flooded houses Houses stand submerged by floodwaters after Hurricane Florence hit in Bergaw, North Carolina, on Thursday, Sept. 20, 2018. (Photographer: Callaghan O’Hare/Bloomberg)

(Bloomberg) – When Hurricane Florence reached Belhaven, North Carolina, last weekend, the flooding that followed was unlike anything Ricky Credle, the mayor of the tiny coastal town had ever experienced.

“I’ve been here 45 years,” Credle said in a phone interview. “I’ve never seen this much water.”

For federal taxpayers, however, the flooding in Belhaven was all too familiar.

Since 1978, 120 homes in the town of 1,600 people have cost federal taxpayers $13.4 million in National Flood Insurance Program payouts, according to data the Natural Resources Defense Council obtained from the Federal Emergency Management Agency (FEMA); 36 received more money than their total value. Five of those homes have gotten federal flood insurance payments 10 times or more, including one that received money 15 times.

Living in vulnerable areas

The result: homes that flood keep getting rebuilt with public money, only to flood again. That leaves people living in vulnerable areas who might rather receive money to move away — and the flood insurance program, already more than $20 billion in debt, going deeper underwater.

“We spend all this money to rebuild these homes, and we spend very little money helping people get out of these homes — even when that’s what they want,” said Rob Moore, a senior policy analyst at the Natural Resources Defense Council. “Efforts to help move people move somewhere safer are seen as a last option, instead of a first option.”

Related: Tackling the U.S. Flood insurance challenge

Encouraging people to keep rebuilding in vulnerable places reflects the design of the flood insurance program. Not only does it subsidize people’s premiums, it imposes no limit on the number of times a homeowner can make a claim. At the same time, federal programs designed to pay people to move out of flood-damaged homes often take years to result in offers, by which time many people have repaired their homes and moved back in.

Repetitive loss properties

There are more than 1,100 so-called severe repetitive loss properties across North Carolina, the NRDC data shows. The federal government has paid out $163.9 million in flood insurance for those homes, which is almost 60% of their combined total value. More than 400 have gotten more in federal insurance claims than the home is worth.

One home, in Nags Head, received flood insurance payments 28 times before it was torn down.

Severe repetitive loss properties account for just 2% of all flood insurance policies, but as much as one-third of all claims, according to R.J. Lehmann, director of insurance policy for the R Street Institute, a Washington think tank.

The result is that the program relies ever more heavily on taxpayers. Last year, the Congressional Budget Office calculated that annual costs exceed premiums by about one-third — and that was before Hurricanes Harvey, Irma and Maria. In October, Congress forgave $16 billion in debt that the program owed the U.S. Treasury.

“The NFIP was not designed to retain funding to cover claims for truly extreme events,” the Congressional Research Service wrote in a report released this year.

Little has been done to reduce threat from next flood

Belhaven demonstrates that trend as well as any place. For all the money the federal government has spent in the aftermath of previous flooding there, it has spent very little on reducing the threat from the next flood. Just one-third of the town’s severe repetitive loss properties have gotten money for what the government calls “mitigation” — a category that includes flood-proofing or raising the home on stilts.

The most effective type of mitigation is tearing down the house, and paying its owner to move elsewhere. But that step is also the most rare. The NRDC’s data show that of the 120 homes, none have been torn down through a buyout program.

Credle, the Belhaven mayor, said moving some residents to safer locations should be considered as part of the response to Florence. He said it didn’t matter if that meant his town shrinks, along with its property tax revenue.

“You always want the tax base to be good,” Credle said. “But you also want people to be safe.”

Other examples

Other examples abound in the wake of Florence.

Washington, a North Carolina town at the mouth of the Pamlico River that was also flooded by Florence, has 114 severe repetitive loss properties. Together, those 114 homes have received $12.6 million in federal insurance payments since 1978. Yet at most 28 of those homes have received federal money to reduce their flood exposure, and only one has been torn down. One of those homes, with a total value of $102,000, has gotten federal flood insurance payments 11 times.

In New Bern, a town 45 minutes south of Washington, 29 severe repetitive loss homes have received $2.7 million in federal flood insurance payments. The federal government has acted to protect just six against flood damage. None of those homes have been bought out and demolished.

As climate change gets worse, federal policies have effectively reduced the cost of living in flood-prone areas, increasing the number of homes that continue to flood at taxpayer expense.

By subsidizing flood insurance by allowing an unlimited number of claims, the insurance program serves to increase other types of federal disaster costs, Lehmann said. “If people weren’t living there, then there would be less disaster assistance necessary,” he said.

FEMA didn’t immediately respond to a request for comment.

Congressional action

Congress worried about the perverse incentives of the flood insurance program long before Florence. In 2012, Congress passed legislation phasing out the subsidies offered to homeowners, increasing premiums in places like coastal North Carolina. Homeowners objected, and Congress rolled back those changes in 2014.

Related: Stalling on flood reform wastes billions & limits choice

Then, last year, the House passed a bill that would limit the amount of money a home could get from the flood insurance program to three times the value of that home.

The bill didn’t clear the Senate.

“People that live in this cycle of flooding and rebuilding may never even be offered assistance to move somewhere safer,” the NRDC’s Moore said. “If they have flood insurance, they’re always offered the option to rebuild in the same location.”

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