Anatomy of a Buyout Program -- New York Post-Superstorm Sandy

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Conference: 16th Annual Conference on Litigating Takings Challenges to Land Use and Environmental Regulations, At New York University School of Law
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Abstract
A description of the New York City and New York State acquisition and buyout programs following Superstorm Sandy.
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VERMONT LAW SCHOOL
THE 16TH ANNUAL CONFERENCE ON LITIGATING
TAKINGS CHALLENGES TO LAND USE AND
ENVIRONMENTAL REGULATIONS
NOVEMBER 22, 2013
NEW YORK UNIVERSITY SCHOOL OF LAW
NEW YORK, NEW YORK
ANATOMY OF A BUYOUT NEW YORK POST-SUPERSTORM
SANDY
Anne R. Siders, J.D.
Stanford University
Ph.D. Candidate, Emmett Interdisciplinary Program in Environment and Resources
Stanford, CA
2
ANATOMY OF A BUYOUT -- NEW YORK POST SUPERSTORM SANDY
In the wake of a natural disaster, government acquisition of damaged properties can reduce
homeowners’ recovery burden by providing the option to relocate rather than undertake the
potentially financially and emotionally exhausting task of rebuilding and preparing for future
events. In fact, across the United States, acquisition programs are one of the most commonly
used tools to reduce community vulnerability, particularly with respect to flooding and storms.
1
However, the effectiveness and cost of these programs are uneven and depend upon the
program’s structure.
Following Superstorm Sandy in October, 2012, Governor Cuomo and Mayor Bloomberg
announced acquisition programs for New York State and New York City that follow two
different models: one a buyout and the other an acquisition redevelopment program. This paper
presents a general overview of the differences between the two models, major sources of funding
and their constraints on program design, and a description of the design and implementation to
date of the New York acquisition programs.
Buyout v Acquisition
The terms buyout and acquisition are often used interchangeably, but they are distinct and
serve distinct purposes. Acquisition is the general term and refers to the purchase of private
property by government for public use. It is not confined to a particular purpose or end use for
the property. Buyout programs, conversely, are a specific subset of acquisition in which private
lands are purchased, existing structures demolished, and the land maintained in an undeveloped
state for public use in perpetuity. In the wake of Superstorm Sandy, the Department of Housing
and Urban Development (HUD) defined a buyout even more narrowly as “acquisition of
properties located in a floodway or floodplain that is intended to reduce risk from future
flooding.”
2
Both buyout and acquisition programs can be conducted without the consent of the
landowners by using eminent domain, but most often they are conducted with voluntary sales
from landowners who have recently experienced a natural disaster. The most important
distinctions between the two types of programs are the goal of the program and the end use of the
acquired land parcels (see Table 1 for other distinctions).
Acquisition programs can be designed for many purposes. Most often, following a disaster,
they are intended to purchase damaged parcels from homeowners who are unwilling or unable to
rebuild, thereby granting the homeowners the financial resources to relocate to a less vulnerable
area.
3
The parcels are then re-sold to a developer, who is held to stricter building requirements
to make the new structure more resilient to natural threats. Acquisition programs designed in
† Anne R. Siders, J.D.
1
See A. SIDERS, MANAGED COASTAL RETREAT HANDBOOK (Columbia Center for Climate Change Law, 2013); THE
RISK IS REAL: MITIGATION WORKS, MITIGATION BEST PRACTICES: PUBLIC AND PRIVATE SECTOR BEST PRACTICE
STORIES FOR ACQUISITION/BUYOUTS ACTIVITY/PROJECT TYPES IN ALL STATES AND TERRITORIES RELATING TO
FLOODING HAZARDS (FEMA, March 25, 2005); NATIONAL WILDLIFE FEDERATION, HIGHER GROUND: A REPORT ON
VOLUNTARY PROPERTY BUYOUTS IN THE NATIONS FLOODPLAINS 19 (July 1998).
2
HUD, Allocations, Common Application, Waivers, and Alternate Requirements for Grantees Receiving
Community Development Block Grant (CDBG) Disaster Recovery Funds in Response to Hurricane Sandy, 74to
FEDERAL REGISTER 14329, 14345 (March 5, 2013) (hereinafter HUD Guidelines).
3
NATIONAL WILDLIFE FEDERATION, supra 1.
3
this way are intended to maintain similar amounts of housing and a similar local tax base in the
affected community. Such programs may also improve the resilience of the community, by
requiring developers to meet more stringent mitigation standards, but they will be no more
resilient than communities where the original homeowners undertake mitigation programs. The
main benefit is to the homeowner who is enabled to relocate.
4
Table 1. Major distinctions between general acquisition and buyout programs.
