Eminent domain for environmental projects?
A SENATE BILL WOULD FUND THE TAKING OF PRIVATE PROPERTY TO CREATE FLOODPLAINS AND OPEN SPACES
Update: the bill was amended in committee in four significant ways;
- Language was added to prevent the fund from being used to directly finance eminent domain takings. To use eminent domain, local governments would simply need to seize the land prior to applying for a loan or grant from this fund.
- All references to bonding were removed from the bill, limiting the fund to loans and grants instead of additional borrowing.
- Administration of the fund has been moved from the Department of Natural Resources (DNR) to the Department of Administration (DOA) Disaster Recovery Office.
- Language was added to encourage people removed from floodplains to resettle in “Opportunity Zones.” – a recently created federal economic development program where investors are subject to reduced taxes for developing in a government-designated area. (to read more on Opportunity Zones click here)
A bill in the Senate (S.259) aimed at addressing flood mitigation and control would actually pose a threat to South Carolinian’s property rights.
The bill would create the “South Carolina Resilience Revolving Fund” for the purpose of acquiring properties to turn into floodplains (an undefined term) or open spaces. The fund would provide grants and low interest loans to local governments, the state, and environmentalist constructs called land trusts. The fund would be administered by the Department of Natural Resources’ (DNR) flood mitigation office.
There are no protections against eminent domain in this bill, despite claims that home buyouts would be voluntary. Once the loan has been issued, the recipient entity could do whatever necessary to acquire the property – in fact, the bill declares the carrying out of its provisions “an essential public function”, which is explicit language supporting the use of eminent domain.
Who can receive this money, and what can they use it for?
The bill would authorize three groups to receive loans and grants: state government and its subsidiaries, local governments, and land trusts. These entities could then use the funds for home buyouts and floodplain restoration – defined as “any activity” toward returning the land to its “natural state.” To be eligible for buyout, the home must have suffered flooding-related damage of over $1,000 twice in ten years – a remarkably low bar. The property would not have to be turned into a floodplain, however; it could also be converted to open space with an easement to prohibit any future development.
State agencies like the Department of Parks, Recreation and Tourism could access these funds to purchase more land for parks. Local governments, however, would likely be the primary recipients. The bill contains incentives to encourage loan and grant recipients to acquire areas of land larger than 10 acres, ensure residents relocate outside the floodplain but within the tax base and remain there for five years, buy individual homes, and convert the open space into a floodplain – and anything else DNR considers appropriate as long as it contributes to community flood resilience (another undefined term).
DNR could potentially use the funding to issue bonds without outside oversight, accountable only to the DNR director and board – a frightening prospect considering how deeply in debt the state and its agencies currently are, and how easily the current obligations could trigger an automatic statewide property tax.
What are they trying to accomplish?
The federally funded National Flood Insurance Program (NFIP) and other federal grants cover repairs to flooded homes. The purported goal of the bill is to save taxpayer dollars by relocating residents away from homes prone to repeat flooding damage. This federal program was created in 1968 to insure properties that private companies would not insure, and Congress later mandated participation by requiring purchasers of property in flood-risk areas to buy flood insurance either from or underwritten by the NFIP if the mortgage lender was federally regulated. This is why the taxpayer-funded NFIP (and its underwritten private plans) provide the majority of flood insurance coverage in the United States in at-risk areas.
This incentivized development in flood-prone areas. In addition, the waterfront development was that the larger construction required more disruption of the environment, destroying many natural barriers to storms and tidal rise such as beach dune ecosystems, salt marshes, and mangrove or other coastal forests.
The bill is not narrowly drawn to target the specific problems of repeat flooding. The proposed policies would go much further, allowing homes with minimal flood damage history to be seized and converted to open space.
The removal of large tracts of property from local government tax rolls would almost certainly create budget shortfalls, which would necessitate either spending cuts or more revenue from taxpayers.
The state’s property rights laws are already weak, and the proposed legislation to fund the seizure of land to create floodplains would make citizens’ property vulnerable to an unaccountable state entity. The bill is not narrowly drawn and thus would open the door for even broader takings, and for reasons other than even the stated purpose.