Reports - Mississippi Renewal

70 | AFFORDABLE HOUSINGAs insurancecompaniestake stockof theiroperationson the Coast,they should beencouraged toreduce theirrisk premiumsfor housingthat exceedsbasic waterand windsafety codes.program. The Department of Energyand EPA might also be asked to supportthis effort. The long-term costs aredifficult to predict at this point, thoughthe long-term benefits should exceedthe costs.Recommendation 24: Innovative EfficiencyMortgages. Private mortgagecompanies should be encouraged to reducetheir lending rates for affordablehousing that is efficient with respect tolong-term maintenance needs, water usage,energy usage, and location. The rationaleis that as these operational costsfor home ownership are reduced, so toois the risk of default. The MississippiHome Corporation should encouragebanks to experiment with this idea byproviding guaranteed support as thefinancial community collects informationto assess the program. For instance,in the event of a default the state couldback the difference between the interestthat would have been charged and thelower rate being offered under this program.The Mississippi Home Corporationand the CDE should work togetherwith private companies to develop thisprogram. This effort likely would beconducted in concert with the recommendation“Create a Combined FannieMae Mortgage Product” discussedabove. This program would ideally bedeveloped within six months. In additionto working with private lenders,the state should ask Fannie Mae, as wellas the Department of Energy and theEPA, for assistance in developing thisprogram. While the long-term costsare difficult to predict at this point, thelong-term benefits should exceed thecosts.Recommendation 25: Innovative InsurancePrograms. As insurance companiestake stock of their operations onthe Coast, they should be encouragedto reduce their risk premiums for housingthat exceeds basic water and windsafety codes. To the extent that additionalsafety measures reduce the riskof damage in the case of severe weatherevents, those savings should be passedalong to homeowners. This, too, shouldhelp make housing more affordable andcreate greater incentives for developersto exceed basic codes. The federal floodinsurance program already includes reductionsfor basic safety features, butperhaps the insurance premium reductionsshould be even larger to providemore incentives for additional safetystrategies.The Mississippi Department of Insuranceshould take the lead in developingthis program and working with insurersto implement it. Within six monthsthe program should be developed. Theexpense associated with this recommendationwould likely be relativelylow. The primary cost, borne by theDepartment of Insurance and privateinsurance firms, would be administrativein nature as the program is set up.Once the program is implemented, thepremiums charged by insurance companiesfor homes built to higher safetystandards will of course be reduced, butso, too, will the required payouts thenext time a major storm hits.Recommendation 26: Future PropertyTax Rebates for Efficient Housing. Withlocation- and resource-efficient housing,local governments over time willspend less on utilities and infrastructuresuch as roads or sewer lines. For this reason,they should be able to offer reducedproperty taxes on units that are locatedin high-density mixed-use neighborhoods,are located near transit, or useenergy and water at high levels of efficiency.Unfortunately, with the existingloss of the property tax base, there is no