27. Federal Tax Law: The Problem With Casualty Losses and Gradually Inundated Properties
Congress Has An Opportunity to Proactively Revise the Federal Tax Code for SLR Property Losses
Here’s the scenario:
It is 2010. Mr. Smith has a house situated in a sea level rise vulnerable area. His intent is to keep the property in his family for decades to come.
Twenty years later, he finishes paying off his mortgage, and is “free and clear.” Gradually, through the years, however, Mr. Smith has repeated flooding which manifests itself as water intrusion from beneath the ground.
The problem escalates each year. No matter what steps Smith takes to deal with the issue, parts of his property become increasingly unusable.
Within 40 years of purchasing the property, he cannot afford to keep bailing it out. His cherished property is no longer usable and his dreams are crushed. The only party interested in the property is the state, since ocean waters have evicted Smith’s and his family.
What does the Internal Revenue Code offer in the form of relief? The answer is probably not a “casualty loss” on Smith’s tax return.
According to the Internal Revenue Service, “A casualty loss can result from the damage, destruction or loss of your property from any sudden, unexpected, or unusual event such as a flood, hurricane, tornado, fire, earthquake or even volcanic eruption. A casualty does not include normal wear and tear or progressive deterioration.” The casualty event must be unanticipated.
Mr. Smith has a big problem. Unless the current definition of casualty loss is expanded to accommodate the consequences of gradual sea level rise, he is out of luck. Absent a hurricane or major weather event such as a tropical storm, invasive waters most likely fall under the category of “progressive deterioration.” Sea level rise is anticipated.
SLR does not occur all at once, but over a period of years, increasing inches of ocean water will degrade the property and produce a retrogression of property value.
If loss of real property does not fit within an IRS defined “casualty,” what exactly is it? That’s for Congress to decide.
In the most susceptible and defenseless areas, this is not just an academic question. People in Satellite Beach, Florida may want answers to this question sooner than later. According to the South Florida Sun Sentinel on April 20, 2014, “The city eventually may have to abandon some homes along the oceanfront and move toward multi-family housing complexes on higher ground, said John Fergus, a member of the city's planning advisory board.”
Before that happens, affected landowners will most likely be looking to the tax laws to see what help they can get when they permanently leave their properties. They may not find an adequate answer.
Adaptation to sea level rise is not confined to the "built environment." It also applies to the federal tax laws and the halls of Congress. Lawmakers have an important opportunity: Equitable revisions, based upon sea level rise, to the nation’s tax statutes and regulations.
28. Sea Level Impact Statements Are In Your Future
Developers Will Be Asked To Assess Sea Level Rise Adaptation and Retreat Issues
The National Environmental Policy Act (NEPA) requires Environmental Impact Statements (EIS) to help decision makers at the federal level decide if a development or project should be permitted. Under existing U.S. law, social and physical aspects of a proposed project, such as interstate highways or rail lines, need to be carefully assessed to ensure responsible environmental planning.
Another federal document, known as the Environmental Assessment (EA) can be required when environmental impact statements are not initially required, and can be a precursor of the need for a full EIS.
The purpose of these documents is to understand and explain potential adverse environmental impacts in advance of federal action which might harm the environment. By understanding the consequences of a proposed development or action, government can get ready and prepare mitigation measures designed to counter otherwise adverse and lasting consequences.
The goal: Identify and study methods to do the least harm to the environment. It’s a smart planning tool.
When it comes to sea level rise, such a mechanism is needed at the state and local levels.
Thus far, however, there are no specific "Sea Level Rise Environmental Assessments (SLREA)" at the federal, state or local levels."
This is likely to change shortly.
While many coastal states have laws that require coastal permitting and studies, the recognized and better understood threat of sea level rise merits consideration when fresh reviews of existing laws and regulations are undertaken to see if they properly address invading ocean waters.
Sea level rise impact studies should be required by state legislatures and local governments when developments and construction activities are considered for areas vulnerable to rising oceans, increased flooding from storm surges and tidal flooding.
They should also be considered for inland areas, such as in South Florida, where invading waters will be pushed up through porous limestone.
Much like Environmental Impact Studies, such sea level rise impact reports could identify the affected environment, and provide options and alternatives to the proposed development which may cause a threat to the nearby environment and the health, safety and welfare of society in general.
Through state required specific Sea Level Rise Impact Statements, the economic and social implications of the project under study could be provided, not just to local and state governments, but to populations in the affected areas to enhance public understanding.
