Post-Disaster Community Investments in Lumberton Through the North Carolina State Acquisition and Relocation Fund for Buyout Relocation Assistance

Executive Summary

Lumberton, North Carolina provides one example of how state funding for relocation assistance can help support local buyouts and community investments in underserved areas. In the Fall of 2016, the small community of Lumberton was devastated by Hurricane Matthew when the Lumber River flooded over 870 households, as well as a number of businesses. As the city was beginning to recover, only two years later, Lumberton was hit a second time by Hurricane Florence, resulting in damage to over 500 structures. As of 2019, Lumberton is seeking to leverage several grants and funding programs, including North Carolina’s State Acquisition and Relocation Fund (SARF), to rebuild the community and provide residents with relocation assistance to obtain new homes in Lumberton through a state-local partnership. Specifically, with funding from SARF, the local government is considering opportunities to invest in new homes in one existing, but underserved neighborhood of Lumberton that can offer safer homes for bought-out residents. As SARF and the ongoing work in Lumberton demonstrate, state and local governments can support voluntary, post-disaster transitions of people and minimize negative impacts to individuals, communities, and local tax bases from buyouts by reinvesting in underserved areas within their municipalities.

Background

Lumberton is a community found in central North Carolina. Located directly on the Lumber River, it is made up of almost 22,000 individuals - 37% African American, 37% Caucasian, and 12.6% Native American. With an average income of a little over $32,000 per person, over 40% of African Americans in the community are living below the poverty line.

In the late 2000s, the city received a Community Development Block Grant (CDBG) from the U.S. Department of Housing and Urban Development (HUD) to fund a revitalization project around the underserved Mill Street area in East Lumberton. At the same time, private developers had similarly purchased homes within the Mill Street area, renovated them, and began to rent them to members of the community who had lost their homes to prior flooding or storms. The city viewed this as an opportunity to leverage CDBG funding in tandem with the private developers’ efforts to enhance the East Lumberton community, and initially built and renovated between six and eight homes.

In the Fall of 2016, however, Lumberton was devastated by Hurricane Matthew. The work planned in the Mill Street area was put on hold while record flooding raised the levels of the Lumber River, impacting over 870 households, as well as a number of businesses. As the city was beginning to recover, only two years later, Lumberton was hit again by Hurricane Florence, resulting in damage to over 500 structures. Lumberton’s lower-income neighborhoods were hit the hardest by the back-to-back hurricanes. The city has been evaluating various funding and investment opportunities to recover and assist residents including the State Acquisition and Relocation Fund. The 2019 budget for SARF is approximately $3.3 million and will allow the City of Lumberton to assist between 30-40 property owners.

Managed Retreat Examples

Funding: North Carolina’s State Acquisition and Relocation Fund

North Carolina’s State Acquisition and Relocation Fund (SARF) provides one example of state funding that local governments can leverage to provide relocation assistance for bought-out residents. After Hurricane Florence, Lumberton identified potential sources of federal and state revenue to recover and rebuild, including to potentially revitalize the Mill Street neighborhood with SARF funds.¹ The purpose of SARF is to supplement or provide “gap” funding for individuals where grants from the Federal Emergency Management Agency (FEMA) are insufficient to cover the costs of a buyout. SARF funds can specifically be used to help people relocate to a new, safer home after their disaster-impacted homes are acquired through FEMA’s Hazard Mitigation Grant Program. SARF funds can be used to acquire “safe, decent, and sanitary housing by paying the difference between the cost of a home acquired under the federal Hazard Mitigation Grant Program Acquisition and Relocation Program and the cost of a comparable home located outside the 100-year floodplain.”² The North Carolina Division of Emergency Management administers SARF.

SARF has been utilized in other parts of the state to support bought-out residents and minimize the economic costs of relocating. Some municipalities have also aimed to administer SARF funds to minimize the loss of local tax bases and help keep communities together. For example, Rocky Mount, Kinston, and Greenville have provided SARF grants as a financial incentive to stay local by requiring eligible individuals to buy a new home within their same municipality. In these instances, an estimated 90-97% of SARF participants stayed within their current cities and towns.³ Other state and local decisionmakers could consider offering relocation assistance and other types of financial incentives like SARF to help reduce the negative impacts of buyouts on individuals and communities.

For more information on the SARF Program, as well as eligibility requirements, see the Office of State and Budget Management North Carolina Disaster Recovery Guide.

Next Steps

Lumberton is currently in the process of applying for SARF funds to leverage FEMA Hazard Mitigation Grants for buyouts. The city recognizes the gap between FEMA grants and the actual amount of money homeowners need to relocate and buy a new home within the city’s limits. As of July 2019, the city is in the process of working with the state to receive SARF funds; the amount of money each homeowner may receive will be decided upon a case-by-case basis.

While the city has yet to determine how SARF grants will be used, it will evaluate whether to allocate some of the funds towards projects in East Lumberton - specifically Mill Street - where residents may choose to move after being bought out. Like in the 2000s, the city is looking inward to the under developed and aging Mill Street area that already contains existing infrastructure to rebuild on abandoned lots, rehabilitate existing mill houses, and keep people together in order to maintain the local tax base and preserve communities. The city also hopes that SARF relocation assistance will encourage homeownership, which can enhance community pride and ties that can lead to benefits like increased property values and overall neighborhood safety. In addition, the City of Lumberton is working with the Development Finance Initiative from the University of North Carolina’s School of Government on a public-private partnership to construct between 60-70 senior living units very near the Mill Street area. If this potential work with SARF funds and public-private partnerships goes forward and residents choose to move to East Lumberton, the city can become its own “receiving community” for people transitioning away from flood-damaged properties.

Considerations and Lessons Learned

Other local governments could consider identifying similar areas for redevelopment to help bought-out residents move either post-disaster, like in Lumberton, or pre-disaster through planning and zoning tools (e.g., identifying higher ground areas where increased density is allowed) in response to gradual impacts from climate change like sea-level rise in coastal areas. It is important to note, however, that local governments may encounter challenges if the federal or state funding allocated for buyouts outpaces new construction; therefore, examples like Lumberton can demonstrate the need for advanced planning and construction of affordable housing to help people move into new, permanent homes as soon as possible once they accept a buyout offer.

Publication Date: 2020

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