Rising Seas Are Going to Create a Huge Property Tax Headache for Coastal Communities

People are becoming increasingly worried about how they’ll be impacted when rising seas swallow up coastal properties. For starters, there are the homeowners who live on the threatened land. And then there are the mortgage lenders and home insurers who have a financial stake in those properties. But indirectly, anyone who relies on public education, fire departments, and other municipal services should be concerned when parcels of land fall below the tide line. Because when land disappears, so too, does the property tax revenue that it generates to fund those public services.

The threat of this revenue loss to U.S. communities was freshly illustrated in a land risk analysis published Thursday by Climate Central, an organization focused on tracking how extreme climate conditions and rising sea levels are affecting local communities. According to the report, individual properties along the U.S. coast—collectively the size of 75% of New Jersey—are projected to be partly or fully submerged in about 30 years. Billions of tax dollars are likely to wash away with them, which will strain government and school district budgets.

The findings, derived from water boundary data from the National Oceanic and Atmospheric Administration and sea level rise models from the U.N. Intergovernmental Panel on Climate Change, indicate that nearly 650,000 tax parcels totaling 4.4 million acres may be impacted, with 48,000 of them entirely within the tide line by 2050. By 2100, the number of affected parcels more than doubles compared with 2030 figures, and the number of affected buildings jumps sixfold because as you move further inland the number of residences and commercial spaces becomes denser.

“Our ancestors decided to build [there] because we thought it was safe,” says Don Bain, a senior advisor at Climate Central, in a press call ahead of the report’s release. When waters encroach on those communities, the problem “gets worse, very fast.”

READ MORE: The U.S. Is on the Verge of a Climate-Driven Housing Crisis

Not every coastal region, however, has the same risk level. Consider that the model shows a global average sea-level increase of 8.4 inches between 2000 and 2050. Drill down into that model, though, and some areas like Alaska, where melting land ice is causing land to rise and sea levels to fall, will experience no change or even lower sea levels, while other places like Miami Beach, Fla., Galveston, Texas, and Grand Isle, La., will have to contend with 12-inch, 19-inch, and 23-inch sea-level rises, respectively.

As these examples suggest, East Coast and Gulf Coast communities are under the greatest threat. Climate Central, which released 250 county-specific reports, found that 87% of the country’s affected area is concentrated in just four states: Louisiana (8.7% of the state’s total land), Florida (1.8%), North Carolina (1.3%), and Texas (0.2%). These states also had the greatest number of individual tax parcels affected, as the below chart shows, with Louisiana having the most number of properties that will be 100% submerged.

When tides take over the land, the people who live there must shoulder the financial burden in several ways. First is the immediate emergency expenses and infrastructure repair costs. On top of that are systemic revenue declines, as property values depreciate and the tax base shrinks as people migrate away from eroding coastal land. The report notes that when properties are abandoned, their costs are likely to fall to the government, adding new expenses.

Those losses have knock-on effects for police and fire departments, public transit, parks, and public housing—not to mention public schooling. According to the Lincoln Institute of Land Policy, public education revenue across the country totaled $771 billion in the 2018–2019 school year, nearly half of which came from local government sources. Of that local revenue, about 36% came from property taxes.

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Using data from Regrid.com, a company that compiles property tax information, Climate Central tried to put a dollar amount on this loss by conservatively estimating lost property taxes by 2050 across counties that have available valuation data. While it’s only a partial financial picture, the numbers are still staggering: Florida has $7 billion at risk across 44 counties. Texas and North Carolina are each staring down about $5 billion in potential tax losses across nine counties and 21 counties, respectively. (Too many counties in Louisiana lacked data for the researchers to make an assessment.)

While many homes aren’t yet being abandoned or falling into the water in dramatic fashion, the properties they sit on are getting smaller, and some coastal towns are grappling with landowners who expect their taxes to go down in tandem, to reflect their smaller lots. But in other towns, the opposite is happening: despite clear evidence that water is taking over the land, rebuilding and new construction continues right along the water’s edge.

In one example, Climate Central’s Bain presented a property lot map of Dauphin Island, Ala., where more than a dozen lots were completely in the water. “We have properties that are now underwater as a result of coastal erosion, and property owners who are still receiving property tax bills associated with these properties that they can no longer use,” he said. Still, federal aid and insurance payouts allow the island to continually rebuild.

Some experts are hopeful that by estimating property tax losses, even if the figures are nascent, local governments will start to generate more honest conversations around how much coastal property is worth. “There’s a lot of effort to not disclose [flood] risk in order to artificially keep those values high,” says A.R. Siders, an assistant professor at the University of Delaware’s Disaster Research Center, who was not involved with the report but spoke on the call with reporters. “We’re still building in these flood-prone areas [because] we’re so obsessed about having more property value, more property tax revenue.”