Flood Plans: A Comparison of New Jersey’s Use of the National Flood Insurance Program and New York’s Buyout Program

By Ariella N. Sparr*

Print PDF

In the wake of Hurricane Sandy, state and federal governments are creating plans to protect coastlines from future devastation with uncertain outcomes for homeowners. The Governors of two of the hardest hit states, New York and New Jersey, have announced two different plans for the devastated property on their shores. New Jersey Governor Chris Christie proposed that homeowners either spend tens of thousands of dollars to elevate their homes, or pay up to $31,000 per year for federally-funded flood insurance.1 In lieu of federal flood insurance, New York Governor Andrew Cuomo proposed a buyout program for certain coastal areas destroyed by the storm.2 Under this plan, Governor Cuomo proposes to offer the pre-devastation market value of the property to homeowners, and re-purpose the land as dunes, wetlands, natural buffers or public parkland to protect the coast.3 While homeowners could benefit from both plans, the question arises, which of these programs offers better remedies to homeowners?

New Jersey: The Federal Approach and its Procedural Challenges

While a plan like Governor Cuomo’s has never been instituted, federal flood insurance has existed since the enactment of the National Flood Insurance Act of 1968.4 Since its establishment, homeowners have challenged denials of eligibility for flood insurance alleging inaccuracy of flood risk mapping with little success.5 Therefore, even if homeowners follow new ordinances to flood-proof their homes, those that are improperly zoned on the Federal Emergency Management Agency’s (FEMA) Flood Insurance Rate Map (FIRM) may still be at risk of paying higher levels of insurance than necessary or constantly having to renovate homes to comply with new ordinances.6 Courts have decided most of the litigation regarding FIRMs based on procedural issues and homeowners and their advocates may find recourse to mapping issues based on prior case law.7

In Falmouth by Board of Selectmen v. Hunter,8 the Town of Falmouth sought to avoid the enactment of flood plain ordinances based on data showing that the federally-determined flood elevations were two feet higher than necessary.9 The Town sought a preliminary injunction to prevent the government from suspending its federal flood insurance for failure to enact the ordinances.10 The District Court of Massachusetts found that Falmouth had not shown that the suspension would cause the kind of irreparable harm necessary for an injunction because it could still seek private flood insurance.11 In addition, the Court found that Falmouth was afforded due process as the appeal process was neither “irregular” nor did it deviate from “the notice or appeals procedures required.”12 While the Court did not reach the merits of the challenge to the mapping itself, Falmouth demonstrates the hurdles that homeowners may face in challenging flood elevations predicted by FIRMs.

New York: The State Buyout Program and Challenging its Constitutionality

Homeowners who do not want to be bought out may want to challenge the plan through litigation in order to maintain their communities. However because Governor Cuomo’s buyout program is new, there is no case law dealing with these issues. Plaintiffs could attempt to argue that the change in zoning is unconstitutional under the Takings Clause of the Fifth Amendment.13 In the alternative, they could argue that the zoning is a violation of the Equal Protection Clause of the Fourteenth Amendment.14

Under the Fifth Amendment, the government has the power to take private property for the general welfare so long as the private owner is justly compensated.15 New York would likely argue that the buyout program is merely an option for homeowners and, thus, cannot be considered a taking in the traditional sense.16 However, at least one court has found that flood-proofing ordinances are a valid way to protect the public from the damage of coastal flooding and do not constitute a taking.17 Buyout program seem to feel like the only option for homeowners, because their neighborhoods have become ghost towns as many of their neighbors have taken the deal.18 Even if the homeowners can prove that the buyout is a taking, the fact that homeowners will be paid the pre-devastation value of their homes would likely preclude an argument based on unjust compensation.19 Thus a challenge to the buyout as a taking would likely be unsuccessful.

