What’s Next: Hurricane Ian Recovery
On October 26, 2022, Florida TaxWatch hosted a discussion of subject matter experts to gain insight as to how Florida will overcome the impacts of Hurricane Ian as residents rebuild their homes, infrastructure, businesses, and finances. The discussion highlighted actions already taken to support residents, as well as challenges left for Florida to resolve. The Florida TaxWatch team was joined by Eve Rainey, the Executive Director of the Florida Emergency Preparedness Association; Kari Hebrank, Senior Governmental Consultant with Carlton Fields; and Fred E. Karlinsky, co-chair of the Insurance and Regulatory Transaction Practice at Greenberg Traurig. The discussion was moderated by Florida TaxWatch Senior Vice President of Research Bob Nave.
How can the State ease the burdens of taxpayers in the aftermath of Hurricane Ian?
To ensure the current disaster does not evolve into a long-term fiscal disaster, Florida TaxWatch made nine recommendations after Hurricane Ian that would ease the tax burden of Floridians trying to rebuild their homes and businesses. In the following weeks, the strong leadership of Florida has addressed or implemented most of Florida TaxWatch’s recommendations.
1. Postpone tax notices and waive penalties or interest for late filings in affected areas. Government Response: The Department of Revenue (DOR) followed the actions taken by the Internal Revenue Service (IRS) to provide some corporate income tax relief. For any corporation in Florida, all return or installment payment due dates between September 23, 2022, and March 2, 2023, were extended to March 2, 2023. DOR then extended the September and October filing due dates for sales taxes and most other taxes until November 23rd. This is for businesses in Charlotte, Collier, DeSoto, Hardee, Lee, and Sarasota counties.
2. Extend the date for residents to take advantage of the tax discounts they would normally receive for paying property taxes and special assessments in November and postpone or defer the deadline for property tax installment payments. Government Response: The Governor issued an executive order that extends all these due dates by two months, including the April 1, 2023, final due date. People can still get installments and pay early to get a discount.
3. Protect individual and business taxpayers from the risks of notices that they will likely not receive because their home or business addresses are not accessible anymore.
4. Issue no new audits in severely impacted areas, extend the statute of limitations and postpone existing audits that haven’t reached the assessment stage because these cannot be responded to while entire communities are still recovering. Government Response: There has not been an official policy, but DOR has reached out to some taxpayers to postpone existing audits.
5. Create procedures for fairly estimating taxes that cannot be calculated because records have been destroyed by the storm, moving away from the current method which significantly overestimates activity if no records are available.
6. Initiate procedures to offer payment plan assistance for late taxes, rather than resorting to standard collection methods, like liens, levies, or bank freezes.
7. Retroactively apply the recently passed law that provides property tax refunds for residential properties for the period they were rendered uninhabitable as a result of a catastrophic event. Government Response: When announcing that he was going to call a special session of the Legislature in December, the Governor said he wanted to do this. The incoming Senate President voiced her support of this concept.
8. Provide tangible personal property relief and allow residential properties rendered uninhabitable to receive property tax refunds. Government Response: Although there are no details, the Governor said he wanted the Legislature to provide property tax relief for impacted businesses as well.
9. Get Congress to pass a Disaster Tax Relief Act that includes provisions from past packages, including elements such as an Employee Retention Credit, an enhanced casualty loss deduction, and other relief provisions.
Looking back, how well did Florida satisfy needs immediately following Hurricane Ian?
Florida is very fortunate to have an extremely strong emergency management system. Layers of government—state, counties, municipalities—launched emergency programs the moment potential disaster was identified. These entities not only successfully coordinated with each other but also successfully coordinated with a wider network, including the National Hurricane Center, federal agencies, private sector partners, and local volunteers. The foundation of this coordination is built upon lessons learned from prior disasters, and as Florida moves forward, reflecting upon the response and recovery of Hurricane Ian will help Floridians better prepare for future emergencies.
In the months following the disaster, what is the most pressing, unmet emergency need?
As initial search and rescue operations subside, the most significant need is housing. Many displaced residents remain in emergency shelters. For those seeking new homes, the already limited rental and housing markets have even smaller supplies after the wreckage of Hurricane Ian. For those who choose to rebuild, the process will be costly and time-consuming. Residents will likely need to adhere to newer building codes, and although this will benefit residents during future storms, it causes higher construction costs as well as higher insurance rates. In the midst of supply chain shortages, residents will also face difficulties securing necessary materials and supplies.
What actions have been taken to support the shelter needs of displaced residents?
Several federal programs can help displaced residents attain temporary housing. The Federal Emergency Management Agency (FEMA) has a relatively new program called Transitional Shelter and Assistance that allows residents to utilize hotels. FEMA is also trying to provide trailers and manufactured homes.
Local governments are supporting residents as well. For example, Charlotte County is relaxing recreational vehicle regulations in hopes that they can serve as temporary homes as permanent housing structures are rebuilt. These types of options will evolve and expand as rebuilding continues.
As Floridians rebuild their homes, how can they ensure greater resiliency?
Florida has the most stringent building codes in the nation. If the area rebuilds according to current codes, it should be better equipped to withstand future storms. Students from the University of Florida and Auburn University assessed the damages incurred by Hurricane Ian and found that the homes and roofs built to newer codes held up very well; however, the losses for homes built prior to 1996 were twice as high and the damages were much more severe.
Beyond building to code, residents can also take action to better protect their homes by purchasing flood insurance. As of the end of October, about 400,000 residential property claims were filed but only 3,000 were filed for flood losses. Unfortunately, this disparity is due to low enrollment in flood insurance.
How can local governments support resiliency efforts?
The resonating lesson of Hurricane Ian is the looming danger of water damage. Local governments may need to invest in coastal protection, such as wetland protection and natural buffers. To finance such endeavors, localities can utilize the state’s program Resilient Florida, which provides counties and municipalities with grants to better protect against flooding.
Local governments should also update building codes. Current building codes ready homes to withstand high winds but not storm surges. New provisions to mitigate water damage, such as elevation requirements, could help reinforce commercial and residential structures.
Hurricane Ian is also a threat to the homes still standing. How will Hurricane Ian affect Florida’s ongoing property insurance crisis?
In the aftermath of Hurricane Ian, more than 600,000 claims and $7.3 billion in insured losses were filed. About 400,000 of these claims are for residential property. This is a huge insurance event in an industry that has already experienced many hits over the past few years.
Prior to hurricane season, the Florida Legislature conducted a special session that ultimately limited Hurricane Ian’s impact on Florida’s fragile property insurance market. During special session, the legislature allocated $2 billion of General Revenue for the Reinsurance Assistance Program, which is used to protect insurance carriers from insolvency. This proactive investment enabled the state-run carrier of last resort Citizens Insurance, as well as most major carriers, to stay standing in the aftermath of Hurricane Ian.
Although actions taken during May’s special session are helping the state to recover, Florida’s property insurance market is still unstable. The Florida Legislature is scheduled to convene for an additional special session in December. During the upcoming special session, legislators are likely to consider further investment in the Reinsurance Assistance Program, litigation reform, and how to keep reinsurance available and affordable to smaller carriers.
Learning as we move forward:
Recovery is not only clearing debris; it is rebuilding communities. Rebuilding efforts often take years. As Floridians rebuild their homes and businesses, state and local governments should continue to consider the wide range of needs—from alleviated tax burdens to effective building codes—that must be addressed to build a stronger, more resilient Florida.