Much Needed Levee Repairs Could Offset Flood Insurance Costs

West Terre Haute, Ind., residents have seen their share of flooding over the years. They know all too well the “cut-arounds” when the swollen waters of Sugar Creek flood the main roads. And there’s a reason why the land between the Wabash River and town’s eastern edge is now Wabashiki Fish and Wildlife Area.

A levee surrounding West Terre Haute helps protect people and property from some of the flooding, but repairs are needed for the levee to meet federal standards.

The West Vigo Levee Association maintains the 2.5-mile levee, which was constructed in 1977 by the U.S. Army Corps of Engineers.

Repairs would allow the Federal Emergency Management Agency to certify the levee as federally accredited.

That accreditation is vital to residents, giving them the option on whether or not to buy flood insurance on their homes – those with a federally assisted mortgage – and reducing their cost, the Tribune-Star reported.

“Without this accreditation, the town could be designated as a high flood-risk zone, which would result in required flood insurance on property located within that zone,” Roger Montgomery, president of the West Vigo Levee Association, wrote in a letter to the Vigo County Board of Commissioners last week.

The levee protects about 1,188 parcels of property in West Terre Haute from flooding associated with Sugar Creek, which runs along the southwest section of the community, and the Wabash River, which lies east of the town.

The levee association is seeking an intergovernmental loan of $200,000 to pay for construction improvements, testing and inspections. Commissioners OK’d the request, which now goes before the Vigo County Council, the funding arm of county government responsible for appropriating money.

Terry Jones, economic development planner/grant administrator for West Central Indiana Economic Development District, said town residents currently pay a levee association tax, which varies yearly based on projects. The association does not bank money for future projects.

Last year, on average, residents paid $12 for the year on a parcel with a $50,000 property assessment, Jones said.

“That annual amount could be more than triple,” to help pay for needed levee repairs, he said. “But that is better than the alternative, which is having to buy expensive flood insurance.”

Flood insurance costs vary by risk zones, said Daniel Pigg, an agent with Howard Clare Insurance Agency. If West Terre Haute’s levee is not accredited, “the banks will then say, ‘well, to meet our loan guidelines with Fannie Mae and Freddie Mac, (homeowners with federal loans) will have to acquire flood insurance.’ That is a double whammy, as (homeowners) not only have to purchase flood insurance when it was not required before, but they will be in a high-risk flood area,” Pigg said.

West Terre Haute property owners “will get hit with $1,000 to $1,500 flood premiums per year, depending on the deductible,” Pigg said. “The problem is, in that community, they can’t afford it. They will not be able to do it financially.”

Conversely, with the levee accreditation and a $1,000 deductible, flood insurance can be bought for $304 annually, for $100,000 of building coverage and $40,000 of contents, Pigg said.

Vigo County previously used an intergovernmental loan to help the town of Riley with a water project. Under state law, however, the loan must be paid in full by the end of the year.

“So what the community will end up having to do is obtain short-term financing with a local financial institution that would provide the full amount to pay back the county,” Jones said. “Then, the association would request money again next year.”

In 2015, levee tax assessments to West Terre Haute property owners would be set to generate $50,000. The association would then seek $150,000 from the county. The process would continue for four years, Jones said. “It would be paid down $50,000 each time,” he said of the gradual plan meant to spread out the financial impact.

In addition to seeking the intergovernmental loan, the levee association is also in negotiation with a local bank to provide a loan on the full $200,000. “It all depends on the interest rate. We either use a bank for a direct loan or for a short-term loan to pay the county back. We are still working on all this,” Jones said.

Work on the levee must be done this month, Jones said, before heavy spring rains. He believes the repair work can be accomplished in a month. In addition, the levee association must show FEMA this year that it is making progress toward certification, he said.

West Central Indiana Economic Development District has been involved in the project from the start, with Jones working to secure a grant to pay for a levee study.

In 2011, Kentucky-based Cole Engineering Solutions was hired as part of a $462,890 grant. The levee association and the town of West Terre Haute paid an additional $22,500.

Since then, numerous soil borings and sound wave studies conducted on the levee identified two areas in need of repair.

The first repair is to raise about 300 feet of the levee one additional foot in height. Under federal requirements, a levee must be built 3 feet higher than a 100-year flood event. In this case, the 300-foot section is lower than the required 475 feet height to be above that 100-year event elevation.

The section runs from the edge of U.S. 40, near Sugar Creek Scrap, west toward Sugar Creek.

Another section, which runs along McIlroy Street north and south on the southeast side of West Terre Haute, is an area near a water flood gate. The area allows water to pool at the base of the levee.

“The U.S. Corps (of Engineers) feels this area is a bit more susceptible, with a potential for sand boils, which is the first sign a levee is not working as water is coming through, instead of around the levee,” Jones said.

This area will require the adding of clay fill, so there’s more weight against the base of the levee, to keep water from seeping up through its base. Drainage pipes also need to be installed, to move water more easily and back into the river, Jones said.