After Harvey, How Can Houston Improve the Buyout Process?

Grant Patterson

Flooding during Harvey. Photo: Flickr user World Meteorological Organization.

After Hurricane Harvey, conversation quickly turned to buyouts as a cost effective way to deal with homes in flood-prone areas. Public officials and others called for extensive buyouts by local jurisdictions that would purchase flooded homes in the floodplain, demolish them and then leave those spaces as open space in perpetuity. Homeowners, too, expressed interest, calling city and county services in the region asking about eligibility for such a program. And it wasn’t the first time buyouts emerged as a popular solution. In fact between 1985 and 2017, the Harris County Flood Control District purchased more properties than any other jurisdiction in the country. But as it prepares to complete another round of buyouts, the Kinder Institute for Urban Research looked to other jurisdictions to see how it might be done more effectively and with the future in mind in a new report.

Buyouts may seem like an expensive solution, but the cost of these efforts is often dwarfed by the cost of repeat flooding. In fact, within five years of the catastrophic flooding in 1993 throughout the Midwest, buyout programs there returned an average of two dollars for every one dollar spent to acquire repetitive loss properties. And studies throughout the country have shown similar returns on investment from 150 to 200 percent. Although the cost effectiveness of these strategies is well documented, since 1997 only 32 percent of Hazard Mitigation Assistance grants awarded by the Federal Emergency Management Agency has been spent on property acquisitions, according to a Kinder Institute analysis of FEMA data.

Part of that number may reflect the sometimes complex set of eligibility requirements that go along with such programs. Harris County, for example, has an involved prioritization method which changes according to the impact of a particular disaster.

FEMA, however, has some standard requirements. First, each home must be in a community that participates in the National Flood Insurance Program, which Harris County does. Because my home, for example, was built before FEMA established that it was in a flood hazard area, I am required to have flood insurance. Folks who live in homes not in the floodplain are not required to have insurance and are not eligible for a federally funded buyout if they are not covered. According to the Washington Post, only 17 percent of homeowners in the eight most Harvey-impacted counties have flood insurance.

Second, the Harris County Flood Control District has to conduct a benefit-cost analysis. In this analysis, all of the projected benefits of turning an individual property into open space—the total economic value of recreational space, detention basins, water and air quality, etc.—are weighed against the projected costs of that house repeatedly flooding. The county then makes a case to the state and FEMA that permanently moving a property out of harm’s way will ultimately save the county, state and FEMA money in the long run.

Funding for this comes from the Hazard Mitigation Grant Program (HMGP), FEMA’s oldest and largest hazard mitigation program that can be used for acquisition and demolition. The program has paid out over $63 million to Harris County since 2000 for that purpose alone. Other Hazard Mitigation Assistance programs have awarded Harris County an additional $86 million for acquisitions since 2004. That $150 million makes up only 24 percent of the total federal funds secured by the Harris County Flood Control District since 1985. The remainder of the funds went to structural interventions as well as soft costs associated with planning and design of mitigation projects. In Harris County, 100 percent of federal buyout funds have been used to acquire single-family residential homes that were developed in flood-prone areas though these funds could also theoretically be spent on multifamily residences. As required by FEMA, deed restrictions have been placed on the purchased properties to mandate open space uses after demolition.

The Harris County Flood Control District has then used Capital Improvement funds to develop these lands into green spaces—putting recreational facilities alongside detention basins. Bretshire Stormwater Detention Basin, Hall Park Stormwater Detention Basin, South Belt Stormwater Detention Basin and Inwood Forest Stormwater Detention Basin are all examples of projects done on buyout properties. Those four projects alone add over 2,600 acre feet in detention capacity, but will still not be nearly enough to account for the continued explosion of impervious surfaces across the plains to the north and west of Houston. Although the county has purchased over 3,100 properties and has received over 3,500 voluntary buyout forms since Harvey, it estimates that as many as 180,000 homes remain in floodplains.

Although the Harris County Flood Control District has accomplished a great deal, County Judge Ed Emmett and other officials recognize the need for increased local and state support for buyout efforts. To sufficiently scale up this approach, the program has to be examined front to back, looking for opportunities to increase efficiency, get community buy-in and move away from dependence on federal funds. In this arena, looking to examples of innovative buyout programs in other communities in the United States should be a central concern for those doing the work of hazard mitigation in our region.

