6 facts about Flood Insurance in Bradenton and Anna Maria Island

5.) The Dilemma

Box House on Anna Maria Island

Box House under construction on Anna Maria Island, thanks to FEMA

FEMA rules require a community to disallow any new residential construction with living space below the BASE FLOOD ELEVATION (BFE) in order to qualify. Practically for Florida, and most coastal communities like Anna Maria Island, this means building elevated homes. The first floor needs to remain unoccupied space (below BFE) and may not be used for living. No electricity, just a big waste of space.
Now many may say: This makes sense. From an insurance standpoint yes, but:

FEMA has the megalomania to regulate whole communities instead of individual projects. Flood insurance is an individual choice or individual requirement. But FEMA requires the whole community to obey their rules to qualify.

The Result

Anna Maria Island is changing. Small cottages (ground level) cannot be built any longer new. Since the 1970s. Even renovations are limited to 50% of the building value of renovation, otherwise, it’s illegal. This rule has been existing for quite some time, but now local government with their megalomania are starting to enforce. Local Lawsuits follow, costing taxpayers money. Our famous FEDs even enacted legislation to regulate that.

So the reality is, small cottages are too small to give a great ROI with skyrocketing insurance rates. Building new costs more, because it needs to be built elevated.

So anybody not needing Flood Insurance, because he / she pays cash or finds a portfolio or private loan without the Flood insurance requirement, is bound by FEMA. Even if the land value is higher than your loan, the FED regulated banks will require flood insurance for that tiny cottage. Even a Billionaire building a mansion is out of luck as well as the retiree looking for a nice (new) little cottage. Not available anymore.

Anna Maria Island Cottage

Anna Maria Island Cottage

The consequence: Investors buy cottages, one-by-one, tear them down and built the maximum available living space on 3 or 4 stories, with up to 10 bedrooms to use as rental space on a tiny lot. Instead of lovely cottages, box houses are built changing the coastal areas forever. Now the local residents get upset and the commissioners. Well, you or your predecessor enacted the legislation to comply with FEMA. Question that my friends!

The good thing for Anna Maria, no high rises here, but elsewhere, this will become a nightmare over time.

But one questions remains: Why do all these old houses still stand when they are so dangerous (per FEMA discretion)?

No democratic legitimacy

By the way, FEMA was enacted by congress. But all these rules covering building requirements for whole communities and owners who are not even interested in buying subsidized flood insurance, are not.

6.) Flood insurance rates today and rates with reality for tomorrow

Since rates for EC (Manatee County after 1971) properties can only be determined with an EC. The interesting part is here for PRE-Firm properties:

Property EC says BFE 11 feet
Located South of Cortez on Mainland near 86th Street W

First floor 8.3 feet, adjacent grade 7.5 feet (admitted, pretty bad)

Value: Built 1971, $100k, never flooded, Flood zone AE


FIRM (just following EC):

However, PRE-FIRM properties are subject to increases of about 15 to 18% p.a. to match FIRM properties over time. So the rates will likely be (these estimates were provided by a licensed insurance agent, but are not guaranteed):

2016   $ 1172

2017   $ 1407

2018   $ 1688

2019   $ 2026

2020   $ 2431

2021   $ 2917

2022   $ 3501

2023   $ 4201

2024   $ 5041      EC at 3% pa 5978

2025   $ 6049      EC at 3% pa 6158

So in 2025 the same property will be at $6k annual flood insurance with a value of $100k.

7.) Our recommendation

If you consider buying a Pre-Firm property, it is important to educate yourself regarding realistic flood insurance in future. Don’t rely on current rates as those will significantly increase over time. Better get a EC to estimate future target rates to get a realistic picture.

If you have the financial means covering a loss and you don’t need a mortgage, consider the land value vs. the improvement (i.e. dwelling value). On the other hand side, who wants to take 10 steps or more to go to the pool or use a BBQ 10 times a day? As long as the risk is realistically calculated an older home may be highly attractive and very sought after in future.

Our goal is not to just sell, real estate has its balls and whistles and we are going beyond the scope of many colleagues to make you be happy with your purchase. That’s Sea to Sky Realty’s approach.

BTW: It is highly unlikely, if not impossible, that government controlled flood insurance rates will decrease.

Back to #1 of this article

For questions about buying Real Estate on Anna Maria Island, Bradenton, and Sarasota

Sea to Sky Realty

The Florida Real Estate Company with the GERMAN Twist!
Axel and Bea Weiss
Bradenton, Florida 34205
(941) 866 1666