Courtesy Harvey Memories Project

Climate change is propelling more extreme weather events, including more precipitation and flooding, which means the need for more strategies such as buyouts has never been more urgent. As a concept, buyouts are fairly straightforward: the government buys up properties to remove them out of harm’s way, reducing the risk of loss of life, the need for future flood repairs, insurance payouts and other costs. 

This is part of a series of posts exploring the city of Houston's climate and resilience progress. Read more here.

In practice, however, it’s an exercise fraught with complications, as these transactions must contend with rising property values, long government processes, and potentially inequitable results. Harris County is hoping to mitigate some of these challenges with new incentives.

When homeowners volunteer to be relocated out of flood-prone areas, local governments apply for federal funds to buy out their properties. Funding can be used to permanently move residents—and even entire neighborhoods—to safer areas in order to mitigate disasters from flooding. Homes that are bought out are demolished, and the land becomes open space that can absorb more stormwater during floods. 

In 2017, Hurricane Harvey flooded more than 154,000 homes in Harris County, prompting the federal government to allocate billions of dollars to reduce flooding risks, including property buyouts. Earlier this year, Harris County unveiled its guidelines for homeowners who voluntarily choose buyouts funded by the U.S. Department of Housing and Urban Development (HUD)’s Community Development Block Grant Disaster Recovery (CDBG-DR) program. The county expects to use $15.4 million in CDBG-DR funds out of a $57.8 million allocation from HUD to the state in 2017 to buy out 50 properties that flooded during Hurricane Harvey.

Additionally, as shown on the Kinder Institute’s Hurricane Harvey Funding Dashboard in its newly released Resilience and Recovery Tracker website, Harris County also gained approval for a sizable amount of CDBG-DR buyout assistance in 2018—about $213 million through a “first round” of funding for property owners who voluntarily participate in the buyout program. About 4,000 property owners volunteered to participate during and after the hurricane, according to the Harris County Flood Control District (HCFCD). More than 150,000 units remain in the 100-year floodplain, according to Kinder Institute analysis. Considering that the buyout process often takes several years, much of that funding from 2018 is just beginning to be expended. 

Out of the initial $15.4 million in buyout funding from 2017, it is estimated that eligible participants will receive an average of $230,000 for each buyout property, depending on the “pre-storm fair market value” and settlement costs.

To further encourage homeowners to relocate, Harris County is promoting incentives and payment assistance in its Voluntary Buyout Program Guidelines that make an effort toward retaining residents within county borders to help preserve social networks as well as making relocation more affordable. 

As for retaining residents, Harris County is committed to moving residents outside of the 100-year floodplain but still within county boundaries. In addition to the county’s offer to purchase homes based on the pre-storm fair market value of the property, the county is offering a $19,875 “locality incentive” that aims to assist vulnerable populations with moving to a nearby community in the county. According to the Voluntary Buyout Program Guidelines, one intention of the incentive is to encourage residents to relocate to a community that is similar to the one they are leaving behind. This approach by the county is part of a broader push that recognizes the value of maintaining existing social networks within new communities, an idea supported by a study published last year by Rice University sociologist James Elliott and his colleagues.

The county’s locality incentive may aid in retaining residents by promoting a shared sense of “community attachment.” Given the county’s steadily declining stock of affordable housing in some parts of the county and the challenge residents may have finding housing near members of their local community upon moving to a reduced flood risk area, the locality payment may help to preserve community ties

In terms of making relocation affordable, Harris County is providing a subsidy to homeowners to make it easier for them to find housing in another part of the county that is comparable to their current home. Known as a “replacement housing incentive”, the payment will assist residents in purchasing a replacement home even if it costs more than the value of their current home. The approach may help to strengthen participation in the buyout program by ensuring that residents do not lose money by enrolling in the program. There is no maximum cap on the assistance.

To guarantee that the quality of a replacement home is consistent with the condition of an applicant’s current home, Harris County is extending a rehabilitation incentive to low-to-moderate income (LMI) residents. The incentive will help residents make repairs valued between $5,000 and $20,000 to their replacement home to make certain that it conforms with building codes and safety standards. This could represent a step toward housing equity in the county because it endeavors to both keep residents within county boundaries and make relocation more affordable.     

Another county incentive is a maximum of $35,000 per household for down payment assistance to reduce financial hardship and make relocation more affordable. The assistance can be put toward the down payment and closing costs for a replacement home for LMI residents and other buyout participants with up to 120% of area median income (AMI). Once a buyout participant takes ownership of a replacement property, the homeowner is required to live in the new house for at least 5 years.   

These incentives are just a few from the county’s Voluntary Buyout Program Guidelines that suggest Harris County is thinking in more long-term ways to make relocation to adjacent communities both more affordable and equitable. ​​To measure the impact of the 50 new buyouts, the county could ask the flood control district to use its existing Geographic Information Systems (GIS) technology to track homes that would have otherwise flooded if they had not been bought out using the $15.4 million in funding. Harris County could then use this information to encourage participation in the 2018 voluntary buyout funding with $213 million in CDBG-DR funds. The county could also implement similar buyout incentives from the 2017 program, if successful, in the 2018 round of funding to encourage residents to voluntarily move out of flood-prone areas in affordable and equitable ways.  

Harris County buyout incentive programs

Incentive Purpose Amount Offered
Locality Incentive Assist vulnerable homeowners with moving to a nearby community in the county $19,875
Replacement Housing Incentive Assist residents in purchasing a replacement home even if it costs more than the value of their current home Based on pre-storm fair market value of buyout home and replacement home cost
Rehabilitation Incentive Assist low-to-moderate income (LMI) residents to make repairs to their replacement home $5,000–$20,000
Down Payment Assistance Assistance can be put toward the down payment and closing costs for a replacement home for LMI residents and other buyout participants with up to 120% of area median income (AMI) Up to $35,000 per household