Disaster Resiliency

Disaster Resiliency At the Community and Business Levels Provided for: The Economic Development Administration

November 2011

This study was performed by the University of Texas at San Antonio Institute for Economic Development’s Center for Community and Business Research. The project was supported with funding from the San Antonio Economic Development Administration. Any findings, conclusions, or opinions are those of the authors and not necessarily those reflected by the University of Texas at San Antonio or the Economic Development Administration. Acknowledgements: This report was prepared by Dominique Halaby, Javier Oyakawa, Christine Medina, Goran Todorovic, and John Temperilli. A special thanks to Dr. Renee Nank from the University of Texas at San Antonio’s College of Public Policy and the staff of the Sustainable Business Program at the University of Texas at San Antonio’s Institute for Economic Development for their support and assistance in this effort.

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Table of Contents EXECUTIVE SUMMARY ........................................................................................................... 4 INTRODUCTION ................................................................................................................... 12 NATURAL DISASTERS IN THE LOWER RIO GRANDE VALLEY ................................................... 14 HISTORY AND BACKGROUND ............................................................................................................. 14 LOW-INTENSITY HURRICANES ........................................................................................................... 14 HURRICANE DOLLY ......................................................................................................................... 16 CDBG DISASTER RECOVERY FUNDS ................................................................................................... 17 TDRA WEATHER MODEL AND FEMA ................................................................................................. 28 FLOODING AND DRAINAGE IMPACTS................................................................................................... 29 ECONOMIC IMPACT OF HURRICANE DOLLY .......................................................................... 31 THE REGION .................................................................................................................................. 31 ECONOMIC IMPACTS OF HURRICANE DOLLY IN THE REGION .................................................................... 35 COUNTIES SPECIFIC IMPACTS ............................................................................................................. 39 METHODOLOGY ............................................................................................................................. 43 SOME SURVEY RESULTS FROM HURRICANE DOLLY ................................................................................ 47 COMMUNITY RESILIENCY..................................................................................................... 49 BEST PRACTICES .................................................................................................................. 51

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Executive Summary The goal of this report is to support the formulation of programs and the establishment of mechanisms to increase the resilience and sustainability of disaster affected communities by providing a framework for understanding the effects of specific natural disasters and outlining strategies for both mitigating and recovering from these events. The report will focus especially on top-down policies that may be implemented on a local or state level. This study involves several major components. First is the assembly and analysis of the latest information on recent natural disasters, most specifically the low-intensity Hurricane Dolly that struck the Lower Rio Grande Valley off the coast of South Padre Island in July 2008. This event is chosen as a case study for this paper because it highlights the profound weaknesses that exist in the area with regard to disaster preparedness and resiliency, even in the face of natural disasters considered on a national scale to be lower in intensity. The effect of this hurricane was, in fact, quite large in scale as compared to the strength of the hurricane itself, which made landfall as a category 1 hurricane and never rose above a category 2 at any point on- or offshore. The second component is the implementation of a methodology to measure the economic impacts of low-intensity hurricanes in the Lower Rio Grande Valley. Using the widely used IMPLAN software, the study estimates the output, employment, gross regional product, and tax impact revenues in the 4-county area. The study also disaggregates the impacts for each individual county and for the most impacted industries in each area. After several years, these calculations, using three scenarios, uncovers the important impacts Hurricane Dolly had in the area and highlights how large these impacts were. Next, this report outlines factors, policies, activities, and best practices which should be explored for their relevance to the particular situation of south Texas, and which might be implemented on an even wider scale. By examining the factors which make communities generally more resilient to disasters and understanding the gaps that existed leading up to and following Hurricane Dolly, recommendations can be provided which may help the Lower Rio Grande Valley area become a more cohesive resiliency network, and also may be adapted to the larger nationwide community facing these sorts of lower-intensity natural disasters on a recurring basis.

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Damage Experienced: Personal descriptions “The store had to be remodeled, due to rain damage. Roofing was blown off and the store had to be closed for about two months.” – Chain Retailer “Completely closed for eight months. Loss of customers and damaged building – there were 5 feet of water to deal with. More than 2 years to return to full operations.” – Lodging “No physical damage, but the customer flow was affected. People in the area were out of electricity for about a week. That and there was flooding in the area, so a lot of people were stuck at home.” – Hair Salon “Closed for 3 or 4 weeks; lost business; employees were temporarily sent to another store.” Chain Retail Store “The valley is very small. When one community is affected, we are all affected. If one area is flooded, then we couldn’t deliver to that area. Since Dolly, we have had rains that have kept us from recovering.” –Concrete Company “Lost out on 90 percent of sales for two weeks; instead of processing orders had to reorganize business and regroup.” – Retailer “Loss of supplies and business. Water damage. Had to sell that property and move to a new location; now trying to rebuild business; still not at full capacity.” – Retailer

According to Governor Perry’s Texas Rebounds Report November 2008, the 2008 hurricane season will go down in history as having been particularly unkind to Texas. The State was impacted by Hurricanes Ike, Gustav, and Dolly and a significant tropical storm within a 52 day time frame. Preliminary unreimbursed damage estimates by the Texas Rebounds Report for the 2008 hurricane season total more than $29.4 billion. Of this amount, almost $22.9 billion in nonhousing related damages were identified as well as $3.4 billion of housing assistance needs. Homes, businesses, and infrastructure were damaged and destroyed. The Texas Rebounds Report also estimates over $1.1 billion in losses to the forestry, agricultural, and fishery industries. Over 473,000 acres of timber were affected, agricultural fields were destroyed by salt contamination, and barns and barbed-wire fences were destroyed, thereby affecting the availability and suitability of grazing lands, with an estimated 15,000 head of livestock killed. The report details damages to area crops and recreational and commercial fisheries. 5

Instances where large-scale damage necessitates a massive or multi-faceted recovery process with a long recovery period, such as the devastation of an entire area, the immediate need of safe and sanitary housing on a significant scale, the decimation of an industry, medical facilities, or the destruction of a major public infrastructure system, are scenarios in which the urgent need of such a situation shall be considered. The Texas Rebounds Report estimates unreimbursed damage to medical facilities and loss of equipment and supplies at $71.9 million, although that figure may increase as additional information is gathered. Even though tourism could be characterized by some as less urgent, the reality is that the tourism industry is also a major underpinning of the coastal economy, providing necessary jobs and tax revenues. 1 Hurricane Dolly made landfall in July 2008, making it the first U.S. land-falling hurricane of the 2008 season. Despite being a Category 1, Dolly is considered the most destructive hurricane to hit the Rio Grande Valley in the previous four decades, leaving 15 counties of Texas a federal disaster area, 155,000 homes without electricity, and near $1.05 billion in property damage (a large proportion being agricultural).