Acquisition
Buyout
Purpose
Any (often to permit disaster-
struck homeowners to relocate and
new developers to rebuild)
Permanent removal of built
structures; creation of public space
and natural buffers
Price
Post-Disaster price of home under
HUD and FEMA rules; Relocation
assistance also permitted
Pre- or Post-Disaster price (most
often pre-disaster price + incentive
bonus and relocation assistance)
Rebuilding /
Redevelopment
Yes
No except limited circumstances
(e.g. flood structures, parks)
Eligible for future
federal disaster aid
Yes
No
Buyout programs not only assist individual homeowners but are also intended to improve the
resiliency of the entire community in the following ways:
Reduce exposure by limiting the people and infrastructure located in vulnerable areas;
Reduce future disaster response costs and flood insurance payments;
5
Restore natural buffers such as wetlands in order to reduce future flooding levels;
6
Eliminate the need to maintain and repair flood control structures;
7
Eliminate or reduce the need for public expenditures on emergency response, garbage
collection and other municipal services in the area;
8
and
Provide open space for the community.
4
See, e.g., DAVID R. GOLDSCHALK ET AL., NATURAL HAZARD MITIGATION: RECASTING DISASTER POLICY AND
PLANNING 202, 207212 (1999); NATIONAL WILDLIFE FEDERATION, supra note 1, at 19;
5
See id., at 207212 (1999); Christine A. Fazio & Ethan I. Strell, Government Property Acquisition in Floodplains
After Hurricane Sandy, N.Y. LAW JOURNAL, Feb. 28, 2013.
6
Buyouts are most often discussed in relation to flooding hazards, and given the recent impact of Sandy, this
document also focuses on floods, but buyouts can also be effective to mitigate against mudslides, wildfires,
volcanoes, and other natural disasters with a clear hazard area.
7
The clearest example of this case is the Wapello Levee District in Iowa, where the entire flood district was
purchased and turned into natural wetlands, thereby eliminating the need to spend $3 million to repair the levees that
had repeatedly failed. See BRUCE G. MOUNTAIN, CASE STUDY: HOW A PUBLIC/PRIVATE PARTNERSHIP
TRANSFORMED THE FLOOD-DAMAGED LEVEE DISTRICT 8 IN LOUISA COUNTY, IOWA, INTO THE HORSESHOE BEND
DIVISION, MARK TWAIN NATIONAL WILDLIFE REFUGE 5 (Oct. 25, 1995)..
8
John Crompton, The Impact of Parks and Open Spaces on Property Values, 63 CALIFORNIA PARKS AND
RECREATION 32 (2007); see also JOHN CROMPTON, THE PROXIMATE PRINCIPLE: THE IMPACT OF PARKS, OPEN
SPACES AND WATER FEATURES ON RESIDENTIAL PROPERTY VALUES AND THE PROPERTY TAX BASE (National
Research and Parks Association, 2004) (reviewing 50 research studies conducted in 21 states).
4
Resilience achieved through buyouts can have real economic consequences in addition to
improved social resilience. According to FEMA, “voluntary buyouts in the 30 top repetitive loss
communities cost $1 for every $2 saved in future insurance claims,” an estimate which does not
include money saved on actions “such as local flood fighting, evacuation, and rescue and
recovery expenses that will not be incurred in the future.”
9
Acquisition programs do not produce
the same results because the new-built homes, even if built to be more resilient, are still
vulnerable and may still suffer damage during subsequent events. Buyouts remove such
structures entirely, ensuring no repeat damage, and they also benefit the larger community by
enabling the creation of natural buffers, areas such as restored wetland or park space, that create
spatial separation between buildings and the hazard (as in the case of wildfire) or actively reduce
the threat (as in a wetland that soaks up storm and flood waters and thereby reduces or prevents
flooding further inland).
In order to achieve these goals, buyouts need to acquire a continuous swatch of land, rather
than individual homes in isolated areas. Acquisition programs can be effective even if they
purchase individual isolated homes, but buyout programs will be most effective when they
purchase entire streets or neighborhoods.
Buyouts may also add value to communities through the development of open spaces,
depending upon the purpose the government selects for the acquired parcels. If the government
restores the land to wetlands, it may provide ecological benefits by providing habitat for local
species. If it creates public parklands, it can provide not only intangible social benefits but also
economic profit by increasing the property values of surrounding homes.
10
Federal Funding
Acquisition and buyout programs can be funded entirely through state or local funds, but
most often such programs occur after a nationally recognized disaster and use a combination of
federal and state funds. The Federal Emergency Management Agency (FEMA) administers
programs to help with buyouts under the Stafford Disaster Act, and the Department of Housing
and Urban Development (HUD) administers another through Community Development Block
Grants (CDBG). These funding sources can reduce the economic burden on the local
community. However, the funds also come with guidelines and regulations that may constrain
policy makers’ choices on whether to pursue an acquisition or buyout strategy and how to shape
their programs.
9
FEMA estimates that "every $1 paid toward mitigation saves an average of $4 in future disaster-related costs."
Mitigation Saves Time, Money, and Possibly Lives, FEMA (Nov. 8, 2006), http://www.fema.gov/news-
release/2006/11/08/mitigation-saves-time-money-and-possibly-lives, citing MULTIHAZARD MITIGATION COUNCIL,
NATURAL HAZARD MITIGATION SAVES: AN INDEPENDENT STUDY TO ASSESS THE FUTURE SAVINGS FROM
MITIGATION ACTIVITIES (2005), available at http://www.nibs.org/?page=mmc_projects#nhms. See also NATIONAL
WILDLIFE FEDERATION, supra note 1, at 39.
