Comment of the Day: A Watershed Approach To Paying for Flood Control

COMMENT OF THE DAY: A WATERSHED APPROACH TO PAYING FOR FLOOD CONTROL “. . . I think that if we are going to be realistic about the way that we finance flood control, that the core of such a plan needs to take a page from how flood insurance gets underwritten. Everybody pays a property tax to a watershed-specific flood control entity, but that tax is adjusted based on the elevation of their first-floor living area relative to the Base Flood Elevation. If you’re more than a few feet above it, your tax is very low. If you live more than a few feet below it . . . you’re probably going to pay so much in taxes that it’ll become immediately economic to raise your structure or demolish it. Right away, the inventory and value of property subject to flood risk is reduced; and what’s left that is tolerably at-risk pays for its own reduced need for risk mitigation. And . . . if we’re too gun shy to pull the trigger on a plan like this, which would totally wipe out a lot of people’s equity in vast swaths of real estate, okay well that’s where people not at very much risk should be expected to pay more taxes even without receiving very much in the way of benefits. Yeah, I’m basically proposing Obamacare for flood control in Houston, but only as a humane alternative which reveals a startling truth: that the big money for this sort of thing is unlikely to come from up on high, from the feds or the state government (and it shouldn’t IMO). Financing this stuff locally is going to hurt. One thing is very very clear: whatever kinds of administrative bodies are created or re-jiggered to deal with this issue have got to address legacy development first and foremost. We need a plan to cope with what is already on the ground. This is not something that we can just build ourselves out of, going forward, with stricter rules for new development, feel the catharsis, hold hands and sing Kumbaya, and call it a day.” [TheNiche, commenting on An 8th Wonder Distillery; New Bridges for Brays Bayou; How Apartment Buildings Get On Your Nerves]

11 Comment

  • It’s not my field of law by a long shot, but I think the government would have to be willing to pay out on a hell of a lot of takings claims if they decided to enact this. Someone who knows condemnation law well please explain to me why this wouldn’t be a takings – I would really love to understand it better.

  • Hell no. How much have you invested in real estate Mr Obamacare for Flood control? I have several homes ,one of which was built in 1973 with a first floor sunken living space. So myself and others should just take a compete loss so others pay less? When donkeys fly outta your ass !!!! You proposal would wipe out a huge chunk of the residential and commercial Real Estate markets. Putting people out of work,total chaos in the markets, wreaking havoc in the ancillary industries.and sharply reducing one of the TOP 5 drivers of the US economy.. The Federal & State governments MUST defary the costs which owuld be in the BILLIONS !!! In the meantime, the people who just get by , would have a less valuable home and would probably LOSE all of their value in their property..Your socialist idea would be cheered on by Bernie Sanders, with little to NO traction with the property owners !!

  • Hey, you know in my view a “taking” might should legally be construed as zoning which does not reflect the highest and best use of land, a historic status which subjects a property to some higher degree of scrutiny, an ordinance mandating some standard of lawn care or that trees can’t be cut down, or basically anything else that erodes a property owner’s bundle of rights. However, my view of what is or what ought to constitute a “taking” is a great deal broader than Texas real estate law currently recognizes, which tends to be limited to rights-of-way, easements, and so on.
    The critical consideration underlying the establishment of new property taxes is to ensure that a valuable service is being provided as a consequence of taxation. This is not uniformly the case: MUDs that overlap municipalities and municipal services that duplicate county services are good examples. Likewise, I doubt that very many people in Katy appreciate that they fund the Port of Houston or the Harris County Hospital District. However, if it is clear that taxes extracted from a property owner directly benefit them…well, those aren’t taxes, those are utilities expenses with probably quite a bit of consumer surplus. If disaster management is a function of the government which more than offsets its costs to consumers, then it too is providing a kind of public utility. The intractable problem with that is that costs and/or benefits are distributed unequally across the same jurisdiction, and this is probably one of those situations where if any one group of constituents is entirely happy with the policy — then it is bad policy.

  • @ HappyGoLucky: I advanced the Obamacare model of flood control in order to illustrate just how difficult this topic is to approach, but because *without it* a lot of folks would lose their shirt. That is to say, your response is back-assward. Even though I thought of this scheme, I’m not sure that I would advocate for it. What is optimal is probably some hybrid policy where the devil is in the details, and probably fewer than some fraction of one percent of homeowners would really understand it. Policy that is optimal is often like that.
    Furthermore…as far as I’m concerned, federal involvement in disaster relief that has no direct connection to structural risk affecting the national economy or to national security interests is totally and completely without merit. Recent federal budgets have put a lot more pressure on states to deal with state issues at a state level and to pressure localities to deal with local issues. That is as it should be. Getting smaller jurisdictions to be held accountable to their own circumstances is good policy, not at all like socialism.

  • Obamacare with no subsidies from the Federal Government is what the Republicans in Congress want. It will make the whole thing so painful for Americans that we just give up on it and go back to the way it used to be.
    The only way your idea works, Niche, is if there are hefty subsidies to help homeowners in flood prone areas move to higher ground; and then the tax laws are imposed for new development. Essentially, buyouts on a scale we’ve never seen before.