Economic Impacts of Hurricane Dolly Hurricane Dolly made landfall on July 23, 2008, in South Padre Island as a Category 1 hurricane. Earlier in the month, while in the Gulf of Mexico, Dolly was classified as a Category 2 hurricane. Under the Saffir-Simpson scale, categories 0-2 are considered “low-intensity” storms, while categories 3-5 are considered “high intensity.” Different from high-intensity hurricanes, low-intensity hurricanes do not carry very heavy physical or structural damages, although they can inflict important physical damages. The impacts of low-intensity hurricanes are better measured in terms of business activity interruption, or how much do businesses lose when they are affected by these types of hurricanes. Business interruptions include disruptions in the flow of supplies and in the ability to ship goods, reduced employee productivity caused by transportation problems, declines in customer traffic and reduced demand for certain goods and services, among other issues. These post-disaster operational problems can be a significant impediment to business recovery. 2

1

Plan for Disaster Recovery. http://www.lrgvdc.org/downloads/disasterrecovery/Action_Plan_for_HUD_Approval.pdf 2 Webb, G. R., Tierney, K. J., and Dahlhamer, J. M. (2000). ‘‘Businesses and disasters: empirical patterns and unanswered questions.’’ Natural Hazards Review. 1 (2), 83–90.

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The study focuses on four counties: Cameron, Hidalgo, Starr, and Willacy. The 4-county area shows a diverse set of characteristics with two counties accounting for most of the population, output, and employment in the area: Hidalgo and Cameron. For all counties, total population for 2008 is close to 1.2 million people, most of it from Hidalgo and Cameron. Total economic output for the region is close to $41.9 billion, with Hidalgo accounting for more than half its value with $24.4 billion. Similarly, employment in the area is close to 459 thousand and with Hidalgo accounting for more than half of it. A better measurement of economic activity in the area is gross regional product, because it avoids double counting activities, with close to $23.1 billion with Hidalgo accounting for close to 60 percent of its value. The other two counties, Starr and Willacy, represent smaller amounts in output and jobs.

County Hidalgo Cameron Starr Willacy Totals

Summary Statistics for 4-County Area Gross Regional Output Product (millions $) (millions $) Employment $24,409 $14,056 283,689 $15,401 $7,749 152,166 $1,111 $736 17,244 $963 $588 6,547 $41,885 $23,129 459,646

Population 726,604 392,736 62,249 20,600 1,202,189

Source: IMPLAN database 2009 for year 2008.

Output represents the value of sector production. In IMPLAN these are annual production estimates for the year of the data set and are in producer prices. 3 These estimates usually include the value of inputs used in the production process in a particular sector or sector. When adding up different sectors to obtain an aggregate for the area, the inputs sold among local sectors are double counted; first as output of the sector of origin and second as an input in the sector of destination. The following graph shows the historic and predicted path of quarterly sales in the 4-County area. If sales had continue to grow 4 as they were doing from the fourth quarter of 2002 up to the second quarter of 2008, by the second quarter of 2011 total sales would have been $7.2 billion. Instead, total sales were $5.6 billion. In the year following Hurricane Dolly, the four counties accumulated a loss of $1.5 billion in sales. How much of that amount can be attributed to Hurricane Dolly? The study gives a partial answer to that question by calculating the loss of sales due to business interruptions.

3 4

IMPLAN http://implan.com/V4/index.php?option=com_glossary&task=list&glossid=13&letter=O&Itemid=12 Predicted sales were assumed to grow exponentially over time.

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Historic and Predicted Sales Before and After Hurricane Dolly in the 4-County Area

Source: Texas Comptroller’s Office web site at https://ourcpa.cpa.state.tx.us/allocation/HistSales.jsp. Elaboration CCBR-IED at UTSA.

The graph suggests that after the second quarter of 2009, the area recovered its historic rate of growth or was close to it. Hurricane Dolly impacted the area at the beginning of the third quarter of 2008. Considering the 4-county area, including Cameron, Hidalgo, Starr, and Willacy counties, the combined total loss of business revenues due to Hurricane Dolly is close to $836.3 million and 10,606 jobs, both full- and part-time. Hurricane Dolly also produced losses close to $21.1 million and close to $22.8 million for the state and local governments, respectively.

Output Employment Payroll Gross Regional Product Estimated Local Governments Revenue Estimated State Revenue

Total Impacts Three Scenarios Low estimate Moderate estimate $792,021,394 $836,347,828 10,044 10,606 $238,440,350 $251,784,953 $463,268,282 $489,195,652

High estimate $880,674,263 11,168 $265,129,555 $515,123,021

$21,575,422

$22,782,917

$23,990,411

$20,003,864

$21,123,405

$22,242,945

Source: IMPLAN software version 3, database 2009 for year 2008.

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Taking in consideration the low and high scenarios, the impacts can be summarized as having an output regional impact between 1.89 percent and 2.10 percent; an employment regional impact between 2.19 percent and 2.43 percent; and a gross regional product impact between 2.00 percent and 2.23 percent. These results are higher than those presented in Burrus et al. (2002) for three North Carolina counties, with impacts going from 0.8 percent to 1.8 percent, but they seem reasonable in the context of the relative size of the areas and the economic activity within them. The population affected in the present study is five times larger than the one included in the previous study. 5 The direct, indirect, and induced impacts in the moderate scenario for the 4-county area are presented in the following table:

4-County Estimated Impacts 2008 Moderate Scenario Economic Impacts Direct

Indirect

$607,421,466 $113,013,460 Output 8,274 977 Employment $189,421,170 $28,183,777 Payroll $359,524,763 $60,298,417 Gross Regional Product Estimated Local Governments Revenue Estimated State Revenue

Induced

Total

$115,912,902

$836,347,828

1,355

10,606

$34,180,006

$251,784,953

$69,372,473

$489,195,652 $22,782,917 $21,123,405


Steps taken since Dolly Representatives from the three Lower Rio Grande Valley Development Council (LRGVDC) counties and cities within met to develop a regional approach to address the flooding and drainage issues. The representatives agreed that addressing the flooding issues would help the Dolly impacted areas, future planning and recovery, and economic sustainability goals. A Building Disaster Resilient Communities Planning Committee was formed from members of the LRGVDC Board of Directors and the Rio Grande Regional Water Authority and tasked with developing a regional drainage project. The committee created a project and strategy totaling

5

At the end of the chapter on the economic impacts there is an explanation of the methodology used in the study.

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around $106 million. To address funding constraints the committee divided the regional project into sub-projects to be prioritized. Prioritization was based on the following characteristics: which areas received the majority of the impact of flooding during Hurricane Dolly (based on total precipitation), low moderate income (LMI) that the sub projects would serve, and whether the drainage sub-project would be ready for implementation in the allotted two year Texas Department of Rural Affairs (TDRA) time-frame. The committee gave their recommendations to the LRGVDC Board of Directors resulting in a sub-project ranking that was included with the Method of Distribution (MOD). The goal of the drainage project was obvious: to reduce the regional impact of flooding to avoid repeat damage in future disasters. The reason the committee created a priority list was because the funding came in about $50 million short of the goals, so priority was given to the most relevant sub-projects. Additional drainage projects in the region are needed but will only be done if a surplus in allocated funding exists. 6 Still in consideration, as of July 1, 2011, is the allocation of the remainder of nearly $125 million. The allocation is pending until the Phase 2 Analysis of Impediments is released and a full MOD can be formulated by the region.

