MSD executive director Greg Heitzman at April MSD board meeting

MSD executive director Greg Heitzman at April MSD board meeting | Photo by Joe Sonka

Metropolitan Sewer District executive director Greg Heitzman is expected later today to present a preliminary “quick buyout program” of flood-damaged homes that have been prohibited from repairs due to a 2006 Metro Council ordinance. The program would be funded by a pool of money from insurance claims, federal grants, MSD and Metro government.

As opposed to its long-term strategy of finding funds to buy out many of the 12,500 homes in the floodplain, Heitzman said at an MSD board meeting on Tuesday he would present an option today to the flood mitigation work group to tackle 20 to 30 of the homes that were most severely damaged in recent flooding. He said he hopes MSD could cut checks to homeowners in the next 45 to 60 days.

Using a hypothetical, Heitzman said to offer some sort of buyout for 30 qualifying homes with an average value of $150,000, MSD would need a pool of $4.5 million. A large portion of that funding could come from insurance claims. Assuming Metro Council approves an ordinance on Thursday to allow affected homeowners to finally repair their homes, they could choose to allocate insurance money toward the buyout pool instead of investing in a home that will likely flood again.

Another source for the quick buyout pool would be FEMA grants of up to $30,000 that are offered to lift homes out of the floodplain, as well as roughly $10,000 per home from the federal Small Business Association, as flood insurance premiums could instead be directed toward buyouts. Heitzman added that MSD could “absorb $1 million to $1.5 million” from its current budget for the pool, and he would request additional money from Metro Council and Mayor Greg Fischer.

“The concept is to come up with anywhere from $3 to $5 million that would be available for the most severely damaged homes, to be able to offer a voluntary program,” said Heitzman, adding that MSD might impose a cap of $50,000 per home, which would not be a complete buyout for many.

While Heitzman said he hopes the city would kick in as much as MSD for the quick buyout fund, he said from preliminary discussions with city officials, that appears unlikely.

“A majority of the (local) funding will come from MSD,” said Heitzman. “Ideally, I’d like a third from FEMA, a third from MSD, a third from local money. I just don’t think that with the budget conditions for the city right now, that it’s going to be possible to fund a third of it at this point.”

Fischer’s spokesman has not yet returned an email asking if the new city budget the mayor will present to Metro Council on Thursday would include any buyout funds.

One key question relates to an ordinance the council is expected to approve tomorrow, amending a 2006 law that has prohibited nearly 20 homeowners — and perhaps hundreds more — from obtaining construction permits to repair their homes. The language of the proposed ordinance would take away that barrier, but Heitzman added that most of the affected homeowners would prefer those insurance claim funds go to a buyout instead of repairs — as long as it could be done quickly. Heitzman said if the quick buyout program was to be truly effective, it would have to cut checks within 45-60 days and be attractive enough for homeowners to bypass repairs.

While Heitzman and MSD originally opposed the ordinance based on the fear that it would raise the city’s FEMA class and increase federal flood insurance premiums by more than $50 per home, he said on Tuesday that was no longer the case. While not yet receiving an official assurance from FEMA, Heitzman said even if the 2006 ordinance is amended, MSD still expects the city’s FEMA class would improve to 3, meaning that changing the law would likely have no effect on premiums.

In addition to the quick buyout program, Heitzman said MSD hopes to follow through on a long-term buyout program, not for all 12,500 homes in the floodplain but so the agency “could start tackling 100 homes per year with other funding sources.”