Flood Plain Pain

On today’s show we are unpacking the critical details every sophisticated investor, developer, needs to understand about the different types of flood plain designations and how wetland mitigation can make or break your deal.

First, why do people even want to develop in flood plains? For one, the land doesn’t usually present itself as a flood plain. It’s completely dry most of the time. But, like every opportunity, there are layers of risk and regulation you need to run through.

The U.S. government, via FEMA, essentially maps out risk using what’s called Flood Insurance Rate Maps, or FIRMs. Picture these as overlays on your site plan that tell you how often the water is likely to rise and cause problems.

• 100-Year Floodplain (SFHA - Special Flood Hazard Area)
• 500-Year Floodplain
• Floodplain X - minimal risk

But what is your flood map is out of date? 75% of existing FEMA maps are out of date.

As you know, the US government is in a budgetary shutdown, with no signs of a quick resolution. Even if you are not relying on government funding for a loan, if your property is in a flood plain, your lender will require paperwork from FEMA before they can close the loan. So the government shutdown means your loan cannot close until the government re-opens FEMA gets caught up on their backlog of requests.

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