Addicks and Barker Reservoirs homeowners have limited options to sue if their homes flood again

From Houston Public Media:

Did your home flood during Harvey? If so, how has that affected your flood insurance premiums? Email Andrew Schneider at andrews@houstonpublicmedia.org or contact him on Twitter @aschneider_hpm.

Homeowners within the Addicks and Barker Reservoirs recently won a judgment against the federal government for letting their homes flood during Hurricane Harvey. The government has appealed the judgment, and a final ruling isn’t likely until sometime in 2024. But even if that ruling favors the homeowners, it will come at a cost: residents of those neighborhoods will have limited options if their homes flood again.

Bill Cook has been a flood advocate ever since the Addicks Reservoir flooded his former home in Bear Creek Village after Hurricane Harvey. He’s concerned not enough homeowners know they’re vulnerable if another Harvey hits the Addicks and Barker Reservoirs, giant basins designed more than 80 years ago to protect downtown Houston from floodwaters.

“Many of them are not aware of it,” Cook said, poring over several sets of documents on home sales on his dining table. “It’s seldom disclosed in the documents, if you were to buy a home in the post Harvey market.”

What many people don’t know is they won’t be able sue the federal government if homes there flood again.

Last October, Judge Charles F. Lettow of the U.S. Court of Federal Claims awarded homeowners in six test cases a combined award of roughly $500,000, after finding the U.S. Army Corps of Engineers liable for flood damages the reservoirs inflicted on their homes during Harvey. People who owned other homes within the reservoirs at the time of Harvey and suffered similar damages have until August 30 of this year to file their own lawsuits for compensation.

But Lettow’s damage award came with a caveat, identified in the final pages of the judgment as a “flowage easement.” It allows the Corps access to the test properties without paying another dime.

“The easement itself basically grants the government a permanent right to impound water within homes or properties that essentially were flooded during Harvey,” Cook said.

Charles Irvine, one of the lead attorneys for owners of homes sitting in the reservoirs behind the dam gates, agreed with Cook’s interpretation.

“Reading that in context with the liability decision, you could infer that a court will make the same ruling on all of the other upstream properties, when it gets the opportunity to do that,” Irvine said. “(The Corps) will treat that easement as applying to every single upstream property that flooded during Harvey.”

Home sellers can be sued themselves if they’re not careful

The Texas Legislature passed a law in 2019, Senate Bill 339, that requires that sellers disclose their homes’ flood history to prospective buyers. It explicitly requires sellers to disclose whether a home is wholly or partially in the 500-year floodplain, a flood pool, or a reservoir.

“The Texas Association of Realtors changed our disclosure obligations,” said Ed Wolff, president of Beth Wolff Realtors and flood czar for the Houston Association of Realtors. “And TREC, the Texas Real Estate Commission, has included those in the seller’s disclosure form that’s required, that discusses whether or not your property is located in a reservoir, or in an area of ponding, or an area of known water release control locations.”

SB 339, authored by State Senator Joan Huffman, R-Houston, also requires sellers to reveal any court judgments like the ones that now bar people from suing the government for future flood damages. Failure to provide such information could leave the seller open to lawsuits if the property later floods.

“Buyers purchasing in these areas, instead of going after the Army Corps of Engineers, potentially would have a cause of action against the seller of a property who did not disclose properly what was happening in the area,” Wolff said.

The problem is that not everyone who lives within the reservoirs has been following the lawsuit against the Corps closely enough, and that could leave them open to being sued themselves.

“What I would tell you is that the majority of the sellers in this location are not necessarily aware of the lawsuit situation,” Wolff said. “They are aware of their physical location in the reservoir. And for as much as we would like for every individual to know everything, unfortunately, most people go through their ownership of their property being blissfully ignorant to the things that are occurring surrounding them. We have abysmal attendance at homeowners association meetings. We have very low interaction with city governments in general.”

Attorney Charles Irvine confirmed that lack of awareness among those in the reservoirs who want to sell their homes is all too common.

“During the compensation trial, we discovered that, out of 1,200 seller disclosures that we looked at, less than 3% had actually correctly answered those questions. And actually, all of those were clients that we had advised on how to answer those questions,” Irvine said.

That’s only one of the problems that homebuyers face in getting compensation if the reservoirs flood their homes again. And it assumes those new residents can actually afford to sue. Many cannot.

“Those neighborhoods out there are very diverse,” Irvine said. “They range from million-dollar homes to $100,000 homes, so it’s a very diverse neighborhood, depending on whether you’re in one of the oldest subdivisions or one of the newer ones.”

Flood advocate Bill Cook said some of the most vulnerable homes are located in the Highway 6 corridor from Clay Road to FM 529, as well as the area around West Little York Road.

“The market price of those homes (is) less than new construction two or three miles away,” Cook said. “There’s a lot of people that have been buying in the 30, 40, 50-year-old communities, because the homes are affordable, they’re larger, they’re (on) bigger lots.”

Realtor Ed Wolff said there are plenty of factors luring lower-income residents into these older neighborhoods within the reservoirs. “The proximity of those properties to town and the easy access that there is to get downtown from those properties,” Wolff said. “The schools in the area are excellent, and it makes an affordable product in an area that otherwise has substantially more expensive property.”

Premiums for flood insurance, mandatory for new home purchases, are skyrocketing

There’s one more wrinkle many lower-income buyers don’t consider until after they’ve purchased. Banks are requiring borrowers to buy flood insurance, and prices for coverage there have spiked since Harvey.

Buyers can delay the pain if they know to take over the previous homeowners’ flood insurance policies. But they’re still looking at increases of up to 18% a year until they reach what insurers call the “full risk rate.” Wright Flood, the nation’s biggest flood insurance agency, said that average full risk rate annual premium in the reservoirs is $909, more than double the annual premium before Harvey. And it’s what some homeowners will get stuck with right away.

“The flood insurance will be costly,” flood advocate Bill Cook said, “and if people are stretched or strained or just barely comfortable in their house with their current mortgage, they could be looking at flood insurance that costs well over $1,000 a year. That could add another $100 or more to their overhead.”

For those residents of the Addicks and Barker Reservoirs who are eligible to sue the federal government for compensation – including people who have since sold their homes and moved out of the area – there’s a hard deadline of August 30 for filing a claim. Attorney Charles Irvine said he and his colleagues representing plaintiffs in the bellwether lawsuit are doing all they can to get the word out.

“We continue to sign up clients, and we’re going to be encouraging through a series of town halls and advertising and things like that people to you know, they need to be aware that there’s an easement out there, and that if they don’t file a case, then there’ll be forever barred,” Irvine said.

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