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Voluntary Home Buyout

One way to reduce flood damage is to remove any houses or other structures that might be damaged by flood events. This simple observation underlies District efforts to purchase homes that are hopelessly deep in floodplains, remove the houses from harm’s way, and move the people to higher ground.

A home that once existed here was bought out by the District. It is one more home that will never flood again. Voluntary home buyout is used by the District to reduce damage and losses caused by flooding from bayous, creeks and smaller waterways that feed into the bayous in areas where a structural flood damage reduction project, such as widening the channel or constructing a stormwater detention basin, is not considered to be cost effective or beneficial. When elevation or modification of a building located in a special flood hazard area is not practical, purchase and removal may be the most effective and efficient way to prevent future losses.

Location, Location, Location
Harris County experienced a housing boom following World War II up and through the early 1980s that led to thousands of houses being built in areas along bayous and creeks that were later determined to be in a floodplain. The beauty of these areas was an attractive amenity for homebuyers who often did not understand the flood risk associated with the county’s coastal terrain.

Many of the floodplains in the county are relatively shallow, 1 to 2 feet deep, and much of the time the appropriate flood damage reduction tool is to construct a structural project, such as channel modifications, to reduce expected flood levels.

In other cases, where houses were built deep in floodplains that are several feet deep, the appropriate tool in the flood damage reduction toolbox is a non-structural one: purchasing an affected house, removing the house from the floodplain, moving the people to higher ground, and allowing the bayou or creek to flow onto its floodplain.

In the early 1980s, the first detailed Federal Emergency Management Agency (FEMA) Flood Insurance Rate Maps (FIRMs) were issued. After Tropical Storm Allison, new maps were prepared using improved technology. The new FIRMs were adopted in mid-2007. Potential homebuyers can now determine with reasonable assurance in advance if their prospective home is located in a flood hazard area.

An Effective, Non-Structural Tool
The purchase or “buyout” of houses that are flood-prone has proven to be one of the most cost-effective tools in the District’s flood damage reduction toolbox. The problem is not necessarily the bayou or creek occasionally wanting to occupy its floodplain. Sometimes the problem is the house…and where it was built.

When compared to the high costs of larger channels, stormwater detention basins or other flood damage reduction options, a home buyout can be the most cost-effective method of addressing the risk to people and their property. Buying and removing these flood-prone structures is the best way to ensure that they are not damaged by floods in the future.

Why should the government buy flooded homes?
People’s lives are at risk, and the flood losses drain government and community resources that affect all taxpayers. For example, a house that has had four claims under the National Flood Insurance Program (NFIP) totaling $232,000, was purchased at a total cost of $191,000, resulting in estimated avoided damages (calculated using FEMA methodology) of $589,000.

Case Study: House in Harris County
Four NFIP Flood Damage Claims

Average Claim $58,000
Total Acquisition Cost $160,000
District Discretionary Cost $31,000
Total Cost $191,000
Total Cost to FEMA $120,000
Total Cost to District $71,000
Total Avoided Damages $589,000

Federal Funds for Home Buyout
The level of activity in Home Buyout is influenced heavily by the availability of federal funds to leverage the District's funds that support it. The Federal Emergency Management Agency (FEMA), through the Texas Governor’s Division of Emergency Management (TxDEM) and the Texas Water Development Board (TWDB), has provided substantial federal funding for the purchase of flooded homes through FEMA's Flood Mitigation Assistance program (FMA), the Hazard Mitigation Grant Program (HMGP), the Pre-Disaster Mitigation program (PDM), and the Severe Repetitive Loss program (SRL). By pursuing FEMA grants, the District leverages each dollar it spends into as much as two to four dollars to acquire and demolish homes that are at high risk of flooding in the future.

Federal funding for home buyout usually requires local matching funds of at least 25%, although the SRL program match requirement is only 10%. In addition to matching funds, the District also funds certain expenses (such as some relocation costs) that are not covered by the FEMA grants.

It is important to note that, although some grant funds are made available only after a disaster declaration, these buyout grants do not provide immediate flood recovery assistance. These programs typically take eight to twelve months after the flood event to even get started, and then may take place over a period of many years following a flood event.

