Report: Federal Flood Program Takes Years to Complete Home Buyouts

In this aerial photo, houses are surrounded by floodwater, Thursday, Dec. 31, 2015, in Arnold, Mo.

In this aerial photo, houses are surrounded by floodwater, Thursday, Dec. 31, 2015, in Arnold, Mo. AP Photo/Jeff Roberson

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The five years it takes to complete a buyout of homes damaged by floods is too lengthy for many homeowners to endure, a new Natural Defense Resources Council study says.

Homeowners in flood-prone areas face a conundrum after a natural disaster: stay in place and rebuild or leave and start over. It can be tempting to rebuild, but doing so can put people at risk of flooding again and again.

That’s why some federal buyout programs encourage residents to get out of flood-prone areas by compensating for their damaged property.

But a new analysis of a property buyout program administered by the Federal Emergency Management Agency (FEMA), shows that some homeowners can get stuck waiting for years to find out if they even qualify for the program, let alone receive monetary compensation that could help them start over. The Natural Defense Resources Council analyzed data from the Hazard Mitigation Grant Program and found that over the last 30 years, the median wait time to complete a buyout is five years.

“These long timeframes really make it difficult for the people who most need the assistance and it really makes it an issue of equity,” said Anna Weber, a senior policy analyst with NRDC and a co-author of the report. “We think everyone one should have the opportunity to have a wide range of options after a flood disaster and the option of a buyout shouldn’t be something that is only available to people who can afford to wait for years through this process.”

FEMA’s Hazard Mitigation Grant Program can be used to fund buyouts as well as other risk-mitigation strategies, such as raising houses. The agency has provided money used to purchase more than 43,000 properties since 1989, according to the NRDC report. Once the properties are acquired, the land remains protected open space where redevelopment is not allowed.

The process to acquire property is complicated and a FEMA spokesman said it requires coordination with state and local officials—local agencies apply for mitigation projects and receive the federal funding that is used to compensate property owners. The complicated process significantly slows the time it takes to complete a project, according to the report, which was released last week. 

The approval process alone often takes upwards of two years, the report found.

“Approximately 70% of approved buyout projects were approved within two years of the associated disaster, but over 400 have taken three years or more to receive approval,” the report said of the buyouts that were analyzed. “Several years usually elapse between project approval and closeout, and fewer than half of buyout projects are closed within five years.”

FEMA did not respond directly to concerns raised in the report about the length of time it can take to complete a buyout. Instead, a spokesman provided a statement explaining the process.

“Acquisitions must also be done on a voluntary basis and include the same negotiation and settlement processes that are typical of property transfers in the local real estate market—offer, acceptance, appraisal, title work, settlement, etc.,” spokesman Michael Hart said.

Homeowners who qualify for the program may drop out because the wait is too long, the NRDC report found. The Blue Acres Buyout Program in New Jersey, which was used to facilitate buyouts after Superstorm Sandy, submitted twice as many properties as it expected to purchase because authorities knew homeowners would drop out before the program could be completed, according to the NRDC report.

In the FEMA program’s history, the agency funded the largest number of property buyouts in response to the Great Flood of 1993 in the St. Louis-region, which led to buyouts of 8,024 properties.

The NRDC report did not identify any correlation between lengthy waits and the amount of money paid for a property nor did the time it took to complete buyouts get shorter in states that had more familiarity with the process.  

To address the long buyout timeframe, the NRDC report suggested several options to help speed up the process:

  • Allow the National Flood Insurance Program to provide direct assistance for buyouts.
  • Allow owners whose homes have flooded multiple times to be pre-approved and guaranteed a buyout under the NFIP.
  • Give non-profit organizations the ability to facilitate buyouts so they can acquire land from property owners, place the property in land trusts, and later be reimbursed by local governments.

The report also suggested the federal government should investigate the reasons for delays.

“While every buyout project is different, one thing is clear: long wait times make buyouts less accessible, less equitable, and less effective for disaster mitigation and climate adaptation,” the report said. 

Andrea Noble is a staff correspondent with Route Fifty.

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