We have suffered through Katrina, Sandy, and in a matter of 10 days Harvey and Irma. Inundated neighborhoods and business districts built with a blind eye in or near current flood zones are becoming extremely familiar weather-related outcomes. And these flood zones have been and will be expanding further due to rising sea levels.

I had mentioned to an investment management client after Harvey that another advisor client had redlined South Florida for investment, and he responded that his company had to begin considering climate issues in investment decisions too.

And that was before downtown Miami was swimming in Irma storm surge and flooding as new high-rise projects rise up just blocks from what is now the waterfront. In the next decade or two will some of today's South Florida beaches and inland waterway docksides disappear under the ocean and bay? And how many more times will Houston residential districts flood before planners take action? Do developers and investors care as long as they can sell out in the meantime?

Cities and towns which go through mammoth weather events like to talk up resiliency and staying power, but then want billions in dollars of federal relief and cheap flood insurance rates, underwritten by Washington to rebuild or repair in place—so much for cutting the deficit and lowering taxes when it comes to ravaged backyards since local governments live off property taxes from high value waterfront developments up and down the East and Gulf coasts. Developers and builders, meanwhile, welcome the repair and rebuild bonanza, Home Depot stock spikes, and the building supply industry rejoices. If the Feds pay for reconstructing, these interests will look the other way when it comes to concern about red ink flowing out of DC. And market values will hold up as long owners can get insurance at unrealistically low rates or as long as lenders think they will get a bail out if worst case happens.

Houston touts its laissez fair development policy, but should developers be allowed to build along bayous and fill in swamp land that can drain storm run off? Pictures of ravaged Marco Island in Florida show houses, wedged along streets, built up to the shoreline and beside canals. Does this make sense? It's the same on barrier islands from Long island in New York to South Georgia or along the Mississippi River through the deep South into the Midwest. Given rising sea levels, it is likely a matter of time—probably only decades—before some of these places become uninhabitable.

So what would happen if the government redlined certain zones now—no flood insurance and no rebuilding relief in the case of storm related damage? Or what if flood insurance was at least made mandatory even at rationally subsidized rates? Buying flood insurance isn't required now and if that policy were legislated, it probably would lower property values in high risk zones. And would it be objectionable if reclaimed waterfront is turned into parks and wetlands to protect inland areas and provide recreational uses for the public? Can a value be placed on providing for the public good and avoiding large scale future payouts to recompense impacted property owners for the reasonable value of their increasingly vulnerable properties. Or do property owners want to risk inundation and total loss and do we want to encourage more development to be bailed out? At present the U.S. government effectively is helping inflate coast line property values for wealthy home owners (including the title holder of Mar-a-Lago) and commercial investors (hotel and resort operators in particular), while leaving the taxpayer potentially on the hook for repeated multi-billion annual restoration bills. And these costs promise only to escalate with sea levels.

And that gets back to my investment management clients. Is this heightened awareness the start of investors factoring in the cost of higher risk or will complacency return just as snow birds move back to warmer Florida climes for the winter? Or do investors figure they can ride out a holding period or buy some damaged properties on the cheap, and cash in before the next storm hits. And do powerful real estate interests exert their influence to keep the current bundle of various government flood zone subsidies in place?

At some point it won't matter. Rising sea levels will settle these questions. And maybe sooner than later. In the meantime, the costs to the public at large keep rising with the tides.

Full disclosure: I own a house on a barrier island within two hundred yards of the ocean.

We have suffered through Katrina, Sandy, and in a matter of 10 days Harvey and Irma. Inundated neighborhoods and business districts built with a blind eye in or near current flood zones are becoming extremely familiar weather-related outcomes. And these flood zones have been and will be expanding further due to rising sea levels.

I had mentioned to an investment management client after Harvey that another advisor client had redlined South Florida for investment, and he responded that his company had to begin considering climate issues in investment decisions too.

And that was before downtown Miami was swimming in Irma storm surge and flooding as new high-rise projects rise up just blocks from what is now the waterfront. In the next decade or two will some of today's South Florida beaches and inland waterway docksides disappear under the ocean and bay? And how many more times will Houston residential districts flood before planners take action? Do developers and investors care as long as they can sell out in the meantime?

