Real Estate Games, Environmental Reality

The United States does indeed seem to be governed by officials fomenting mythology that serves incumbent power players well and denigrates experts with lots of research and, apparently now considered un-American, facts. If you own land or real estate assets in an area that is almost certain to be severely flooded, aside from the higher insurance cost (or requirement), pretty obviously, those assets are clearly going be worth a whole lot less than comparable real estate in areas where flooding is highly unlikely. Duh!

But if you can present “evidence” that your land (including buildings) isn’t officially on one of those flooding lists – because you were able to exert political pressure to have it declared safe – even when it is right in the middle of an inevitable flood zone, then folks buying, developing or renting that parcel will make their economic decisions on pricing structures accorded to non-flood-prone real estate. That the information provided in official government documents has been seriously manipulated to create a false impression doesn’t really help those buyers, developers or renters when the flood hits and wreaks its damage. They might not even have obtained a very necessary flood insurance policy as a result.

What, you say, no governmental body would step out, ignore reality, and declare the clearly unsafe properties to be safe. Or if some “bad apple” managed to try and twist the system, surely the checks and balances inherent in transparent government would soon correct that anomaly. Yeah, and I am the Easter Bunny. Once of the most flagrant examples of such malignant governmental fact manipulation is the City of New Orleans, particularly vulnerable as it continues to sink.

“According to current projections, roughly 75 percent of New Orleans will be below sea level by 2050, up from 54 percent today. And all the while, canals dug by the oil industry are causing coastal wetlands — the crucial buffer against hurricane storm surges — to fall into the Gulf of Mexico at the rate of a football field every hour. And yet, according to the new map, most of the city is safe.” Andy Horowitz (assistant professor of history at Tulane, who is writing a book on Hurricane Katrina) commenting in the June 1^st New York Times. These facts are clearly threatening to anyone owned real estate in that lovely city. But what to do about such nasty, property-value-tanking facts?

“According to new maps issued by the Federal Emergency Management Agency, even vast areas of the city that are below sea level — including parts of the Lower Ninth Ward, Lakeview and New Orleans East that sat under 10 feet of water after Hurricane Katrina — need not worry about the next storm.

“But as a historian of disasters, I know that FEMA’s maps offer a myopic view of New Orleans’s vulnerability. They threaten to put thousands of people at greater risk, and offer more ominous evidence of our country’s stumbling efforts to reckon with climate change.

“The maps in question, called digital flood insurance rate maps, are a crucial component of the National Flood Insurance Program, which Congress created in 1968 to subsidize flood insurance (which private insurers would otherwise not offer), in exchange for communities’ regulating land use in flood-prone areas. The maps designate ‘special flood hazard areas’ where FEMA estimates there is a 1 percent or greater chance of flooding in any given year; for anyone seeking a mortgage in these areas, flood insurance is mandatory.

“The flood insurance rate maps for New Orleans that were in force in 2005, when the federal levee system failed during Hurricane Katrina, dated from the 1980s. They offered a relatively accurate prediction of the city’s vulnerability: About 80 percent of New Orleans flooded.

“Nonetheless, New Orleans officials protested in 2009 when FEMA released drafts of new maps suggesting most of the city was still vulnerable. Knowing the flood maps would shape the city’s future — dictating property values, insurance premiums and perceptions of the city’s viability — the officials claimed that FEMA had not adequately taken into account the protection offered by the $14.5 billion post-Katrina levee system.

“Now, after more than six years of waiting and wrangling, the finalized maps FEMA released this spring reflect the most optimistic possible assessment. FEMA’s maps mean homeowners who have rebuilt in many neighborhoods flooded in 2005 — including, to give just one example, the area around a new memorial exhibition at the site of a catastrophic levee failure — will no longer be required to buy flood insurance. Insurance rates will fall, and despite the city’s cautions to the contrary, many will forgo coverage altogether. Property values will rise. Cash-strapped New Orleanians will celebrate.” Horowitz.

So there’s more “sinking,” less protection from hurricane-caused storm surges because of deteriorating buffering wetlands, and rebuilt “too big to fail” mechanical systems that… er… failed spectacularly in 2005… but the land is no-longer designated as flood prone? Because city leaders, pressured by landowners and developers, have managed to pressure federal officials to go “totally rosy” on them? So rosy that folks in what are actually very flood-likely areas aren’t even in an area where flood insurance is either recommended or required.

Horowitz nails the bottom line: “By many measures the National Flood Insurance Program is a failure. The program was supposed to limit federal payouts after flood disasters, while discouraging building in risky areas. But since its inception, development in dangerous places has accelerated, while costs to federal taxpayers for both flood insurance and disaster relief have skyrocketed. As of 2014, after Hurricane Katrina and Superstorm Sandy, the program was $24 billion in debt.

“We face a difficult choice. The National Flood Insurance Program can charge an unsubsidized, or ‘actuarial,’ rate for coverage (as Congress decreed in 2012, though it later severely limited how rapidly those rates could rise); doing so would impose crippling costs on homeowners. Or it can continue to subsidize development in dangerous places. But these new maps represent an unwise compromise: blinding residents to their physical vulnerability, while also inviting them to financial ruin.” Stories of massive coastal flooding in the U.S. are everywhere. New Orleans is just one of the more obvious candidates, but the bottom third of Florida is probably equally vulnerable. But if we can just get someone in government to present an official map or designation of “safety,” hey… aren’t we all better off?

Damn, Americans love labels! Put a label on something, create a simple slogan that offers appealing but unworkable solutions to complicated problems, and voila, problem solved, nasty facts eliminated and so what if a few folks are seriously inconvenienced… or lose everything they own… or die… Hey, it worked for a while. Is this simple denial or deeply preprogrammed lying or fraud.

I’m Peter Dekom, and ultimately, sooner or later, it will be your tax dollars at work… or paying for the consequences of relying on staggering misinformation that your tax dollars paid to create.