After Hurricane Irene pounded the East Coast last year, most
affected residents began an arduous cleanup and rebuilding process
to get their homes and lives back to normal.
But some flood-weary homeowners instead took the government up
on a rare offer. They agreed to sell their properties to start over
on safer ground. Crews will bulldoze their former homes and turn
the land into permanent open space.
Since 1993, communities across the country have bought more than
20,000 damaged homes under a buyout plan funded largely by the
Federal Emergency Management Agency (FEMA). The process, part of a
larger grant program to lessen hazards, aims to save money.
Eliminating homes in risky areas prevents future damage and cuts
off the stream of
claims for those properties.
For families, it's a chance for a fresh start.
"Now they can go buy comparable homes outside the flood zone and
continue their lives," says Lt. Robert Little, New Jersey's state
hazard mitigation officer.
How the buyout program works
FEMA provides 75 percent of the money for property buyouts and
states work with local communities to fund the rest and administer
the process. As a homeowner, you can't apply directly to the
government for a buyout. After a disaster, state and local
officials identify where buyouts make the most sense.
A complex formula is developed to determine which properties
warrant acquisition. Those that have been damaged repeatedly and
are most likely to incur Mother Nature's wrath again have the best
chances of qualifying. To satisfy federal requirements, a cost
benefit analysis must show that every dollar spent for a buyout
will result in at least a dollar saved. To determine potential
savings, officials examine the history of flood insurance
Buyouts are voluntary; a homeowner can refuse the offer and stay
put. Homeowners who accept the offer are paid the pre-disaster fair
market value of their homes. FEMA's website has more information on
the home buyout process
Sound like a good deal? For residents anxious to leave a flood
zone, it is. But don't count on the government coming to the rescue
the next time your house is flooded.
Long waits and red tape
The buyout process is long and complex, and there's far less
funding than demand from homeowners who want to sell.
Take New Jersey, which made property acquisition a top priority
to reduce flooding hazards after Hurricane Irene.
"We had requests [from towns] for over $400 million for buyouts,
but we had only $50 million to spend," Little says.
The state is in the process of buying out 146 homes in 14 towns.
That's a substantial number compared to previous years, but it's
still a drop in the bucket compared to the number of homes damaged
"We had thousands of people saying, 'I'm done. I want to go,'"
Little says. State and town officials fielded countless calls from
residents. "They'd ask, 'How come my neighbor got in the program
and I didn't?'"
New Jersey officials have worked hard to streamline the process.
Little says most homes designated for buyouts from Hurricane Irene
will be purchased by the one-year anniversary of the storm. Usually
the process takes three years.
"It's definitely not simple," he adds.
The waiting periods for the real estate closings are tough.
Residents either find other places to live while they wait, or they
fix up their homes enough to make them habitable. Any money they
receive from flood insurance to fix their homes is deducted from
the amount they get for the buyouts. Flood insurance does not
include coverage for additional living expenses. Homeowners have to
foot the bill to rent a place to live while their homes are being
repaired or they're waiting to sell.
Protect yourself with plenty of insurance
Many communities in the U.S. are at risk from natural disasters.
Storm Surge Report
found that more than four million dwellings are subject to
hurricane-driven damage. The vast majority of flood victims never
will be offered a buyout.
"My No. 1 piece of advice for people is to make sure they
purchase flood insurance even if they're not in the flood plain,"
says Mary Goepfert, external affairs liaison for the New Jersey
Office of Emergency Management. "There's this myth they need to be
in a flood plain to purchase flood insurance."
Here are more
flood insurance myths
People outside of high-risk flood areas receive a third of
disaster assistance for flooding and file more than 20 percent of
flood insurance claims, according to the National Flood Insurance
Little doesn't live in a flood zone, but his house sustained
thousands of dollars in damage during a heavy storm. "Since then, I
bought a flood insurance policy," he says.
A standard home insurance policy does not cover flood damage.
Peter Moraga, a spokesperson for the Insurance Information Network
of California, says people tend to think disasters never will
happen to them and, if they do, the government will bail them out.
But federal disaster aid to individuals is capped at $30,000 per
person and is often in the form of low-cost loans. The FEMA buyout
program is very limited.
"With an insurance policy, your payment will be almost
immediately after the disaster," Moraga says. "Within 30 days,
you'll have a check. With government assistance you will have
paperwork, paperwork, paperwork, and you won't know until you apply
if you qualify."