Taking a Buyout from the Beach

A market-based initiative could help people escape from deteriorating beaches.

Published August 18, 2016

Coastal communities are under threat—from erosion, sea level rise, and, in some cases, increasingly powerful storms and floods. People who live on degrading coastal land face a difficult choice: they can stay and risk increasingly hazardous conditions, or leave and suffer potentially heavy financial losses.

In a new paper, lawyer Emily Nellermoe argues that a market-based solution known as transferable development rights, or TDR, could be used to help homeowners vacate coastal properties without overextending government budgets.

Historically, methods to move or protect people or restrict development in fragile coastal areas have had problems. Easements—government programs that restrict how property can be used—are expensive and voluntary. Programs that reinforce or rebuild the shore in a bid to let people stay, such as beach renourishment or sea wall construction, are also expensive and can negatively affect nearby areas.

Transferable development rights programs are a cheaper alternative that can influence where people live. These programs can be either voluntary or mandatory, and were first used in 1968 in New York City for its Landmarks Preservation law.

In a TDR program, the government will categorize an area in which it wants to reduce the amount of buildings or population as a “sending zone,” while in another area, called a “receiving zone,” regulations are enacted to make it more attractive to both homeowners from the sending zone and developers. Property owners in the sending zone receive credits based on the value of their former property that they can either use to build in the receiving zone or sell. A credit’s value can run into the hundreds of thousands of dollars, depending on the property.

Since 1968, TDR programs have been implemented 239 times throughout the United States, and at least 37 times internationally as of 2012. Only seven have focused on coastal areas.

Using the city of Folly Beach, South Carolina, as an example, Nellermoe argues that TDR programs could help people cope with erosion, and escape the heavy costs of renourishment projects.

In 1993, Folly Beach was allotted US $115-million for coastal renourishment. This money was supposed to last for 50 years until 2043. As of 2015, however, the city had already spent $80-million. As a response, the city has been looking for different ways to revamp the coast.

Nellermoe says a TDR program could potentially help all of Charleston County, where Folly Beach is located, by providing a way to increase density and reduce the county’s urban sprawl problem. Nellermoe lists several ongoing major development and redevelopment projects in her paper that could work in a TDR program.

But as Nellermoe notes, getting a TDR program implemented would require a degree of political will. Two successful TDR programs have already been put into place in South Carolina, in 2007 and in 2008. But getting widespread acceptance for the plan could still be difficult, she says. Despite being a low-tax state, a mandatory TDR program would likely not go over well.

“It could be seen as government overreach,” Nellermoe says. “Which historically the South Carolina public is not a fan of.”

Rick Pruetz, a planning consultant specializing in TDR, says there’s another reason it could be tough to implement a TDR program on the coast. Unlike inland-to-inland TDR programs, the receiving area will be missing a major draw of the original property: “A lot of the homeowners aren’t driven by profit,” Pruetz says. “They want to live on the coast.”

But with sea level rise and the costs that come with it, Pruetz says TDR could become more attractive to some communities, especially if federal funding for renourishment and reconstruction dries up. Some coastal property owners, he suggests, will gradually be convinced that it is better to take the cash and move than bear the brunt of rebuilding in storm-prone areas.

“I think jurisdictions should make TDR an option for owners of vulnerable beachfront property,” he says. “And then be patient.”