Mitigation and adaptation plans specifically directed to the issue of sea level rise could be required under such studies.
Requiring such specific SLREA’s will help elected officials make the tough political decisions to approve, decline or require modifications to proposed projects. These studies could be another tool to help in the reasonable exercise of political will.
If an area is designated as an Adaptation Action Area because of rising seas and flood risks, the SLREA could be used as a tool to help educate stakeholders as to the consequences of the proposed development and require unprecedented cooperation between the private and public sectors in making sure developments meet the rigors of the coming decades.
State statutes and local ordinances should immediately be updated to require SLREA’s. Some of the topics that could be included in SLREA’s are:
1. The effect of sea level rise and tidal flooding over five year increments;
2. Specific actions recommended by certified consultants to "seal" buildings and their utility connections from intruding waters;
3. What public infrastructure will be needed to support the development over it’s anticipated life span; and
4. The cost of anticipated government aid in helping to rebuild projects which are faced with sea level rise, tidal flooding and storm surge.
5. SLREA’s could, for the first time, at the most local level, assess likely costs, over specific time periods, of coastal retreat, both from a physical and economic standpoint.
Other criteria can be added. New developments require careful consideration in the era of enlarging oceans.
Is your community studying these and other relevant factors? If not, SLREA’s should be on your local government’s radar.
30. Demolition Permits, Governmental Regulation and Urban Waterfronts As Toxic, Ticking Time Bombs
We wil all contribute to ocean acidification if the law does not change
We do not create ethical urban waterfronts. Instead, we produce coastal buildings to emanate toxicity. With each construction permit, local governments and private landowners are creating conditions that will further acidify our endangered oceans as sea level rise (SLR) advances to permanent inundation.
There is no greater long-term responsibility facing today’s urban waterfront planner than to formulate strategies to prevent disastrous bleeding from inundated structures in areas where the invading seas will overcome the built environment.
Utility connections, electronic components, underground storage tanks, paints, sealants, solvents, cleaners, chemical treated carpets, adhesives, glues, electrical grids, sewer systems, septic tanks and drain fields need to be insulated so their chemistry does not cause environmental harm when covered by water.
With each new edifice, our generation is leaving a legacy of neglect. No reasonable society would further acidify the oceans, but that will happen as seas overwhelm coastal shores, allowing the escape of dangerous lead, mercury, formaldehyde, heavy metals, insulation fibers, PVC chemicals, perfluorinated compounds, fiberglass, wall foam, oils, lubricants, flame retardants, toxic electronic wastes and other threatening building materials.
In the absence of secure demolition, what we build on dry land now will poison the seas of tomorrow. Yet, we keep building. According to CraneSpotters.com, as of December 29, 2014, up to more than 300 new South Florida condominiums are being constructed or are on the planning board. While they are required to have elevated foundations, there are no standards to insure those structures are ready for inundation within the average 30 year mortgage span to 80 years, or in some areas, less time. According to RiskyBusiness.org, in Florida alone, “between $15 billion and $23 billion in current property will likely be inundated by 2050 from mean sea level rise…”
We are not ready.
Property owners are taking little, if any, personal responsibility for making sure their condominiums, office towers, government buildings and homes can sequester noxious substances when the time comes to abandon buildings and retreat from today’s threatened and vulnerable areas. To amplify the problem, older properties are poised to release, unchecked, asbestos and volatile organic compounds into ocean currents for unbounded distribution.
The mechanism of the built environment infecting our oceans is already a reality. According to the Guardian(December 28, 2014) “Almost 7,000 homes and buildings will be sacrificed to the rising seas around England and Wales over the next century…” The paper adds, “Over 800 of the properties will be lost to coastal erosion within the next 20 years”. In 2013, 1,400 homes fell into the ocean due to a ‘huge tidal surge’ which affected England’s east coast.
What measures can we take? One can envision a new industry of environmental inspectors and engineers to consult with stakeholders on how to adequately “seal” and prepare homes, offices, schools, hospitals and public infrastructure in the aftermath of hurricanes and advancing salt waters. Such experts are needed before construction begins, and once again when the building is no longer deemed habitable by public health authorities. Done right, such an industry will prompt the creation of thousands of jobs globally.
