Flood Plan Could Cost Billions to Economy : Regulations: A 10-city study says that until levee projects are completed in 2002, cities threatened by floods must meet federal construction rules. That could mean losses of up to $18.25 billion.

A federal regulation that would force developers to raise new buildings to protect them against catastrophic floods may cause Long Beach and many Southeast cities to lose billions of dollars in construction projects, according to a recent study.

The study by the Planning Institute of the University of Southern California states that many developers would take their projects--and the jobs and tax revenue that go with them--elsewhere to avoid the costly building regulations.

Cities covered by the study are Bellflower, Bell Gardens, Compton, Downey, Lakewood, Long Beach, Paramount, Pico Rivera, South Gate and the South Bay city of Carson. The 10 cities paid for the $55,000 study.

The Army Corps of Engineers has projected that a giant 100-year flood, which has a 1% chance of occurring in any given year, would overflow the banks of the Rio Hondo and Los Angeles River and inundate parts of those 10 cities. Parts of Lynwood would also be flooded, but that city did not participate in the study. Damages would total $2.25 billion, according to the Corps of Engineers.

To eliminate the chance of flooding, the Corps of Engineers has proposed to spend $340 million to build concrete walls atop levees along the Rio Hondo and Los Angeles River and to raise bridges.

If all goes well, the project could be completed by about 2002, an official said.

Until then, the cities threatened by floods must meet the requirements of the National Flood Insurance Program, which requires flood insurance and imposes building regulations to minimize property damage.

The Federal Emergency Management Agency (FEMA), which oversees the program, is expected to put those regulations into effect by January, 1993, said Jack Eldridge, regional chief of the flood insurance program.

The 10 cities have long contended that the building regulations would be devastating to their economies because they would prompt developers to go elsewhere. The USC study gave credence to their fears.

The study predicts rippling economic losses, including less work for the local building industry because there will be less construction. There would also be a loss of jobs and tax dollars for local cities because, for example, of a loss in office-building construction.

The study also predicts losses of at least $18.25 billion for the 10 cities if the building requirements are in effect until 2005. Those building requirements could be lifted sooner, depending on the progress of the Rio Hondo and Los Angeles River improvement projects.

Losses for the overall Southern California economy would be at least $30.7 billion.

USC researchers Harry W. Richardson, Peter Gordon and Myung-Jin Jun called that economic impact very high, even compared to damage from a 100-year flood.

The cities will ask Congress to kill or suspend the proposed building regulations. City officials said they will not fight the requirement that property owners in the flood-prone areas have flood insurance.

“The purpose of FEMA is to protect an area against devastating floods, but their own flood regulations are going to be the most devastating aspect of the whole problem,” said Downey City Manager Gerald M. Caton.

If the FEMA building regulations take effect, new residential construction in flood-prone areas would have to be raised above projected floodwater levels, which could run as high as 15 feet in one area of Long Beach. Commercial properties could be raised or flood doors or shields could be installed to keep out water.

The regulations would also cover existing homes and other buildings that are significantly improved.

In addition, those buying property with federally insured loans would be required to obtain flood insurance. The insurance would cost about $250 a year for a home that could be rebuilt for $150,000, officials said.

The Corps of Engineers first announced in 1987 that the Southeast and Long Beach areas needed more flood protection than previously thought. Because of urban growth over the years, there is less undeveloped land to absorb storm runoff. That means more water is being channeled into the Rio Hondo and the Los Angeles River, which carry the storm runoff to the ocean.

The most extensive flooding would occur in Paramount. FEMA estimates that 90% of the city would be inundated in a 100-year flood. But Long Beach would have the deepest flooding--average depths of about seven feet, according to FEMA projections.