10
Mark Correll, Jane Lillydahl, and Larry Singell, The effect of green belts on residential property values: Some
findings on the political economy of open space, 54 LAND ECONOMICS 207 (1978); see also Sarah Nicholls and John
Crompton, The Impact of Greenways on Property Values: Evidence from Austin, Texas, 37 JOURNAL OF LEISURE
RESEARCH 321, 322 (2005); Margot Lutzenhiser and Netusil Noelwahr, The effect of open spaces on a home’s sale
price, 19 CONTEMPORARY ECONOMIC POLICY 291 (2001).
5
FEMA
• The Hazard Mitigation Grant Program (HMGP) provides a percentage of total disaster
assistance funds for mitigation measures to be implemented during the immediate recovery after
a disaster. (Discussed in more detail below)
The Flood Mitigation Assistance (FMA) Program provides funding to states and
communities for measures that reduce or eliminate the long-term risk of flood damage to
buildings, manufactured homes and other structures insured under the National Flood Insurance
Program (NFIP).
The Pre-Disaster Mitigation (PDM) Program provides competitive grants to states, tribal
governments and local governments for cost-effective hazard mitigation that complements a
comprehensive mitigation program.
HUD Funding
Community Development Block Grants (CDBG) provide flexible funding to help cities,
counties, and States recover from presidentially declared disasters, especially in low-income
areas. Funds can be used for a variety of activities, including acquisition of damaged properties.
(Discussed below)
A Note on Cost Sharing
FEMA funds may be used to cover 75% of the expenses, but the remaining 25% must come
from another source. In some cases, local communities can apply for and use HUD CDBG
funding to cover the remaining 25%.
11
In other cases, some states and municipalities have
imposed property taxes or enacted new sales taxes, the proceeds of which flow into a fund
specifically designated for buyouts.
12
Hazard Mitigation Grant Program (HMGP) (FEMA)
The Robert T. Stafford Disaster Relief and Emergency Assistance Act authorizes the
President to issue major disaster and emergency declarations. This allows federal agencies to
provide assistance to states overwhelmed by adverse events. Section 404 of the Act is known as
the Hazard Mitigation Grant Program (HMGP) and is one of the primary funding sources for
large buyout programs.
HMGP funding is only available to communities in a presidentially declared disaster area.
Under the Disaster Mitigation Act of 2000, local communities must have a FEMA-approved
Local Mitigation Plan in place in order to receive funding. Individual homeowners may not
apply to the program.
HMGP funds may be used for a variety of projects that will reduce or eliminate losses in
future disasters. Projects must provide a long-term solution to a problem, for example,
permanent elevation of a home to reduce the risk of flood damages as opposed to buying
11
Housing and Community Development Act of 1974, 42 U.S.C. 5301-5320. HUD Guidelines, supra note 2, at
14330. “[A]s provided by the HCD Act, funds may be used as a matching requirement, share, or contribution for any
other Federal program when used to carry out an eligible CDBGDR activity. This includes programs or activities
administered by the Federal Emergency Management Agency (FEMA) or the U.S. Army Corps of Engineers
(USACE).” Id.
12
For example, following the devastating 1993 floods of the Mississippi River, the City of Davenport funded a
preexisting acquisition program through a local sales tax. See GOLDSCHALK ET AL., supra note 5, at 207.
6
sandbags and pumps to fight the flood. In addition, in order to be considered cost effective, a
project's potential savings must be more than the cost of implementing the project.
Examples of HMGP projects include, but are not limited to:
Acquisition of real property for willing sellers and demolition or relocation of buildings
to convert the property to open space use;
Retrofitting structures and facilities to minimize damages from high winds, earthquake,
flood, wildfire, or other natural hazards;
Localized flood control projects designed specifically to protect critical facilities;
Post-disaster building code activities that support building code officials during the
reconstruction process.
Applying for funding through the HMGP is a multistep process that requires coordination of
local, state, and federal officials. A state must demonstrate to FEMA that it has the ability to
manage the program, an approved mitigation plan, and a demonstrated commitment to mitigation
activities
13
in order to administer the buyout program. State administration provides the state
with greater control and direction, especially the power to review and approval local mitigation
plans. However, it also requires state resources that might be scarce during a disaster recovery
period. State officials set the priorities for disaster response, and based on these priorities, local
officials prepare and collect buyout applications from homeowners, which they then submit to
state officials. State officials review the applications and submit them to FEMA,
14
who reviews
the applications and determine whether the plan: a) satisfies FEMA’s rules, b) is environmentally
sound,
15
and c) is a cost-effective use of funds.
16
The HMGP has particular requirements and conditions that must be met in order to secure
funding. Among the most important are:
The buyout must be a cost-effective measure that will substantially reduce the risk
of future flooding damage;
Properties must be acquired at pre-disaster prices;
Acquired lands must be maintained as open public space, used for recreational
purposes, or used for wetlands management practices.
