Tuesday, November 20, 2012

On Florida Real Estate: The Superstorm Sandy effect ... by gimleteye

After the 1992 super-hurricane Andrew, South Florida was in a state of shock, similar to coastal New Jersey and New York today. Andrew was a compact, category five hurricane. In South Dade where the impact was strongest, the morning after the storm, sun and blue skies prevailed. The strike zone looked like a bomb had gone off.

Civic leaders quickly rallied under the proud banner, "We Will Rebuild". How would South Florida rebuild? the blue ribbon panel asked. Twenty years later, the coastal areas of New Jersey and New York are facing a similar question after Superstorm Sandy. This time, the answers may be very different.


Twenty years ago in Florida, talk of sea level rise and climate change was in the margins. The subject had a place in the corner, where Chicken Little's nursed their wounds, far from sight and off the political radar.

In its congratulatory essay on the Obama victory, The New Yorker put the issue startingly in front. The magazine, understandably rattled by the impacts of Sandy, followed bold statements by Gov. Andrew Cuomo and New York City Mayor Michael Bloomberg. The eponymous magazine, Bloomberg Businessweek, instantly put on its Nov. 1 cover, "It's Global Warming, Stupid", as though channeling a Clinton era ordering of priorities, largely avoiding global warming, that the former president might wish he could do over.

In Miami in 1992, a segment of the urban planning community proposed that rebuilding South Miami-Dade, hardest hit by the hurricane, ought to be done with care and with an eye toward sustainability, incorporating planned growth in flood plains such as those provided by nearby national parks. Modest plans were drawn up and circulated through well-intended public meetings.

What followed was nearly as devastating as the hurricane itself. Those angels of our better nature did not prevail. Growth in the aftermath of Hurricane Andrew easily slid back to the default business model: putting condominiums on beachfronts and platted subdivisions in low lying flood plains.

By 1998 in Florida, Gov. Jeb! Bush had swung into office supported by Miami development interests whose business model was backed by the full, faith and credit of the Growth Machine. In 2000, when Al Gore ran for president, environmental issues vanished from sight, especially in Florida where campaign advisors persuaded Gore not to antagonize constituencies who tolerated talk about "balancing the environment and the economy" so long as this high road had plenty of exits to the free way.

Political entities, under the control of property rights activists and local bankers, didn't simply ignore the idea of adaptation in land use planning, they made sure that what emerged from the wasteland of a category 5 hurricane was nothing more than a bigger and better version of the same strip mall culture that infects everything it touches.

Drive today along US 1 in Florida City en route to the Florida Keys, and you would never know anything happened, that any hurricane hit, or that issues on the forefront after Superstorm Sandy had been briefed, here, fully, twenty years ago; vetted by the lawyers, lobbyists, and builders. Nothing changed. Nothing, that is, until 2007 when financial consequences were eventually extracted by the housing collapse, the way a zip file is unpacked, following a housing boom whose origins were exactly in South Florida and exactly in flood plains vulnerable to sea level rise.

With Superstorm Sandy and a few tens of billions of damage, climate change and sea level rise may have finally pushed through the powerful forces that conspire to suppress policies to mitigate the impacts of sea level rise, especially regulations governing local land use.

The New Yorker observes:
"Inaction on climate change has an insidious ally: time. As the writer and activist Bill McKibben writes in The New York Review of Books, “Global warming happens just slowly enough that political systems have been able to ignore it. The distress signal is emitted at a frequency that scientists can hear quite clearly, but is seemingly just beyond the reach of most politicians.” When the financial system collapsed, the effects were swift and dramatic. People could debate how best to fix the problem, but they could not doubt that there was a problem and it had to be fixed. Yet, as Nicholas Stern, a former chief economist of the World Bank, who studied the costs of climate change for the British government, has observed, the risks are vastly greater than those posed by the collapse of the Western financial system."(http://www.newyorker.com/talk/comment/2012/11/19/121119taco_talk_remnick#ixzz2ChaNwbT3)
As an appointee to the original Miami-Dade Climate Change Advisory Task Force in the early 2000's, I can attest to incredulity when former county commissioner  Natacha Seijas, through chief of staff Terry Murphy, prevented the inclusion of precise geographical elevation maps in the local land use plan. Seijas was the de facto chair of the county commission; enforcing the political order emanating from campaign contributions that funded local races, by local homebuilders tied together with mortgage bankers and the Chamber of Commerce.

