FLAGSTAFF, Ariz. — In one of Arizona's oldest cities, Bisbee residents live with a threat of flooding that doesn't come from major lakes or rivers. When the storm clouds hover, rain can send water rushing through dry washes, gulches and streets into homes built in low-lying areas of the hilly community.
Residents in the southeastern Arizona town who have mortgages are required to buy flood insurance that can be costly. Home buyers tend to avoid areas of town in flood plains for that reason, said longtime Bisbee real estate agent Rosalie Butler.
For years the federal government subsidized flood insurance on homes and businesses built in the days before flood zones were created, including for dozens of policies in Bisbee. But premiums collected haven't covered the payouts, sending the National Flood Insurance Program $24 billion in debt.
President Barack Obama on Friday signed a relief bill that erases the immediate pain of dramatic flood insurance hikes included in a 2012 bill passed by Congress that was meant to reflect the true risk of flooding and end subsidies. Still, policyholders are facing large, repeated rate hikes over the years.
"It's sure not going to help the real estate market," said Butler, who has been in the business for 45 years. "It's been tough in Bisbee, harder than a lot of areas. That's not going to help at all."
An Associated Press analysis found that the increases for subsidized insurance will hit as many as 1.1 million policyholders across the country, including more than 6,000 in Arizona, based on 2012 figures. Of Arizona policyholders, 1,370 business and second-home owners will see increases of about 25 percent per year, and 4,635 homeowners will see increases of up to 18 percent annually.
In Bisbee, 69 percent of policyholders with subsidized rates — 69 homeowners, and 20 businesses and second-home owners — will be affected.
Butler said she hasn't run into a situation yet where sellers are hesitant to put their home on the market because of the higher premiums, but she said buyers likely will offer less for homes as a result.
Other policyholders facing graduated increases in flood insurance premiums are spread throughout the state, including nearly 840 in Tucson, about 200 in Flagstaff, 110 in Prescott, nearly 360 in Scottsdale and 1,455 in Phoenix.
The old copper mining town of Miami in Gila County has the highest percentage of policyholders in Arizona facing increases at 92 percent, affecting 24 business and home policies.
Gila County chief engineer Darde de Roulhac said many of the old homesteads in the county are located near creeks and now dry washes that can flood during times of heavy rain. Flood maps for the county didn't go into effect until the mid-1980s, he said.
De Roulhac said people slowly are becoming aware of the increased flood insurance premiums.
"A lot of people refinancing or selling property, they're starting to check in areas they didn't check before," he said.