17
This may require local
officials to deed restrict all property using FEMA’s Model Deed Restrictions
(available on the FEMA website) and submit a sample deed restriction to FEMA;
18
13
42 U.S.C. § 5170c(c)(2)(A)(C).
14
See Hazard Mitigation AssistanceProperty Acquisition (Buyouts), FEMA, last updated Dec. 27, 2012,
http://www.fema.gov/application-development-process/hazard-mitigation-assistance-property-acquisition-buyouts
(last visited Aug 14., 2013).
15
FEMA actions must satisfy the National Environmental Policy Act (NEPA). However, the Sandy Recovery
Improvement Act of 2013 created a streamlined environmental review process. See Fazio, supra note 5. The Act
requires that “adequate resources are devoted to ensure that applicable reviews under” NEPA are completed quickly
and that the shortest applicable NEPA process be used for review. Sandy Recovery Improvement Act of 2013, Pub.
L. No. 113-2, § 1104, 127 Stat. 4 (2013).
16
42 U.S.C. § 5170c(a). For FEMA’s cost-benefit analysis tools, see Benefit-Cost Analysis, FEMA, last updated
Feb. 1, 2013, http://www.fema.gov/benefit-cost-analysis (last visited Aug. 14, 2013).
17
42 U.S.C. § 5170c(b)(2)(B)(i), (b)(2)(ii)(I)(III), (b)(2)(iii). See also HUD Guidelines, supra note 1, at 14345.
18
Required Pre-Award Documents for Mitigation Projects, FEMA, last updated Mar. 10, 2013,
http://www.fema.gov/application-development-process/required-pre-award-documents-mitigation-projects (last
visited Aug. 14, 2013).
7
No new structure may be built upon the acquired property, aside from small
recreational facilities (picnic coverings, rest rooms) that are functionally related to
open space, and flood control structures;
19
No future disaster assistance funds may be applied for or received from the federal
government with respect to this property; and
Buyouts must be voluntary in order to use HMGP funds.
20
Community Development Block Grant Program (CDBG) (HUD)
Through the CDBG, HUD provides funding to communities to address a range of
development needs. The CDBG Disaster Recovery Assistance program is a specific effort
through which funds are appropriated by Congress to assist communities to recover from
presidentially declared disasters.
21
Similar to FEMA HMGP, grants are awarded to government
agencies, not to individual homeowners, and governments applying for the program must submit
an action plan that details the intended purposes, management, and oversight of funds.
Activities must also meet at least one of three national objectives: (1) benefit persons of low
and moderate income, (2) aid in the prevention or elimination of slums or blight, or (3) meet
other urgent community development needs because existing conditions pose a serious and
immediate threat to the health and welfare of the community where other financial resources are
not available.
22
Examples of CDBG activities include:
Purchasing damaged properties in a flood plain and relocating residents to safer areas;
Rehabilitation of homes and buildings damaged by the disaster;
Buying, constructing, or rehabilitating public facilities such as streets, neighborhood
centers, and water, sewer and drainage systems;
Homeownership activities such as down payment assistance, interest rate subsidies and
loan guarantees for disaster victims;
Helping businesses retain or create jobs in disaster impacted areas; and
Planning and administration costs (limited to no more than 20 percent of the grant).
23
Following Superstorm Sandy, HUD released specific guidelines on the use of CDBG funds
for buyout programs. Unlike HMGP funds, where the government must pay the pre-storm value
of the property, CDBG funds allow the administrator to choose whether to use pre- or post-storm
value as the purchase price, so long as the price is consistent throughout the program.
24
Post-
disaster prices will result in lower overall costs for the program, but pre-disaster costs will
provide greater assistance to homeowners and potentially result in higher rates of participation in
voluntary programs.
19
42 U.S.C. § 5170c(b)(2)(ii)(I)(III); see also HUD March 2013 Guidelines, supra note 1, at 14345 (stating that
flood control structures may be built on acquired land).
20
Hazard Mitigation AssistanceProperty Acquisition (Buyouts), supra note 14.
21
HUD, Community Development Block Grants Disaster Recovery Assistance,
http://portal.hud.gov/hudportal/HUD?src=/program_offices/comm_planning/communitydevelopment/programs/drsi
(last visited, Nov. 13, 2013).
22
Id.
23
Id.
24
HUD March 2013 Guidelines, supra note 1, at 14345.
8
HUD CDBG Buyout Guidelines
25
a. Buyout requirements:
(1) Any property acquired, accepted, or from which a structure will be removed pursuant to
the project will be dedicated and maintained in perpetuity for a use that is compatible
with open space, recreational, or wetlands management practices;
(2) No new structure will be erected on property acquired, accepted or from which a
structure was removed under the acquisition or relocation program other than (a) a
public facility that is open on all sides and functionally related to a designated open
space (e.g., a park, campground, or outdoor recreation area); (b) a rest room; (c) a flood
control structure; or (d) a structure that the local floodplain manager approves in
writing before the commencement of the construction of the structure;
(3) After receipt of the assistance, with respect to any property acquired, accepted, or from
which a structure was removed under the acquisition or relocation program, no
subsequent application for additional disaster assistance for any purpose will be made
by the recipient to any Federal entity in perpetuity;
(4) Grantees have the discretion to determine an appropriate valuation method (including
the use of pre-flood value or post-flood value as a basis for property value). However,
in using CDBGDR funds for buyouts, the grantee must uniformly apply whichever
valuation method it chooses;
(5) All buyout activities must be classified using the ‘‘buyout’’ activity type in the DRGR
system; …
b. Redevelopment of acquired properties.
