal states, urged the Biden administration to delay the implementation of Risk Rating 2.0. He’s proposed legislation to cap annual premium hikes for flood insurance at 9 percent; the current maximum is 18 percent for primary residences and 25 percent for second homes. Menendez and his allies are also considering an effort by Congress to block the policy as part of upcoming government-funding legislation that Biden will have little choice but to sign. “We’ve got all options on the table,” he said. The coastal coalition that Menendez is now leading has flexed its power over the flood program before: A decade ago, Congress enacted reforms that resulted in higher insurance rates, only to reverse itself two years later under political pressure.

For years, the crude system for calculating flood premiums made no distinction between fancy homes that were directly on the water and tiny shacks a mile inland. “It led to a bias against lower-value homes,” Laura Lightbody, the director of a flood-risk initiative at the Pew Charitable Trusts, told me. “Those lower-value, lower-risk homes were often paying too much, and higher-risk homes weren’t paying enough.” Under Risk Rating 2.0, pricing can be much more precise, taking into account factors like a home’s specific flood risk and its replacement cost.

Like all good politicians, the critics of Risk Rating 2.0 don’t cast themselves as champions of the rich. The constituents they claim to be protecting aren’t the seaside elite but the working-class citizens of inland cities like Paterson, New Jersey, which is a half-hour drive north of Newark. “We’re just concerned that this is going to be a disaster for these middle-class, working families,” Representative Frank Pallone, a New Jersey Democrat and the progressive chairman of the House Energy and Commerce Committee, told me. “They want some sort of assurance that the premiums are not going to go up.”

To the Biden administration, however, the New Jersey Democrats are waging a curious fight. More homeowners in Paterson, for example, will see lower premiums as a result of Risk Rating 2.0 rather than a spike in costs. The same is true across the country. “You can’t just ignore that,” David Maurstad, who runs the National Flood Insurance Program for FEMA, told me. Nationwide, he said, only 3,500 homeowners will see premium increases of more than $100 a month, and those houses are valued at more than $1 million.

Menendez wants to shield those people too, because in high-cost New Jersey, owning a million-dollar home is not a signifier of extreme wealth. The state has one of the country’s largest percentages of homes valued at more than $1 million, and its median home price is well over the national average. On that score, the battle over flood insurance resembles the debate among Democrats over the state and local tax deduction, or SALT. Lawmakers from New Jersey, New York, and other high-tax states have demanded that Congress revive the tax break—which Republicans gutted under President Donald Trump—despite the fact that its biggest beneficiaries would be millionaires. Menendez told me he’s used to such attacks. “People want to say that this is for the wealthy. They’ll say it no matter what, but I don’t know what wealthy is to them,” he said. “Is a $400,000 home wealthy? Is it a half-a-million-dollar home? Is it a million-dollar home? I don’t know. But in New Jersey, a lot of middle-class families are in homes that I’m sure others would consider wealthy.”

Opponents of the bill that Menendez and Pallone proposed point out that it would cap rate increases even for second homes; the Democrats contend that many of their constituents who own vacation homes have inherited them and would be forced to sell if their insurance rates spiked.

The Biden administration argues that if lawmakers like Menendez succeed in delaying the new pricing system, the biggest losers will be the lowest-income homeowners, who will miss out on the savings of reduced premiums. But for the supporters of Risk Rating 2.0, the more troubling prospect is that it delivers on its promise of a fairer insurance program—and the wealthiest Americans win out anyway.

Jody Stewart owns a home on the New Jersey coastline, but it is not a mansion, and she is not a millionaire. She lives by a bay on the Mystic Island peninsula, a casino community about a 40-minute drive from Atlantic City. Stewart and her husband, a retiree, rebuilt their 1,300-square-foot home—“just a little place,” she told me, valued at about $350,000—after it was destroyed by Sandy. Stewart hasn’t received her flood-insurance renewal notice and doesn’t know what her new rate will be; the couple’s decision to construct their home on an elevated platform after the storm has saved them money on premiums. But she worries that the rate increases—whether modest or more substantial—will accelerate a trend in which wealthier people building homes two or three times the size of hers are replacing the community that had lived on Mystic Island for decades. “You’re just going to see working-class people quit paying for insurance,” Stewart told me. “They’re just going to quit, or they’re going to walk away from their homes because they can’t afford it.”

