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This story was originally published by Grist and is reproduced here as part of the Climate Desk collaboration.

When US homeowners buy subsidized flood insurance from the Federal Emergency Management Agency, they make a commitment to build back better after flood disasters, even if it costs them. FEMA’s notorious 50 percent rule stipulates that if a home in a flood zone suffers damages worth more than half its value, it must be torn down and rebuilt so it’s elevated above flood level. This can cost homeowners hundreds of thousands of dollars, but it prevents the American public from footing the bill for the repeated destruction of vulnerable homes—at least in theory.

Enforcement of the 50 percent rule largely falls to local officials in flood-damaged regions, who are charged with ensuring that their constituents aren’t rebuilding in flood zones. In exchange for this diligence, the federal government subsidizes low-cost flood insurance for homes in communities that certify their compliance with the rule, goosing red hot real estate markets in Florida and other scenic but climate-threatened regions.

As Florida continues rebuilding from 2022’s devastating Hurricane Ian, however, the Biden administration may be signaling that this era of easy money is over. Late last month, FEMA sent an explosive letter to local officials in Lee County, Florida, where over 750,000 people live near some of South Florida’s most prized coastal land. FEMA claimed that almost 600 homeowners in the city of Cape Coral and other nearby towns had rebuilt vulnerable homes in the flood zone over the 18 months since Hurricane Ian, violating the 50 percent rule as well as local construction laws.

The agency had long given the county and its cities a 25 percent discount on flood insurance in recognition of the county’s efforts to control flood risk, which saved residents millions of dollars a year. The letter threatened to yank away that discount, arguing that the county’s lax approach to the Hurricane Ian rebuild had negated those earlier efforts. The message was clear: After decades of risky construction in floodplains, the feds were putting their foot down.

This new effort to penalize floodplain construction is yet another sign that the long-hidden costs of climate change and development are starting to catch up with homeowners in coastal states—and at the very same time that housing costs more broadly are increasing for many Americans. FEMA has already raised flood insurance premiums across the country in recent years to keep up with mounting risk, and private home insurance companies have also hiked premiums for wind insurance in several states along the Gulf Coast.

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