The Flood Mitigation Assistance (FMA) Program has the goal of reducing claims under the NFIP and assists in implementing measures that reduce or eliminate the long-term risk of flood damage to buildings, manufactured homes, and other NFIP- insurable structures. The District has used a series of small FMA grants to purchase homes with repetitive losses in the Cypress Creek watershed. FMA 2007 and 2008 concentrated on properties within the White Oak Bayou and Greens Bayou watersheds.
The Hazard Mitigation Grant Program (HMGP) provides grants to implement long-term mitigation measures after a Presidential disaster declaration, and is designed to enable mitigation measures to be implemented to reduce future damages that might otherwise result from a similar incident. The District successfully applied to FEMA for grants following Tropical Storm Allison in 2001, and subsequently purchased and demolished more than 2,000 homes following that disaster. HMGP grants also were received after flooding in October 2004, September 2005 (Hurricane Rita), and September 2008 (Hurricane Ike).
The Pre-Disaster Mitigation (PDM) Grant Program provides funds to implement mitigation projects prior to a disaster event. PDM grants are awarded annually on a nationally competitive basis without reference to state allocations, quotas, or other formula-based allocation of funds. In the first two cycles of the PDM program, the District received several PDM grants totaling $24 million in FEMA funds (a total of $35.1 million with HCFCD match included) for the purchase of approximately 180 homes. Funds have also been awarded to the District in the 2007, 2008 and 2009 PDM cycles.
The Severe Repetitive Loss Program (SRL) was initiated by FEMA to provide funding to reduce or eliminate the long-term risk of flood damage to severe repetitive loss residential properties insured under the National Flood Insurance Program (NFIP). Owners of SRL properties have filed multiple NFIP claims during a ten-year period and the cumulative amount of those claims frequently exceeds the market value of the building. Because buying these properties results in substantial savings to the NFIP, and Texas has a FEMA-approved Enhanced Mitigation Plan, this program has a local match requirement of only 10%. The District has participated in the SRL program since its first cycle in 2008, with 116 homes approved for acquisition in that grant.
Not All Buyouts are the Same
The guidelines and procedures for buyout activities before or after a flood event may differ, depending on the requirements of the specific funding source. Each of FEMA’s grant programs has requirements for local participation that are updated on an annual basis. In general:
  • homes are appraised at fair market value by certified independent appraisers,
  • homeowners are screened for eligibility for relocation assistance and/or moving expenses,
  • negotiations are carried out with the Harris County Right of Way Division, and
  • homeowners have access to Harris County Flood Control District buyout counselors during the transaction.
Potential buyout structures are generally ranked using a formula that considers the risk, severity and history of flooding. When applying for a FEMA grant a Benefit Cost Analysis using FEMA calculations is required. When Harris County Flood Control District funds are leveraged with other funds, the ranking priority of the financial partner may supersede that of the District. However, most rankings are based on similar considerations, with the ultimate objective of reducing damage and losses caused by flooding.

So, How Does Home Buyout Work?
Buyout Grant Applications

For any of the FEMA grant funded buyout programs, the process begins with the District filing an application with the State (Grantee) who submits it to FEMA (Grantor) on behalf of the District (Subgrantee). Only those homes that meet FEMA’s Benefit/Cost (BC) requirement are eligible for grant funding. In simplest terms, a good BC ratio (greater than 1.0) means that the cost of acquiring and demolishing a home is less than the cost of projected future flood damages to that home. Generally, homes with higher BC ratios are given priority in buyout applications for competitive grant funding.

When the District prepares an application for a FEMA grant program, it must identify specific properties that meet the program’s eligibility requirements. These properties also must contribute to an overall application Benefit/Cost computation that is competitive with applications being submitted by other entities, including the 35 flood plain administrators in Harris County.

The NFIP Repetitive Loss list identifies only those properties that have had insured losses. Additional properties with substantiated losses that were not insured can become eligible for FEMA grant funding based on the local elevation surveys being completed by the District. In 2005, the District began collecting specific elevation data for areas with a record of high flood damages to supplement information on homes that are potential candidates for buyout. This information will increase the number of homes eligible for federal programs and provide a greater likelihood of successful grant applications when applying for funds to acquire homes that have experienced uninsured flood losses.

FEMA now requires a signed Statement of Voluntary Participation (SVP) from the owner prior to including the property in a grant application. The SVP indicates that the property owner is willing to be included in a grant application. It does not commit a homeowner to selling the property, nor does it commit the District to buying the property. FEMA home buyouts are voluntary for both parties to the transaction.

Funded Buyout Grants
Once a grant is awarded by FEMA and the Commissioners Court of Harris County accepts the grant, a buyout “project” is established and the acquisition process begins. The District contacts owners to confirm their interest in participating and updates their contact information from the SVP. Once that is done, the process is very similar to other voluntary property acquisitions by the District.

Property Acquisition Process
The steps required to complete a property acquisition transaction vary with the funding source, but these can usually be completed in 16-20 weeks from the time the District turns the property over to the Harris County Right of Way Division for acquisition. Title issues or other complications could extend this timeline. Once a funded buyout project is in place, the biggest unknown factor in the amount of time required for voluntary acquisition of a property is the amount of time it takes for a seller to accept an offer. Once the home is purchased, demolition of the structure is scheduled soon thereafter, and the structure, with slab or supports, is removed.

Demolition of a house

What Happens to Buyout Open Space?
The District works with communities, civic associations and neighborhoods, and individual neighboring property owners to determine what uses are feasible for the land that remains after a structure is removed. The goal is to have open space land become a community amenity, with possibilities ranging from a community garden to a park, or to an area that is left to return to nature. The District also works with a buyout property's neighboring owners so that they may use an adjacent lot as yard space in exchange for mowing and maintaining the land, which continues to be owned by the District.

Home Buyout Progress
Between 1989 and Tropical Storm Allison in June 2001, the District, acting alone and in partnership with other agencies, purchased 440 of the most repetitive flood-loss homes in Harris County for a total cost of about $44 million.

Since Tropical Storm Allison, and as a direct result of the disasters caused by Allison, Rita (September 2005), Ike (September 2008) and other major storm events, the District, in partnerships with FEMA and the State of Texas, has purchased about 2,400 severely at risk and flood damaged houses for a total cost of approximately $240 million.

The Success of Home Buyouts Ensures Continuation
Because of the direct financial benefit to the National Flood Insurance Program (NFIP) from buying repetitive flood loss houses, FEMA continues to be a major funding partner with the District on the buyout efforts in Harris County. When FEMA grant programs are available, the District applies for additional funds to offer owners of qualifying flood-prone homes the opportunity to move to higher ground.

For More Information about Home Buyouts
For questions about voluntary home buyout , including eligibility criteria, grant application status, the buyout process, and environmental justice relocation assistance, click here for contact info, or call the Home Buyout Hotline at 713-684-4020 or 713-684-4035.

> See Texas Landowner's Bill of Rights
> See news story on Home Buyout

Harris County Flood Control District
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