Volume 30

PACE-Ing Flood Resilience

by Ryan A. Reed

Flooding is a substantial problem in the United States and is slated to become significantly more consequential over the next century as climate change brings sea level rise and changing precipitation patterns, in turn increasing flooding risk. In order to continue to inhabit areas that are currently densely populated, individuals, business entities, and governments will have to consider building and rebuilding in a sustainable, thoughtful manner. Interest in sustainable building (and rebuilding) has grown in recent years, but it still presents massive challenges for funding, government involvement, and the feasibility of continuing to inhabit certain areas. This Note does not purport to solve these complex problems, but instead examines an existing funding mechanism that could be repurposed to help interested parties access flood resilience. Property Assessed Clean Energy (PACE) currently provides property owners with loans. The loans are paid back as a special tax assessment, which travels with the property if and when the owner decides to sell. PACE loans are currently only available for renewable energy and energy efficiency upgrades and have aided a large number of people in making those changes. This Note examines whether the PACE structure can be used for flood resilience infrastructure upgrades. Specifically, this Note surveys types of flood resilience activities, whether such activities fit within the overall structure of PACE financing, and what steps state and local governments should take to ensure a sustainable, healthy program. Overall, this Note finds that using PACE financing would be a good fit for certain flood resilience activities that protect individual homes and properties as well as large scale projects. PACE-financed flood resilience activities would provide the direct benefit of discounts on flood insurance, while relieving individuals of the direct and indirect costs associated with flood events. State and local governments should seize upon PACE financing as an opportunity to improve the resilience of their communities by using private capital to fund projects of interest. PACE financing should emphasize funding sustainable flood resilience projects while protecting individuals who take advantage of PACE financing. PACE financing could have a positive impact on building and rebuilding properties in a way that accommodates exceedingly likely future flood risk. It will not solve the problem, nor will it address potential causes of sea level rise, but it can help make the decision to invest in flood resilience easier for individuals. This will lower total flood risk and ultimately benefit the country as a whole.

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