Best practices One best practice by a community was identified as a case study by FEMA; it offers particular relevance to the Lower Rio Grande Valley, based on its proximity to the ocean and resulting hurricane vulnerability, the serious destruction experienced and response to a number of lowintensity but high-impacting hurricanes, and previously ineffective drainage. Kinston, North Carolina was featured for study by FEMA 7 because of its responsiveness to these disasters and its innovative floodplain management systems put in place to mitigate the future impacts of low-intensity hurricanes like those that have caused so much damage in the Lower Rio Grande Valley area. During the late 1990s Kinston, North Carolina was hit by three hurricanes, resulting in repeated flooding that left more than 75 percent of homes in the floodplain substantially damaged. After the repeated losses the city of Kinston and Lenoir County made a commitment to reduce their risks and incorporate floodplain management planning into their community. Using Geographic Information Systems (GIS) as the technical foundation for their plan, officials developed and utilized databases and tracking functions to produce graphical images to aid in

6

Partial MOD for Round 2 DR supplemental Allocation. http://www.lrgvdc.org/downloads/disasterrecovery/REVISED_Partial_MOD_LRGVDC_10-06-2010.pdf 7 FEMA mitigation case studies: Kinston, North Carolina

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planning, implementing, and tracking floodplain management. The City of Kinston regularly updates the GIS data and uses the information in the four steps of project planning and management: Pre-Disaster Mitigation Planning, Risk Reduction, Disaster Response, and Disaster Recovery. Pre-Disaster Mitigation - Planners can use Geographic Information Systems (GIS) to predict the impacts on the infrastructure, buildings and people for a variety of disaster scenarios. The City of Kinston-Lenoir County used GIS to show the 100- and 500-year floodplains and identify susceptible structures. Risk Reduction – Using GIS to track mitigation efforts. Kinston used GIS to track the progress of floodplain property acquisitions. Disaster Response - Emergency responders can use GIS to access critical information to aid in disaster response. The City of Kinston Fire Department uses GIS to obtain critical information for responding to emergency calls. Disaster Recovery – Local officials can use GIS to access the community’s needs. Kinston developed a demographic profile that helped identify how many homes and in what price range were needed to accommodate residents wishing to relocate outside of the floodplain. Local officials used GIS to graphically illustrate the 100 and 500 year floodplains and the Hazard Mitigation Grant Program (HMGP) acquired lots to show the benefits of proactive floodplain management and plan for future acquisitions. Through systematic efforts the city and county have already acquired over 1,000 properties with FEMA’s HMGP funds, leaving 225 remaining to acquire. Another best practice that can be used as a reference is the southeastern areas of the Commonwealth of Virginia. The case of southeastern Virginia offers valuable insight and possible solutions to flood damage assistance. Flood insurance and mitigation saved taxpayer dollars and expedited flooding recovery. Dissemination of information for adequate insurance and practical mitigation requirements could be useful in the Lower Rio Grande Valley.

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Introduction The goal of this report is to support the formulation of programs and the establishment of mechanisms to increase the resilience and sustainability of disaster affected communities by providing a framework for understanding the effects of specific natural disasters and outlining strategies for both mitigating and recovering from these events. The report will focus especially on top-down policies that may be implemented on a local or state level. This report is a part of a larger project and effort to increase sustainability and disaster resiliency among businesses and communities. One major component of this effort involves the creation of curricula and the execution of training and seminars among small business and community stakeholders in southwest Texas, an area particularly prone to low-intensity hurricanes. This paper is intended as a tool to inform the ongoing effort to build resiliency in this geographic vicinity by highlighting public policy actions that can result in greater resiliency to the residential and business community, while also exploring the efficacy of the business and community level preparedness measures and response to recent natural disasters, specifically the low-intensity Hurricane Dolly. By studying both municipal and public preparation efforts and response to these sorts of disasters, it is hoped that changes may be suggested and implemented that will make the southwest Texas area, especially the Lower Rio Grande Valley vicinity, a more disaster-prepared and disaster-resilient locale in spite of the area’s unique challenges. This study involves several major components. First is the assembly and analysis of the latest information on recent natural disasters, most specifically the low-intensity Hurricane Dolly that struck the Lower Rio Grande Valley off the coast of South Padre Island in July 2008. This event is chosen as a case study for this paper because it highlights the profound weaknesses that exist in the area with regard to disaster preparedness and resiliency, even in the face of natural disasters considered on a national scale to be lower in intensity. The effect of this hurricane was, in fact, quite large in scale as compared to the strength of the hurricane itself, which made landfall as a category 1 hurricane and never rose above a category 2 at any point on- or offshore. The second component is the implementation of a methodology to measure the economic impacts of low-intensity hurricanes in the Lower Rio Grande Valley. Using the widely used IMPLAN software, the study estimates the output, employment, gross regional product, and tax impact revenues in the 4-county area. The study also disaggregates the impacts for each individual county and for the most impacted industries in each area. After several years, these calculations, using three scenarios, uncovers the important impacts that Hurricane Dolly had in the area and highlights how large these impacts were. Next, this report outlines factors, policies, activities, and best practices which should be explored for their relevance to the particular situation of south Texas, and which might be implemented on an even wider scale. By examining the factors which make communities 12

generally more resilient to disasters and understanding the gaps that existed leading up to and following Hurricane Dolly, recommendations can be provided which may help the Lower Rio Grande Valley area become a more cohesive resiliency network, and also may be adapted to the larger nationwide community facing these sorts of lower-intensity natural disasters on a recurring basis.

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Natural Disasters in the Lower Rio Grande Valley History and Background

There are seven basins where tropical cyclones form over the world’s waters. The basin that produces the storms affecting the Atlantic and Gulf Coasts of the United States is called the Western Atlantic Ocean. Tropical cyclone formation in this region varies widely from year to year, ranging from one to over twenty-five per year, and most Atlantic tropical storms and hurricanes form between June 1 and November 30. 8 On average, the Western Atlantic Ocean Basin produces 11 named storms (tropical storms or higher), of which 6 become hurricanes and 2 become major hurricanes. The Western Atlantic Ocean storms will either continue into the Gulf of Mexico and hit somewhere in the Caribbean, on the Gulf Coast, or carry up the United States East Coast and make landfall. The Gulf Coast is especially prominent for damaging hurricanes; six of the ten most costly hurricanes in United States history have landed along the Gulf Coast, including the top four. Low-Intensity Hurricanes

Low-intensity hurricanes present an interesting opportunity for research and for community focus and preparation. Unlike their high-intensity counterparts, low-intensity hurricanes generally do not cause total structural devastation, and they may not become the subject of ongoing recovery and rebuilding efforts to the same extent as more serious hurricanes. Even though, this can actually cause a greater long-term negative economic result than higherintensity hurricanes. Low-intensity hurricanes are also far more frequent than higher category storms, and so their total effects certainly merit additional research consideration. A Category 3, 4 or 5 hurricane that makes landfall along the US Atlantic or Gulf Coast will cause devastating or catastrophic damage. Wind speeds for these highest-intensity hurricanes are greater than 130 miles per hour, and the risks include: 9

8

Atlantic Oceanographic and Meteorological Laboratory, Hurricane Research Division. "Frequently Asked Questions: What are the average, most, and least tropical cyclones occurring in each basin?” NOAA. http://www.aoml.noaa.gov/hrd/tcfaq/E10.html. Retrieved 2006-11-30. 9 The Saffir-Simpson Hurricane Wind Scale Summary Table. National Weather Service: National Hurricane Center.

