Bloomberg to Offer Own Sandy Buy-Out Plan, with a Twist

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Russell Gordon, a homeowner in Oakwood Beach, Staten Island, who is eager to take advantage of Governor Cuomo's Sandy buy-out plan

Weeks after New York Governor Andrew Cuomo proposed buying out homeowners in flood-prone areas, the Bloomberg administration is indicating that it will offer a similar program. But the mayor’s program could differ in one significant way: the properties the city acquires could be turned over to someone else to be developed again.

Under Cuomo’s plan, the state would use $400 million in federal Sandy aid to acquire, at pre-Sandy prices, properties from owners who would prefer to move than rebuild in the flood plain. The land would be turned into open space for use as parks, wetlands, drainage or other purposes. The governor said he would start the buyouts in the Oakwood Beach area of Staten Island's East Shore.

In testimony at a City Council committee hearing Feb. 26, Brad Gair, the director of the city’s housing recovery office, said the Bloomberg administration is working on its own buyout program using federal Community Development Block Grant funding, $1.8 billion of which has been earmarked for the city so far. He said details, like how much money would be devoted to it, had yet to be worked out. But he added the city’s plan may not stipulate that the acquired properties be turned into open space.

“If there is one element that we have not yet come to full alignment on,” Gair said, “it’s whether properties acquired should be made permanently open space or whether some of those would be suitable for redevelopment—preferably for the home owners in the area.”

It was the first time that a member of the Bloomberg administration said publicly that buyouts would be an important part of the city's relief package. Previously, Lauren Passalacqua, a City Hall spokeswoman, called buyouts "just one of many potential mitigation strategies."

At the City Council hearing, Gair said that even though one property owner may want to sell and move away from the 100-year-flood plain, other people would be willing to move there.

“These are valuable properties,” he said. “There is a limited amount of coastline properties.”

The Federal Emergency Management Agency has been funding similar types of buyouts in flood prone areas for 20 years. But whenever FEMA buys out a property, it requires the land be set aside permanently for open space.

James Fraser, an associate professor at Vanderbilt University in Nashville, Tennessee, says the requirement protects taxpayers from having to pay twice for the same property: to buy it out, and then again later, if it gets flooded.

“When a locality continues to develop in a flood plains, they are not only putting themselves at risk,” Fraser, who has researched FEMA buyouts, said. “They are putting the nation at risk because financially FEMA has to pay for future flooding.”

Mayor Bloomberg has suggested that modern construction methods, such as elevating homes above the 100-year-flood level, will make them sufficiently flood-proof for the future. Fraser says modern rebuilding helps, but it doesn’t solve the whole problem.

“You still have impervious surface and that impervious surface is going to contribute to the amount of flooding that’s experienced in the surrounding area,” he said.

In a follow-up interview, Peter Spencer, a spokesman for the city’s housing recovery office, said that the city’s program would not be bound by FEMA's restrictions against redeveloping bought-out properties because the Community Development Block Grant money comes from the Department of Housing and Urban Development. He added that allowing a resident to buy a property adjacent to his own, and which otherwise would be turned into open space, could alleviate the so-called “jack-o’-lantern effect” that some people worry will result if some, but not all, homeowners on a street otherwise sell their properties to the government. (A similar program in New Orleans allows people to renovate the structure on the adjacent lot and rent it out as long as that is permitted by zoning regulations.)

“There are some areas where perhaps it makes no sense to build on again,” Spencer said. “In other areas, the current owner may not have the desire or the means to rebuild, but there could be others who do want to. This certainly could be a way to rethink these communities and re-plan these communities and make them better."

If the city pursues its buyout plan, it would have to get permission from the federal government. Guidelines released Friday said any acquired property “could not typically be redeveloped.” But they do allow for some exceptions if the buyout price is based on the post-disaster value of the land and if additional aid to the property owner is given for relocation assistance.