Governments need to ask not just what happens when the waters regularly intrude, but what occurs after human retreat becomes a reality, and take all reasonable measures to prevent toxins from seeping into the very same waters our heirs will depend upon for survival. In exchange for tax incentives, “abandonment certificates” should be required, based upon rigorous mandates. Existing pollution controls and laws need to be reviewed with SLR and tidal flooding in mind. Financial systems urgently need to help fund efforts to stop the flow of pollutants from our buildings. We must not assume that even LEED certified structures are ready for this challenge.
Legislatures need to focus on what the threat of non-carbon building emissions holds for the near future. Existing pollution control plans, regulations and laws need to be fortified by sound public policy requiring, as a condition precedent to property development, the built environment be made “ocean-safe,” to tough, state-of-the-art standards. The process of issuing demolition certificates must be more demanding. Intensified research of post-retreat acidification should immediately be funded.
Dangerous building materials and contaminants can be dealt with, but it is imperative that attention to this issue be given at the initial planning level…not just when properties are condemned in future years. Similarly, older structures must not be overlooked for their toxicity potential.
Some governments and owners have made a good start in understanding and appreciating the problem. TheInternational Living Building Institute, the U.S. Environmental Protection Agency and even Google have identified “red list building materials” that should not be used in new construction. But such efforts are only for newconstruction or those undergoing renovation.
“Ocean Safe” buildings must be our legacy. The dangers of SLR go far beyond losing property and disrupting lives. Permitting irresponsible construction techniques and unorganized coastal retreat is not only myopic, it is a continuing crime against nature. The privilege of living in an urban waterfront in 2015 shoulders a burden: leave it ready for the populations of 2030 and beyond.
he release of those waters into cooler waters...causing melting in the Antarctica region, all of which contributes to global sea level rise.
-M. Chester;Originally published on TheNatureOfCities.com, January 2015
29. Updating Building Codes and Land Use Plans In An Era of Accelerating Scientific Projections of Sea Level Rise
Why Local Government Leaders Cannot Use the Shield, "I Am Not A Scientist."
"I am not a scientist" is a line used almost daily by many political figures when it comes to discussing sea level rise. What are the local implications of that excuse?
Politicians are not expected to be scientists. They are expected, however, to be leaders. Educated leaders. Informed.
Many of those politicians are mayors, council persons, commissioners and city managers. They oversee the hard work necessary to plan our communities effectively with zoning, land use plans, regulations, building codes, and comprehensive development strategies.
If they are not trained in climate and sea level rise science, the phrase they use should be, "I am not a scientist, but I am willing to listen carefully to them."
Science is not just warning the world about expanding oceans...Experts are also telling us their understanding of sea level rise is evolving. Scientists are documenting an important trend as they become more sophisticated in forecasting rising ocean waters. The theme is a quickly evolving understanding that what we understood yesterday is just the tip of the iceberg in comprehending what is happening in our oceans today.
I was asked the other day by a reporter for a South Florida newspaper what people can do to become knowledgeable about sea level rise and how to adapt to it. My short answer was that in real estate, the operative phrase is, "location, location, location." But with sea level rise, the operative phrase is "education, education, education."
Climate and sea level rise education means we should not excuse ourselves by saying we don’t know, because we are not scientists. We owe it to our towns, our cities, our states and our nation to find out...to understand the evolving messages the scientists are telling us and put them into wise public policy.
As government and private sector leaders grapple with the myriad of options to adapt to sea level rise, they must understand that the science of expanding ocean research continues to increase, both in data, velocity, and understanding.
The simple fact is, scientists know more about rising seas today than they did just one year ago.
A case in point is a study published in the Journal Science on August 22, 2014. Two scientists have shown how heat has been trapped deep in the Atlantic, about 300 to 1500 meters below the surface in warmer waters with higher salinity.
This work reveals that in the past decade the heat caused by a hotter Earth, which people expected to be in the atmosphere, is actually going to the depths of the ocean, especially the Atlantic Ocean. The lower levels of the sea are warming faster than at the higher levels. While many people proclaim that global warming has not taken place over the last 15 years or so, in fact, the warming appears to have continued, but in a less suspect place than in the atmosphere.
The Atlantic Ocean is like a storage compartment for Earth, where heat that would be expected to be in the atmosphere is being kept below cooler ocean waters.
Called a "heat sink," the Pacific Ocean was always considered to be, because it is the largest body of water, the most likely place where ocean absorption of heat would be taking place.
You know the physics: Heated water expands and takes up more volume. That, in part, is what happened when Hurricane Sandy hit New York and New Jersey. As we understand what happened with that hurricane and storm surge, city and county planners need to adjust their thinking.
