The Potential Cost/Benefits of Buyouts in Rodanthe, North Carolina

One alternative solution to nourishment is to implement a buyout plan for highly exposed properties. Buyouts are rarely a first choice within coastal communities for a variety of reasons, both practical and emotional. Property owners must be interested in selling, and it can be difficult to negotiate a price. Unlike nourishment, buyouts provide a longer-term solution to erosion, allow for a continuous beach over many years, and eliminate the environmental and public safety hazards associated with collapsing homes. In some areas, the U.S. Army Corps of Engineers has carried out buyouts in conjunction with beach nourishment to allow for the construction of protective dunes.

To compare the costs of a possible buyout to the costs of beach nourishment in Rodanthe, we conducted a simple analysis to identify and estimate the value of highly exposed oceanfront properties. The criteria we used identified 80 oceanfront parcels with a structure within 300 feet of the high-tide shoreline, over an alongshore area that is roughly the same footprint as the potential nourishment project. Assessed tax value was used to represent the current value for these properties. Detailed methods for property selection and fiscal analysis are described in the following sections of this document.

Results from this analysis estimate that it will cost nearly $43 million to buyout all selected properties (at currently assessed value), and by removing these properties Rodanthe will likely have a viable beach for 15-25 years. Only one of the properties appears to be a primary residence. A number of parcels have lots that are deep enough to move the structure back (outside our buffer), at lower cost than buying the property and removing it.

The loss of tax revenue is a common concern expressed about buyouts. The 80 selected properties generated $171,068 of county property tax revenue in fiscal year 2023, which is only 0.25% of the Dare County tax base. The total lost revenue over 30 years could be $7 – $10 million based on the very conservative scenarios outlined in the table below. For example, we assume all 80 properties will still be around in 30 years. This is unlikely. Some of this loss will likely be offset by the additional tax revenue resulting from the increase in value of the remaining properties (e.g., certain second-row homes become oceanfront).

In this simple analysis the beach nourishment costs are significantly higher (roughly 3 times higher) over the next 15 years than buying the properties at current tax value. Of course, predicting the costs for shoreline protection and/or property acquisition over the next couple of decades is not an exact science. The ultimate costs depend on factors such as sea-level rise, storms, and market forces for high-risk properties. An advantage of buyouts is that the process could be piecemealed. A buyout plan could happen gradually, targeting the highest exposure properties and willing sellers first (likely the most practical approach). The initial costs would be significantly smaller than beach nourishment which will require substantial expenditure up front. In addition, buyouts could be initiated immediately, whereas beach nourishment will require substantial planning and permitting.

A more gradual buyout process may cost less than the estimated $43 million, as the market value of properties will likely decrease as erosion begins to threaten homes. While this study does not prioritize the order of acquisition, further analysis could certainly provide the data to do so.

The primary advantage of beach nourishment is that it may preserve the existing oceanfront properties for the next decade or so, along with their tax revenues. In addition, Dare County has experience implementing beach nourishment projects in a professional way. A disadvantage is that there will be multiple episodes of nourishment required over this interval, separated by periods of time when the beach is narrow, and homes are once again highly exposed.  Buyouts would allow for a continuous, wide beach for a longer period of time.

We understand that there are obstacles to both buyouts and beach nourishment. This study is not intended to recommend either approach, but provides additional data that could inform the discussion of possible solutions. Looking at this narrowly, from a cost perspective, it is clear that buyouts are not a crazy idea. A main reason that we conduct an analysis like this is because no one else does. We feel very strongly that, whatever is ultimately decided, projects funded with public funds must examine the costs/benefits of managed retreat through buyouts as one viable option. This is abundantly clear: the status quo (taking no action) is the least favorable and most environmentally damaging option.