As Congress considers changes to the National Flood Insurance Program, cities on the water say rising premiums present an existential threat.

On October 29, a historic storm laid waste to Central Maine with drenching sheets of rain and wind gusts up to 70 miles per hour. The next day, downed trees and power lines turned my drive to Gardiner, a small city in the Kennebec Valley, into a winding maze of endless detours. The whole way, the radio crackled with dire updates. Half a million without power. Houses swept away in flash floods. Gardiner, it said, had been squarely in the path of the storm.

It took Patrick Wright, executive director of Gardiner Main Street, the nationally-accredited Main Street America program that works closely with the city of Gardiner, multiple attempts to navigate a route to his office that morning. When he finally arrived, he found the Kennebec River, visible through his second-story window, still securely within its banks. The last time it flooded the city was in 1987.

When it comes to flooding, the river isn’t what worries Wright. It’s the city’s flood insurance premiums, the steady rise of which presents a far bigger threat to Gardiner’s long-term health. By law, every property in America that falls within FEMA’s Special Flood Hazard Areas must hold a flood insurance policy until its mortgage is fully paid off. Virtually all of these policies are issued through the government’s National Flood Insurance Program (NFIP), a deeply indebted entity that’s raising premiums to get itself out of the red. For Miami McMansion owners with seven-figure stock portfolios, those rising premiums may be a nuisance. But in working-class cities like Gardiner, they could stall a fledgling economic recovery.

Like former manufacturing cities throughout the Northeast, Gardiner has staked its future on reinventing itself as a magnet for families, digital nomads and entrepreneurs. “We’ve focused on being a welcoming community as people get priced out of the Portland market and become more mobile,” says Wright, a Virginian transplant with an untamable orange beard. “In order to thrive you need talented people who are attracted to a sense of place.” Gardiner’s low cost of living, its walkable downtown and its gritty authenticity form the core of this attraction.

Already, you can see the strategy working. On Water Street, downtown’s central drag, a hip craft brewery glows from within, lit by Brooklyn-approved Edison bulbs. The old train depot has been reborn as a stylish medical marijuana dispensary, and at Lisa’s Legit Burritos I was served a lunch worthy of the restaurant’s name. These green shoots signal hope in a downtown pockmarked with vacant storefronts. “The main street approach is a proven method,” says Wright. “You work it, you commit to it, you have to believe in it.”

Beneath these efforts, however, runs a hairline crack that could crumble the city’s nascent revival. “Our entire historic downtown is located within the floodplain,” says Wright. That means every downtown building with a mortgage is insured by the NFIP. “So here’s the thing. Those [flood insurance premiums] are now increasing 25 percent per year. That’s currently happening. We’re in our second year of those increases. And I think the first year, folks probably opened their bill and were like, ‘Oh, it went up a couple hundred bucks.’ My sense is they didn’t really think about it.”

The following year, when premiums went up yet again, Wright got a few phone calls from property owners wanting to know what was going on, but the warning signs still weren’t registering. “It’s just not top of mind,” he says. Flood insurance is one of those bills you pay once a year and try to forget about. “We’ve tried to let people know about what’s going on, but we haven’t reached that critical moment.”

Unless Congress acts, that moment is imminent. The NFIP will come up for reauthorization on December 8, by which time its long-term fiscal outlook needs to be stabilized. That stabilization is sure to include increasing premiums for property owners in flood zones across the country, but how much and how fast they’ll rise is an open question. Wright and other community leaders say if premiums are allowed to surge unabated, housing markets could crater and take down local economies with them. Owners will find themselves stuck with properties they can neither sell nor afford to keep. Landlords will be forced to pass the costs of surging premiums on to their tenants. For cities like Gardiner, whose economic strategies rely on convincing new residents to buy in, a flood insurance–sparked housing crisis could make that all but impossible.

“My honest opinion is there is no way Congress can allow us to continue on this trajectory,” says Wright, the Kennebec gliding southward behind him. “The endgame just doesn’t work.”

Insuring Risk In The Age of Superstorms

It was a property investor from Bangor who gave Wright the bad news. “I still remember the phone call,” says Wright. “This was 2014. We always work with potential buyers and businesses who want to come in, and I’d been working with this guy. And he called me one day and said, ‘I just got our flood insurance quote. I’m out.’” The annual premium for the Gardiner property he was looking at would be $30,000.

Wright called the insurance agent, convinced the figure was a mistake. But it wasn’t. Earlier that year, Congress had implemented the Biggert-Waters Act, legislation designed to stop the NFIP from hemorrhaging money. The program’s payouts for Hurricane Sandy, and before that, Hurricane Katrina, had transformed its surplus into a deficit. Claims for Katrina totaled $18 billion. Sandy took out an additional $10 billion. The two storms leeched the program of nearly half the money it had paid out since 1978.

To get the NFIP out of the red, Biggert-Waters eliminated subsidies for premiums on properties that had been grandfathered in before the flood maps were drawn. It was a well-meaning effort to ensure the program’s long-term sustainability that nonetheless eviscerated the value of thousands of properties. “It was just like a punch in the gut,” says Wright. “We were finally turning the corner.”

