The new Fannie Mae/Freddie Mac flood insurance guidelines require lenders to determine whether a structure is in a Special Flood Hazard Area (SFHA). The key distinction for government officials is between providing information and making a determination that a property is in or out of a SFHA. If a local official makes a determination and fills out the Standard Flood Hazard Determination Form (SFHDF), he/she could be liable for inaccuracies or misrepresentations. Local officials' only obligation is to have the information available and accessible to the public, including the determination companies.
In Wisconsin, it is recommended that local officials require the property owner to provide a site plan showing the location of the proposed project in relation to the SFHA. The site plan should be done by a licensed engineer or surveyor.
Local officials should be extremely cautious about making flood zone determinations. The flood zone determination companies are being paid to use their expertise to make this determination and to guarantee that it is accurate. These companies cannot expect local officials to make the determination. This is not the local officials' responsibility; it is the lender's, under federal law.
If a local official chooses to assist property owners in determining their flood zone status, it should be made clear that the determination is for informational purposes only. The property owner's lender must still have an official determination done on an approved form, with the preparer's name, address, and telephone number listed. The preparer is the individual or company that made the determination, not the government agency or official that provided information. Local planning and zoning officials' names should not appear in this space. Local officials should make sure the lenders in their area understand this.
The making of flood zone determinations is a growing business, and competition is keen. There are over 100 companies providing the service. To cut costs, some companies simply call local officials and ask them to interpret a flood map over the phone. It's best to not provide the interpretation. The local official has no way of knowing if the property information they are given is accurate. It is the determination company's responsibility to visually interpret the correct map in making a determination. Any reputable company will have all the current maps for any area in which they do business. Local governments simply need to make the flood maps available for public review. Communities currently participating in the Community Rating System (CRS) program may wish to take note of the requirements of Activity 320 - Map Information. This CRS activity is designed to reward communities for informing a requester of a property's flood zone status, not determine whether flood insurance is required. This activity does not create any liability for government officials. Local officials should make it clear to all requesters that the lender (or a third party hired by the lender) is still required to do an accurate determination and fill out the determination form.