Flood buyout program falters
As federal money lags and investors prowl, leaders demand quicker effort
Local, state and federal officials, frustrated by an influx of investors buying flooded homes and lengthy delays in disaster prevention funding, are working to overhaul the country’s buyout program, hoping to speed up sales that can now take years to complete.
So far, they lament, none of the $10 billion approved by Congress for long-term flood recovery in Texas has made it to local governments, leaving homeowners in a lurch and neighborhoods open to investor speculation.
Leaders, deeply concerned that they are losing buyout opportunities to such investors, have even started to talk about more punitive measures: FEMA chiefs have discussed canceling flood insurance policies for homes that have suffered multiple floods, and Harris County Flood Control officials have started talking about using eminent domain to forcibly remove homeowners from those houses.
“At what point is allowing this program to be voluntary still a benefit to everyone, to the community, and to the owners living
there?” asked James Wade, head of the Harris County Flood Control buyout program. “These are homes at such high risk of flooding. People are in harm’s way.”
State legislators, flood control leaders and even the head of the taxpayer-funded National Flood Insurance Program advocated this week for a stronger, more nimble buyout program. A Houston Chronicle story earlier this month revealed that investors large and small are buying thousands of Harvey-flooded properties, transforming some Houston neighborhoods into block after block of rentals, interrupting county plans to buy out flood-prone properties and leaning on the flood insurance program to protect them from future floods.
“It’s very disturbing,” said state Rep. Garnet Coleman, a Democrat who represents central and southeast Houston. “The money needs to come faster. Everything is too slow.”
No plans from city, county
Officials view buyouts as a key part of a successful flood control program. After purchase, local governments typically bulldoze the home, removing it permanently from the flood plain.
Such a move has multiple benefits: The green space can again absorb water, or even become a detention basin. It can be used for public good, such as a park or ballfield. And, since most homes in the flood plain are insured by the National Flood Insurance Program, buyouts end the cycle of repetitive insurance payments and save taxpayers tens of thousands of dollars per house.
Harris County has run a buyout program for 30 years. It focuses on homes that have flooded multiple times or are hopelessly deep in the 100-year flood plain. It pays the pre-flood market value of the house, closing costs, relocation and storage expenses, and even up to $31,000 to cover the difference in cost between a homeowner’s old house and a comparable new one. It has purchased about 3,000 homes since its start. And it takes about two years from flood to buyout, if not more.
The county now prioritizes 70 neighborhoods with about 5,500 parcels and 3,300 homes. Every one of those areas flooded during Harvey; buying the homes would cost about $700 million.
Congress has approved $10 billion since Hurricane Harvey hit Houston for long-term storm recovery, including $5 billion it passed in September in Housing and Urban Development funds, some of which is earmarked specifically for buyouts.
But because of infighting and bureaucracy, none of that money has yet made it to Houston.
After storms, the Texas General Land Office typically coordinates the state’s application for HUD funding. The process is laborious: HUD takes months to come up with rules for each federal appropriation. The land office creates a state plan, and submits it to HUD, which evaluates the proposal and approves use of the money. Local governments then prioritize projects and submit them for state approval. The process takes months, if not longer.
But after Harvey, Houston and Harris County fought with the state over control of the money and appealed to HUD to submit their plans and receive their money without state oversight.
The land office has since sent the state plan to HUD for other area municipalities. It expects to hear back in about a month and a half.
But the tussle with the state has delayed the city and county. Neither has yet submitted a plan for approval, said Brittany Eck, spokeswoman for the land office.
“We are pushing,” said Tom McCasland, director of housing for the city of Houston. “We’re all frustrated we can’t move faster.”
And HUD hasn’t even announced rules for the second $5 billion.
“It’s ridiculous,” said Rep. Coleman. “That’s what everyone is complaining about.” He said he didn’t expect local governments to have HUD cash before the end of the summer.
The county is now considering including as many as 3,500 buyouts in its upcoming multibillion dollar bond issue, which would be paid for by local property taxes.
Major changes from FEMA?
State legislators have heard testimony on the issues, said Coleman, who also chairs the House County Affairs Committee. He said he planned to look into some of the investor purchases as a type of price gouging.
County flood control leaders have briefed elected officials and FEMA chiefs on the problem, and suggested solutions — such as a rainy day fund set aside for buyouts.
And the Federal Emergency Management Agency, which administers the National Flood Insurance Program, is itself considering major changes:
Federal money for mitigation — actions such as buying out homeowners or giving them grants to raise houses — typically comes after big storms, when Congress is motivated to act and traumatized homeowners are willing to sell.
But the Flood Insurance Program’s new chief, David Maurstad, said last week that FEMA is now talking about “fundamental changes” that could make more money available before storms hit, removing more houses from the flood plain and moving more families to higher ground. Such actions would, at the same time, lower flood levels and reduce damages for those still at risk.
Wade, the county buyout chief, said most local flood control officials agree that something more needs to be done, though all aren’t convinced that eminent domain — the forcible sale of private property for public use — is the right approach.
The county doesn’t want to kick people out of their homes, Wade said. It wants them in a safer, better place.
“At the same time, we’ve got folks in these areas who’ve dug in, who have made it known to us, ‘Hey we are not interested in your program. We know it floods here. We’ve received your outreach letters,’ ” Wade said. “But they just don’t want to go.”