We evaluated public housing authorities (PHA) that did not have flood insurance before Hurricane Sandy to determine why some buildings were not insured as required. Flood insurance is necessary to ensure that PHAs remain financially viable, continue to provide safe and habitable housing to low-income residents, and minimize costs to taxpayers for keeping public housing units operational.

We identified three PHAs with some buildings in a flood zone that did not have flood insurance before Hurricane Sandy. For two PHAs, not all of the buildings were covered by flood insurance because the PHAs relied upon insurance companies to keep abreast of the Federal Emergency Management Agency’s (FEMA) updates to flood plain maps. The third PHA was aware of the need to obtain flood insurance but did not do so. As a result, one PHA incurred debt to pay for Hurricane Sandy-related repairs, and another operated at a loss. FEMA deducted the amount the third PHA would have received from flood insurance from a FEMA grant.

We recommend that the Office of Public and Indian Housing (1) require field offices to verify that PHAs have flood insurance policies for buildings in a flood zone, (2) establish procedures to obtain updated flood plain maps and distribute them to PHAs, and (3) require the Crisfield, MD, PHA to procure full flood insurance coverage.