The US government is buying
up and then destroying American homes like this
one. Some homeowners in
floodplains may voluntarily Sell their doomed
properties to the Government. Since 1989, FEMA has funded
something on the order of 45 To 50,000 home buyouts. Fema is estimated to have
spent somewhere around $4 Billion on the project so
far. But that's just a fraction
of the total amount spent on Buyouts. Since there are
programs outside of FEMA, But not everyone is
convinced buyouts are a good Idea. It's a bit of a mixed bag. I think in some cases
they're successful, and in Some cases they're not. Any person that is moved out
of harm's way is a positive Move forward, provided that
they're given appropriate Resources to move and to
start their lives anew Somewhere else. Because there's so much
variation, sometimes buyouts Are heartbreaking and
sometimes they're a Celebration. Kinda tugs at my heart a
little bit. I was there for 17 years. I'm like, they're going to
tear this house that I was Living in down. I miss the neighborhood,
but I'm happy in this Location. It's not in a
flood zone. Buying up homes and
demolishing them seems Pretty counterintuitive to
solving the housing crisis. The US is still short, up
to 7.2 million homes. We're talking about a crisis
of affordability in housing Across the country,
combined with the crisis of
The climate change effects,
how do we ensure that we Provide for our population
while making sure that They're not in harm's way? So do floodplain buyouts
help or hurt American Homeowners, and can the US
afford to bail out Communities? The general way that
floodplain buyouts work is That a disaster occurs. There's damage done to
people's homes, the Community, the local
government. They decide that it might
make sense to offer buyouts To residents in those
damaged areas. Most often, the local
government and the state Then request funding from
the federal government. They receive the funding. They make an offer to
purchase a home from someone Who has a damaged home. That homeowner decides
whether or not to sell. If they sell, they relocate
somewhere else. The government owns the
property, they demolish the Home and create open space,
and there are almost Infinite variations at
every single one of those Stages I just described. But that's the really
general process. These homes are often
located in the floodplain, Or in an area that is
deemed likely to flood. One of the most successful
buyout programs has been in The area near Charlotte, North Carolina, Where there's almost
20,000 acres of floodplain. Over 475 homes have been
purchased since 1999, Relocating over 785
families and businesses Outside of the floodplain. My name is Andrea Jones. I'm 59 years old and I work
for a bank, so I've been in
The banking industry for 36
years now, and I moved here To start that job and I
stayed, didn't have a reason To to move back to South
Carolina until now. I moved with the buyout
program in May of 2023. So ten months now, 11
months now, I do consider Myself a member of the
Charlotte-Mecklenburg Community because I still
work there, and that's where I do the majority of my
shopping. My doctors are still there. Um, I didn't move any of
that because I'm not that Far away. So I am still a
member of the community. I just don't live there
anymore. The county says $90.5
million have been invested From federal, state, local
and other sources and claims It has avoided $40.9
million in losses. Some of the largest
programs that support Floodplain buyouts are
FEMA's Hazard Mitigation Grant and three programs
from the US Department of Housing and Urban
Development, or HUD. They all come with different
requirements and different Provisions. For example, from FEMA, the
flood buyouts tend to occur For severe repetitive loss
properties. So places that have gone
through several floods. For HUD for example, if a
state chooses after a Disaster to use its funds
to allow for buyouts, then Those homes that went
through the flood are Eligible. On average, federal buyouts
can take 2 to 5 years, Though 80% of FEMA
acquisitions are approved in Less than two years. And that's a long time to
wait. If your home has mud In it and you're trying to
figure out whether to Rebuild or not.
And it usually is predicated
on which program is funding The buyout. Some buyouts have happened
in as little as 3 or 4 Months, especially when the
funding comes from the state Or local level instead of
the federal. It was a letter sent through
the mail, and it was sent to All of the homeowners on
the street. Within three years of me
being in the house was the First time I experienced
the heavy flooding. It came up to my mailbox. You could not see the
street. You could not see the
beginning of my driveway. A couple of years later,
the street flooded again Because of the pandemic. Finally got everything
completed in December of 2022, um signed my contract
for them to purchase my House in January of 2023,
and then we had to start the Appraisal process. Once they did the
appraisal, I did a second Appraisal. They allow you
to get your own. The one thing I didn't like
about that was my appraisal Had to include the flood
zone. And I thought because my
house was not in a flood Zone when I purchased it,
that I didn't have to do That. But they said, yes, I
do. Once I found a home, the
process was easy. I told them when I could
move and we scheduled the Closing. So the home that I
was in, we closed on the Thursday and then I closed
on this home the very next Day. Andrea said some of her
neighbors took the buyout, But others didn't,
especially those who didn't Have a mortgage. The estimates of homes in
the United States who are at
Risk of being flooded
ranges from somewhere to Between 4 and 41 million by
2100. That's a big margin of
error. But regardless, if We've spent the last 30
years buying out 45 to 50,000 homes, and in the
next 80 years we need to do 4 million, we're nowhere
near the scale that would be Required. The FEMA grants are funded
through a cost share, where The federal government
provides 75% of the money, And the remaining 25% comes
from a different agency, the State or local government,
or the homeowner. In some instances, the 2021
bipartisan infrastructure Law can cover 90% of the
buyout with federal funds. The non-federal funds are
generated straight from the Tax revenue or, Income tax revenue.
