A Q&A on California’s Proposed Revolving Loan Program for Coastal Retreat
June 1, 2021
Helen Wiley, interviewer
California’s coast is threatened by the impacts of sea level rise with projections indicating a half-foot rise by 2030, a two-foot rise by 2050, and a seven-foot rise by 2100. Increased sea levels will exacerbate the damage caused by coastal erosion, and storm surge, and increase risks of salt-water intrusion into drinking water supplies. California, like many other states and local governments, is looking for ways to proactively fund and manage shoreline retreat in the locations where it is deemed the preferable policy. A core component of this approach is buyouts, in which local and state governments purchase certain floodprone homes and preserve the property as open space, thereby permanently reducing exposure and possibly creating floodwater storage, as well. A challenge everywhere, however, is how to fund the widespread buyouts that scholars predict will be needed. California has a novel solution to this problem.
Proposed state legislation SB83 would create a revolving loan program, allowing California counties and communities to purchase vulnerable coastal properties. The loans would be repaid by communities renting back the properties to residents until they are uninhabitable. To learn more about this proposed legislation and the program it would support, the Risk Center reached out to California State Senator Ben Allen and Julia Stein at UCLA School of Law.
Ben Allen is a California State Senator representing the 26th district, which covers the Westside, Hollywood and coastal South Bay communities of Los Angeles County. Ben chairs the Senate’s Environmental Quality Committee and co-chairs the Legislature’s Environmental Caucus. Julia Stein is Supervising Attorney for the Frank G. Wells Environmental Law Clinic, and Project Director for the Emmett Institute on Climate Change and the Environment at UCLA School of Law. She has experience lobbying, drafting legislation, and orchestrating research and comments on significant regulations. Stein’s California Environmental Legislation and Policy Clinic class collaborated with Senator Allen’s staff on the proposed legislation discussed here. This interview has been edited and condensed.
California has a lot of wonderful places—and a large amount of property value—along the coast. What kind of risks does sea-level rise pose to the state?
Stein: Sea level rise-related risks are significant. The State projects that between $8-10 billion of existing property will be underwater within the next 30 years, and an additional up to $10 billion of property will be at risk during high tides. By the end of the century, the great majority of Southern California’s famous beaches could be completely eroded; saltwater marsh ecosystems could be substantially disrupted; and major airports in San Francisco, Oakland, and San Diego would be vulnerable to serious flooding if protective measures aren’t taken. Reasonably likely projections of sea level rise would see tens of thousands of Bay Area residents experiencing flooding on a daily basis. Coastal armoring to protect communities and infrastructure would be incredibly costly; the U.S. Geological Survey estimates protective measures in the San Francisco Bay Area could cost up to $450 billion. In sum, California faces enormous costs in the form of risks to human health and life from coastal disaster events, lost property, interference with and need to decommission coastal infrastructure, and disruption of coastal economies and ecosystems.
Senator Allen: Additionally, our coastline is home to 68 percent of California’s population and is responsible for 80 percent of our gross domestic product. More than 150 million dollars in property could be at risk of flooding by 2100. We face too many disasters reactively rather than proactively – consider the costs in lives, irreplaceable belongings, and property that could have been saved if California had taken action two decades ago to lessen the impacts of our devastating wildfires. Also, it is tempting to see sea level rise as a “first world” problem for wealthy coastal enclaves like Malibu or La Jolla. In reality, sea level rise will do the most harm to those communities that can least afford to address it—communities like Imperial Beach and Chula Vista in San Diego; in Port Hueneme and Marina on our central coast, and Milpitas to Crescent City in the northern part of the state.
Retreat from the coast—while inevitable in many places—is often met with resistance because of the costs it imposes on property-owners. This innovative legislation has possible found a way around that problem. Can you explain how it would work?
Senator Allen: Senate Bill 83 would establish a revolving loan fund through the state that communities could use to purchase threatened properties from willing homeowners. Several state agencies administer revolving loan funds to finance, for example, building new charter schools or projects to provide clean drinking water. Essentially, the state of California would offer low interest, state-backed loans for a city or county to buy any threatened coastal property at a fair price from the willing owner. That homeowner could then relocate safely and shed the liability caused by sea level rise. Current estimates suggest we have around 20 to 30 years before sea level rise significantly changes our coastline. We could use that time to purchase these properties and rent them back out on the market until they can no longer be lived in safely. That cash flow would pay off the loan, and even in some cases, generate revenue. All too often coastal planning results in gridlock between the state, local jurisdictions, and property owners. This strategy could help avoid that same result.
