Hurricane Florence could push Congress to pass a bill on mitigation

As flood waters continue to rise in parts of the Carolinas, the devastation caused by Hurricane Florence may spur Congress to pass laws that would help mitigate this damage in the future.

Nothing would make Alan Rubin happier.

Rubin, director of Blank Rome Government Relations LLC and a member of the firm's emergency rescue team, accompanied the federal emergency agency to New Bern and Wilmington, North Carolina, on Saturday and Sunday.

"It was pretty destructive," Rubin said of what he observed.

North Carolina officials are doing "incredible work" to quickly commit to recovery efforts, Rubin said, adding, "They can not do much until floods come to an end in South Carolina.

Hurricane Florence made landfall around 7:15 am September 14 near Wrightsville Beach, North Carolina, about 20 miles east-southeast of Wilmington.

Although Florence was a major Category 4 hurricane as it approached the Carolinas, it slowed down before impact and hit Wrightsville Beach as a Category 1 hurricane with winds around 90 mi / h.

The water, not the wind, was the main weapon of Florence. Rain rain for days, Florence flooded cities and farms, and still pushes rivers on their banks. At least 43 deaths were recorded in North Carolina, South Carolina and Virginia from Tuesday.

The first estimates of the damage caused by insured and uninsured losses in North Carolina and South Carolina are estimated at $ 40 billion, plus additional economic losses of $ 4 billion, Rubin said.

An indispensable measure that will mitigate the magnitude of these losses in the future will soon be available, he added, adding that it could also strengthen the ratings of state and local government bonds.

Congress is preparing to adopt the 2018 Disaster Recovery Reform Act, enacted in 303, which, according to Rubin, will focus on disaster mitigation and the financing of its implementation by FEMA. The bill would also authorize the federal aviation administration for five years.

After seeing the devastation of Florence in North Carolina, Rubin said he thought people would accept measures that would harden and increase structures and protect them from future disasters, especially those that have suffered repeated losses.

"I think people are willing to look at this and say that prevention is better than cure," he said. "We are finally getting to the point where people recognize that we can not survive through emergency relief and that we need to start thinking about resilience.

Bill Shuster, R-Pa., Chair of the House's Transportation and Infrastructure Committee, called on Congress to approve bipartite legislation in an editorial released by his committee on Tuesday.

"It costs less to prevent and minimize the damage and strengthen our communities than just spending resources for recovery afterwards – a sensible approach, but not our federal programs," wrote Shuster. "Facilitating and encouraging mitigation is the most effective way to reduce the disaster cost curve."

According to the National Association of Counties, the House was scheduled to vote on the bill on Wednesday. Rubin said he was expecting a vote in the Senate by September 30, at the end of the fiscal year. The bill provides emergency assistance of $ 8.8 billion for the states beaten by Florence, and will introduce a separate revenue stream for FEMA's mitigation program – $ 950 million in "Performance Grants" Until 2022.

"I am very enthusiastic about this," said Rubin, who advised lawmakers on what should be included in the bill based on his experience with multiple natural disasters.

This experiment includes working with officials of Hurricane Andrew, a Category 5 storm that decimated South Florida in 1992 and destroyed 165,000 homes. It caused about $ 46 billion worth of damage in today's dollars and led Florida to enforce some of the country's strongest building codes.

"The place seemed to have been destroyed," Rubin said of Andrew's wind damage. "The land was not flooded with water."

The strengthening of building codes, he added, helped the mainland of Florida to avoid the considerable damage caused by Hurricane Irma in September 2017.

Rubin said he expects measures such as stronger building codes and building taller buildings to resist flooding will also help communities "protect" their solvency.

"People will start looking at green bonds," he said, adding that federal, local and private funds can be used to finance projects that address resilience and green bonds are a class of Assets that attracts investors interested in socially responsible investing.

Rubin also stated that there are circumstances where advance planning would address some known conditions such as floods caused by rain in parts of the Carolinas with Florence.

"I do not think anyone can be prepared for 40 inches of rain and flooding in vast rivers and lakes," he said. "It's part of the charm of North Carolina that they have all these lakes and rivers – some areas are called lowlands for a reason. They are beautiful, but people need to think about how to tackle life in this environment and make it part of their economic development. "

Florence could also have an impact on some credits for which parts of the Carolinas were not prepared for the Florence impacts, including areas that had never been flooded before. This is where rating agencies monitor the extent of damage, especially public infrastructure.

"We continue to contact issuers likely to experience events related to the crisis," said Bianca Gaytan-Burrell, an analyst with S & P Global Ratings. "For local governments and utilities, we believe that the affected transmitters are primarily located along the coastline of North Carolina, where the storm has stranded near Wilmington, North Carolina.