(1) Properties purchased through a buyout program may not typically be redeveloped, with
a few exceptions. See subparagraph a(2), above.
(2) Grantees may redevelop an acquired property if: (a) the property is not acquired
through a buyout program and (b) the purchase price is based on the property’s post-
flood fair market value (the pre-flood value may not be used). In addition to the
purchase price, grantees may opt to provide relocation assistance to the owner of a
property that will be redeveloped if the property is purchased by the grantee or
subgrantee through voluntary acquisition, and the owner’s need for additional
assistance is documented.
(3) In carrying out acquisition activities, grantees must ensure they are in compliance with
their long-term redevelopment plans.
Federal funds may be available to communities following presidentially recognized disasters
through the FEMA-administered HMGP and HUD-administered CDBG programs. However,
these programs will place some restrictions on communities’ choices. Specifically, the HMGP
limits programs to buyouts rather than acquisition. The CDBG, although allowing acquisition
programs, permits payment of post-storm value for the home only, which may reduce
participation and increase political resistance to the program.
25
HUD Guidelines, supra note 1, at 14345.
9
NEW YORK BUYOUT AND ACQUISITION
In his January 9, 2013 State of the State address “New York Rising,” New York Governor
Andrew Cuomo captured the need for acquisition to be part of a larger recovery effort:
The realities of post-storm recovery present an opportunity for communities and
individuals to reevaluate previous decisions about where and how to build or
rebuild. This reevaluation will involve taking a hard look at the balance of risk
and beneficial use of any particular property. The State will use various strategies
to assist home- and business-owners whose properties were damaged in
Superstorm Sandy to mitigate for the future or, if they choose to do so, to sell
their properties and relocate.
26
In that same speech, Governor Cuomo announced his intention to re-create the NY Home Buyout
Program in New York State to purchase damaged homes and turn the land into natural buffer
zones to protect against future storms.
27
A few months later, New York City Mayor Michael
Bloomberg announced an acquisition program as part of his Build it Back effort to purchase and
redevelop damaged properties.
28
These two programs may appear quite similar, and some media
outlets initially referred to both as buyout programs,
29
but the distinctions, as discussed above,
between buyouts and acquisition programs mean that the two efforts are likely to have very
different results.
New York State Buyout
The Cuomo Administration submitted its application for CDBG funds in mid-March, and the
plan was approved in April, 2013.
30
The plan included proposed projects for housing, economic
development, retrofits for infrastructure, community planning, and local government support.
Within the housing proposal, the plan included an effort to re-create the New York State Buyout
Program.
31
Eligibility
Only one- and two-unit homes are eligible for the NY Home Buyout Program, and only those
that were substantially damaged (more than 50% of the value of the home) and are located within
the highest risk area along the coast (the FEMA-designated V Zone).
32
26
GOVERNOR ANDREW M. CUOMO, 2013 STATE OF THE STATE ADDRESS: NEW YORK RISING (Jan. 9, 2013), 224
(hereinafter NY Rising).
27
NY Rising, supra note 26, at 224-225.
28
Acquisitions in New York City were first discussed by the Bloomberg administration in the February 26, 2013,
City Council committee hearing testimony of Brad Gair, director of the city housing recovery office. See Matthew
Schuerman, Bloomberg to Offer Own Sandy Buy-Out Plan, With a Twist, WNYC NEWS, Mar. 4, 2013. The formal
plan was first announced on June 3, 2013 and later included in the city-wide PlaNYC: A Stronger, More Resilient
New York, released June 11, 2013. See Dana Rubinstein, Bloomberg launches a post-hurricane rebuilding effort,
acquisition option included, CAPITAL NEW YORK, June 3, 2013; PLANYC: A STRONGER, MORE RESILIENT NEW
YORK (2013).
29
See e.g. Schuerman, supra note 28.
30
NEW YORK STATE HOME AND COMMUNITY RENEWAL: OFFICE OF COMMUNITY RENEWAL, STATE OF NEW YORK
ACTION PLAN FOR COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM DISASTER RECOVERY, Federal Register
Docket No. FR-5696-N-01 (April 2013) (hereinafter NYS CDBG Action Plan).
31
Id. at 40-41.
32
Id. at 40.
10
Payment
The standard payment offered under the NY Home Buyout Program is 100% of the pre-
Sandy fair market value of the home. Certain designated areas are targeted as “Enhanced
Buyout” locations, and in these areas homeowners are eligible to receive additional incentives.
33
In order to encourage participation in the program, homeowners in enhanced areas could receive
an additional 10% above the pre-storm fair market value of their home. Homeowners that
participate in the program and relocate within the same county are eligible for an additional 5%.
