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Saturday, March 2, 2024

Lost renourishment funding, lower property values?

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New research indicating a significant connection between beach renourishment funding and coastal property values could attract property owners to the table as local leaders investigate future funding options for storm mitigation projects.

Completed by researchers from the University of North Carolina Wilmington, Duke University and The Ohio State University, the study states oceanfront home values could dip between 17 and 34 percent without ongoing federal financial support for the beach projects, typically paying 65 percent of each multimillion-dollar project. Dylan McNamara, UNCW associate professor of physics and physical oceanography, said the research assumes coastal property owners will undertake project costs in the absence of federal contributions.

“If, all of a sudden, that local property owner had to pay for nourishment costs, then the net value of that property would change, and we wanted to see how much it would reduce. And it turned out that it reduced pretty significantly,” McNamara said. “So effectively, that nourishment subsidy is elevating the value of the property, and if it disappears, the intrinsic property value would decrease.”

Local discussions about alternative funding strategies for the projects, if federal financial assistance disappears, have not included relegating the cost to property owners. New Hanover County Shore Protection Coordinator Layton Bedsole said the cost to build the dunes and widen the beach strands every couple of years would likely be tackled by the state, the county, and the local municipalities.

Currently, the remaining 35 percent of each project’s cost is split by the state and an earmarked portion of the county’s room occupancy tax proceeds. If the proposed 2015-16 fiscal year budget is approved, Wrightsville Beach will have more than $1 million in a savings fund dedicated for emergency renourishment costs by July 1, said town manager Tim Owens, generated primarily from parking meter revenues.

Not all beach renourishment projects qualify for federal financial assistance; the cost of participation is weighed against the estimated cost of recovery and repairs the government could incur following hurricanes and other coastal disasters.

“That’s how the federal government decides whether to participate in one of these civil works projects with the [U.S. Army] Corps of Engineers. … For the beach projects, they have to show a return on the investment. The benefits have to be greater than the costs,” Bedsole said.

Renourishment projects at Wrightsville, Carolina and Kure beach towns are federally authorized, or eligible for funds — but new federal guidance requires an updated analysis of projects, costs and benefits every few years, raising concerns from local stakeholders about the reliability of the funding.

Because continued federal financial support for the projects has been a hot-button issue locally, McNamara said the researchers were motivated to explore the mathematical relationship between federal participation in the projects and nearby property values. To determine the role federal cost-share for beach-widening projects plays in the value of oceanfront homes, researchers analyzed different features and factors influencing property values in coastal towns across North Carolina, separating the intrinsic attributes of the structure and the adjacent beach strand.

The study’s conclusions are not meant to be “the end of the story” or influence policy decisions, McNamara said, only to present empirical information about the value of federal renourishment funding for local property owners.

“It’s not our job as scientists and economists to suggest what the policy should be. We’re just trying to get as much information out there as we can,” McNamara said.

The findings on federal renourishment funding and property values are the latest installment in a years-long collaborative effort among the three universities to better understand how natural and manmade processes will impact the Eastern Seaboard. McNamara said the study’s conclusions apply to renourished beach communities along the Atlantic coast.

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