Stein: Importantly, the program would give residents of coastal communities the option to stay in their homes while properties are still safely habitable and enables them to sell properties while they still have value, which may ease the financial burden of relocation if or when it becomes necessary. And the State and local governments could realize significant cost savings by having the flexibility to implement adaptation and resiliency plans before communities and ecosystems experience the worst effects of sea level rise.
How large would the loan program be? Do you foresee lots of communities making use of it?
Senator Allen: We simply do not know yet. We have gotten really positive feedback since introducing the bill, but it is hard to tell how many jurisdictions will take advantage of this new tool. The hope is the program will be able to secure some funding initially, and if the program becomes popular, create a strong case for more money. Every jurisdiction that does participate means less conflict for that community and less stress on taxpayer resources to respond to a future disaster. In theory, the program would begin selling itself.
There are other efforts to address sea-level rise and costal hazards in the state. How would this program tie in with other existing programs and initiatives?
Stein: I see this program as one tool in the toolbox the State will use to address the risks of sea level rise. The other tools the State has—building protective barriers, adapting coastal communities to the realities of sea level rise, and/or relocating communities and key assets out of areas that are most prone to flood risk—wouldn’t be entirely displaced by a program like this. But this program does have the potential to work alongside those other strategies in ways that could make the deployment of those strategies more cost effective and equitable. For example, in a best case scenario, the State might be able to assist some coastal communities with a gradual relocation that results in lower danger to human life from disaster events; an ability to proactively decommission infrastructure (rather than having to do so in an emergency situation); and a reduction in the need for coastal armoring structures, which themselves can raise serious equity and ecological concerns.
Senator Allen: Agreed, this program is another tool in the toolbox for addressing sea level rise and related coastal hazards. Many of the other tools only focus on mitigating risk, but we need to both mitigate risk and have a solution for when the risk is happening in real time. USGS experts have pointed out that building protections, walls, and berms can prevent overland flooding, but that won’t protect groundwater. They warn us to be mindful of the “slow creep upward” that gets into “garages and foundations and roadbeds.” And, sea walls, for example, can negatively affect areas to the north or south of any wall, worsening matters for neighboring communities.
The state’s approach should be three-tiered. First, we must reduce our greenhouse gas emissions to reduce sea level rise as much as we can. We must continue our fight to bend the climate curve. With strong efforts, maybe we’ll keep our warming climate under two degrees, leading to fewer threatened properties. Second, we need to mitigate the risk that we already know is inevitable. For example, Senate Bill 45, our proposed climate bond, would allocate funding to invest in projects like dune rehabilitation that can help hold back rising waters. Then third, we need to prepare for properties to inundated and uninhabitable. That is where this tool fits in. We identify the homes that we cannot save, and use this mechanism to help willing homeowners safely relocate without either simply losing their home or having taxpayers foot the bill. It also allows local governments to run ahead of the issue – rather than only focus on disaster recovery.
What would you recommend to other states and municipalities interested in creating a similar program?
Stein: Start thinking about it now! Time is of the essence when it comes to creatively managing sea level rise risk. Early buy-in to programs like this will be important for governments to be able to recoup their investments in these properties before they become unsafe to inhabit. That means governments need to be communicating options like this to coastal communities now, even before some communities fully appreciate the risks they face.
Senator Allen: Indeed, one of the most important things other interested states or municipalities can do is collaborate with their communities, and be sure to do so early. The key will be early action. We know it is difficult for our local governments right now. In many of our conversations with cities and counties, we’re hearing that they need help today, not just dealing with climate disaster, but with so many issues. It is difficult to think about 10 or 20 years down the line. We understand it can be tough to triage all of the many competing priorities that communities are facing, but if we can plan ahead now, we can avoid even tougher choices later.
Anything else you’d like to add?
Senator Allen: Sea level rise is already here. In the last 100 years, the sea rose less than 9 inches in California, encouraging communities to build up to the water’s edge. By the end of this century, the surge could be greater than nine feet. Communities in California are spending fortunes to deal with the effects. Balboa Island is spending 1.8 million dollars to raise the wall that separates it from the ocean. Pacifica is spending over half (16 million of its 36 million dollars) of its operating budget that relies largely on property tax to cope with damage from one bad storm season. Two-thirds of Southern California’s beaches could vanish. We need the political will to act now, while there is still some time. These choices are tough, but they will get tougher when insurance companies refuse to cover properties and banks won’t provide mortgages. Will taxpayers be asked to cover the cost – whatever the cost may be – when the flood water is at our doorstep?
Stein: As with many climate change-related risks, the magnitude of the challenge posed by sea level rise is hard to overstate and will only continue to grow into the future. Communities will need to think outside the box to effectively plan ahead, so it’s exciting to see ideas like this being considered.