This incentive serves to “preserve the community” by encouraging relocation within a relatively
short distance. In total, therefore, a homeowner could receive 115% of the pre-Sandy fair market
value of her home.
Outside of enhanced buyout areas, the state may provide a 10% incentive called a “Group
Buyout Incentive” when 2-10 consecutively located properties within the V Zone all agree to
participate in the buyout.
34
This incentive may be necessary in certain rare cases to facilitate the
reclamation of a concentrated area of high risk and to avoid the patchwork effect of purchasing all
but one or two properties inside such a cluster of properties.”
35
As discussed above, one of the major
benefits of buyout programs is the creation of natural buffers, which require the purchase of
contiguous swaths of land rather than isolated purchases. The use of pre-storm fair market value as
the purchase price and the additional incentives are intended to encourage participation to maximize
the potential for the program to achieve a high participation rate in local areas.
End Use
On property purchased through the state buyout program, existing buildings will be demolished
and reconstruction is not permitted.
36
The empty parcels are to be maintained as coastal buffer zones,
but the plan also permits for “other non-residential/commercial uses,” which are not specified.
37
The
incentives provided by the program, as described above, are explicitly designed to assist in achieving
these end uses:
[T]he State will seek the maximum level of homeowner participation by offering this
individual incentive so that as much land as possible within these areas can be
returned to and reclaimed by nature, land that will be maintained in perpetuity as
coastal buffer zones. This level of incentive was selected in order to ensure that a
sufficient incentive is available, as the number of properties involved will need to be
significant in these areas to produce the intended outcome.
38
Location
From the outset, Governor Cuomo has mentioned the Oakwood Beach community on Staten
Island as a starting point for buyouts, but deciding on eligible locations has not been entirely
straightforward. Following Superstorm Sandy, in order to gauge initial interest in a buyout, the
state launched a pre-registration process for homeowners in need of assistance. By April 2013,
the state had received over 7,000 registrations.
39
Some 2,500 homeowners, 34% of all
33
Id.
34
Id.
35
Id.
36
Demolition costs can also be paid for using CDBG funds. Id.
37
Id.
38
Id.
39
Id. at 19
11
registrants, expressed initial interest in a buyout, although the Action Plan predicts that many
who expressed initial interest are expected to change their minds and rebuild, “even if [the
buyout] is their economic best interest.”
40
On average, the state expects just 10% of homeowners
who are offered a buyout to accept the offer.
41
As a result, the initial Action Plan estimated that
the State would conduct between 750 and 1,000 buyouts.
42
Figure 1. Initial interest expressed in a state buyout program according to pre-registration.
43
Of course, these represent only a fraction of the homes that were damaged. Early estimates
suggested as many as 9,500 homes were substantially damaged (damaged in excess of 50% of
their pre-storm value).
44
When Governor Cuomo originally announced the intention of the State to conduct a buyout
program, he announced the potential to spend up to $400 million.
45
However, the CDBG Action
Plan submitted by New York State to HUD requested only $171 million to address immediate
needs for the buyout.
46
According to the plan, The goal to provide up to $400 million in
funding for buyout purposes remains the same, but it is recognized that this need will be met
over time, with additional sources to be identified and deployed.
47
The FEMA-administered
HMGP, although not included in the initial plan, is noted as a possible source for future
administration of the program.
48
40
Id. at 20.
41
Id. at 46.
42
Id.
43
Id.
44
Id.
45
See, e.g., Thomas Kaplan, Cuomo Seeking Home Buyouts in Flood Zones, NEW YORK TIMES, Feb. 3, 2013,
http://www.nytimes.com/2013/02/04/nyregion/cuomo-seeking-home-buyouts-in-flood-zones.html?_r=0. New York
Action Plan, supra note 30, at 106.
46
New York Action Plan, supra note 30, at 106.
47
Id.
48
Id.
6,425
4,262
2,582
Indicated need for NYS
Repair assistance Indicated need for NYS
Mitigation assistance Expressed preliminary
interest in Buyout program
Volume of interest in different
forms of Neorms received by New York State by March 26,
Volume of interest in different forms of New York State housing assistance
# of pre-registration forms received by New York State by March 26, 2013
12
As for selecting a starting point, Oakwood Beach volunteered itself. As early as January,
2013, owners of 106 homes in Oakwood Beach signed a petition in favor of a buyout (out of a
total of 165 homes in the area).
49
Joe Tirone, a real-estate agent who owned property in
Oakwood Beach, headed an Oakwood Beach Buyout Committee that worked with the
community to petition the Governor to consider a buyout program in the area. The state agreed,
and in August, it expanded the
eligible area to include 300 homes,
with the potential to expand up to 510
in total.
50
The general area is
bounded by Tarlton Street to the
southwest, Mill Road to the north,
and Kissam Avenue to the east, in
addition to parcels along Aviston
Street, including Riga Street,
Dugdale Street, Merkel Place, and
Delwit Avenue
51
(see image at left).
In mid-September, 2013, Joe
Tirone was reportedly the first
member of the community to receive
a written offer.