Sometimes they're coming From a sales tax. There's a couple
communities who put in a Sales tax specifically for
this issue. Sometimes it's a bond
measure, sometimes it's Volunteering, volunteering
the fire department's time, For example, to demolish
some of these bought out Homes or it's other
voluntary donations in kind Of time or services or
others that are meeting Those requirements. Some communities may not
have the funds to support Their part of a plan like
this, and worry the buyouts Could chip away at their
already stretched taxbase. Downe Township's mayor says
without its bayside Sections, the rural
communities already small Tax base, would be
decimated. We're not going have any
ratables or revenue left, And I don't see anything
else except bankruptcy. We're a hurting community in
terms of we are built out.
We're two square miles, and
every home we knock down, we Lose the tax revenues and
there's nothing to replace It. Individual homeowners
may also be concerned about How much money they'll be
able to make in the sale. The water was up to here. The idea is that the
government will buy the home For the same value that
someone could have sold Their home on the private
market for a private sale, But that doesn't mean every
homeowner will be happy with Their buyout offer. Right now. The way the
market is, it wouldn't be, You know, it wouldn't be to
our advantage. How much would you lose? At least $100,000. It's not just our home, it's
our entire life. It's everything that we've
worked for and built up to This point that we're
gambling with. Typically going to run into
a situation in which the Value of the buyout offer
is not going to match what It's reasonably going to
cost for the recipient to Relocate to a higher,
drier, safer location Outside of the floodplain. That could be because the
average cost of a house in The US has jumped 3.5% from
2022 to 2023. The house originally sold
for $135,000. That was back in 2006. The, uh appraised value was
325,000. So we paid off my the
remainder of my mortgage. The new home was 437,000. Obviously, um, values, home
values gone up. Um, I did buy a nicer home
than what I was in. If I'm going to move, I
need to get what I want. This house is three
bedrooms, two baths as well, But there's also a half
bath.
Even though I put a good
bit of money down on this House, my mortgage still
doubled. I had a 3.62 mortgage
interest rate. Um, it went up more than
two points. I have a 5.99% interest
rate now. And then the amount of the
house, it was $206,000 for The mortgage, whereas when
I originally bought the Other house was 135. The actual execution of the buyout work is done by the State or local government. And so those local
governments can make lots of Decisions that are
appropriate for their Context. How many homes
they want to make offers to, How much additional
assistance they want to make To help people relocate
afterwards, how they use the Land after it's purchased,
and on and on. Larger buyout programs can
offer additional incentives For the homeowner. For
example, the Blue Acres Program in new Jersey is
able to negotiate lower Mortgage rates for buyout
recipients when they look to Relocate. If a homeowner
still holds a mortgage, the Balance will be paid off to
the bank directly. The land is then deeded to
the local government with Restrictions on how it can
be used. You can't go in and
redevelop. There's a few Very, very small
exceptions, like if you made A community garden or a
park, you can put a Restroom, but that's
basically it. That's that's the level of
reconstruction you could do. Ideally, the land is
maintained as some sort of Public benefit, like a park
or a swale, which is a Depression in the land that
can collect flood waters to Protect the other homes in
the neighborhood. Some municipalities even
create wildlife corridors.
