Property Buy-Outs: A Good Option for Local Governments and Homeowners?

Community and Economic Development – Blog by UNC School of Government

https://ced.sog.unc.edu

Property Buy-Outs: A Good Option for Local Governments and Homeowners?

By Brian Dabson

Published September 5, 2017

The devastating impact of flooding is once more in the public spotlight following the unprecedented rainfall from Hurricane Harvey in Texas. Nearer to home, residents in Princeville, Fair Bluff, Seven Springs, Windsor, Kinston and Lumberton NC are planning how to build stronger and safer after Hurricane Matthew last October. These two major events are only the latest in a long string of natural disasters that have wreaked havoc in our communities in recent years. Giving greater attention to finding ways of reducing the toll in lives and property has become more urgent. One significant effort is through the Federal Emergency Management Agency’s (FEMA) Hazard Mitigation Grant Program (HMGP). This program helps communities implement mitigation measures and supports cost-effective post-disaster initiatives that eliminate or reduce long-term risks, and in so doing reduces reliance on Federal funding in future disasters. These efforts can include preparing hazard mitigation plans, elevating homes above potential flood levels, and structural retrofitting of homes to make them more resistant to floods, earthquakes and wind. One measure promoted in the program is funding to help communities purchase and demolish flood-prone property. Between 1993 and 2011, FEMA spent over $2 billion on acquiring some 20,000 homes (1), but in spite of its popularity, little research has been done on what happens to the land and the people after the buy-out process.

Karla Jimenez-Magdaleno worked with Brian Dabson at the UNC School of Government to conduct a literature review to find out more about the outcomes of the buy-out program across the United States. Karla is a dual MA/MPH candidate in the School of Public Health and Department of City and Regional Planning at UNC-Chapel Hill and an economic development analyst with NCGrowth, part of the Kenan Institute of Private Enterprise.

Before summarizing the review’s findings, it is important to note two requirements of the buy-out program:

• The HMGP covers up to 75 percent of the acquisition costs (real estate transaction costs or relocation costs are not eligible); the balance has to be met by the local government. Upon acquisition, the local government is the property owner, not FEMA.
• Any land purchased with HMGP funds must be restricted to open space, recreational and wetlands management uses in perpetuity.

Impact on the Land and Municipalities

Communities established on coastal and river floodplains must weigh three options before deciding to participate in a buyout program – rebuild as before, rebuild with modifications to reduce future damage, or relocate uses to a less flood-prone location (2).  The third option to buy-out and relocate has had mixed results. In some places, the vacated lands are well-managed public spaces offering amenities such as parks, playgrounds, walking trails, and parking lots. In others, vacant properties are scattered through neighborhoods when few residents have opted to accept a buyout (3). Other land has been left to “return to nature” (4). The challenge appears to be that few communities have an adequate process for engaging residents about the buyouts, a plan for the use of the land, or undertaken a fiscal impact analysis of acquisitions and alternative after uses. Studies indicate that there has been limited reflection and learning on what works (5).

Impact on People

The period after a disaster is one of great stress and uncertainty for those whose homes have been damaged. Pressures to decide whether to stay and rebuild or sell and relocate compound this. A lack of trust in the motives of those managing buy-outs leads to fewer people participating, although those concerned about their families’ safety might be better served by relocating (6). However, as has been observed in North Carolina, a general shortage of affordable housing away from flood plains limits options for those considering moving from their community. From a policy perspective, there is little data on where people relocate or what there are experiences are during and after relocation. This is possibly because the buyout program focuses more on property transactions and less on community and individual impact.

Conclusions

Local governments vary widely in their management of buyouts and often do not adapt their responses based on experience.  Local governments need better guidance on good policies and practices based on sound empirical research that evaluates the outcomes of buyouts, tracks where people relocate and how successful they are at recovering, and assesses under what conditions buy-outs are or are not a good option.

References

• Polefka, S. (2013). Moving Out of Harm’s Way? Center for American Progress. https://www.americanprogress.org/issues/green/reports/2013/12/12/81046/moving-out-ofharms-way; Maly, E., & Ishikawa, E. (2013). Land acquisition and buyouts as disaster mitigation after Hurricane Sandy in the United States. Proceedings of International Symposium on City Planning, 1–18.
• Bukvic, A., & Owen, G. (2017). Attitudes towards relocation following Hurricane Sandy: should we stay or should we go? Disasters, 41(1), 101–123. DOI:10.1111/disa.12186; Freudenberg, B. R., Calvin, E., Tolkoff, L., & Brawley, D. (2016). Buy-In for Buyouts. The Policy Focus Report Series. Cambridge, MA.
• Zavar, E. (2015). Residential Perspectives: The Value of Floodplain-Buyout Open Space. Geographical Review, 105(1), 78–95.
• Freudenberg, B. R., Calvin, E., Tolkoff, L., & Brawley, D. (2016). Op. cit. p. 54.
• Greer, A., & Binder, S.B. (2016). A Historical Assessment of Home Buyout Policy: Are We Learning or Just Failing? Housing Policy Debate, 1482(June), 1–21. DOI:10.1080/10511482.2016.1245209; Zavar, E., & Hagelman, R. R. I. (2016). Land use change on U.S. floodplain buyout sites, 1990-2000. Disaster Prevention and Management: An International Journal, 25(3), 360–374. DOI:10.1108/DPM-01-2016-0021
• Binder, S. B., & Greer, A. (2016). The Devil Is in the Details: Linking Home Buyout Policy, Practice, and Experience After Hurricane Sandy. Politics and Governance, 4(4), 97–106. DOI:10.17645/pag.v4i4.738; Bukvic, A., & Owen, G. (2017), op.cit.; De Vries, D. H. & Fraser, J. C. (2012). Citizenship rights and voluntary decision making in post-disaster U.S. floodplain buyout mitigation programs. International Journal of Mass Emergencies and Disasters, 30(1), 1–33; Henry, J. (2013). Return or relocate? An inductive analysis of decision-making in a disaster. Disasters, 37(2), 293–316.