52
Although the exact
offer amounts have not yet been
made public, the offer was in the
range of $400,000.
53
The first
closures were made in early October,
and demolition started a few weeks
later.
In early October, the State also began expanding the program to other communities. It sent
letters inviting applications from roughly 600 homes in Long Island neighborhoods, including:
Lindenhurst, Oakdale, Sayville, Bayport, Patchogue, Mastic Beach, and Flanders section of
Riverheads.
54
Coordination with New York City
New York City initially operated its own acquisition program under the Build it Back
recovery effort. The New York State CDBG Action Plan specifically notes that Within New
49
See Anjali Athavaley, Sandy Spurs Call to Buy Up Homes: Most in Hard-Hit Staten Island Enclave Reject
Rebuilding, WALL STREET JOURNAL, Jan. 11, 2013,
http://online.wsj.com/news/articles/SB10001424127887323442804578236082058061460.
50
See New York State Housing Trust Fund Corporation, Public Notice: Combined Notice of Finding of No
Significant Impact and Notice of Intent to Request Release of Funds for Oakwood Beach Recreate NY Home
Buyout: Site-Specific Properties Acquisition/Demolition in Oakwood Beach Area, Staten Island, NY, Aug. 2, 2013,
http://www.nyshcr.org/Programs/NYS-CDBG-DR/OakwoodBeach-RichmondCounty-Notice-Finding-
NoSignificantImpact08-02-13.pdf.
51
Id.
52
Judy Randall, Sandy buy-out offers in Staten Island’s Oakwood Beach are ‘on the money’, SI LIVE, Sep. 13, 2013,
http://www.silive.com/news/index.ssf/2013/09/staten_islands_fox_beach_sandy.html.
53
Id.
54
See Mathew Schuerman, Cuomo Expands Sandy Buyouts to 600 on Long Island, WNYC NEWS, Oct. 4, 2013,
http://www.wnyc.org/story/cuomo-expands-sandy-buyouts-600-long-island.
13
York City, the City of New York will undertake buyout or acquisition activities, if any, except
inside the “V Zone” or in other geographic areas determined jointly in consultation with the
City.”
55
According to a news report by WNYC News, citing an interview with an unnamed state
official, the state plan was restricted to V Zones within the city because the Bloomberg
administration was concerned that a more expansive program would revert too many properties
to open space.
56
As New York City plans to add a million people in the coming years, finding
housing for that expansion could be threatened by large buyout programs.
On October 10, Mayor Bloomberg announced the one, and so far only, purchase under the
New York City acquisition program. The house in Tottenville belonged to Patricia Dresch,
whose husband and teenage daughter died in the home during Superstorm Sandy.
57
The property
will be re-developed with a more storm-resistant home built on the same place.
Just ten days later, New York City and State arrived at a new agreement, in which the State
will administer both buyout and acquisition programs.
58
It is still not entirely clear what this deal
means for the funding sources, whether the state will take over all financial responsibility or
whether the city will be expected to contribute some of the HUD CDBG funds it was awarded to
administer its acquisition program (estimated $350 million).
59
The State Action Plan
incorporated an option for acquisition, so it should be permitted to undertake both activities,
although any properties acquired for redevelopment using CDBG funds would need to be
purchased at post-Sandy market values.
60
The Staten Island Advance reports that under the new
partnership, the state would acquire homes at the pre-storm value, but it is not clear what funding
source the state would use for such an outcome.
61
Properties acquired for redevelopment would
be ceded back to the city, and the revenue from sale to a developer would be split between the
city and state.
62
Conclusion
Federal funding sources for acquisition and buyout programs can provide important
assistance to communities recovering from disasters, but those funding sources can also
constrain choices. The decision to pursue an acquisition in which property is purchased at post-
disaster prices and redeveloped or a buyout in which property is purchased at pre-disaster prices
and maintained as a natural buffer against future disasters has major consequences for the
community involved. In New York, despite support from communities and the Governor’s
administration, the buyout process has been slow and is still relatively small. However, even a
small neighborhood purchased and returned to natural wetlands can have a significant impact on
the resilience of a larger community to future events.
55
New York Action Plan, supra note 30, at 40.
56
Matthew Schuerman, Cuomo Offers Sandy Homeowners Less Money in Buyout Program, WNYC NEWS, April
18, 2013, http://www.wnyc.org/story/287184-new-york-state-restricts-sandy-buyout-offer.
57
See Erin Durkin, Widow sells Sandy-ravaged home to NYC in first Build it Back program buy, NY DAILY NEWS,
Oct. 10, 2013, http://www.nydailynews.com/new-york/sandy-wrecked-home-sale-nyc-rebuilding-program-article-
1.1482323.
58
Staten Island Advance Editorial, Sorting out Sandy responsibilities: State, city agree on buyout, rebuilding duties,
SI Live, Oct. 20, 2013,
http://www.silive.com/opinion/editorials/index.ssf/2013/10/sorting_out_sandy_responsibili.html.
59
Id.
60
New York Action Plan, supra note 30, at 40.
61
Id.
62
Staten Island Advance Editorial, supra note 58.
