On Tuesday January 15, 2008, The Federal Emergency Management Agency, or FEMA, announced that the Natomas area will be placed in a flood hazard "AE" zone. An "AE" flood designation means that the area is within the 100-year flood plain, and the base flood elevations have been determined. This is an announcement that has been long expected by many, but has brought with it a political firestorm.

The flood zone determination has been based on inspections made to the city levees by the Army Corps of Engineers. Several sections of the levee have been found to be leaking, and they are too short to protect the Natomas area from floodwaters. The Army Corp of Engineers has stated that the Natomas levees are unable to protect from a 100-year flood; in fact, they are unlikely to stand up even to a 30-year flood. This means that there is a 3% chance that the Natomas levees could fail this year. That is an unsettling revelation for many homeowners.

Building in the Natomas area of Sacramento will be halted until the leaky levee system can be repaired. The greatest impact will be felt on projects which do not yet have building permits; projects with current permits may continue. Many city officials, including Sacramento Mayor Heather Fargo and Sacramento City Manager Ray Kerridge, expressed anger and outrage over the report. They feel that halting development in this region will cause the city revenues to be severely cut, which will further aggrevate the already strained city budget deficit. The new Natomas flood hazard designation also means many residents with mortgages on their homes will be required by their lender to carry flood insurance. Flood insurance rates are set by the federal government and are relative to the flood zone that a structure is located on. Once the flood zone for the Natomas area becomes a hazard zone, costs for flood insurance could nearly double. Residents should be contacting their insurance agents now to purchase their policies at lower premiums.

Some Natomas residents feel that they have been deceived by lawmakers and develelopers who assured them that their residences were protected by the current levee systems. However, many old timers remember when the low-lying areas between Rio Linda and the Sacramento Airport were nothing more than soggy rice fields, agriculturally valuable land with a natural irrigation system and a high water table. For generations this land was left undeveloped, and many feel that building permits should never have been issued for this sub-prime area. However, the only solution at this point is to repair the damaged infrastructure and bring the flood protection for the Natomas area up to date. The goal is to avoid a catastrophic loss, similar to the disaster in New Orleans following Hurricane Katrina. This massive levee project, which will involve raising, widening, and reinforcing levee canals, will cost around $400 million and construction will likely begin next summer.