Homeowners may also attempt to challenge the buyout program as a violation of equal protection. Under the Fourteenth Amendment, a state may not “deny to any person within its jurisdiction the equal protection of the laws.” In Responsible Citizens in Opposition to Flood Plain Ordinance v. Asheville,20 commercial property owners challenged new flood-proofing ordinances as a violation of equal protection arguing that they treated owners of property within flood hazard areas differently than those with property outside these areas.21 The Supreme Court of North Carolina held that the difference in treatment was constitutionally permissible because the goal of minimizing losses due to flooding was reasonable and rationally related to the flood-proofing ordinances.22 Furthermore, the Court found the burden of cost to flood-prone property owners was akin to the difference in treatment among all legislative classifications.23 Although Responsible Citizens is a single case, it demonstrates that an equal protection challenge may not produce favorable outcomes for homeowners who do not want to be bought out.

The Pros and Cons of New York and New Jersey’s Flood Plans

In light of the difficulties of challenging either plan, the question remains whether either of these plans will produce more favorable outcomes to homeowners. Under Governor Christie’s plan inaccurate FIRMs may force homeowners to follow expensive building ordinances that constantly change or are unnecessary.24 Furthermore, failure to follow ordinances may result in paying extremely high insurance premiums to private insurance companies.25 While procedural safeguards exist to correct FIRMs, homeowners must be vigilant about any procedural issues with appeals, as most of the case law turns on these issues and not on the merits of mapping accuracy.26 Looking forward, homeowners may prefer Governor Christie’s plan because they will be able to maintain their homes while protecting their communities from severe devastation.

In contrast, Governor Cuomo’s buyout program may ultimately protect our coastlines more than Governor Christie’s, but the loss in sentimental value of a home may be too great for some to bear. Protective natural landscaping would not only mitigate the effects of coastal flooding due to storms but would also decrease the social costs for every storm that hits.27 While the economics make sense to some homeowners, many have lived in the areas slated to be part of the buyout for generations and are sentimentally attached to their homes.28 Furthermore, the program targets inexpensive waterfront property with full-time residents, who could not otherwise afford such a location, and forces these residents to move to poorer neighborhoods inland.29 However, homeowners may prefer the buyout to having to constantly renovate their homes to comply with changing building codes.

Conclusion: A Plan that Balances Homeowners’ Rights, the State’s Economy, and Environmental Protection

As six of the seven largest hurricanes in the Atlantic Basin have occurred in the past decade, coastal states need to start planning for the reality of severe hurricanes as a part of their climate and adopt plans like Governor Cuomo’s.30 However, these plans should be limited to areas that have already been devastated and that FIRMs and independent data show will continue to suffer the impact of storms. Furthermore, homeowners who wish to remain in their homes should be entitled to appeal adverse zoning decisions. Allowing zoning appeals would offer homeowners willing to assume the risk of living in flood prone areas a reasonable opportunity to maintain their neighborhoods. The appeals process should be aimed at the merits of flood risk determinations flood risk to avoid the issue of deciding appeals based solely on complicated procedures—as in the case of FIRMs. Balancing the risks of climate change and the individual rights of homeowners will continue to present problems to government agencies, legislators, homeowners, and advocates. A commitment to protecting the environment and fostering home ownership in new ways will resolve these challenges and, ultimately, produce the best outcomes for homeowners.

* Candidate for Juris Doctor, May 2015, Northeastern University School of Law.

1 Todd B. Bates, N.J. Sandy Rebuilding Rules: Go Higher or Pay More, U.S.A. Today (Jan. 25, 2013, 10:29 A.M.), http://www.usatoday.com/story/news/nation/2013/01/25/sandy-rebuilding-flood-maps/1863761/.

2 Thomas Kaplan, Cuomo Seeking Home Buyouts in Flood Zones, N.Y. Times (Feb. 3, 2013), http://www.nytimes.com/2013/02/04/nyregion/cuomo-seeking-home-buyouts-in-flood-zones.html?pagewanted=all&_r=1&.

