FEMA Eyes Letting People Rebuild Homes After Taxpayer Buyouts

(Bloomberg) -- The Federal Emergency Management Agency is proposing to allow owners of homes destroyed by storms and bought out by the government to rebuild on the same flood-prone land.

Currently, FEMA offers to buy homes that have been repeatedly damaged by flooding but then tears down the structure and turns the land into open space. The policy is intended to limit future disaster costs, by removing buildings in locations that make them particularly vulnerable to floods.

Under a change proposed in February, the agency would let homeowners sell their homes to the government but retain ownership of the property underneath it. Once FEMA tears down the home, the owners would be allowed to rebuild the house, so long as the new structure "meets community flood management building codes."

"Why would you want to change the rules?" Larry Larson, senior policy adviser for the Association of State Floodplain Managers, said in an interview. "That doesn't make sense."

Larson said the point of federally funded buyouts is to protect taxpayers against future costs. Allowing people to rebuild on flood-prone land that's been bought out defeats that purpose, he said.

"Once the federal government buys their property out, they should never have to pay disaster relief on that property again," Larson said.

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FEMA is accepting comments on the proposal until April 30. The proposal stems from last year's record storms, according to FEMA spokeswoman Jenny Burke.

"Following Hurricane Harvey, there were discussions regarding direct to homeowner acquisitions," Burke said in an email. "FEMA decided to collect comments and input through the federal register notice process. We will review and evaluate all comments received during the comment period and determine the best path forward."

In comments submitted to FEMA this month, the floodplain managers' association warned that the change could violate federal law, which according to the association requires the government buyouts to purchase both the structure and the land it sits on.

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The Natural Resources Defense Council echoed the concern that FEMA's proposal would defeat the goal of the buyout program.

"The purpose of a buyout is to retire a property, so there's no structure on there anymore that's at risk of flooding," Joel Scata, an NRDC lawyer who focuses on flood policy, said in an interview.

Others argued that loosening the rules around buyouts could address the concerns of local officials, who worry that leaving land permanently undeveloped will cut into their tax base.

Craig Fugate, who ran FEMA under President Barack Obama, said that letting people rebuild to a higher standard could be "a pragmatic solution."

"Purists would like to say, if you buy it out you should never build there," Fugate said in an interview. That approach, he added, "is always a hard sell."

To contact the reporter on this story: Christopher Flavelle in Washington at cflavelle@bloomberg.net.

To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net, Elizabeth Wasserman

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