Rising Seas Are Going to Create a Huge Property Tax Headache

People are becoming increasingly worried about how they’ll be impacted when rising seas swallow up coastal properties. First, homeowners living on threatened land. The mortgage lenders and insurers that insure these homes have financial interest. However, any person who depends on the public education system, fire department, or other municipal services, should be cautious if land parcels are below the tide line. Property tax revenue generated by the land to pay for these public services also disappears when it is lost.

Climate Central published a new land risk analysis Thursday that highlighted the threat to U.S. communities. The organization is focused on monitoring how rising sea levels and extreme weather conditions are impacting local communities. According to the report, individual properties along the U.S. coast—collectively the size of 75% of New Jersey—are projected to be partly or fully submerged in about 30 years. They will likely wash away billions of dollars in tax money, which could strain the budgets for government and schools districts.

These findings are based on data on water boundaries from the National Oceanic and Atmospheric Administration and models of sea level rise from U.N. Intergovernmental Panel on Climate Change. Nearly 650,000 tax parcels, covering nearly 4.4 Million acres, may be affected, with 48,000 being entirely within the tideline by 2050. If you go further inland, your number of residential and commercial properties becomes smaller. This means that there will be six times more affected parcels than 2030.

“Our ancestors decided to build [there] because we thought it was safe,” says Don Bain, a senior advisor at Climate Central, in a press call ahead of the report’s release. When waters encroach on those communities, the problem “gets worse, very fast.”

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But not every coast has the same risk. Take into account that this model projects a worldwide average rise in sea levels of 8.4 inches from 2000 to 2050. However, if you drill down to the model, some regions like Alaska where melting landice causes sea levels to rise will not see any change. Other places, such as Grand Isle (La.), Galveston (Texas) and Miami Beach, Fla. will need to deal with sea-level rises of 12-inch to 19-inch and 23 inches, respectively.

These examples show that the most vulnerable communities on the East Coast and Gulf Coast are those in Florida, North Carolina, North Carolina, Texas and Texas. Climate Central, which released 250 county-specific reports, found that 87% of the country’s affected area is concentrated in just four states: Louisiana (8.7% of the state’s total land), Florida (1.8%), North Carolina (1.3%), and Texas (0.2%). The chart below illustrates that these states were also home to the greatest numbers of tax parcels, with Louisiana being the state where the majority of the properties will be submerged at 100%.

The financial responsibility for the loss of land due to flooding is shared by all those who reside there. There are immediate expenses for infrastructure repair and emergencies. There are also systemic revenue drops as property values decline and the tax base shrinks due to people moving away from coastal erosion. It is noted that the cost of abandoned properties will be passed on to government. This can lead to additional expenses.

Those losses have knock-on effects for police and fire departments, public transit, parks, and public housing—not to mention public schooling. According to the Lincoln Institute of Land Policy, public education revenue across the country totaled $771 billion in the 2018–2019 school year, nearly half of which came from local government sources. About 36% of that local revenue came from property taxes.

Climate Central used data from to estimate the loss. Climate Central conservatively estimated lost property taxes for all counties with available valuation data by using data. While it’s only a partial financial picture, the numbers are still staggering: Florida has $7 billion at risk across 44 counties. Texas and North Carolina each face $5 billion potential tax loss across 9 and 21 counties. The researchers could not make an assessment because of the lack of data in Louisiana for many counties.

While many homes aren’t yet being abandoned or falling into the waterThe properties that they own are decreasing in size, which is causing some towns along the coast to struggle with landowners, who want their taxes to fall in parallel to their smaller lots. But in other towns, the opposite is happening: despite clear evidence that water is taking over the land, rebuilding and new construction continues right along the water’s edge.

In one example, Climate Central’s Bain presented a property lot map of Dauphin Island, Ala., where more than a dozen lots were completely in the water. “We have properties that are now underwater as a result of coastal erosion, and property owners who are still receiving property tax bills associated with these properties that they can no longer use,” he said. The island can still rebuild with federal assistance and insurance payments.

Many experts believe that estimating the property tax losses will help local governments start having more transparent conversations about how coastal property values. “There’s a lot of effort to not disclose [flood] risk in order to artificially keep those values high,” says A.R. Siders, an assistant professor at the University of Delaware’s Disaster Research Center, who was not involved with the report but spoke on the call with reporters. “We’re still building in these flood-prone areas [because] we’re so obsessed about having more property value, more property tax revenue.”

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