New Jersey's Lost Valley Tells The Story Of Government Home Buyouts

NPR obtained FEMA data detailing 40,000 homes the federal government purchased as a way of avoiding future losses from disasters. We explore a New Jersey neighborhood after the buyouts were complete.

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There's a neighborhood in New Jersey that was once part of a booming manufacturing town. But now its name seems prophetic - Lost Valley. This morning, as part of NPR's reporting on inequities in federal disaster aid, we are visiting Lost Valley. As NPR's Robert Benincasa reports, floodwaters from a warmer, wetter climate are leading to the destruction of homes there, both by nature and by taxpayers.

ROBERT BEERS: So this bridge now takes us over to what they call the Lost Valley.

ROBERT BENINCASA, BYLINE: NPR found this neighborhood in a national database of about 40,000 homes. The government purchased them as a way of avoiding future losses from floods and other disasters. We got the data from the Federal Emergency Management Agency after suing the agency for access. Robert Beers is driving us around town. He's superintendent of schools here in Manville, N.J. - a town of about 10,000 people in the central part of the state.

BEERS: This area was hit the hardest. And as we drive through, you're going to be able to see a lot of vacant homes and areas that were bulldozed. Some of these open - these vacant lots here, there were homes here.

BENINCASA: What's happening here helps tell the story of how home buyouts have played out around the country. In our analysis of the FEMA data we obtained, NPR found that government-funded sales of disaster-damaged homes, essentially taxpayer bailouts for homeowners, occurred most often in places that are predominantly white. Nearly two-thirds of the sales since 1989 happened in places that were more than 80 percent white and non-Hispanic. The national population is only 62 percent white and non-Hispanic. And disasters happen in all kinds of communities. The buyout pattern is linked to racial and ethnic differences in homeownership and household wealth. And those with stronger finances may be better able to tolerate the buyout process, which can be long and bureaucratic. The buyouts fall under FEMA's hazard mitigation programs, which have allocated more than $15 billion since 1989. Here's Beers again.

BEERS: You see some with the stickers that are boarded up, and no one's living here. And you can tell the homes here are nice. People took care of - you know, this is a nice neighborhood. It's just, unfortunately, in a flood zone. And due to the storms that we had, it was decimated.

BENINCASA: In Manville, as the buyouts went through over the past two decades, many homeowners - many of them white - moved away. One longtime resident who stuck with Lost Valley for more than 30 years through several floods is Eleanor Nieliwocki.

ELEANOR NIELIWOCKI: After the first flood, people began thinking, is it time to get out? After the second flood - not again. And the third flood - we've had it.

BENINCASA: Nieliwocki and her husband John signed up for a buyout. John died in 2014, and she now lives in Florida. And since 1999's Hurricane Floyd, household incomes in Manville have dropped. And there are now fewer homeowners. Manville's Hispanic population rose from 5 percent to 23 percent. Back at his office, Superintendent Beers explains that as the town's population changed, the schools needed more funding to meet students' needs.

BEERS: So we had a pretty large demographic shift in town - right? - where our free and reduced lunch rates and poverty rate went up significantly.

BENINCASA: But the district was losing money.

BEERS: And we also lost 24 percent of our rateables.

BENINCASA: Rateables means houses that are taxed to pay for the schools. In all, officials say about 150 homes have been bought out, another 80 are abandoned. And 200 more will likely take buyouts in the future.

BEERS: We've had to cut programs. Class sizes have grown. And quite frankly, we haven't been able to offer the supports that our students so desperately need.

BENINCASA: Beer's worried about paying for required programs like physical education and art. But after an intense lobbying effort last spring, his and other underfunded districts got the state government to send them more money.

DAVID MAURSTAD: I think our program is achieving in Manville what it's intended to achieve.

BENINCASA: At FEMA headquarters in Washington, D.C., David Maurstad oversees the buyout program. FEMA says it and others like it save federal taxpayers six dollars for every dollar they spend. I asked Maurstad if FEMA considers local economic factors and racial demographics.

MAURSTAD: I'm not aware that there's been a specific study by FEMA or anyone else on the demographic distribution of that approach. But the approach itself is not one that would necessarily intentionally lead to those outcomes.

BENINCASA: Maurstad says the buyout program is meeting its goals if it makes a community less risky, saves property and, potentially, saves lives. And FEMA doesn't decide where the buyouts occur - states and localities do. Remarkably, Manville's buyout experience isn't the town's only story about climate change and inequity. There's at least one more. Reeling from repeated floods, the town asked the Army Corps of Engineers to build a flood-control system to protect it. In 2016, the Corps said no. The Corps counted about 500 homes and businesses in flood zones and said it could protect them for about $67 million. But here's the catch. For every dollar spent on the project, only 40 cents' worth of property would be saved. Under federal guidelines, that's not enough of a payoff.

CATHERINE KLING: So my name is Catherine Kling. I'm a professor in the Dyson School of Applied Economics and Management at Cornell.

BENINCASA: Dr. Catherine Kling studies the kind of benefit versus cost analysis the government requires. We talked about the policy's winners and losers.

The focus on the value of the real estate suggests, to me, that it's going to favor wealthier neighborhoods than poorer neighborhoods.

KLING: Absolutely, there's no question about that. It's also going to be more valuable businesses, more valuable real estate.

BENINCASA: But it ends up picking winners and losers.

KLING: Absolutely, that's exactly right. And one hopes that with good government, people see that and do things to accommodate and support losers in other ways.

BENINCASA: The Corps predicted that without the flood control project it declined to build, Manville will likely continue to suffer millions more in property damage along with economic hardship and, perhaps, loss of life. Robert Benincasa, NPR News.

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