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 

  

High risk of injury or death to residents and their pets and livestock; Total destruction of most or all mobile homes, poorly constructed frame homes, many industrial buildings and masonry buildings, older metal buildings, and severe destruction to the higher floors of multi-story buildings; Falling glass and blown-out windows in all buildings; Downed power lines and long-lasting power outages; and Uninhabitable areas for weeks to months.

Category 1 and 2 hurricanes, however, bring slightly lesser, though still serious physical and structural risks: 10     

Risk of injury or death from falling/flying debris; Destruction to older and some newer mobile homes; Roof, siding, and window damage to various buildings; Signage, fencing, and canopy damage; and Scarce potable water and possible power outages that could last up to weeks.

In terms on physical and structural damage alone, communities impacted by high-intensity hurricanes clearly fare much worse. In the case of high-intensity hurricanes, it is virtually impossible for the community to rebound in any efficient or sufficient manner in the short term. When examining overall impacts and total economic activity, however, some interesting research findings exist. Several studies support the notion that the short- to medium- term negative impacts of high-intensity hurricanes can be offset or surpassed by the positive economic impacts associated with rebuilding. Outside dollars stemming from construction projects to rebuild destroyed infrastructure due to high-intensity hurricanes have been shown to increase local wages, build municipal revenues, and enhance overall economic activity. 11 The same level of “offsetting activity” is not typically present in a lower-intensity hurricane. Taking into account the relatively higher frequency of lower-intensity hurricanes, their damage can easily equal or exceed the expected annual damage of high-intensity hurricanes on a yearly basis. When considered cumulatively over the course of a year, these impacts are substantial. A study of the Wilmington, NC area determined that average losses per low-intensity storm to that region are roughly 0.8 to 1.23 percent of annual output, 1.11 to 1.63 percent of employment,

10

Ibid. Burrus Jr, Robert T., Christopher F. Dumas, Claude H. Farrell, and William W. Hall Jr. “Impact of Low-Intensity Hurricanes on Regional Economic Activity”, Natural Hazards Review, Vol. 3, Iss. 3, pp. 118-125, August 2002. 11

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and 1.21 to 1.81 percent of indirect business taxes, totaling an expectation of damages equivalent to a high-intensity hurricane based on the average frequency of low-intensity hits to the area. 12

Hurricane Dolly

Hurricane Dolly made landfall in South Texas in July 2008, making it the first U.S. land-falling hurricane of the 2008 season. Despite being a Category 1, Dolly is considered the most destructive hurricane to hit the Rio Grande Valley in the previous four decades, leaving 15 counties of Texas a federal disaster area, 155,000 homes without electricity, and near $1.05 billion in property damage (a large proportion being agricultural).

According to Governor Perry’s Texas Rebounds Report November 2008, the 2008 hurricane season will go down in history as having been particularly unkind to Texas. The State was impacted by Hurricanes Ike, Gustav, and Dolly and a significant tropical storm within a 52 day time frame. Preliminary unreimbursed damage estimates by the Texas Rebounds Report for the 2008 hurricane season total more than $29.4 billion. Of this amount, almost $22.9 billion in nonhousing related damages were identified as well as $3.4 billion of housing assistance needs. Homes, businesses, and infrastructure were damaged and destroyed.

12

Ibid.

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The Texas Rebounds Report also estimates over $1.1 billion in losses to the forestry, agricultural, and fishery industries. Over 473,000 acres of timber were affected, agricultural fields were destroyed by salt contamination, and barns and barbed-wire fences were destroyed, thereby affecting the availability and suitability of grazing lands, with an estimated 15,000 head of livestock killed. The report details damages to area crops and recreational and commercial fisheries. Instances where large-scale damage necessitates a massive or multi-faceted recovery process with a long recovery period, such as the devastation of an entire area, the immediate need of safe and sanitary housing on a significant scale, the decimation of an industry, medical facilities, or the destruction of a major public infrastructure system, are scenarios in which the urgent need of such a situation shall be considered. The Texas Rebounds Report estimates unreimbursed damage to medical facilities and loss of equipment and supplies at $71.9 million, although that figure may increase as additional information is gathered. Even though tourism could be characterized by some as less urgent, the reality is that the tourism industry is also a major underpinning of the coastal economy, providing necessary jobs and tax revenues. 13

CDBG Disaster Recovery Funds

The Community Development Block Grant (CDBG) program is a flexible program that provides communities with resources to address a wide range of unique community development needs. Beginning in 1974, the CDBG program is one of the longest continuously run programs at the U.S. Department of Housing and Urban Development (HUD). In response to disasters, Congress may appropriate additional funding for CDBG programs as Disaster Recovery grants to rebuild the affected areas and provide crucial seed money to start the recovery process. Since CDBG Disaster Recovery assistance may fund a broad range of recovery activities, HUD can help communities and neighborhoods that otherwise might not recover due to limited resources. On September 30, 2008, Congress appropriated more than $6.5 billion in supplemental funding for 13 states and Puerto Rico. HUD allocated a total of $3.1 billion to Texas to address damages caused by hurricanes Ike and Dolly. In addition, The State of Texas was required to publish an Action Plan for Disaster Recovery that describes the proposed use of HUD and CDBG funding

13

Plan for Disaster Recovery. http://www.lrgvdc.org/downloads/disasterrecovery/Action_Plan_for_HUD_Approval.pdf

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associated with the Consolidated Security, Disaster Assistance, and Continuing Appropriations Act. 14

Round 1 Allocation On November 28, 2008, HUD made an initial one-third allocation to Texas for $1.3 billion in disaster recovery supplemental funds from the Community Development Block Grants (CDBG) program for public infrastructure, economic development, and housing needs as a result of natural disasters that occurred in 2008, namely Hurricanes Dolly and Ike. These funds were to be allocated among 11 regions in the affected areas of the state based upon FEMA damage assessments as of December 1, 2008 under the following activities: 15 16

Category

Amount 622,752,828.00 587,328,615.00 2,600,000.00 36,559,240.00 65,749,510.00

Housing Non-Housing Infrastructure Economic Development Planning State Administration

$ $ $ $ $

Total

$ 1,314,990,193.00

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Percentage 47.36% 44.66% 0.20% 2.78% 5.00% 100.00%

Action Plan Amendment No.1 (6/1/2010), Pg. 9. http://www.tdra.texas.gov/TxDRA/programs/disasterrecovery/DRGrantAwardsandReports.aspx -- Hurricanes Ike/Dolly Performance Report 3Q 2010 16 Note: According the Action Plan Amendment No.1 the first round of HUD funding was allocated in February 2009. 15

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2.78% 0.20%

Housing $622,752,828.00

5.00%

Non-Housing Infrastructure $587,328,615.00 47.36%

Economic Development $2,600,000.00

44.66% Planning $36,559,240.00

State Administration $65,749,510.00

A series of five public hearings ensued in December of 2008 and an Action Plan for Round 1 aid was published on March 4, 2009 by the Office of Rural Community Affairs. Using preliminary assessment input from FEMA and input from the hearings, allocation amounts to 11 COGs was approved by HUD in March 2009 (listed in the following table).

