Beachfront Roulette

By Gabrielle Gurley

Last September, Hurricane Ian turned Southwest Florida inside out. Clocking wind speeds of 150 miles an hour, Ian’s walls of water pummeled Fort Myers Beach, Sanibel Island, Naples, and other Gulf Coast communities, and scrubbed homes off their beachfront foundations. Storm surge combined with driving rains swelled the rivers that destroyed inland properties. Ian is now the costliest storm ever to hit Florida, totaling $114 billion in insured and uninsured losses, and the third-most expensive hurricane in American history, behind Katrina and Harvey.

Florida’s climate perils are well documented. Southwest Florida is on target for one foot of sea level rise by 2050, within the lifetime of a 30-year home mortgage. Hurricanes are stronger and intensifying faster, and extreme heat complicates everything. But the money sloshing around in the housing sector means the ecosystem is alive and well. Real estate developers prioritize home construction and sales, lenders profit on interest and closing costs, and investors cash in on mortgage-backed securities. Cities and towns need that system to run, surviving on the associated fees and taxes that are even more of a priority to recoup after large taxable property losses. For 2023, Fort Myers Beach saw a 40 percent decrease in taxable property values and Sanibel had a 33 percent drop, equivalent to $2 billion in losses in each municipality.

As long as the federal government provides disaster assistance, flood insurance, and new fortifications to protect property that survived the last storm, there is little incentive to break these cycles. Long-term options, such as inland alternatives to living on coastal fringes, are set aside. Those elements, combined with a White House–seeking Republican governor who rambles on about “the politicization of the weather,” have virtually guaranteed that there’s no post-Ian discussion in Florida about strategic relocation.

For the fastest-growing state in the country, there’s no crisis in their climate. Some snowbirds dazzled by c’mon-down-thewater’s-fine pitches from Florida realtors still shell out their savings for dream homes on Gulf of Mexico barrier islands that nature intends to finish chewing up and spitting out. “Even after this hurricane demonstrated that places like that can be inundated,” says John Capece, president of the Democratic Environmental Caucus of Florida, “they still want to build there.” Cape Coral, just southwest of Fort Myers, is the third-most popular Florida destination after Miami and Tampa for Redfin users looking to relocate, even though the town saw between 9 and 12 feet of storm surge during Ian, and nearly all its homes are at risk for severe flooding.

“From the standpoint of government those are very attractive homes—apartments and condos— because they have the least demand for services, yet they’re paying the same amount of taxes,” says Craig

Fugate, a former FEMA administrator and Florida Division of Emergency Management director. “If I’m a developer and I’m looking at these areas that got hit, this is some prime real estate that was probably underdeveloped. So, I can go in there and buy those lots at distressed value, and I’m going to demo it and I’m going to go with a higher density.”

At the end of 2022, the Dublin Real Estate Investment Group LLC spent $7 million on the damaged 27-room beachfront Carousel Inn, in Fort Myers Beach, which once appealed to “budget travelers looking for a sunny getaway,” according to the hotel website Oyster.com. The developer plans a luxury residential condo development, with 12 4,000-square-foot units that start at $3.9 million. Real estate developers gravitate toward winter season rentals for visitors, or second homes and condos for mostly part-time residents; those people are likely to be elsewhere and their properties likely to be vacant during the height of the summer hurricane season.

Some of the confidence in this paradise on the edge stems from stringent post–Hurricane Andrew building code reform, which turned Florida’s weak building codes into the strongest regulations in the country. “Hurricane proofing,” or at least something approaching it, is now a well-developed business model. Post-Andrew new home construction codes require windows to resist water penetration, as well as impacts from wind-borne flying debris and highlevel wind loads (a measure of sustained wind pressure or force against the exterior of a structure rather than wind speeds). In 2018, the owners of the Sand Palace, a Mexico Beach home in the Florida Panhandle, built their residence to withstand 250 mileper-hour winds, which exceeded the top end of the county regulations by 100 mph. It stood up to Hurricane Michael. Unlike older homes, newer construction fortified with concrete and steel features strong connections between walls and roofs, using “hurricane straps” that literally fasten the roof to the rest of the house.

One beachfront home built in 2020 in Fort Myers Beach in Lee County is a testament to building code reforms in Southwest Florida. After Ian, the home remained standing, surrounded by more than a dozen empty lots that once contained homes built between 1930 and 1991. All of the older construction was swept away by a nearly 15-foot storm surge. This destruction made a lot of lots available. In early July, Zillow had 94 properties on sale in Fort Myers Beach, ranging from a vacant lot for $99,500 on the market for more than 130 days to a $3.9 million beachfront vacant lot (after a $1.3 million price cut), part of a former condo complex, that has been on the market since the end of May.

Despite high interest rates and construction anxiety due to the exodus of undocumented construction workers and ongoing supply chain shortages, the high-end beachfront market perseveres. In Collier County (excluding Marco Island), the May 2023 median closing price of single-family homes near beach locations increased 20 percent year over year, to $3,125,000 from $2,600,000, according to the Naples Area Board of Realtors. Overall, the May 2023 median home closing price decreased a little more than 1 percent to $600,000, from $607,500 in May 2022.

Cindy Banyai, a former Democratic candidate in Florida’s 19th Congressional District, sees investors offering to buy out people waiting on roof repairs for their homes. “Some people are taking that,” Banyai, a small-business owner, says. “There’s no real concern or care about where people are going, what’s happening to neighborhoods, or how it’s affecting the prices around it because basically, most of the municipal jurisdictions as well as the county, their idea is to want everything to be luxury.”