Charlotte, Mecklenburg County

For instance, Charlotte and Mecklenburg County in North Carolina have consolidated many local government functions to increase efficiency and reduce redundancy. One arena in which this strategy has excelled has been in its buyout program, administered by the Storm Water Services utility that covers the city of Charlotte, unincorporated county areas and other nearby municipalities. The utility has implemented a number of innovative practices to hasten buyout processes, deepen impact and achieve financial sustainability.

To move toward local financial sustainability, the utility collects storm water fees based on the surface area of impervious surfaces on a property. The more square feet of concrete or roof on your parcel, the higher the fee schedule for your land. This mechanism serves two purposes: it incentivizes greener, more ecologically sensitive building practices—green roofs, pervious pavers, etc.­–and generates a revenue stream that the utility can then use to finance floodplain property acquisitions. This revenue stream has been so successful, that almost half of all buyouts in Charlotte-Mecklenburg have been locally funded by these fees as well as property taxes and other local revenues.

With those local revenue sources, Charlotte-Mecklenburg are able to run a number of effective mitigation programs, including the Local Risk-Based Buyouts Program, which fully funds acquisitions using storm water fees and other local contributions. The Quick Buys program works similarly but draws from the Storm Water utility’s own Rainy Day Fund, allowing the utility to move flooded residents out of floodplains before they go through the arduous, painful process of rebuilding. Because not all flooded properties can be bought out, the utility also has a program, RetroFIT, which funds up to 95 percent of the costs necessary to floodproof homes through elevations, raising water and electricity equipment, adding flood resistant materials and other improvements. They also assign participants a technical advisor to help facilitate the contractor hiring and construction processes. In addition, Storm Water Services also regulates floodplain development and determines eligibility for programs based on its own custom flood map called the Ultimate Floodplain. This map covers the FEMA regulatory floodplain for the community and goes further, accounting for projections of future land use and the ensuing expansion of impervious surfaces in determining flood elevations. By shifting to more local funding, planning for the future and offering a comprehensive menu of programs, Charlotte-Mecklenburg has been able to implement an agile and effective program.

New Jersey

Given the scale of Harvey’s impact, and the sheer number of communities affected by flooding, it will also be crucial for leaders in the region to consider improvements to the acquisitions process. Following Hurricane Sandy, the State of New Jersey implemented a federally funded $300 million comprehensive buyout program called Blue Acres, based in the Department of Environmental Protection (DEP). To get folks out of harm’s way into safe homes as quickly as possible, DEP staff became active and accessible liaisons between local communities and federal officials, examining and revising the buyout process from front to back. The effect of these process reforms is hard to overstate. While in most communities, the acquisition process can take over two years, in New Jersey they were closing on properties weeks after the process began.

How did they do it? First, they centered residents in the process. Every participating homeowner was assigned a case manager who helped with paperwork and technical support. Homeowners could also opt out at any time during the process. Low-income participants could get access to free legal aid and financial services through partnerships with area nonprofits. And they even allowed some short sales and payoff approvals for underwater mortgages, totaling $4.5 million in debt forgiveness. Other innovations addressed front-end efficiencies. Blue Acres staff co-located in an Eatontown field office with local officials there as well as FEMA administrators. Proximity offered easy communication and coordination, and increased responsiveness to community concerns. Second, appraisers, hazard inspectors, title reviewers, GIS analysts, real estate professionals and others were put into interdisciplinary teams to conduct multiple required benefit-cost analyses together, coordinating this process with local caseworkers. Third, Blue Acres staff collaborated with FEMA and the State Historic Preservation Offices to create a Dashboard Survey, allowing the team to forego full assessments—usually required by FEMA—for many properties. Lastly, to save time and funds, the Blue Acres team used light detection and ranging (LiDAR) technology to model community topography and digital elevations. This move sped up the identification of eligible properties, saving two to three months and $1,000 per individual application.

Given the scale of impact in floodplains across southeast Texas, it’s appropriate that leadership is now calling for buyouts as a priority to avoid loss of life and property. But these efforts can and should be informed by the practices of other localities to make sure Houston not only recovers from this storm but is better prepared to deal with the next one. We can and must learn from peers around the country and implement programmatic changes that ease the buyout process for homeowners, speed the process up, increase greenspace and stormwater detention capacity and increase our ability to pay for our own mitigation efforts.

Grant Patterson is a staff researcher with the Kinder Institute’s Development, Transportation and Placemaking program.

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