Hurdles for Gov. Cuomo’s New York Buyout Program

by Anne Siders

In the wake of Hurricane Sandy, coastal communities throughout New York have had to face the question: rebuild or retreat?  Now Governor Cuomo is proposing to make that decision a little easier.  On Sunday, he announced a $400 million plan to purchase homes that were damaged in the storm, demolish the structures, and preserve the flood-prone land as public parklands or natural buffers against future storms.

In his January 9th State-of-the-State publication Governor Cuomo expressed his intent to recreate the New York Home Buyout Program, saying that “In certain cases, designating an area to use as parkland rather than for residential or commercial structures may protect the community from destruction that could be avoided.” (See NY Rising, p225)

He therefore proposes to use up to $400 million of the $51 billion federal disaster relief package approved by Congress last week to purchase homes in the most vulnerable areas of New York.   Lands acquired by the state could not be re-developed but could serve as parks or could be turned into wetlands, dunes, or other natural buffers that would help mitigate the effects of a future storm on inland neighborhoods.  Although the program still requires federal approval to be implemented, it would be an ambitious project with significant challenges, including decreased tax revenue, adequate funding, and homeowner resistance.

Coastal properties are often among the most expensive and therefore generate the greatest amount of tax revenue, so re-locating homes away from coastal communities will have a damaging effect on city and county tax revenue.   This is one reason that the program Governor Cuomo proposes would pay homeowners a 5% bonus above market value if they relocate within their home county.

Another risk for the program is the “checkerboard” challenge, a classic problem for managed retreat policies.  If only some houses in a given neighborhood agree to the buyout, the state ends up owning land in a checkerboard fashion, which makes it difficult or impossible to build parklands and natural buffers that would protect neighborhoods further inland and prevent future damage.   In order to encourage whole neighborhoods to move, the Cuomo plan offers a 10% bonus for homeowners if entire blocks agree to move.  In a few highly vulnerable areas, homeowners will be offered an additional 10% bonus to give them further incentive to relocate.

Unfortunately, of the more than 10,000 homes substantially damaged by Hurricane Sandy in the 100 year flood zone, the state predicts that only 10-15% of the eligible homeowners will accept the buyout.  Nassau County Executive Edward Mangano told the New York Times, “We’re not expecting whole neighborhoods, but rather smaller, flooded pockets of areas that may qualify.”  If only small pockets re-locate, New York State won’t own sufficiently large and continuous tracts of land to establish the parklands or natural buffers that would protect other neighborhoods from future events.

The $400 million budget reflects this problem; the funding is only sufficient to purchase around 1,000 – 1,500 homes throughout New York.  Even though the program is not targeted at the most expensive waterfront homes (those in the $2-$5 million range), and would cap payments around the median home value in a given neighborhood, the median home value in some of the storm-wrecked areas is quite high.  For example, at the median home value in Long Island ($360,000), the $400 million program could purchase only 1,100 homes – fewer if those homeowners qualify for one or more of the bonus incentive payments.

Moreover, resistance from local communities is still high.  Governor Cuomo himself, in his State-of-the-State publication, said “Retreating from most of the low-lying areas that were flooded is not a choice.  They are home to thousands of people and thousands of businesses.” (NY Rising, p230)   And many of those people are not ready to leave their homes, whatever the cost or the buyout.

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