Backlash from coastal states led to subsequent legislation that delayed the most dramatic increases, but that only postponed a painful reckoning. The NFIP is still billions of dollars in debt, hollowed out by payouts to repeatedly flooded properties. But the program’s core problem is that it simply wasn’t designed for an era of superstorms. In essence, what it was designed for is cities like Gardiner, where flooding is occasional and rarely catastrophic. Gardiner has weathered about three major floods over the last century. They typically occur in the spring when heavy rains combine with snow melt, or ice floes clog up the river. “It’s sort of like a bathtub backing up, not a torrent of water” says Wright. “The water backs its way into town and it leaves a big mess. But our buildings are 200 years old and they’ve withstood it.”

Look at old newspaper reports of these floods and you’ll see many buildings still standing today, now selling burritos and high-grade kush instead of coal and leather goods. In these flood photos, you can trace Gardiner’s economic evolution from a shoe manufacturing town in the 1930s to a city fighting the forces of decline in the 1980s. Perhaps photos of the next flood will capture a new phase: a place with a rich history of making it work, powered by new-economy workers and entrepreneurs.

It largely depends on the NFIP. On November 14, the U.S. House of Representatives passed the 21st Century Flood Reform Act, an attempt to reauthorize the program and simultaneously make it solvent. As part of the reforms, the bill would allow the NFIP to deny coverage to homes that flood repeatedly. It would also let some premiums rise, though it would cap those premiums at $10,000. Bruce Poliquin, the congressman from Maine’s 2nd District, voted in favor of the bill.

It still needs to be reconciled in the Senate, which will likely lead to changes. Until then, the bill’s uncertain final form is making Wright’s job that much more difficult. A year ago, Camden National Bank sold Gardiner a block of buildings for a dollar — 22,000 square feet with the caveat that the city redevelop them within five years. “We’ve had several developers come through who say, ‘I’m interested, but what are you going to do about the flood issue?’ It’s too big of a risk for them to buy in without knowing relief is in place,” says Wright. “They’re doing a pro forma that shows their premiums being $30,000 a year at the end of 15 years.” Once they see that, they typically tell Wright to call them when he’s figured that part out.

A Housing Crash In The Making

When settlers put down stakes in Gardiner in 1754, they didn’t pick the spot for its scenic waterfront views. It was the perfect site for a mill, situated at the hydro energy-infused confluence of the Kennebec River and the Cobbossee Stream, the type of powerful waterways that would make Maine the backbone of America’s textile industry.

Nearly two centuries later and 1,500 miles to the south, water propelled a different kind of industry — a coastal real estate boom that would come to define the Floridian economy. “My mother always said, they don’t make more waterfront,” says Cheri Bett while sitting in the low-slung bungalow she grew up in, a mid-century gem of rattan-and-ficus-era Florida. Behind her, a picture window frames the shoreline of Tampa Bay. Her parents built this house in 1959 and it has never flooded. Today, Bett lives around the corner and rents this one out.

Psychically, Tampa is a world away from Gardiner. The sun-drenched Floridian coast seems to banish any sense of what Wright calls New England’s glass-half-empty mentality. But Gardiner, built on a riverbank centuries ago for salt-of-the-earth purposes, can at least lay claim to needing the waterfront for industry’s sake. Coastal Florida real estate, on the other hand, is often perceived as a luxury product whose owners can weather a financial storm. “People think flooding is the rich man’s problem here,” says Bett.

But in terms of the threat of rising premiums, Bett’s community isn’t all that different from Wright’s. Tampa is a water city — it’s not unusual for working-class people to live in the flood zone. “Some of these houses have two or three families living in them,” says Bett as we drive through a neighborhood of one-story homes, crabgrass lawns, “Beware of Dog” signs and chicken wire fencing. “The thing people don’t consider is that we have a lot of people who rent now. It’s very hard to get mortgages these days. And all these [insurance] expenses that are put on homeowners get passed on to our tenants.” Over 30 percent of Florida renters already spend more than half their income on rent — the highest proportion in the country, in part because of the rental demand created by the housing crash. Like Gardiner, Tampa, which was hit particularly hard by a wave of foreclosures, recently slogged through its own economic recovery.

Bett used to carry flood insurance on her own rental property but she canceled it when Biggert-Waters took effect. “The house is paid for, so they can’t force me to buy it,” she says. Now she’s rolling the dice, hoping her six-decade streak of zero flooding will keep going strong. “Since Irma came through,” she says, “I kind of feel like I’m running a risk.” Her decision to forgo insurance illustrates a conundrum of the NFIP: raise premiums too much, and homeowners whose properties rarely flood could bail on the program, leaving it with a surplus of high-risk policyholders. Wright compares this scenario to the flaw in the health care system that Obamacare’s individual mandate was designed to counteract. “If your risk pool is mostly sick people, it’s a losing proposition,” he says, “and that’s essentially what we have.”