Regional Allocations

Region

Percentage of Total Additional Total Allocation to Total Allocation by Damage Initial Allocation Amount Allocation Amount Regions Percentage

ATCOG 0.11% BVCOG 0.85% CBCOG 0.30% CTCOG 0.01% DETCOG 5.64% ETCOG 0.88% GCRPC 0.03% H-GAC 77.39% SETRPC 13.30% LRGVDC 1.46% STDC 0.04% SUBTOTALS

$1,164,673 $8,952,164 $3,121,376 $86,207 $59,310,711 $9,224,823 $327,612 $814,133,493 $139,940,688 $15,347,037 $383,370 $1,051,992,154

$0 $0 $0 $163,793 $10,689,289 $0 $672,388 $0 $50,059,312 $39,652,963 $616,630 $101,854,375

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$1,164,673 $8,952,164 $3,121,376 $250,000 $70,000,000 $9,224,823 $1,000,000 $814,133,493 $190,000,000 $55,000,000 $1,000,000 $1,153,846,529

0.10% 0.78% 0.27% 0.02% 6.07% 0.80% 0.09% 70.56% 16.47% 4.77% 0.09% 100.00%

Total Regional Allocations Percentage Allocation Amount Program (Total Regional Allocations) 87.75% $1,153,846,529 Administation 5.00% $65,749,510 State Planning/Project Delivery 2.78% $36,559,240 TDHCA Affordable Rental Set Aside 4.47% $58,834,914 Totals

100.00%

$1,314,990,193

Percentage of Allocations State Planning/Project Delivery, 2.78% Administation, 5.00%

TDHCA Affordable Rental Set Aside, 4.47% Program (Total Regional Allocations) Administation

State Planning/Project Delivery TDHCA Affordable Rental Set Aside Program (Total Regional Allocations), 87.75%

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Round 1 Funding Distribution by COG17 Region Houston-Galveston Area Council (H-GAC) South East Texas Regional Planning Commission (SETRPC) Lower Rio Grande Valley Development Council (LRGVDC) Deep East Texas Council of Governments (DETCOG) Seven COG Competitive Pool Total

Percentage 70.56% 16.47% 4.77% 6.07% 2.14% 100.00%

As reflected in the tables, out of the initial $1.3 billion allocation to Texas (State Allocation), the state set-aside 5 percent (approximately $65,749,510) for State-Administrative expenses, including contract administration, compliance monitoring, and the provision of technical assistance to applicants and sub-recipients. The state has also set aside 2.78 percent (approximately $36,559,240) for planning activities and 4.47 percent (approximately $58,834,914) for the state administered Texas Department of Housing and Community Affairs (TDHCA) Affordable Rental Housing Stock Restoration Program. The remaining 87.75 percent ($1.1 billion) was to be distributed to the 11 regions. At least 10.6 percent ($139,743,911) of the State Allocation total funds awarded must be used for affordable rental housing programs, as required by the federal statute. Should any COG have funds that are unallocated to eligible entities, those funds would have been returned to the state for reallocation at the state’s discretion. 18

Round 2 Allocations Traditionally, CDBG disaster recovery funds are allocated using FEMA and other federal damage estimates and data to calculate unmet need. However, according to TDRA, since Hurricane Ike hit before the Hurricane Dolly damage assessments were completed, the FEMA damage assessment method were deemed inaccurate. As a result, Round 2 allocations initially used a weather-based funding allocation model (ORCA/Texas Funding Allocation Model) based on wind speed, rainfall, and storm surge then submitted the proposed Action Plan in September of 2009 for HUD Approval. HUD provided guidance on the new allocations based on their model relying on FEMA data and the Small Business Administration (SBA) information, but acknowledged the inadequacy of the FEMA damage assessment process in the Lower Rio Grande Valley Development Council region and allowed the State to maintain the allocation to the region developed using the Texas Allocation Model.

17

Action Plan Amendment 1, pg. 3. http://www.tdra.state.tx.us/TxDRA/programs/disasterrecovery/DRActionPlanR1R2.aspx HUD Approved Action Plan. 18

21

Action Plan Amendment No.1 A second round of funding ($1.7 billion) was announced in the Federal Register, dated August 14, 2009, requiring the submission of an amendment to the State’s Action Plan. Upon receipt of the Round 2 appropriation the State began preparing an Amendment to the Action Plan. HUD declined to approve the first iteration of proposed Amendment No.1 and asked the State to take corrective action based on guidance.19 A fair housing complaint was submitted against Texas, originally filed on December 1, 2009. This complaint by Texas Low Income Housing Information Service and Texas Appleseed was added to the issues to address before the State. This second iteration was submitted in draft form with HUD responding with several suggested changes, bringing about the third and final iteration submitted June 1, 2010. This Amendment No.1 contained key elements from all iterations, including:    





 

19

Adjusted allocations to the four most impacted regions and the Seven COG Competitive Pool as directed by HUD; Inclusion of key program components from the conciliation agreement negotiated with Complainants; Strengthened language to address fair housing issues raised in the Complaint; A modification providing a minimum of 55 percent allocation for housing and not more than 45 percent allocation for non-housing activities that require funds be used for their designated purposes. In other words, grantees may not use funds designated as housing funds for non-housing projects; Prioritization of projects that meet the U.S. Department of Housing and Urban Development’s low to moderate income (LMI) national objective, and increase funds allocated to it from the initial submission to 55 percent, an increase of 5% over HUD’s published requirements; Allocations and set-asides for targeted activities, including the disaster recovery enhancement program, affordable rental housing, innovative housing approaches, and title clearance and legal assistance. These activities will allow for a broader approach to recovery and greater flexibility for local officials; A competitive funding pool will be utilized for the 32 eligible counties least impacted by the storms to assure access to funding and maximize the use of funds for high priority needs within the designated disaster areas; and Program criteria that encourage long-term strategies for reducing the risk of damage from future natural disasters in housing and non-housing programs.

Action Plan Amendment 1, pg. 3.

22

The Texas Department of Housing and Community Affairs (TDHCA) was responsible for overseeing housing activities and administering disaster recovery funding for those activities. While the Texas Department of Rural Affairs (TDRA), was designated to coordinate the CDBG disaster recovery funding for Hurricanes Dolly and Ike and was responsible for:      

Execution of the CDBG grant award; Development of Action Plan amendments; Completion of quarterly reports; Management of the associated letter of credit; Preparation of the end of the award report; and Administration of CDBG funds for non-housing activities

Amendment No.2 (September 9, 2010) The Second Amendment to the State of Texas Plan for Disaster Recovery (Action Plan) aimed to address the circular nature of the formula for Pool Non-Housing Competitive Process Criteria. The formula from Amendment No.1 was circular, often yielding identical answers regardless of variables for a specific criterion of applicants for the relief funds. In order the address the issue, the following changes to the criterion were made: 

The scoring calculation shall be based on the latest available FEMA Public Assistance (PA) and Individual Assistance (IA) data as provided by the application preparer;



The constant used to determine the “base” in the formula is changed from 1.25 to 0.80;



The formula step dividing the applicant’s damage per capita by the “base” and then multiplying the result by the maximum possible score of 20 is removed. Instead, the “base” is divided by the maximum possible score of 20 to establish the raw score, and a cap of 20 points is established. A raw score of 20 or above will equate to an actual score of 20.

Amendment No. 3 (March 4, 2011) The document constituting the Third Amendment governs the receipt and allocation of Round 3 funds and addresses the use of $18,000,000 of the Disaster Recovery Enhancement Fund (DREF) funds after HUD notified the State that it could receive up to $55,481,416 in DREF funds.