Cities and towns which go through mammoth weather events like to talk up resiliency and staying power, but then want billions in dollars of federal relief and cheap flood insurance rates, underwritten by Washington to rebuild or repair in place—so much for cutting the deficit and lowering taxes when it comes to ravaged backyards since local governments live off property taxes from high value waterfront developments up and down the East and Gulf coasts. Developers and builders, meanwhile, welcome the repair and rebuild bonanza, Home Depot stock spikes, and the building supply industry rejoices. If the Feds pay for reconstructing, these interests will look the other way when it comes to concern about red ink flowing out of DC. And market values will hold up as long owners can get insurance at unrealistically low rates or as long as lenders think they will get a bail out if worst case happens.

Houston touts its laissez fair development policy, but should developers be allowed to build along bayous and fill in swamp land that can drain storm run off? Pictures of ravaged Marco Island in Florida show houses, wedged along streets, built up to the shoreline and beside canals. Does this make sense? It's the same on barrier islands from Long island in New York to South Georgia or along the Mississippi River through the deep South into the Midwest. Given rising sea levels, it is likely a matter of time—probably only decades—before some of these places become uninhabitable.

So what would happen if the government redlined certain zones now—no flood insurance and no rebuilding relief in the case of storm related damage? Or what if flood insurance was at least made mandatory even at rationally subsidized rates? Buying flood insurance isn't required now and if that policy were legislated, it probably would lower property values in high risk zones. And would it be objectionable if reclaimed waterfront is turned into parks and wetlands to protect inland areas and provide recreational uses for the public? Can a value be placed on providing for the public good and avoiding large scale future payouts to recompense impacted property owners for the reasonable value of their increasingly vulnerable properties. Or do property owners want to risk inundation and total loss and do we want to encourage more development to be bailed out? At present the U.S. government effectively is helping inflate coast line property values for wealthy home owners (including the title holder of Mar-a-Lago) and commercial investors (hotel and resort operators in particular), while leaving the taxpayer potentially on the hook for repeated multi-billion annual restoration bills. And these costs promise only to escalate with sea levels.

And that gets back to my investment management clients. Is this heightened awareness the start of investors factoring in the cost of higher risk or will complacency return just as snow birds move back to warmer Florida climes for the winter? Or do investors figure they can ride out a holding period or buy some damaged properties on the cheap, and cash in before the next storm hits. And do powerful real estate interests exert their influence to keep the current bundle of various government flood zone subsidies in place?

At some point it won't matter. Rising sea levels will settle these questions. And maybe sooner than later. In the meantime, the costs to the public at large keep rising with the tides.

Full disclosure: I own a house on a barrier island within two hundred yards of the ocean.

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Jonathan D. Miller

A marketing communication strategist who turned to real estate analysis, Jonathan D. Miller is a foremost interpreter of 21st citistate futures – cities and suburbs alike – seen through the lens of lifestyles and market realities. For more than 20 years (1992-2013), Miller authored Emerging Trends in Real Estate, the leading commercial real estate industry outlook report, published annually by PricewaterhouseCoopers and the Urban Land Institute (ULI). He has lectures frequently on trends in real estate, including the future of America's major 24-hour urban centers and sprawling suburbs. He also has been author of ULI’s annual forecasts on infrastructure and its What’s Next? series of forecasts. On a weekly basis, he writes the Trendczar blog for GlobeStreet.com, the real estate news website. Outside his published forecasting work, Miller is a prominent communications/institutional investor-marketing strategist and partner in Miller Ryan LLC, helping corporate clients develop and execute branding and communications programs. He led the re-branding of GMAC Commercial Mortgage to Capmark Financial Group Inc. and he was part of the management team that helped build Equitable Real Estate Investment Management, Inc. (subsequently Lend Lease Real Estate Investments, Inc.) into the leading real estate advisor to pension funds and other real institutional investors. He joined the Equitable Life Assurance Society of the U.S. in 1981, moving to Equitable Real Estate in 1984 as head of Corporate/Marketing Communications. In the 1980's he managed relations for several of the country's most prominent real estate developments including New York's Trump Tower and the Equitable Center. Earlier in his career, Miller was a reporter for Gannett Newspapers. He is a member of the Citistates Group and a board member of NYC Outward Bound Schools and the Center for Employment Opportunities.

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