All growth was good. All good until you looked at those maps that show exactly where sea level rise will flood Miami-Dade property according to the march of the sea inland. (The first unstated reason the maps were suppressed was that the Growth Machine opposed anything that might be used to impinge on property rights, in the future. The second unstated reason: taxpayers in Miami can be fooled into paying for anything, at the right time.)

In South Florida -- with the most economic value at stake in the nation -- public awareness of sea level rise is growing belatedly. A recent presentation by Dr. Harold Wanless, University of Miami scientist, was packed. When slides bearing photos and data on melting Greenland and Antarctic ice sped by, no one moved.

Still, if Florida is predictive of the national response to sea level rise, there is no leadership on the toughest part of climate change adaptation: retreating from the coasts. The entire southern half of the state is scarcely a few feet above sea level. Yet, the region's biggest utility -- Florida Power and Light -- is proceeding with plans to put two new nuclear reactors at a cost of more than $20 billion in exactly the area of the state, South Florida, that is most vulnerable to the rising seas.

The reality of future economic and social hardship from global warming is so severe, it might chase anyone to the side of denial. One of the best examples, unsurprisingly, is from Florida: US Senator Marco Rubio. Rubio is a Florida Republican whose political future has been groomed and manicured more carefully than any in the Bush camp. As Eye On Miami repeatedly pointed out this year, Senator Rubio has refused even to be briefed by scientists on climate change. In an interview released on Monday, Rubio told GQ Magazine, “Whether the Earth was created in 7 days, or 7 actual eras, I’m not sure we’ll ever be able to answer that. It’s one of the great mysteries."

Just look to beach renourishment projects -- deemed essential by the Chambers and tourism trades and costing hundreds of millions so far -- as a bellwether: we will keep putting sand on beaches to get washed away until it is too expensive.

Who will decide when it is too expensive? It is one of the great mysteries.

This order of political crisis has overtaken the washed-away property owners in beach front communities of New Jersey and New York. The New York Times reported yesterday, "The Fate of Storm-Damaged Homes".  Hundreds of homes are unsalvageable. Thousands of homes and businesses will need repair, financing and insurance.

Who will say, whether the owners of the property underlying the homes have the right to build in the same place? Before or after, one hundred year storms occur every five years? 

This is a question that was obvious twenty years ago, but never asked because "We Will Rebuild" is antithetical to the notion there are places we shouldn't rebuild. On the other hand, nature does bat last. Taxpayers will eventually reach the conclusion, why should they pay for property owners who couldn't get out of the strike zone. Twenty years later, and even the New York Times treads gingerly on what's next.

In the interim Florida has been fortunate to have escaped a storm the intensity of Hurricane Andrew. It may be a long time before a massive tropical storm coincides with a lunar tidal event, winds, and a bull's eye toward valuable coastline. Then again, it may not.

Meanwhile South Florida is wrestling with higher sea levels right now. It is one thing when the hotel industry agitates for more money for the US Army Corps of Engineers to fill in the eroding Miami Beach waterfront. It is another thing, when private property owners on the coasts want upland taxpayers to share the burdens of a storm like Sandy, Katrina, or the next supertide that inundates lower Manhattan like occurred recently in Venice, Italy.

Miami is entering its busy season. The weather is glorious. The humidity, gone. In only a few weeks, many of the world's richest collectors will arrive for Art Basel Miami Beach. The airports will be full, from passengers in private jets to the cheap seats in economy class. It is going to be grand, spreading joy and a keen appreciation for art. Few will know that sea water now creeps into nearby basement crawl spaces on ordinary high tides. Immoveable truths accompany rising seas.

Anyone can build on their property if they are willing to self finance and self insure. But if you need financing and insurance?

This is the shoe -- the insurance industry response to sea level rise -- that hasn't dropped. But it will, and sooner maybe than anyone thinks. For years on global warming, while industrialized nations dithered, the world's biggest reinsurance companies have been most vocal on the economic risks of global warming. Risk is, after all, their business; not Glenn Beck's, or Rush Limbaugh's, or the commentatoriat on Fox News.

Meanwhile, the tides rise and fall as they always have and always will. Just higher.

1 comment:

Marg Properties said...

Thanks for the info and do any guys have info about the real estate impact of Sandy.