New York Considers Buying Up Flood-Prone Properties Damaged by Sandy

New York Gov. Andrew M. Cuomo is proposing to spend a chunk of Superstorm Sandy relief funds on buying out severely damaged homes and turning the properties into open space or flood plains, an idea that met with approval by industry interests.

The New York Times reported Monday that the governor proposes to spend $400 million to purchase the homes and reshape the coastal landscape of New York.

Under the plan, The Times says that residents living in flood plains with homes that suffered significant damage would be offered pre-storm value for their houses to relocate. Homeowners in more vulnerable areas would receive a bonus of 10 percent above market value for the houses. Homes in extreme-risk areas, where all the homeowners in the neighborhood agree to sell, would receive an additional 10 percent bonus.

Ray Lehmann, public-affairs director with R-Street, a national think-tank, says the governor’s proposal is based on the National Flood Insurance Program’s own plan to repurchase frequently flooded properties, as outlined in the 2004 flood bill introduced by Rep. Earl Blumenauer, D-Oregon.

“We certainly support the concept,” says Lehmann in an e-mail. “Subsidized flood insurance has, for decades, provided incentives to develop in flood-prone areas, with terrible consequences both for taxpayers and the environment.”

A key to the plan, Lehmann stresses, is that the land needs to be protected as wetlands or open space, never to be redeveloped.

He says there have been cases where “communities that accepted federal funds to buy out flooded properties come back several years later seeking to rededicate that land to future development.”

He goes on to say, “That ends up putting taxpayers doubly on the hook—they’ve already paid for the buyout, and could further have to pay for any future losses once the land is redeveloped.”

Andrew Logan, director, oil and gas and insurance programs at CERES, which represents investors that advocate for sustainable business practices, says, “Climate change represents a significant risk to insurers and society, and Gov. Cuomo’s plan highlights the need for bold action. Insurers and society need to work together to mitigate the threat of climate change. Otherwise, we face a world where society is in constant retreat, insurers are pushed out of markets, and the costs of extreme weather will continue to fall heavily on taxpayers.”

New York Insurance Association President Ellen Melchionni, says in an e-mail, “A comprehensive mitigation effort by New York State and its residents is a crucial component of the state being better prepared for a disaster in the future. Governor Cuomo’s proposal of buying homes along the coastline to turn the land into dunes, wetlands or other natural buffers could certainly help in this overall effort.”

The governor’s plan is described as more ambitious than the usual government buyout plan because it would affect about 10,000 homes. Under the plan, no homeowners would be forced to sell their homes.

The proposal still needs federal approval, but the Times says sources believe federal officials reacted positively to the idea. The report indicates the governor hopes to formally unveil the plan in about two weeks.

A request for comment from the governor’s office was not immediately returned.

In a 2004 presentation on FEMA’s buy-out plan, the Hazard Mitigation Grant Program, the program listed its pros and cons.

On the positive side, the plan saves money in the long run by not having to pay for repeated flood claims. It would provide permanent protection and enhance natural flood protection.

On the downside, the program involves high up-front costs, reduces the property-tax base, disrupts neighborhoods, and could cause short-term disruption in the housing market.

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