In some cases, if there are signs of extreme or prolonged tax stress in response to damage or flooding, S & P has stated that it may assign negative credit ratings to CreditWatch or change the stable outlook. in a negative way.

S & P said hurricanes may result in the inability to process water and wastewater for an extended period of time, permanent loss of customer base, immediate loss of revenue, unexpected capital costs and subsidies. are received.

Geographically, S & P said its efforts were concentrated in New Hanover, Onslow and Brunswick counties in North Carolina.

S & P said it is still unclear whether the Cape Fear River – a source of drinking water in east central North Carolina – has been "tainted" by coal ash from nearby facilities from Duke Energy.

"We believe that this systemic risk is potentially the most detrimental to credit quality and will seek to understand this aspect of solvency in addition to short-term financial effects when we contact issuers," Gaytan-Burrell said.

With respect to utilities, S & P stated that it expects service restoration costs, the cost of alternative energy and long-term investment costs for damage and dislocations of customers are minimal.

"While we also understand that additional flooding may still occur while some waterways are expected to increase further, we do not anticipate significant disruption or damage to electrical service," said Gaytan-Burrell. "Accordingly, we do not anticipate any rating measures on US retail and wholesale issuers, co-operative power utilities, and utility transmitters in North Carolina or South Carolina."

S & P believes that local government debtors likely to have potential credit impacts include the counties of North Carolina Craven, Bertie, Edgecombe, Halifax, Hertford, Northampton, Onslow, Bladen, Cumberland, Duplin, New Hanover , Carteret, Dare, Pender and Brunswick.

The municipalities in North Carolina that could be affected are Greenville, the stormwater management system for the City of Wilmington, Fayetteville, Goldsboro and the City of River Bend.

The North Carolina utilities that S & P oversees include the Cape Fear Public Utilities Board, the Brunswick County Water and Sewer System, the Onslow Water and Sewer Authority and water and sewer system of the City of Oak Island.

Electricity utilities under consideration include: Brunswick Electric Membership Corp., North Carolina Eastern Municipal Power Agency, North Carolina Electric Corp. Corp. and the power grids owned by the cities of Concord, Fayetteville, Greenville, Monroe and Shelby.

In South Carolina, S & P said the utilities examined were: Central Electric Power Cooperative Inc., the Piedmont Municipal Electricity Agency, the Public Utility Authority of Carolina South – also called Santee Cooper – and city-owned municipal services. from Camden, Easley, Greenwood, Greer, Newberry and Rock Hill.

Although rising floodwaters could have an impact on inland issuers, S & P said credit effects are probably more tied to short-term and cash flow rather than a systemic system. and in the long run.

Due to state and federal disaster reporting, S & P stated that it expected most cleaning and repair costs to be eventually reimbursed by insurance or FEMA.

The governor of North Carolina, Roy Cooper, said Monday that 27 counties have been approved for federal assistance for uninsured and underinsured damage resulting from Hurricane Florence.

About 80,000 people have registered for disaster assistance and more than $ 26 million in federal disaster assistance has been approved for individuals and families, he added.

"Florence is gone but the storm of the storm is still with us," Cooper said, adding that the state had opted for full-time recovery efforts.

According to latest estimates from Moody's Analytics, the costs of Hurricane Florence have reached between $ 38 billion and $ 50 billion, due to property damage, vehicle losses and loss of production. have involved. "

"Many flooded areas as a result of Hurricane Matthew are experiencing similar tribulations this fall, but their footprint seems much wider after Florence, extending about 200 miles to the west coast. from North Carolina and extending for 150 miles from north to south. , extending to South Carolina, "according to analyst Ryan Sweet and researcher Adam Kamins. Matthew hit the area in October 2016.

The pair estimates that most of the damage is caused to single-family homes because of the destruction associated with similar past storms and the value of single-family homes in affected counties.

"These losses will no doubt be exacerbated by the lack of flood insurance," they said.

With insufficient flood insurance coverage due to outdated flood maps that allowed many owners to remain uninsured despite the risk, they said it would be more difficult for the region to rebuild.

"This problem reflects the types of problems that hampered the reconstruction efforts during Hurricane Harvey and demonstrates the increasing ineffectiveness of the National Flood Insurance Program," said Sweet and Kamins.

Rubin said the bill before Congress will help alleviate the floods and repeat the events.

"It makes a huge difference when you have different streams of income" for recovery and mitigation, he said.

In North Carolina, Mr. Rubin said that one example of a problem is floodwater pollution from pig excrement from farms that did not have adequate sanitation to cope with flooding.

According to state officials, about fifty artificial pits called lagoons and collecting animal waste have been flooded.

"Some [federal] The preparation and recovery money can give them the opportunity to develop better systems so that in case of a new flood, there is not the environmental nightmare they have today, "he said. Rubin.