HOBOKEN — Mayor Dawn Zimmer asked congress on Thursday morning to immediately address a "fundamental unfairness" in the insurance system.
Businesses owners who are located in a flood zone must purchase flood insurance from their mortgage companies, Zimmer said on Thursday morning. "But the Flood Insurance Program treats garden style businesses as if they were basements," the mayor continued.
Any property that requires one to step down when entering is considered a basement by FEMA.
FEMA's coverage of basements is limited to only include things like the boiler, hot water tanks, and electrical control panels, leaving many business owners scrambling.
"These rules do not reflect the reality that in places like Hoboken, New York City, and other urban areas," Zimmer continued, during Thursday morning's hearing.
"The business owners and residents who work and live in these stores and homes are required to buy flood insurance, are required to pay premiums into the flood insurance system," Zimmer said, "yet they receive virtually no coverage."
Many businesses are also still struggling because the Hoboken PATH station is still closed. Zimmer said business is down by about 60 percent in town.
"The National Flood Insurance Program is not designed to meet the needs of the built urban environment," Zimmer testified. "I believe there is a fundamental unfairness in the system that I respectfully ask Congress to address."
One option for local business owners is a loan from the Small Business Administration, but many are wary of acquiring more debt in already uncertain times. And, Zimmer said, in order to qualify for the SBA loan, a business owner is required to get flood insurance.
"What we have is unfortunately not a rule that protects against moral hazard, but a trap that victimizes people at their time of greatest need," Zimmer said.
"The inequity of the system is apparent when we see homeowners receiving $250,000 in coverage for vacation homes on the shore while primary homes and businesses fall through the cracks of the flood insurance program," Zimmer said, as she asked congress for an immediate solution.
"I strongly urge Congress to provide direct assistance for businesses and residents caught in the flood insurance trap," she said. "Specifically," the mayor continued, "I ask you to take action to address the unfair basement issue for the future."