A Review of Funding Mechanisms for US Floodplain Buyouts

Abstract

Increases in extreme weather events have caused extensive flooding across the United States. In response, federal, state, and local governments have broadened their flood mitigation strategies to include acquisition and demolition of flood-damaged homes (“buyouts”). Little work has documented or analyzed the range of strategies for funding buyouts. Federal programs provide the bulk of funding, but these programs are often slow. Also, state and local governments struggle to meet cost-match requirements. We present and analyze a nationwide census of buyout funding programs (n = 34), which draw on five primary funding mechanisms. We find that state and local governments are using a range of traditional and innovative financial mechanisms, including municipal/green bonds, revolving loan funds, local option sales taxes, and stormwater utility fees, as viable tools for funding buyouts. These tools may promote more autonomy from federal government mitigation programs, and ultimately, faster buyout processes.

Categorising Area Models for Stormwater Fees at Property Level: A Literature Review

“…For offset program [25] reimbursement of overpaid income tax that the landowner has paid in is set off against debt due for stormwater fee. The stormwater fee with fixed and variable component is a proposed method for taxation based on individual parcel assessment, described by Barton [36], Peterson et al [39] and Godyń et al [40]. For these models a fee specific for the property can be calculated through the combination of detailed land use maps, a hydrological model, estimates of current and expected costs of stormwater networks and treatment.…”

“…Incentive scheme[4],[9]-[13],[25],[32],[35],[37],[43],[44] Flat fee[11],[24],[28],[29],[31],[32],[39],[45] …”

Assessing the full costs of floodplain buyouts

“…The majority of buyout funding in the USA comes from federal government sources, including the Federal Emergency Management Agency's (FEMA) Hazard Mitigation Assistance programs-in particular the Hazard Mitigation Grant Program (HMGP)-and the Department of Housing and Urban Development's (HUD) Community Development Block Grant -Disaster Recovery (CDBG-DR) program (Peterson et al 2020). These programs, which fund buyouts in addition to other hazard mitigation and disaster recovery efforts, have supported floodplain buyouts for the past three decades (FEMA 2018).…”

“…In contrast, HUD distinguishes between these two models, referring to the former as a "buyout" and the latter as an "acquisition"; FEMA only funds the former, which it refers to as an "acquisition and demolition" project (HUD 2019;FEMA 2015). Because FEMA funding accounts for such a significant share of buyout funding (Mach et al 2019;Peterson et al 2020), buyout properties that are redeveloped are relatively uncommon.…”

Homeowner Preference for Household-level Flood Mitigation in US: Analysis of a Discrete Choice Experiment

“…Other possible federal funding sources include FEMA's Pre-Disaster Mitigation Assistance (PMA), which was recently replaced with the Building Resilient Infrastructure and Communities program; Flood Mitigation Assistance (FMA); Housing and Urban Development's Community Development Block Grant Disaster Recovery (CDBG-DR) Program (BenDor et al, 2020;Peterson et al, 2020); and the Community Development Block Grant Mitigation Program (CDBG-MIT). Buyouts are usually initiated after a presidential disaster declaration and homeowner participation in the program is voluntary.…”