3 Id.

4 42 U.S.C. § 4001 (2013). See Peter Brush, NY Post-Sandy Buyout Plan A Possible Blueprint For Future, Law 360 (Feb. 6, 2013, 6:30 PM), http://www.law360.com/articles/413299/ny-post-sandy-buyout-plan-a-possible-blueprint-for-future (stating that unlike FEMA’s buyout program, which gives 75% of a home’s value, Cuomo’s program is unique in its compensation at full value plus bonuses).

5 See, e.g., City of Brunswick v. United States, 661 F. Supp. 1431 (S.D. Ga. 1987), rev’d, 849 F.2d 501 (11th Cir. 1988); City of Trenton v. Fed. Emergency Mgmt. Agency, 545 F. Supp. 13 (E.D. Mich. 1981).

6 See Bates, supra note 2.

7 3-18 Zoning and Land Use Controls §18.03 (2013). See City of Brunswick, 661 F. Supp. at 1431 (holding that Brunswick was not entitled to award pursuant to the Equal Access to Justice Act); Roberts v. Sec'y of Housing & Urban Development, 473 F. Supp. 52 (N.D. Miss. 1979) (holding that the administrative hearing by the HUD followed procedure and there was no basis to claim that the determination of floodplains was arbitrary); City of Trenton, 545 F. Supp. at 13 (dismissing the case because Trenton failed to file the action within the 60 day requirement of the National Flood Insurance Act).

8 427 F. Supp. 26 (D. Mass. 1976).

9 Id. at 29.

10 Id. at 27.

11 Id. at 30.

12 Id. at 31.

13 See, e.g., Responsible Citizens in Opposition to Flood Plain Ordinance v. Asheville, 302 S.E.2d 204, 210 (1983) (plaintiffs claimed that their commercial property in a flood hazard area was “taken” by the government’s enactment of floodplain ordinances).

14 Id. at 212 (plaintiffs claimed that the government imposed burdens on property owners in the flood prone area for the benefit of those outside the area in violation of the Equal Protection clause).

15 See Chicago, B. & Q. R.R. Co. v. Chicago, 166 U.S. 226, 241 (1897) (holding that takings power is extended to the States under the Fourteenth Amendment).

16 See 1-1 Nichols on Eminent Domain § 1.11 (“Eminent domain is the power of a sovereign to take property for ‘public use’ without the owner’s consent.” Emphasis added). See also Kia Gregory, Deciding Whether It's Lights Out, N.Y. Times, Oct. 25, 2013, at MB1 (stating that participation in the Buyout program is voluntary).

17 Asheville, 302 S.E.2d at 209.

18 See Maura Mcdermott & Joe Ryan, 70 Homeowners Hit by Sandy Ask State to Buy Their Properties, Newsday (Oct. 25, 2013), http://www.newsday.com/long-island/suffolk/70-homeowners-hit-by-sandy-ask-state-to-buy-their-properties-1.6316448.

19 See In re City of New York, 906 N.Y.S.2d 771, 771 (N.Y. Sup. Ct. 2009) (holding that just compensation for the City’s taking of private property owners should be consistent with the value prior to the government’s taking).

20 302 S.E.2d 204 (1983).

21 Id. at 212.

22 Id.

23 Id.

24 See Bates, supra note 2.

25 See Rachel Lisotta, Comment: In Over Our Heads: The Inefficiencies of the National Flood Insurance Program and the Institution of Federal Tax Incentives, 10 Loy. Mar. L.J. 511, 529 (2012) (citing a 2009 Governmental Accountability Office report that stated that private insurers could charge approximately double the cost of federal insurance for the same level of residential coverage).

26 See, e.g., Zoning and Land Use Controls, supra note 8.

27 See Superstorm Sandy Recovery, N.Y. State Gov’t, https://www.governor.ny.gov/2013/superstorm-sandy-recovery-rebuild (last visited Feb. 4, 2014).

28 Id.

29 Id.

30 Sandy Is The Largest Hurricane To Ever Form In The Atlantic Basin (INFOGRAPHIC), Huffington Post (Oct. 30, 2012, 4:29 P.M.), http://www.huffingtonpost.com/2012/10/30/hurricane-sandy-largest-hurricanen2045163.html.