Sacramento is close to reaching an agreement with FEMA after the “permit-gate” scandal allowed homes to be built in a forbidden flood zone, but the solution will cost taxpayers hundreds of thousands of dollars.

The city’s building department allowed builder K. Hovnanian to swap permits and build houses in a Natomas flood zone, in violation of Federal Emergency Management Agency regulations.

Anna Douglas said the past year has left her wondering whether she would be forced to move out of her home, which is inside the flood zone.

“They moved pretty fast to kind of move us in, for reasons I guess we now know,” Anna said. “It’s been hard, not knowing if you’re going to live here or ask you to move.”

Officials discussed sealing the homes, lifting them, moving them, and other assorted ideas that seemed progressively far-fetched.

“A lot of things were giggled at. They were impossible to do,” Anna said.

Existing homeowners will be allowed to stay, but according to the National Flood Insurance Program, insurance would cost up to $87,000 a year per home — nearly $1 million for all the homes inside the affected area.

FEMA has agreed to declare the homes uninsurable, and the city is recommending splitting the costs of private insurance from Lloyds of London with K. Hovnanian, with the city paying no more than $350,000.

“Basically what that says, we’ve looked at every remedy to physically look at short of kicking people out,” said David Brent of the Sacramento Department of Utilities.

The city’s internal investigation into the matter is still ongoing. FEMA and Mayor Kevin Johnson have a press conference scheduled for Tuesday.

(© MMX, CBS Broadcasting Inc. All Rights Reserved.)


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