Oddly enough, on a national level, Florida is one of the “healthy” states keeping the NFIP afloat — its homeowners pay far more in premiums than they take out in reimbursements. With 1,350 miles of coastline, the state accounts for nearly 40 percent of NFIP policies, according to a 2011 study by the University of Pennsylvania. Between 1978 and 2008, Florida policyholders paid in $16.1 billion in premiums but collected only $4.5 billion in claims. Hurricane Irma may have changed that calculus, however. Though the NFIP hasn’t released official numbers yet, it’s stated that Florida’s share of Irma-related reimbursements will surely be “several billion dollars.”

Those claims are being filed at the very moment the federal government is making some tough decisions about how to make the NFIP a fiscally-solvent program. There will be pressure to allow premiums to rise. The question will be, how much and how fast? “I’m a former schoolteacher. My husband is an electrical engineer for Honeywell,” says Bett. “If our premiums are going up 25 percent a year for the next 10 years, we would have to sell.” But even selling isn’t a foolproof escape plan. Last time around, when Biggert-Waters sent premiums soaring, “the sales just stopped,” says Mike Twitty, the property appraiser for Pinellas County. He says buyers told their realtors, “If it’s in a flood zone, don’t even show it to me.”

Encompassing the peninsula that forms the western shore of Tampa Bay, Pinellas holds the largest number of subsidized NFIP policies of any county in the nation. Nearly 70 percent of its 59,000 single-family homes within the special flood hazard areas are non-waterfront properties with a median value of about $170,000. “If you’re talking about someone in one of those homes paying $2,500 a year for flood insurance, and you’re going to take them up to $8,000 to $10,000 a year, it doesn’t take a rocket scientist to see that their equity could go away overnight,” says Twitty. “You could have people turning their keys over. It could literally be as bad or worse than what happened in the last meltdown.”

The impacts of a localized housing crash would quickly spread beyond those who lost their homes. “We’d value those properties down, and that’s going to increase the tax burden on the people that aren’t affected,” says Twitty. Many of those are retirees living on fixed incomes, people who carefully budgeted out their golden years without taking flood insurance into account. Much like in Gardiner, Twitty says that the average Pinellas County resident has no idea what could be about to hit them. “There’s a very small percentage of residents that have really wrapped their heads around it,” he says.

Managing Rising Waters And Spiking Premiums

“Our buildings are pretty resistant to floods,” says Logan Johnston, the owner of a 19th century brick triple-decker in downtown Gardiner. “It’s not like Florida where they just float away.”

The perception gap that separates Tampa Bay and Gardiner is striking. People in Maine watch tropical storms lash the Florida coast on CNN and equate flooding with total destruction in the Sunshine State. Likewise, Floridians hardly associate central Maine with any serious flood risk at all. But in many ways, the threat of flooding — and of rapidly rising flood insurance premiums — holds similar consequences for the future sustainability of communities in both places. Maine and Florida are both “donor states” that pay in more to the NFIP than they take out, and it’s working-class communities that will bear the brunt of premium spikes in each of them. Perhaps most critically, the ripple effect of such spikes could decimate each area’s housing market in similar fashion, pulling the rug out from under their respective economic recoveries.

This week, the Army Corps of Engineers will send a team to Gardiner to see what can be done to help flood-proof some of its historic downtown buildings. “Normally the Army Corps of Engineers is all about dikes and pump systems,” says Wright. They’re the ones who walled off New Orleans from the sea and encased the Los Angeles River in concrete. In Gardiner, however, they’ll work with Wright and other city leaders to do something more forward-thinking: Find a way for 200-year-old buildings to manage a flood, not just avoid it.

Brian G. Balukonis is a project planner with the Silver Jackets, a branch of the Army Corps of Engineers that brings together local, state and federal agencies to find floodproofing solutions for communities. In a historic downtown like Gardiner, elevating buildings often isn’t practical. So Balukonis and his team work to find other solutions, like “wet floodproofing” buildings, which allows water to flow in through vents, then empty back out once the water recedes. Another potential solution is “dry floodproofing,” which involves sealing a building with water resistant materials to keep the wet out entirely.

“Over the years, the Corps has changed its use of the term ‘flood control’ to ‘flood risk reduction’ to ‘flood risk management,’ as it better reflects what our projects, whether operated by the Corps, or others, do,” says Balukonis. “They are engineered to reduce a specific amount of flood risk.” These risk reduction projects could become a key tactic used by cities to drive down flood insurance premiums. The Corps works with FEMA to ensure its flood maps clearly reflect flood risk reduction projects — the more of these efforts a city engages in, the lower some of its premiums may fall.

But in the eyes of the NFIP, not all floodproofing measures are created equal, and it’s not always intuitive which ones will get you a break on your premium rates. According to FEMA guidelines, wet floodproofing might warrant a discount, but so far, dry floodproofing won’t, at least not in residential buildings. Nor, necessarily, will elevating a building’s utilities. Logan Johnston, for instance, moved his building’s heating systems out of the cellar. “We pointed that out to the underwriter and he said you can put the furnace on the fucking roof, and it won’t change your premium.”

In the meantime, cities like Gardiner continue to work to bring in new residents and businesses, despite the uncertainty created by the still-unresolved NFIP. “We do have some developers who are trying to work with us. They want to be here,” says Wright. “We’re trying to help them make the numbers work. We just need someone to find a solution to this, if there is a solution.”