23

H-GAC SETRPC LRGVDC DETCOG COG Subtotal

Allocations of Housing Funds Received Through DREF by COG Round 2 Housing Allocation DREF Funds Split Funding % Split $647,356,639 66.09% $11,896,200 $190,104,113 19.41% $3,493,800 $122,034,387 12.46% $2,242,800 $20,000,000 2.04% $367,200 $979,465,139 100.00% $18,000,000

Amendment No. 4 (June 29, 2011) The fourth amendment was a letter sent to the Assistant Secretary of Community Planning and Development at HUD, by the Interim Executive Director of TDRA, Howard Baldwin, Jr., requesting that the remaining $37,481,416 of DREF funds be used for “administration, planning, and program activities to help non housing applicants” to address the issues identified by the Analysis of Impediments.20 Analysis of Impediments (AI) In the early 2000s, at the request from state and local governments, HUD developed a Fair Housing Planning Guide and training program to assist fair housing planning and fulfilling the fair housing requirements of the Consolidated Plan and Community Development Block Grant regulations. The guide provides information on how to conduct an Analysis of Impediments (AI) to Fair Housing. AIs assess laws, regulations and administrative policies, procedures and practices that affect the location and accessibility of housing, and conditions affecting fair housing choice. 21 AIs are not usually submitted or approved by HUD, but HUD can require submission of the AI in the event of a complaint or as a part of routine monitoring. If HUD determines no actions were taken to address the identified impediments, the impediments had been incorrectly identified or not were not updated, or the actions taken to address the impediments were inappropriate the Department will work with the jurisdiction to determine proper action is taken to set and obtain fair housing goals. In the case of Texas, after the second round of CBDG funding, a complaint was filed by two fair housing advocacy groups claiming the state’s AI was inadequate and outdated.

20

Amendment No. 4. http://www.tdra.texas.gov/TxDRA/Libraries/disrDocs/HUD_Action_Plan_Amendment_4_062911.sflb.ashx 21 HUD Memorandum. http://www.hud.gov/offices/fheo/library/finaljointletter.pdf

24

HUD informed the state that absent reaching a conciliation agreement with the housing advocates, HUD would immediately launch an investigation in Texas, much as it did with Westchester County, N.Y., and halt all CDBG funding in the state, including disaster recovery funding. Rather than delay the funds for the length of a pending investigation, the State moved toward a Conciliation Agreement with the complainants to ensure Texas had access to more than $3.1 billion in disaster recovery funds. 22 On March 13, 2011 HUD approved Phase 1 of the State of Texas Analysis of Impediments produced by TDRA in conjunction with the AI Committee. Titled Hurricane Impacted Communities, it pertained to the $1.6 billion of second round CBDG funding the state received. Phase 1 identified sixteen impediments (falling in 4 categories: education, training, planning, and enforcement) to fair housing, and recommended funding allocation and programs to further fair housing. In developing the AI, the state worked closely with representatives from communities impacted by Hurricanes Ike and Dolly, persons representing fair housing, and civil rights advocacy groups. In addition, the public was invited to provide input through surveys, focus groups, and public comment periods.23 The report identified limitations and challenges to achieving fair housing, and proposes to increase awareness of the Fair Housing claim process and increase testing and enforcement of Fair Housing issues. Essentially, the state and local jurisdictions identified major steps to providing a path that will help bring greater awareness about the Fair Housing Act to the public and encourage informed decisions moving forward.

Administration Governor Perry designated the Texas Department of Rural Affairs (TDRA) as the lead agency, working with the Texas Department of Housing and Community Affairs (TDHCA), for administration of the $3 billion in aid. While TDRA was responsible for the overall administrative functions of the program and non-housing activities, TDHCA partnered with TDRA to develop the Action Plan and subsequent Amendments, and manage the housing activities. 24 According to the Texas Department of Rural Affairs $591,232,326, representing all of the round 1 disaster recovery funds, had been awarded as of August 31, 2011. On February 25, 2011, Texas Department of Rural Affairs Executive Director Charles Stone released a Disaster

22

Analysis of Impediments, Phase 1. Pg. 11/196 http://www.coscda.org/AnalysisOfImpedimentsPhase1.pdf Analysis of Impediments, Phase 1. Pg. 13/196 http://www.coscda.org/AnalysisOfImpedimentsPhase1.pdf 24 http://www.tdhca.state.tx.us/cdbg/ike-and-dolly/index.htm. Hurricanes Ike and Dolly: CDBG Disaster Recovery Funding Assistance to States Impacted by 2008 Storms 23

25

Recovery Program Transition Letter stating that “TDRA disaster recovery efforts need improvement” and to “downsize the number of TDRA DR FTEs and move the DR efforts in a new way.” In the transition letter Mr. Stone announce that 100% of all round 1 funding, representing $660,830,696, had been awarded and offered a progress report of those activities which as of February 23 , 2011 were as follows:   



TDRA has certified 438 Environmental Review Records for 1612 sites. TDRA has accepted 384 Bid Packages at 100% for 1334 sites. The grantees in the program have awarded construction contracts for 229 bid packages (892 sites) totaling $67.4 Million. This is 40% of the anticipated number of sites for Round 1. Construction is complete on 114 sites or 5% of the anticipated sites for Round 1.

Announcement of the completed transition of HNTB 25 assuming the lead role in the TDRA Disaster Recovery Program came on March 1, 2011. On July 1, 2011 Governor Perry changed the designation of the state agency responsible for the administration of the CDBG disaster recovery funding from the Texas Department of Housing and Community Affairs (TDHCA) and the Texas Department of Rural Affairs (TDRA) to the Texas General Land Office (GLO). In his letter to HUD Secretary Shaun Donovan, Perry cited the move would provide more accountability and save on administrative costs by providing a single contact agency for local communities impacted by Hurricanes Ike and Dolly. This also occurs amidst Governor Perry’s June veto of the “Sunset Bill” for the TDHCA that would have kept the agency in operation, with the veto TDHCA will cease to exist.

25

TDRA engaged the services of a Project Management Company (PMC) in 2009 and that company is the HNTB Corporation.

26

Non-Housing Spending Amount Spent, $121,670,014 , 20%

Amount Spent Undisbursed Funds

Undisbursed Funds, $486,122,479 , 80%

Planning, Administrative Spending Undisbursed Funds, $4,381,116 , 8%

Amount Spent, $48,990,329 , 92%

Amount Spent

Undisbursed Funds

Nonhousing projects include public works such as water, sewage, drainage and road facilities. Source American-Statesman from the Texas General Land Office.

In what’s been called the largest public works project in Texas history, only 20 percent of the first round of federal disaster funds allocated for recovery from Hurricanes Dolly and Ike has been disbursed in the affected communities, while 92 percent of the money for grant overhead has been spent. Federal officials say the lopsided spending rates will likely result in a shortfall of funds to administer the next round of infrastructure projects.