  • I have to applaud Niche’s willingness to think up a plan to spread the risks and costs on a rational basis.
    But, I have to say that the chances of this every happening are close to zero since (1) a lot of public education will have to occur, (2) people are prone to self-interest versus common good in an economic sense, and (3) the political will be either flame out or not be there in the first place.
    Nice mental exercise, though.

  • @ ZAW: For practical purposes, actually I think that buyouts might be quite a bit more limited in scope than the risk zones on existing floodplain maps imply if those buyouts enable new flood control infrastructure and change the floodplains. For example, let’s say that you buy out two dozen blocks in Meyerland and start digging out a huge pit for stormwater detention. Perhaps a few hundred of the highest-risk homes would be destroyed, but how many thousands of homes nearby would be pulled out of the 500-year floodplain?
    The issue of equity and fairness is a difficult one. A lot of houses were not as flood-prone when they were first built, but got that way by way of subsequent low-quality upstream development or subsidence. That wasn’t the sort of thing that was going to be on any reasonable person’s due diligence checklist. Likewise, if it is society that is taking on this project because of a realization that flood mapping and flood policy and risk tolerance were all not well calibrated, and that is what enabled a lot of development, and consumers made bad decisions rather systematically…well yeah, I think that a good argument can be made for at least partial bailouts. But then, what about people who very intentionally bought a house in the highest-and-driest location they could find? What about people that are now snapping up bargain-priced property in risky areas that have flooded multiple times recently, that are well aware of the risk? Under very nearly any financing scheme, there will be people getting bailed out that don’t deserve it by people doing the bailing-out who also don’t deserve that. And caught in between are a lot of homeowners that are more or less ignorant of flood risk, for better or worse.
    One of the scenarios we need to actively avoid is where flood victims are given money to rebuild in flood-prone areas without somehow reducing their risk exposure. That’s just stupid…but that has also been federal policy for decades. Subsidized insurance (especially property insurance) results in less risk aversion and a perpetuation of the problem that the policy had intended to solve!
    By the way…I actually really like discussing this issue because it can provide a tangible and relatively simple model for how existing and proposed public policies can cut both ways on issues of social justice.

  • So, developers come along and put concrete everywhere, causing flooding downstream in another part of town and we are going to tax the snot out of the people who are the downstream victims of bad development practices. That makes sense.
    And if you are wondering what the end game in this sort of scheme would be, just look at how coastal development has progressed after changes in insurance underwriting standards and building codes. People who get wiped out in a storm who are just regular wage earners cannot afford to rebuild because they could not afford the very high rates for insurance and cannot afford to build to the new standards. So, they have to sell for pennies just to be able to move on. Investors snatch up the property and flip it into high end vacation properties. If you tax people out of flood zones and gut their property values to less than lot value, the properties will get scooped up by speculators who will build elevated homes for rich people. People who are affected by floods do not have a big pile of money sitting around to elevate their homes or tear down and rebuild above the flood line. Kicking them while they are down will not help anything.
    Paying for big flood control projects should be very simple. To the extent the State and Federal Government do not come up with the funds, you have a bond election. Houstonians overwhelmingly approved a nearly 2 billion dollar bond to build new schools for HISD. Everyone gets it that we need to make serious investments in flood control projects and that we are going to have to pay for it with property taxes.

  • Buy low…. Sell high… Less dough…. Less dry…

  • No answer generated will have only winners, so the question is who do we want the losers to be. The easiest answer is newcomers and developers by driving up the cost of new structures within effected watersheds. It won’t fix the existing issues, but it will mitigate new ones. This of course will have to be done at a state level, possibly by limiting TX DOT projects that increase sprawl and development in surrounding counties that could impact Houston watersheds. Stop the city from growing horizontally and maybe we have a shot at achieving some stability, otherwise the issues will just continue to pour in and put the city underwater.

  • @ Wolf Brand Chili: Yes, I completely agree that the political feasibility of such a plan is nil or very close to it. However…anything that actually gets done now that wasn’t done before is going to need a funding mechanism. That there could be a local mechanism involving state-chartered special districts is not at all beyond the realm of reason; and there is political will. Even the Rebuild Houston initiative tapped into that political will, which existed before TS Harvey. Where things will become less than elegant is in the details. Also, you’re right that private interests would likely seek to subvert aspects of anything at all that gets done.
    @ Old School & Lost_In_Translation: Don’t forget that Houston has been severely flooding since before anything at all other than prairies and forests existed upstream. Yes, development is a contributing factor, but the worst-offending developments have already been built under old statutes crafted by politicians that are out of office, the respective developers are long-since sold out, and the original homebuyers have mostly turned-over. All of the people responsible for things being the way things are — are irrelevant. I suppose that we could go kick over their tombstones. More recent greenfield development may very well detain more stormwater and for longer than the prairies did that it replaced, and contemporary agencies with flood control responsibilities have billions of dollars of projects lined up to mitigate flood risk by a variety of options. There are two primary policy issues to be sorted out: 1) how much flood risk are we willing to tolerate, and 2) what will be the financing mechanisms to implement the necessary changes. And mind you, it isn’t going to be as simple as a school district’s bond issue. Any approach to this that is adequate in breadth and scope is going to require new state law to enable it. Every option ought to be considered as in-play right now.