Contractor Craig Schusterick, left, stands in front of his three story, 2,860 square foot home on Balboa, replacing the previous cottage that was on the property before. (Don Leach, Daily Pilot / May 3, 2013)

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It would put Newport at risk of losing federal funding, and if there ever were a major flood, the city wouldn't be eligible for aid unless the disaster was federally declared as such.

Plus, for lenders, FEMA's map, not to mention that gray blob covering Balboa, stays firmly in place.

It's very unusual for communities to voluntarily withdraw from the program. It may have happened, but officials couldn't think of specific examples.

And is cheaper insurance from a private company too good to be true?

Possibly — at least, if the city wants to ensure that every homeowner in a flood zone is able to get insurance.

"Philosophically, oftentimes, people say the government should be the cheapest," explained Rebecca Byrom, who owns a San Diego-based insurance agency that provides flood insurance to about 50 island clients. "But if you think about insurance and how it works, it's all about risk. ... If you insure the whole nation, that's a lot of risk, as opposed to if you're an insurer who chooses just to insure in California."

That's how private insurance carriers, such as American Modern, which she sells, can undercut NFIP rates. Byrom said that ultimately, "The federal government wants to privatize federal flood insurance so they can get out of the business," adding that "there's been rumblings within the industry that other major carriers are going to try to jump into the marketplace."

"A marketplace in states like California, it's pretty safe," she said.

But there's a wrench in that process, because, as she put it, "I don't think you're going to find anybody who's going to jump into New Orleans or the Jersey Shore."

FEMA officials, however, are adamant that it would be hubristic to discount the West Coast's flood risk.

"I can tell you this: There is a risk of flood in California," Blackburn said.

The Sacramento area has one of the highest flood risks in the country, and Malibu has seen a fair amount of repetitive loss, officials said.

Huntington Beach, too, has seen flooding.

Still, when the sun's out, few places in the world seem less prone to disaster than Balboa Island.

Cars roll leisurely down narrow one-way streets lined with single-story beach cottages, while residents sprinkle potted plants on front porches.

Along Marine Avenue, Balboa's main drag, you'll find that there's always money in banana stands — island mainstays that harken back to mid-century strolls on the boardwalk.

And from Craig Schusterick's third story roof deck in the heart of the island, you can see the harbor, its boats floating on placid waters.

OLD DEPRECIATION SCHEDULE (Starting from $160 per square foot) Source: City of Newport Beach

Age (years) Percentage Depreciation
1 1%
2 2%
3 3%
4 4%
5 6%
10 20%
15 25%
20 30%
25 35%
30 40%
35 45%
40 50%
45 55%
50 60%
55 65%
60+ 70%

NEW DEPRECIATION SCHEDULE (Starting from $300 per square foot)

For homes in "good condition," meaning they are well-maintained without "overt signs of wair and no obvious maintenance needed." Structures that are in "average condition" are depreciated by a higher percentage, topping out at 30%.

Age in years Percentage Depreciation
0 to 5 3%
5 to 10 7%
10 to 15 11%
15 to 20 14%
20 to 25 17%
25+ 20%

For more information, go to the City of Newport Beach's Floodplain Management page here.