27

After the change in oversight, Deputy Commissioner of the Texas General Land Office Gary Hagood stated his goal to obligate all the Round 2 money by the end of this year. He also discussed the need for local governments to meet performance timelines for using their CDBG disaster recovery funds. 26 TDRA weather model and FEMA

The ad-hoc ORCA Model was developed specifically for this disaster and does not use any observed data on damage or unmet need. The complaints of the use of this model have been voluminous. It is obvious that using a model that distributes funding based on weather severity rather than damage or unmet disaster recovery needs leaves room for discrepancy. To illustrate this shortfall examine the case of Chambers County compared to Galveston County. Using the weather based model assigns Chambers County a 29.19% “surge damage factor” compared to 17% for Galveston County. Chambers County is rural land, mostly pastures, according to FEMA data, and Chambers has approximately 3,700 damaged homes while Galveston County has 37,000. Using a purely weather based model would certainly raise questions about whether the funding was used “for necessary expenses related to disaster relief, long-term recovery, and restoration of infrastructure, housing and economic revitalization” as the model ignores factors such as structural damage. Specifically, the model incorporates various assumptions that may be justified by empirical data but offered no such data according to the complaint filed by Texas Appleseed. One assumption is that a storm surge of 10-12 feet is assumed to be 1.7 times more damaging than one 8-10 feet. Another is that a wind-speed of 85-95 mph is deemed 4.5 times more damaging than a wind speed of 65-75 mph. The confusing explanation offered was that the ‘model determined that higher sustained winds generated greater overall wind speed damage factor,’ however if the model includes this as an assumption, it could not have been the model itself that determined the assumption. In a section of the explanation of the model titled “model calibration” the inconsistency of the model is highlighted as the model had to be ignored for seven COGs after testimony indicated “these regions would not require significant funding during round 2.” 27 The Texas model allocated these seven COGs 12.4% of funding, but the “calibration” ended up yielding these mostly rural regions 3.9%, a misallocation of 300%. 28 At its core we can see that the weather based model has serious flaws. In defense of the model were a few who called the funding formula the “objective model,” citing the necessity to create an ad-hoc model while facing the and later iterations saw the model revised to “consider additional information including low to moderate income population, feedback from

26

http://texashousers.net/2011/07/06/a-new-sheriff-takes-over-texas-disaster-recovery HNTB, orca funding allocation model 11 28 Administrative Complaint. Texas Appleseed. 14 27

28

communities during public hearings, damage assessments of public infrastructure and FEMA data.”29 These iterations are the previously mentioned amendments and have hopefully reduced misallocation. Flooding and Drainage Impacts

Flooding is the most common environmental hazard worldwide. Floods can be categorized as either river floods or coastal floods. Coastal floods are mostly due to storm surges caused by hurricanes or tsunamis. Storm surge is caused by severe onshore winds, usually accompanied by low atmospheric pressure and sometimes high tide. Friction between the wind and water creates drag causing water to pile up. Another cause of coastal flooding is dam and levee failure; in which extensive damage is done by the energy involved in the sudden burst of water when the blocking structure fails. Levees are designed to contain a flood that has the probability of rare occurrence, i.e. 100 year flood. 30 Shortfalls and insufficient drainage can cause rain water to gather and flood, as was the case in the Lower Rio Grande Valley. Another factor which contributes to flooding is soil erosion. This leads to the increased silt content in the rivers further downstream, decreasing the carrying capacity of the rivers, causing the peak flow of the river to increase. Flooding is the number one cause of weather related fatalities in Texas, which leads the nation in flood deaths over the last 50 years three-fold. 31 In July 2008, Hurricane Dolly, the first storm since Bret (1999) to make landfall along the Deep South Texas barrier islands, left a trail of widespread minor to moderate structural and natural damage across much of the Lower Rio Grande Valley and Deep South Texas. Dolly dumped excessive rainfall across the area that caused numerous instances of flooding primarily of low lying and poor drainage locations. The highest reported rainfall totals for the duration of the storm were concentrated over Hidalgo, Cameron, and Willacy Counties where rainfall ranged from 12 to 18 inches. An unofficial report from the Cameron and Willacy County line north of Combes suggested more than 20 inches fell. The floods caused substantial agricultural losses, especially to the Lower Rio Grande Valley cotton crop. Property and Crop damage in the Lower Rio Grande Valley is likely to exceed 1 billion dollars when all data are collected. 32 Fortunately, no injuries or deaths were directly attributed to the flooding. The Lower Rio Grande Valley Development Council (LRGVDC), a voluntary association of local governments in Cameron, Hidalgo and Willacy counties, was given the responsibility of creating the region’s Method of Distribution (MOD) for Disaster Recovery Funding for the area. LRGVDC made this statement on the Hurricane Dolly disaster situation:

29

Plan for Disaster Recovery- Revised Amendment No.1. TDRA. May 21, 2010. Pg 18. Natural Disasters Association. http://www.n-d-a.org/flooding.php 31 NOAA website. http://www.srh.noaa.gov/bro/?n=floodsafety 32 Hidalgo County Website. http://www.co.hidalgo.tx.us/index.aspx?NID=570 30

29

LRGVDC strongly believes that many of the housing needs will be addressed through infrastructure activities as much of the damage to housing resulted from drainage facilities failing to function or sustaining damage during Hurricane Dolly. Given the emphasis on sustainability and long-term planning (desire to avoid repeat damage), LRGVDC feels in prudent to address the cause of the housing damage and make efforts to harden the damaged neighborhoods. The Region received major flooding in specific areas of Cameron and Hidalgo and Willacy Counties and drainage projects will address the majority of those needs along with improving and ensuring the health and safety of those communities during a disaster. 33

33

Action Plan for Hurricane’s Ike and Dolly Disaster Recovery. Lower Rio Grande Valley Development Council. http://www.lrgvdc.org/downloads/disaster-recovery/LRGVDC_Action_Plan_Revised_04-27-09.pdf

30

ECONOMIC IMPACT OF HURRICANE DOLLY To measure the economic impacts of Hurricane Dolly in July 2008, the study used a modified methodology developed by Burrus et al. (2002) for low-intensity hurricanes. 34 In this methodology, the study measures the revenues lost due to the Hurricane effects. Different from other studies, this methodology is appropriate to estimate low-intensity hurricanes because the emphasis is not on structural damage but in regional economic activity through “business interruption.” As mentioned before, low-intensity hurricanes damages could be equal to or exceed the expected annual damage of high-intensity hurricanes on a yearly basis. By using the software IMPLAN 35 the damages can be calculated at industry level, particularly at the 3-digit NAICS code level. This approach not only helps in understanding the overall and disaggregated impacts of Hurricane Dolly on production, but also its impacts on employment, gross regional product, and state and local governments revenues. Hurricane Dolly made landfall on July 23, 2008, in South Padre Island as a Category 1 hurricane. Earlier in the month, while in the Gulf of Mexico, Dolly was classified as a Category 2 hurricane. Under the Saffir-Simpson scale, categories 0-2 are considered “low-intensity” storms, while categories 3-5 are considered “high intensity.” Different from high-intensity hurricanes, low-intensity hurricanes do not carry very heavy physical or structural damages, although they can inflict important physical damages. The impacts of low-intensity hurricanes are better measured in terms of business activity interruption, or how much do businesses lose when they are affected by these types of hurricanes. Business interruptions include disruptions in the flow of supplies and in the ability to ship goods, reduced employee productivity caused by transportation problems, declines in customer traffic and reduced demand for certain goods and services, among other issues. These post-disaster operational problems can be a significant impediment to business recovery. 36

The Region

The study focuses on four counties: Cameron, Hidalgo, Starr, and Willacy. The 4-county area shows a diverse set of characteristics with two counties accounting for most of the population,

34

Burrus et al. (2002). The three counties studied in that research were Brunswick, New Hanover, and Pender. By July 2008, the total population of that area was close to 254,000. The four counties included in the present study, Cameron, Hidalgo, Starr, and Willacy had a population of close to 1.2 million by July 2008. 35 Produced by the MIG group. 36 Webb, G. R., Tierney, K. J., and Dahlhamer, J. M. (2000). ‘‘Businesses and disasters: empirical patterns and unanswered questions.’’ Natural Hazards Review. 1 (2), 83–90.

