Coastal Development

The award mandated through jury trial that State Farm insurance has been required to pay out for damage from Katrina is likely to begin an avalanche of homeowners awards. Yesterday, State Farm settled a suit that it had contested, avoiding the costs of pursuing another, similar suit for damages. In that case, like the Tejodor case settled yesterday, a claim on an existing, paid-up, insurance policy was denied after the storm surge of Katrina.

State Farm and other insurers say their homeowner policies cover damage from wind but not from water, and that the policies exclude damage that could have been caused by a combination of both, even if hurricane-force winds preceded a storm's rising water.
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U.S. District Judge L.T. Senter Jr. took part of that case out of jurors' hands, ruling that State Farm was liable for $223,292 in storm damage to the Broussards' home. Jurors awarded the Broussards an additional $2.5 million in punitive damages.

I am relieved that Gulf homeowners will be getting awards that will enable them to restore their homes, as are most of us homeowners. There is, however, a problem with the prospect of rebuilding in the waterfront in an age of rising waters.

While the Mississippi coast has multitudes of homes that have sat safely for many decades, like all waterfront communities it also has a lurch toward growth. Recently, a whole community in Florida turned itself out, giving over its little mobile home park so that developers could put in a luxury home area, all of it in a land area that is lowlying and likely to be threatened by rising oceans.

The 43-acre property is a down-market relic of old Florida surrounded by multimillion-dollar homes and splashy high-rise condos.

State and local officials still must approve new zoning to accommodate the 900 condo units, a luxury hotel and marina proposed by the developer, Ocean Land Investments of Boca Raton.

Palm Beach County officials have raised concerns about adding a high-density development to South Florida's cluttered coastline. The community is in a hurricane evacuation zone and has few ways in or out.

Somehow I don't think that a great deal of attention will be paid in the zoning decision to the tenuous nature of this development in its waterlogged situation.

Year after year, hurricanes sweep through low-lying areas. The homes built in precarious but desired water view areas are swept away on a regular basis. In some areas, the communities are refusing to subsidize the round-robin building boom, and opting out of flood insurance that they have to tax the residents for. I lived in a little island town that opted out, and left its summer community to rebuild for themselves, with their own private insurance. Typically, the year-round residents were much less affluent than the summer visitors. The voters could not afford to raise their own taxes to pay for the rebuilding of luxury homes that had been situated with the view, not durability, in mind.

In places with great shorelines, like California and Florida, the zoning requirements have been for the most part attacked by developers putting pressure on the community to allow ever chancier building patterns.

Every week more than 3,300 new residents land in southern California, while another 4,800 hit Florida's shores. Every day 1,500 new homes rise along the U.S. coastline. More than half the nation's population now lives in coastal counties, which amount to only 17 percent of the land in the lower 48. In 2003 coastal watersheds generated over six trillion dollars, more than half the national economy, making them among our most valuable assets. Yet two blue-ribbon bipartisan panels—the Pew Oceans Commission and the U.S. Commission on Ocean Policy, convened by the Pew Trusts and the U.S. Congress, respectively—recently issued disturbing reports that found the coasts are being battered by an array of pollution and population pressures. [emphasis added]

With the push to the edge of the continent which ignores its dangers, it's obvious that insurance is going to become a thing of the past if it has to cover full replacement costs. We need to have more care about the development for homeowners' interests as well as conservation. Zoning has been left up to local decision making, but that may not be good enough for the future. I am definitely expecting that the devastation of rising sea levels is going to require national attention. Otherwise, it's going to swamp more than the real estate, and insurance industry, along our coasts, it's going to be drowning our treasury as well.