Others won't have the funds
to maintain or transform the Land, and it simply remains
a vacant lot. I drove by and took a
picture of the empty lot. There's legal liability
associated with owning Property generally, and so
it ends up in some cases, Being a fairly significant
drain on local resources. That's why oftentimes, you
know, localities are not all That keen on buyout
activities because they end Up with a burden. Not all homeowners in the
floodplain are eligible for A buyout, and not all who
are eligible will accept the Buyout offer. You at times end up with a
development pattern that is Called checkerboarding. Um, and this
checkerboarding effect References sort of a
patchwork of homes, some of Which have accepted a
buyout, some of which Haven't. The current policy
movement around buyouts is To try to eliminate that
situation to the degree Possible. Checkerboarding can create
problems like blight, Community fragmentation,
difficulty with municipal Services, and an inability
to restore the floodplain to Be able to properly absorb
water. And then there are things
that savvy buyout Administrators can do about
bundling homes. So maybe you have a home
that is a clear win, and Their next door neighbor is
slightly less of a clear Win. But if you bought the
two of them together, you Could make a much better
community garden or a park. So in aggregate, it makes
sense to buy both of them, Even though one of them is
sort of marginally good and The other one is great. As
a homeowner, you don't go to FEMA and say, I want a
buyout or to HUD and say, I
Want a buyout. You go to
your local government, they Turn around and talk to the
state. The state then Applies to these federal
governments. So in terms of Which program you're under,
it's whichever one your Local government got
funding from. And that means that the
best way for a homeowner to Find out is to talk to your
local official about those Details. The buyouts are meant to
keep flood prone homes off The market, and can help
protect new buyers from Making a bad investment. You know, in many places
across the country, we don't Have strong flood risk
disclosure laws. And so in many cases,
homeowners don't know the Flood risk that they're
moving into. And ultimately, you know,
the developer can build a Development, sell the
homes, and kind of move on Without maintaining any of
the liability associated With the homes that have
been built in a flood prone Area. New Jersey and New York both
just passed laws recently to Increase flood risk
awareness. Right. Maybe that's another piece
of this. The number of people who
buy homes in states where You are not required to
disclose that the home is at Flood risk. Now, you can
make an argument if your Home is on River drive next
to the Ocean, maybe you Should know that it's at
risk. But many homes are Three roads back and might
not know, right? Or they think they're up on
a hill high enough and they Don't know that they're at
that risk. Companies like Realtor.com
now show a home's flood risk Directly on the property's
listing. But critics question if the
US should be bailing out
People who made bad
investments. I think it is very tempting
to say people made bad Decisions. They should deal
the consequences of them. But that presupposes that
we actually have choice. Maybe they bought the home
in the 1970s, when sea level Rise was lower, when storms
were not as frequent, when Rainfall was less
prevalent, they made it Under a totally different
risk assumption than they Are today. For me, had I known that
they were going to move the Flood zone, or if I'd known
that the street flooded the Way it did when I moved in,
I wouldn't have done it. And then you have the
residents where you think About the low income
homeowners. Yeah. There's an estimate
that maybe 10% of government Subsidized affordable
housing in the US is in the Floodplain. And you think
about people who are on Government subsidized
affordable housing. They don't have a lot of
options about where they Live. So to say that they
chose to live in the Floodplain isn't isn't
really true. And many of these residents
could end up using flood Insurance from the National
Flood Insurance Program, a Federally administered
option for risky locations Where private insurers are reducing coverage. It makes sense for the
federal and state and local Governments to be investing
in buyouts, mainly because They may be on the hook for
some of the expenses that May be associated with it. So it makes more sense as
taxpayers, to get rid of a House from the National
Flood Insurance Program. Take it off the insurance
rolls, because we own the National Flood Insurance
Program as taxpayers. At the end of 2022, the NFIP
was $20.5 billion in debt
Because it could not fully
pay back debts it incurred Paying out claims for
catastrophic flood disasters After Hurricane Katrina. We have the federal purse
strings that have paid for So many of these buyout
programs and have encouraged Buyouts in certain harm's
way, but we don't have. So we have all these
carrots, but we don't have The sticks. We're not
telling people because we Can't at the federal level,
tell local jurisdictions Don't build here, don't
allow development here. Move all of these people in
this community to other Parts of your community. We need to have more of
those sticks, to be quite Honest, to make sure that
we're reducing the number of People in harm's way. I think in most cases when
there is a catastrophic Flood sort of day, one
after that flood is when You're going to have the
most support for a Larger-scale buyout
activity. And then as time goes on
and people begin to rebuild Their homes and move back
in, that support can begin To wane over time. And as more time passes
following a significant Flood, it becomes easier to
rationalize the idea that, Well, you know, maybe this
was a, you know, a 1 in 1000 Year type of flood and is
not likely to happen again. Um, but that's a that's a
difficult train of logic to Follow, given how often
we're having significant Flooding events in the
United States. And at some point you're
just displacing people out Of the community. And then
that causes all kinds of Other social issues, people
being displaced. You disrupt the economy,
you disrupt the social Fabric. And that's where it
probably is worth the buyout
To get people out of that
terrible game of hot potato, Of who's left holding that
home when it loses its Value, or when it gets that
worst storm. There is a little, um,
liberation in it. I do feel that. But when I drive by the
other neighborhood, I do Have a sense of, oh, I miss
it. I miss the neighborhood, I
miss my friends. I miss seeing people
walking their dogs, standing Out, talking with them,
having conversations and Things like that. But I
wouldn't. I wouldn't change my mind. I wouldn't go back. I have no regrets from
having made the decision That I made. I would do it
again.