Stewart now works for an advocacy group of storm survivors known as the New Jersey Organizing Project. “I don’t say this nicely or lovingly,” Stewart began. “We are sinking. We are at the forefront of climate change.”

Climate change is the major complicating factor in the debate over flood insurance, and the new scheme allows the government to better warn people about the increasing risk of living in a flood zone—and force them to shoulder more of the financial burden to do so. “Climate change is causing floods to become more common and more frequent, which means more people will find themselves at risk,” Joel Scata, a water and climate attorney for the Natural Resources Defense Council, told me. “And rates for federal flood insurance are already rising.”

Democrats like Menendez and Pallone have backed aggressive action to tackle climate change, both in supporting efforts to slow its pace and to build up resiliency in high-risk areas. Superstorm Sandy devastated New Jersey and left homeowners who struggled to get payouts from insurance companies frustrated with FEMA and the flood-insurance program. “Unfortunately, most people do not trust FEMA, or the government,” Stewart said. More recently, the torrential flooding caused by Tropical Storm Ida stunned both New Jersey and New York, which were unprepared for the damage.

Critics of the rate hikes say they are particularly unfair for people who have already been victimized so frequently by storms over the past decade. But defenders of the new system argue that opponents are simply trying to have it both ways. “You cannot say that climate change is exacerbating this risk and then presume the risk got cheaper. That’s hypocritical thinking,” says Roy Wright, who ran the federal flood-insurance program when officials began to develop Risk Rating 2.0 toward the end of the Obama administration.

The more vexing question—one that FEMA is hesitant to confront—is whether government policy should actively discourage development and home-buying in areas under the gravest threat from climate change. “At some point, members of Congress and policy makers have to make a decision about addressing sea-level rise and climate change, and not continuing to enable people to live and develop in these high-risk areas,” Lightbody said.

Maurstad told me the intent of Risk Rating 2.0 was not to discourage development anywhere. But the policy is already having an impact on the real-estate market in New Jersey’s coastal communities, Robert White, the president of the state’s real-estate-agents association, told me. White, who is a broker in a beach town on the Jersey Shore, told me that although the new rates were not hobbling purchases of higher-end homes, they were pricing people out of mid-range houses as potential buyers saw the cost of flood insurance added to their mortgage. “We see it every day,” White said. Flood insurance is required for homes that have federally backed mortgages in high-risk areas. Purchasers who can pay for their houses without taking out a loan can choose to forgo flood insurance; the super-wealthy buyers who plunk down $3 million in cash for a beach house know they can afford to rebuild from scratch if their home is destroyed, or they are better equipped to handle steeper insurance costs.

The end result, critics of Risk Rating 2.0 fear, is a coastline that is even more of an exclusive haven for the very rich than it is now. “They’re going to build mammoth properties, which doesn’t help the environment. You’re just gentrifying our communities,” Stewart said. One of Menendez’s reasons for keeping premium hikes low even for the wealthy and for owners of vacation homes was to keep them from fleeing the federal insurance program; other lawmakers have cited a projection that as many as 900,000 policyholders will drop their flood insurance over the next several years because of the rate hikes, imperiling the program’s solvency.

The Biden administration disputes these claims. Maurstad, predicting that the rolls of the flood-insurance program will grow rather than shrink in the coming years, said that the government’s ability to better communicate flood risk would help demonstrate the need to purchase coverage. But he was less optimistic on the question of how widely accessible the waterfront should be. Maurstad said he had seen too many families without insurance whose homes, and lives, had been wrecked by storms. “It doesn’t seem to me to be good public policy,” he said, to encourage “those that are least able to bounce back after major disaster events” to live in risky areas. In the age of climate change, in other words, the beaches must remain a playground for the rich—now more than ever.

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