The downside of the obsession with luxury is gentrification. Ian-fatigued survivors are moving inland and upland, or out of state, particularly if they cannot afford to rebuild to the resilience standards required for new construction or pay higher flood insurance premiums. Wealthy newcom - ers drive out middle-class residents, who in turn move to areas where they displace low-income households, often sending both groups further away from coastal jobs. Florida lawmakers have passed the more than $700 million Live Local Act, aimed at building homes for teachers, nurses, and other middle-income homebuyers. The law, however, prohibits stabilization mechanisms such as rent control and preempts certain local zoning controls.

While some people rebuild and cash out, others get their homes back in shape as best they can, and give it one more storm before they decide what’s next. Worse off are those Florida homeowners who did not have flood insurance; an April AAA survey put that number at nearly 70 percent. Many of these people put their life savings into their homes, and are now economically strapped. The most common reasons cited for not having flood insurance were “not living in a flood zone” (nearly 60 percent) and “never having flooding problems before” (about 35 percent). Some wealthy homeowners live without flood insurance, but many others can’t afford it. By 2027, homeowners insured through Citizens, the state’s insurer of last resort, will have to have flood insurance, regardless of location.

The lack of take-up complicates one goal of flood insurance: using higher premiums to spur people to move out of dangerous seaside communities, through a perverse kind of market-driven managed retreat. If many more homeowners go without insurance instead of relocating, while real estate developers continue to cater to homeowners who can afford risks, states and localities may delay taking the necessary steps in time to protect lives and property and reduce taxpayers’ exposure to recovery costs.

The federal government has a different set of priorities when it comes to cities and towns, slowly shifting from exclusively a disaster-focused posture to one seeking to mitigate the impacts of storms through community resilience projects. Coastal residents’ calculations about staying or leaving their homes are tied to their perceptions about how local infrastructure will hold up and how public officials respond. Homeowners ask themselves, “How often am I going to be hit and how is the infrastructure going to be able to cope with that?” says Juan Palacios, director of the Climate and Real Estate Initiative at MIT ’s Center for Real Estate. “If I have high confidence in a levee system and that the government is going to put me back in that house, then my response is very different than if I think that nobody’s going to come to rescue me and I have to rebuild the house.”

The 2017 hurricane season focused the minds of area residents on severe storm risks. Hurricane Harvey soaked Houston and Maria crushed Puerto Rico, while Irma, the first major hurricane to hit Florida since 2005, turned into the most expensive storm in the state’s history at that time.

In 2018, the Army Corps of Engineers began to study a storm protection plan that involved hardening the shoreline in the Naples area of Collier County with a mix of floodwalls, storm surge barriers, concrete reinforced dunes, and other structures and natural features. Although the Army Corps had undertaken similar projects in other parts of the country, Southwest Florida had no experience with these kinds of measures. Environmental agencies and groups concerned about impacts to marine wildlife and erosion pushed back, and the Army Corps shelved the proposal.

This spring, the Army Corps jump-started a new $3 million study of potential solutions and alternatives for an area that saw up to nine feet of storm surge during Ian, and four to five feet during Irma. Corps officials are mindful of incorporating natural solutions, like the region’s dense mangrove patches, as natural fortifications in the first line of defense. “The flooding still pushed through the mangroves and damage still occurred,” says Abbegail Preddy, an Army Corps project manager. “Looking at what exists, we want to formulate measures that would reduce that risk.”

The Army Corps also would consider elements like pump stations to handle water levels around hard structures like floodwalls. That poses questions for inland communities like River Park, a historic African American Naples neighborhood that suffered severe flooding and damage to its 1960s-era homes during Ian. Residents are concerned that features of the project could pose unexpected flooding issues. Some people were able to restore their homes, but others are living in less than habitable conditions or have left the neighborhood. They also fear gentrification and have been dismayed by the city’s lack of attention to their well-being before, during, and after the storm.

The Corps project could also potentially incorporate recommendations for acquiring certain parcels of land that could be designated open space in perpetuity, to provide a measure of protection. (State or local authorities would have to secure those areas by eminent domain.) “It’s difficult to justify acquisition except for maybe in those cases where it is an area that’s low, very low and will continue to flood repeatedly in the future, especially with sea level rise,” says Michelle Hamor, chief of the planning and policy branch in the Army Corps of Engineers’ Norfolk District.

One way for cities and towns and developers to share resilience or recovery costs, especially for new construction in threatened sites, would be to levy impact fees. The Seaport, a multibillion-dollar neighborhood in Boston that sprang to life in the early 2000s, benefits from a climate resilience fund that requires developers to contribute to protective measures.

Protecting shoreline places requires new fiscal strategies. “If it is truly economically beneficial for those developers to develop there and it’s good for the town, the developers should be bearing the cost of keeping those homes safe for the next 30 years, not the local government,” says A.R. Siders of the University of Delaware’s Disaster Research Center. “Make them pay for the strain it’s going to put on your adaptation and resilience system, your emergency services system.”

Given Florida’s peculiar strain of climate denial, deep conservatism, and powerful real estate interests, such proposals would likely need some strong signals before they could even begin to creep forward. Yet if Floridians fail to step up to hurricane threats, it may take focusing events—like back-toback, cataclysmic storms—to impress upon developers, lenders, public officials, and community members that it is sheer madness to threaten lives and churn through taxpayer dollars by propping up beachfront lifestyles in high-risk coastal zones.