Natural Disasters

When Floodwaters Rise, Where Do Homeowners Go? | by ADG4 Companies|Zahra Antaramian | Apr, 2024

Floodwaters can turn a peaceful neighborhood into a disaster zone. Just an inch of water can cause thousands of dollars in property damage, leaving homeowners struggling to decide their next steps. For many, the dream of homeownership turns into a nightmare as they face expensive repairs, lost belongings, and the emotional toll of recovering from a flood. But when homeowners are ready to sell their damaged homes and start over, one potential buyer often steps in: the federal government.

In this blog post, we’ll explore FEMA’s floodplain buyout program, which offers homeowners in flood-prone areas a way to sell their damaged properties and move on. This initiative, designed to reduce future flood risks, has its benefits and challenges. We’ll look at how the program works, why it’s controversial, and what it means for communities and individuals.

The Federal Emergency Management Agency (FEMA) has spent around $4 billion assisting in the purchase of about 45,000 to 50,000 damaged homes since 1989. These homes are often located in areas that are prone to flooding, where the risk of future floods is high. When floodwaters destroy or severely damage homes, FEMA steps in to help homeowners move out of harm’s way.

FEMA’s floodplain buyout program is part of its Hazard Mitigation Grant Program, designed to support local and state governments in reducing the risk of future disasters. Here’s how the process works:

  1. Application and Approval: Local and state governments apply for FEMA grants to purchase properties in flood-prone areas. Once approved, they work with homeowners to negotiate buyouts.
  2. Purchase and Demolition: FEMA provides 75% of the funding for the buyouts, with the remaining 25% coming from state, local, or community funds. In some cases, the 2021 Bipartisan Infrastructure Law can cover up to 90% of the buyout with federal funds. Once a buyout agreement is reached, the government purchases the property, demolishes any structures, and turns the land into public space.
  3. Rehabilitation and Community Use: After demolition, the land is often converted into parks, wetlands, or other public spaces that can absorb floodwaters and reduce the risk of future flooding. This transformation can benefit the entire community by creating open spaces and reducing the potential for flood damage.

Andrea Jones, 59, experienced firsthand the uncertainty and stress that come with living in a floodplain. Jones, who works in the wealth and investments department of a bank, purchased her home in the Charlotte, North Carolina, area in 2006 for $135,000. Although her home never flooded, her street did.

Jones recounted her experience: “Within three years of me being in the house was the first time I experienced the heavy flooding. It came up to my mailbox,” she said. “You could not see the street. You could not see the beginning of my driveway.” Commuting to her home became a concern, especially after the area was rezoned into a flood zone.

This uncertainty led Jones to participate in a floodplain buyout. Despite delays caused by the pandemic, she eventually sold her home and purchased a new one in January 2023. Her experience highlights the relief and safety that buyouts can provide to homeowners living in flood-prone areas.

Floodplain buyouts can offer a valuable lifeline to homeowners who feel trapped in flood-prone areas. However, the program is not without its challenges and controversies. Let’s explore the pros and cons of FEMA’s floodplain buyout program to understand its impact on individuals and communities.

Floodplain buyouts provide several benefits, both for homeowners and for communities:

  1. Safety and Peace of Mind: For homeowners like Andrea Jones, moving out of a floodplain can offer peace of mind. They no longer have to worry about rising waters, evacuation, or the stress of repeated flood damage.
  2. Reduced Risk of Future Flood Damage: By converting flood-prone properties into open spaces, floodplain buyouts help reduce the risk of future flood damage. These open spaces can absorb floodwaters and prevent them from impacting neighboring properties.
  3. Environmental Benefits: Floodplain buyouts can create new parks, wetlands, or natural habitats. These areas not only absorb floodwaters but also provide green spaces for the community to enjoy.
  4. Cost Savings: By reducing the risk of future flood damage, floodplain buyouts can save the government and homeowners money in the long run. The cost of repeated flood damage and recovery efforts can be significantly reduced when flood-prone properties are removed from harm’s way.

Despite their benefits, floodplain buyouts also have their drawbacks and controversies:

  1. Lengthy and Uncertain Process: The buyout process can take a long time, sometimes two to five years, leaving homeowners in limbo. This uncertainty can be especially challenging for those who have already experienced significant flood damage.
  2. Community Fragmentation: If not all homeowners in a flood-prone area participate in the buyout, it can lead to community fragmentation and blight. The Congressional Research Service found that incomplete buyouts can create pockets of abandoned properties, making it difficult for local governments to provide services.
  3. Legal and Financial Burden for Local Governments: When local governments acquire deeded land through buyouts, they take on legal liability and maintenance costs. This responsibility can strain local resources, especially in communities with limited budgets.
  4. Housing Shortage and Affordability: The U.S. is already facing a housing shortage of at least 7.2 million homes, according to Removing homes from the market through floodplain buyouts can exacerbate this shortage and increase housing affordability challenges.

As climate change leads to more frequent and severe flooding, FEMA’s floodplain buyout program will continue to play a critical role in helping homeowners move out of harm’s way. However, the program’s success will depend on addressing its challenges and finding a balance between safety and housing needs.

Carlos Martín, director of the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University, posed an important question: “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?” This question underscores the complexity of the floodplain buyout program and the need for thoughtful solutions.

One of the critical challenges with floodplain buyouts is community fragmentation. When only a portion of a community participates in the buyout, it can lead to a patchwork of abandoned properties and active homes. To address this issue, local governments can work with homeowners to encourage greater participation in buyouts, ensuring that entire neighborhoods move out of harm’s way.

Additionally, transforming bought-out properties into attractive public spaces can help reduce blight and improve the overall appearance of the community. Parks, community gardens, and recreational areas can not only absorb floodwaters but also attract residents and visitors, revitalizing neighborhoods.

The lengthy and uncertain buyout process can be a significant barrier for homeowners. To address this, FEMA and other agencies involved in floodplain buyouts can work to streamline the approval and execution process. Reducing the time it takes to complete a buyout can provide homeowners with greater certainty and encourage more participation.

The U.S. housing shortage adds another layer of complexity to floodplain buyouts. As homes are removed from the market, the pressure on the existing housing supply increases, leading to affordability challenges. To address this, governments and policymakers must balance safety with housing needs. One potential solution is to ensure that new housing developments are built in safe locations, reducing the risk of future flooding while providing affordable housing options.

FEMA’s floodplain buyout program is a complex but vital initiative that helps homeowners escape the dangers of flood-prone areas. While the program has its benefits, including safety, environmental advantages, and cost savings, it also faces significant challenges, such as lengthy approval times, community fragmentation, and increased pressure on housing affordability.

As climate change continues to impact the frequency and severity of floods, floodplain buyouts will play an increasingly important role in helping communities adapt and stay safe. By addressing the program’s challenges and finding a balance between safety and housing needs, policymakers can ensure that floodplain buyouts remain a valuable tool for mitigating flood risks and protecting homeowners.

For an in-depth analysis of FEMA’s spending on flood-damaged homes and further insights into the implications of these buyouts, refer to the comprehensive study covered by CNBC in their recent article on the topic.

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