According to the Economist, on August 23, 2014, the Atlantic Ocean is operating to capture and store much of the heat generated by climate change. This swells the waters.
Scientists warn that this process of sequestration will eventually reverse itself so that the lower levels of the oceans do not have a higher temperature than the surface. When that occurs, more noticeable global warming in the atmosphere will resume, according to their theory. In other words, instead of capturing heat and moderating the atmospheric temperature, the oceans may one day release the same heat they are hiding. We will then see more measurable increases in atmospheric temeratures, with consequences such as public health problems and coastal retreat.
According to the Guardian, on August 21, 2014, "the slowdown of average surface temperature rises in the last 15 years after decades of rapid warming have been seized on by climate change skeptics and has puzzled scientists." Many focused on the Pacific Ocean as the venue for ocean capture of heat.
Now we have new important data and analysis, which government and private sector planners will need to quickly learn and appreciate to forumlate good public policy.
Based upon the new study, the apparently misplaced assumption that the Pacific was playing most of the sequestration role for heat entrapment is an example of how scientists across the globe are learning more about the climate and specifically the impact it has on sea level rise. The more scientists probe, the more we learn, and the more our political and thought leaders need to know.
Here’s another example. The New York Times on May 12, 2014, reported that the West Antarctica ice sheet is rapidly disintegrating. According to the Times, "a large section of the mighty West Antarctica ice sheet has begun falling apart and its continued melting now appears to be unstoppable, two groups of scientists reported on Monday." The article notes an "accelerating retreat" of glaciers draining into the sea around Antarctica.
The study blames the disintegration of parts of Antarctica on warmer waters in the depths of the ocean and noted that the higher temperature waters are being pulled to the surface by powerful winds that encircle the southern tip of Earth. Previously, this was unknown. The article allows one to make a correlation between the first study we mentioned where warmer waters are being sequestered at lower levels and the release of those waters into cooler waters...causing melting in the Antarctica region, all of which contributes to global sea level rise.
Just how intense the winds are getting in Antarctica is something new for scientists to understand.
All of this freshly discovered data is very important for urban and rural planners. According to the New York Times, 3.7 million Americans live on land which may someday be inundated if there is a sea level rise of less than 4 feet in the coming decades.
The Huffington Post, on May 25, 2014, cited another study suggesting if the most recent IPCC projections for sources of rising seas were combined with the new Antarctica figures, the projection would be up by more than a fifth compared with the figure included in last year’s assessment."
In yet another study, the Nature News Network reported on August 23, 2014, that ice sheet loss has more than doubled in the last five years from Greenland and West Antarctica. The network referred to a study which used a satellite to gather precise data. The projections "suggest that the globe’s ice sheets will contribute far more to sea level rise than current projections show." The report also stated, "we are seeing ice sheet loss at rates not imagined even a few years ago."
The need to keep up with the latest data was stressed in Part 4 of "Years of Living Dangerously," recently aired on Showtime. The documentry pointed out that Greenland’s ice is melting five times faster than appreciated just 20 years ago.
Here’s the point. All of these studies are important for municipal and county planners. When making projections about heightened sea levels in the coming decades, if the trend is towards more rapid melting from the West Antarctica ice sheet, Greenland, the expansion of water volume due to thermal expansion and other factors, then building codes, land use plans, comprehensive development plans and adaptation strategies will have to be fine tuned...adjusted to current and reliable data...above and beyond what is understood today.
In short, the simple message is that the changing science of sea level rise requires re-evaluation, a recalibration, of coastal risk every few years.
Government planners and policy makers are not the only people who need to work alongside the scientists. Businesses owners and private citizens also need to understand how we are beginning to learn much more about the sea level rise threat and how it will affect coastal communities such as Miami, New York, Boston, and other major metropolitan areas.
The answer is simple: Careful planners need to take note of Broward County Florida’s comprehensive plan and it’s sea level rise component. That plan requires the county government to reassess its sea level rise projections and assumptions every five years. Given the new information which is flooding scientific journals and causing accelerated projections of sea level rise, five-year study reviews are both practical and absolutely necessary, as well as a model for communities across the coastal regions of the nation.
Working with scientists to understand what we do not know, to properly plan for the middle of the century will help fill the void in the incomplete defense, "I am not a scientist." Completing the sentence with, "but I am willing to listen carefully to them" is the responsible answer for effective and proactive leadership.
-August 30, 2014