  • ... Scholarly work exploring buyouts is relatively limited, though buyouts have been examined across multiple disciplines, including geography (Mu~ noz & Tate, 2016;Zavar & Hagelman, 2016), economics (Freudenberg, Calvin, Tolkoff, & Brawley, 2016;Tate, Strong, Kraus, & Xiong, 2016), psychology (Binder, Baker, & Barile, 2015), anthropology (Marino, 2018), law (Siders, 2013), public policy (Cigler, 2009;Greer & Binder, 2017), and urban studies (Brady, 2015). What we do have can be categorized as emphasizing one of three phases of the buyout experience, namely the pre-buyout, post-buyout, and, more rarely, peri-buyout period. ...
    ... While the state was implementing a home buyout program, New York City launched a similar acquisition program (c.f. Maly & Ishikawa, 2013;Siders, 2013). There were two major differences between these programs. ...
    Article
    Home buyout programs are implemented in the aftermath of disasters, with the goal of moving households or entire communities out of areas that are at risk for a future hazard event. Buyout programs offer residents pre-disaster market value for their homes to relocate away from a hazardous area, and land purchased through buyouts is required to be maintained as open space in perpetuity. Our understanding of how these programs impact affected households and communities, however, is limited. Using a mixed methods design, 36 residents of Oakwood Beach, NY, were asked to describe their experiences with a home buyout program that was implemented in their community after Hurricane Sandy in 2012. While survey results showed that residents were generally satisfied with the buyout, a different picture emerged when they were asked to qualitatively describe the process of being bought out. Their experiences centered around three themes: (i) lack of information and communication from buyout officials; (ii) challenges surrounding the process of sale; and (iii) the buyout as a foregone conclusion. In light of these findings, recommendations are made to inform future home buyout programs and relocation policies.
  • Sandy buy-out offers in Staten Island's Oakwood Beach are 'on the money', SI LIVE
    • Judy Randall
    Judy Randall, Sandy buy-out offers in Staten Island's Oakwood Beach are 'on the money', SI LIVE, Sep. 13, 2013, http://www.silive.com/news/index.ssf/2013/09/staten_islands_fox_beach_sandy.html.
  • Cuomo Offers Sandy Homeowners Less Money in Buyout Program
    55 New York Action Plan, supra note 30, at 40. 56 Matthew Schuerman, Cuomo Offers Sandy Homeowners Less Money in Buyout Program, WNYC NEWS, April 18, 2013, http://www.wnyc.org/story/287184-new-york-state-restricts-sandy-buyout-offer.
  • Sorting out Sandy responsibilities: State, city agree on buyout, rebuilding duties, SI Live
    • Advance Staten Island
    • Editorial
    Staten Island Advance Editorial, Sorting out Sandy responsibilities: State, city agree on buyout, rebuilding duties, SI Live, Oct. 20, 2013, http://www.silive.com/opinion/editorials/index.ssf/2013/10/sorting_out_sandy_responsibili.html. 59 Id. 60 New York Action Plan, supra note 30, at 40. 61 Id. 62 Staten Island Advance Editorial, supra note 58.
  • Cuomo Expands Sandy Buyouts to 600 on Long Island, WNYC NEWS
    • Mathew Schuerman
    Mathew Schuerman, Cuomo Expands Sandy Buyouts to 600 on Long Island, WNYC NEWS, Oct. 4, 2013, http://www.wnyc.org/story/cuomo-expands-sandy-buyouts-600-long-island.
  • Widow sells Sandy-ravaged home to NYC in first Build it Back program buy, NY DAILY NEWS
    • Erin Durkin
    Erin Durkin, Widow sells Sandy-ravaged home to NYC in first Build it Back program buy, NY DAILY NEWS, Oct. 10, 2013, http://www.nydailynews.com/new-york/sandy-wrecked-home-sale-nyc-rebuilding-program-article- 1.1482323.
  • Sandy Spurs Call to Buy Up Homes: Most in Hard-Hit Staten Island Enclave Reject Rebuilding
    • Athavaley See Anjali
    See Anjali Athavaley, Sandy Spurs Call to Buy Up Homes: Most in Hard-Hit Staten Island Enclave Reject Rebuilding, WALL STREET JOURNAL, Jan. 11, 2013, http://online.wsj.com/news/articles/SB10001424127887323442804578236082058061460.
  • Cuomo Offers Sandy Homeowners Less Money in Buyout Program, WNYC NEWS
    • Matthew Schuerman
    Matthew Schuerman, Cuomo Offers Sandy Homeowners Less Money in Buyout Program, WNYC NEWS, April 18, 2013, http://www.wnyc.org/story/287184-new-york-state-restricts-sandy-buyout-offer.
  • Widow sells Sandy-ravaged home to NYC in first Build it Back program buy
    • See Erin Durkin
    See Erin Durkin, Widow sells Sandy-ravaged home to NYC in first Build it Back program buy, NY DAILY NEWS, Oct. 10, 2013, http://www.nydailynews.com/new-york/sandy-wrecked-home-sale-nyc-rebuilding-program-article-1.1482323.