Referendum could be a bellwether of coastal dwellers’ willingness to pay for flood protection
Virginia Beach bond referendum likely won’t be the last as local governments look to fund flood projects
Virginia Beach, June 2021 (Sarah Vogelsong/Virginia Mercury)
Politicos have long looked to Virginia’s off-year gubernatorial races as a bellwether of national political attitudes. But this year’s election may also indicate whether coastal Americans will pay for flood protection as climate change continues to fuel sea level rise.
On Nov. 2, voters in Virginia’s largest city of Virginia Beach will face a bond referendum asking whether they would be willing to see their real estate taxes rise to pay for up to $567 million in flood protection projects that would be rolled out over the next 10 years. Depending on the terms of the bonds issued, the city has estimated that rates would rise between 4.3 and 6.4 cents per $100 of assessed value.
Virginia Beach hasn’t had a successful bond referendum since 1988, when its voters signed off on a $200 million proposal to pipe water into the region from Lake Gaston.
But Councilman John Moss, a self-described “big fiscal conservative” who is enthusiastically boosting the measure, struck an optimistic note about the current referendum’s prospects. There has been no organized opposition to the measure, he said, and City Council voted unanimously in support of putting it on the ballot in July.
“I guess you could say it’s a unifying community-wide solution set,” he said. “I think it’s also a community acknowledgement that climate change is going to demand us to change, and if people want to continue to live at the coast, there’s a cost to that, and the federal government isn’t going to pay it all or the state. There’s going to have to be local government sweat equity.”
If passed by voters on Election Day, Virginia Beach’s bond issuance would be the largest financial commitment to flood protection by any local government in the state.
It likely wouldn’t be the last such referendum, though, said Skip Stiles, executive director of nonprofit Wetlands Watch.
“I think more and more you’re going to see localities pass these kinds of initiatives in order to fill in the gaps,” he said. In Virginia Beach, he added, “the widespread backing for this initiative signals that even in areas that are fiscally and politically conservative, the flooding issue is cutting through any artificial political boundaries.”
Over the past five years, local governments in Virginia’s most waterlogged areas — Hampton Roads, the Middle Peninsula and the Eastern Shore — have increasingly begun to grapple with how to pay for the costs of protecting residents and businesses from rising waters.
“Localities are thinking about this. They know there will be costs,” said Ann Phillips, a retired Navy rear admiral and Virginia’s special assistant to the governor for coastal adaptation and protection. “Virginia Beach’s work is one example of that.”
By any estimate, those costs will be hefty. A study for Virginia Beach by consulting firm Dewberry found that the city would eventually need to spend between $2 and $5 billion on sea level rise and climate change projects.
But while the price tag for coastal protection may be high, many flood protection advocates and economists say that the price of “doing nothing” will be even higher.
A 2016 study by the Virginia Coastal Policy Center found that without adaptation to sea level rise, coastal flooding damages in Hampton Roads could balloon to $100 million annually by midcentury. An Old Dominion University study released Sept. 27 found that if Virginia Beach took no adaptation measures, losses from flooding could amount to $4.6 to $5.9 billion and “would ripple through the Virginia Beach economy, lowering economic output and employment.”
Furthermore, the authors cautioned, “as recurrent flooding increases, insurers are likely to increase premiums and restrict coverages before leaving the Virginia Beach market altogether as losses accumulate.”
For local governments, the decision of what action to take — and when — can be difficult.
“If you’re a locality and you’re trying to make budgetary decisions, you have near-term challenges now,” said Phillips. Still, she said, by the time local governments are seeing obvious impacts, “you’re facing much higher costs to take action and you will maybe face fewer, more limited choices on the actions you can take.”
Bond referenda like Virginia Beach’s may be the most obvious solution to the question of how to fund flood-protection efforts. Voters in Houston, Tex. overwhelmingly threw their support behind a $2.5 billion bond issuance in 2018, a year after Hurricane Harvey ravaged the city. But general obligation bonds aren’t the only tool available.
Hampton has looked to one emerging solution: the environmental impact bond, a financial instrument where the issuer repays investors according to how well the project being financed performs. Last December, the city closed on a $12 million EIB to finance “nature-based solutions to localized flooding.”
Norfolk meanwhile has sought additional flexibility through the institution of “special service districts.” In this model, like one Virginia Beach uses to fund dredging work, property owners can petition the city to raise their real estate taxes to fund flood mitigation and other water-related projects.
Rural areas, with their smaller, more dispersed populations are also eyeing innovative tools like parametric insurance, a form of insurance that Middle Peninsula Planning District Commission Executive Director Lewie Lawrence described as “gambling against the likelihood of an event happening.”
This kind of insurance, said Lawrence, could help cover possible losses of expensive infrastructure like living shorelines that landowners might otherwise not find it cost-effective to install.
Most recently, the newly established Community Flood Preparedness Fund, using 45 percent of the revenues Virginia takes in through its participation in the Regional Greenhouse Gas Initiative carbon market, is making available tens of millions to local governments for both resilience planning and flood protection projects.
What Virginia Beach voters decide Nov. 2, however, will signal how quickly residents think governments need to be moving to combat flooding. If the referendum doesn’t pass, the city still plans to carry out all 21 projects it’s identified for funding — just at a slower pace.
“We’ll accept their judgment that they prefer to accept the risk of the flooding,” said Moss. “Our best guess is it would take us 20 to 25 years to do the 10-year program at our incremental pace.”
Whatever the outcome, he said, “I’m sure other communities are going to be watching how we fare.”
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