Federal $$$ Rebuilds Hurricane Alley

Topsail Island is smack in the middle of hurricane alley, reports CBS News Correspondent Jeffrey Kofman.

Just two years ago, this island was hit with a one-two punch. First Hurricane Bertha struck, then Hurricane Fran. Hundreds of homes were flooded and flattened. Because of all of the battering, Topsail Island is falling into the ocean.

Like many people here, local realtor Sandra Ledbetter returned to find her home a wreck.

"A hurricane's not a good thing. We don't want anymore," she says. "But it's not necessarily a bad thing either...because everything gets a facelift. Everything looks better. Everything gets a renewal."

That renewal comes courtesy of the American taxpayers and FEMA, the Federal Emergency Management Agency. It poured $55 million into the rebuilding of Topsail through emergency aid, loans and a program called National Flood Insurance. Topsail has risen from the rubble -- bigger and better than before.

In fact, Leadbetter says she probably would not have moved here if it weren't for the National Flood Insurance program. That's because of the risk of building on what isn't much more than a big sandbar being eroded by relentless wind and waves.

Eastern Carolina University Geologist Stan Riggs has been studying these barrier islands for 34 years.

"I think that the idea that we're subsidizing development on the highest hazard property that we have in the country is sort of ludicrous," he says.

Yet within weeks of Hurricane Fran, National Flood Insurance was helping Topsail rebuild. It's a great deal for homeowners because it costs just a fraction of what private insurance would cost.

It is the American way for neighbors to help out neighbors when disaster strikes, and when it's a big disaster, for the federal government to help out too. But what about people who knowingly live in high risk areas? Should the federal government bail them out -- again, and again?

Because of a flood of recent claims, National Flood Insurance has had to borrow $725 million from the U.S. Treasury.

"I think it has worked every bit the way it was intended to work," says Ed Pasterick, who runs the program.

He also says National Flood Insurance doesn't have the power to stop people from building in risky areas, but it does force people to build safer, more hurricane resistant homes -- if they want flood insurance.

"If those structures are going to be built, then the best we can do is ensure that they are built more safely," says Pasterick.

However, the safest house can't stand if the ground beneath is washed away. According to Riggs, the Geologist studying these islands, it's likely that the ocean will take over in 10 or 20 years.

Would residents like Sandr Leadbetter rebuild?

"If I could, I would," she says, secure in the knowledge that when disaster strikes, federal flood insurance will restore that ocean view.

Reported by Jeffrey Kofman
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