31

output, and employment in the area: Hidalgo and Cameron. For all counties, total population for 2008 is close to 1.2 million people, most of it from Hidalgo and Cameron. Total economic output for the region is close to $41.9 billion, with Hidalgo accounting for more than half its value with $24.4 billion. Similarly, employment in the area is close to 459 thousand and with Hidalgo accounting for more than half of it. A better measurement of economic activity in the area is gross regional product, because it avoids double counting activities, with close to $23.1 billion with Hidalgo accounting for close to 60 percent of its value. The other two counties, Starr and Willacy, represent smaller amounts in output and jobs.

County Hidalgo Cameron Starr Willacy Totals

Summary Statistics for 4-County Area Gross Regional Output Product (millions $) (millions $) Employment $24,409 $14,056 283,689 $15,401 $7,749 152,166 $1,111 $736 17,244 $963 $588 6,547 $41,885 $23,129 459,646

Population 726,604 392,736 62,249 20,600 1,202,189

Source: IMPLAN database 2009 for year 2008.

Output represents the value of sector production. In IMPLAN these are annual production estimates for the year of the data set and are in producer prices. 37 These estimates usually include the value of inputs used in the production process in a particular sector or sector. When adding up different sectors to obtain an aggregate for the area, the inputs sold among local sectors are double counted; first as output of the sector of origin and second as an input in the sector of destination.

37

IMPLAN http://implan.com/V4/index.php?option=com_glossary&task=list&glossid=13&letter=O&Itemid=12

32

Historic and Predicted Sales Before and After Hurricane Dolly in the 4-County Area

Source: Texas Comptroller’s Office web site at https://ourcpa.cpa.state.tx.us/allocation/HistSales.jsp. Elaboration CCBR-IED at UTSA.

The previous graph shows the historic and predicted path of quarterly sales in the 4-County area. Next, the following table shows that if sales had continue to grow 38 as they were doing from the fourth quarter of 2002 up to the second quarter of 2008, as presented by the column Predicted Sales (Million of $), by the second quarter of 2011 total sales would have been $7.2 billion. Instead, total sales were $5.6 billion (see table above). In the year following Hurricane Dolly, the four counties accumulated a loss of $1.5 billion in sales. How much of that amount can be attributed to Hurricane Dolly? The next section gives a partial answer to that question by calculating the loss of sales due to business interruptions. The graph suggests that after the second quarter of 2009, the area recovered its historic rate of growth or close to it. Hurricane Dolly impacted the area at the beginning of the third quarter of 2008.

38

Predicted sales were assumed to grow exponentially over time.

33

Date

Period

Quarterly Sales (Million of $) Seasonally Adjusted

2002_4 2003_1 2003_2 2003_3 2003_4 2004_1 2004_2 2004_3 2004_4 2005_1 2005_2 2005_3 2005_4 2006_1 2006_2 2006_3 2006_4 2007_1 2007_2 2007_3 2007_4 2008_1 2008_2 2008_3 2008_4 2009_1 2009_2 2009_3 2009_4 2010_1 2010_2 2010_3 2010_4 2011_1 2011_2

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35

$3,804 $3,846 $3,893 $3,913 $4,011 $4,081 $4,143 $4,232 $4,282 $4,346 $4,398 $4,469 $4,603 $4,680 $4,774 $4,902 $5,084 $5,214 $5,335 $5,399 $5,583 $5,666 $5,761 $5,821 $5,695 $5,545 $5,352 $5,213 $5,167 $5,196 $5,258 $5,306 $5,372 $5,496 $5,626

Source: Texas Comptroller site

34

Predicted Sales (Million of $) $3,697 $3,770 $3,845 $3,921 $3,998 $4,078 $4,158 $4,241 $4,325 $4,411 $4,498 $4,587 $4,678 $4,771 $4,865 $4,962 $5,060 $5,160 $5,262 $5,367 $5,473 $5,582 $5,692 $5,805 $5,920 $6,037 $6,157 $6,279 $6,403 $6,530 $6,660 $6,792 $6,926 $7,063 $7,203

Estimated Quaterly Loss (Million of $)

$16 ($225) ($493) ($805)

Economic Impacts of Hurricane Dolly in the Region

Economic impact studies traditionally measure economic value by considering the output or revenues associated with a particular enterprise or industry. Revenues by businesses in the area represent “direct” outputs that are a first-round measure of economic activity. These activities beget additional activities, which are referred to as indirect and induced outputs or, in general, “secondary” output. Secondary output accrues when the businesses invest in facilities improvements, pay subcontractors for services or suppliers for materials, and when their staff members (and the staff members of subcontractors and suppliers) spend their paychecks on mortgages, restaurants, and consumer goods. Secondary output ripples through the economy, resulting in private transactions and tax and utilities revenues from users that are removed from the daily work of the original output. The study also translates output into estimated numbers of jobs supported. As with output, the study also considers the secondary impacts of job creation and an estimate of the amount of payroll attributable to those jobs. Considering the 4-county area, including Cameron, Hidalgo, Starr, and Willacy counties, the combined total loss of business revenues due to Hurricane Dolly is close to $836.3 million and 10,606 jobs, both full- and part-time. Hurricane Dolly also produced losses close to $21.1 million and close to $22.8 million for the state and local governments, respectively.

Output Employment Payroll Gross Regional Product Estimated Local Governments Revenue Estimated State Revenue

Total Impacts Three Scenarios Low estimate Moderate estimate $792,021,394 $836,347,828 10,044 10,606 $238,440,350 $251,784,953 $463,268,282 $489,195,652

High estimate $880,674,263 11,168 $265,129,555 $515,123,021

$21,575,422

$22,782,917

$23,990,411

$20,003,864

$21,123,405

$22,242,945


Taking in consideration the low and high scenarios, the impacts can be summarized as having an output regional impact between 1.89 percent and 2.10 percent; an employment regional impact between 2.19 percent and 2.43 percent; and a gross regional product impact between 2.00 percent and 2.23 percent. These results are higher than those presented in Burrus et al. (2002) for three North Carolina counties, with impacts going from 0.8 percent to 1.8 percent, but the current results seem reasonable in the context of the relative size of the areas and the economic activity within them. The population affected in the present study is five times larger than the one included in the previous study. 39

39

At the end of this chapter there is an explanation of the methodology used in the study.

35

The direct, indirect, and induced impacts in the moderate scenario for the 4-county area are presented in the following table: 4-County Estimated Impacts 2008 Moderate Scenario Economic Impacts Direct

Indirect

$607,421,466 $113,013,460 Output 8,274 977 Employment $189,421,170 $28,183,777 Payroll $359,524,763 $60,298,417 Gross Regional Product Estimated Local Governments Revenue Estimated State Revenue

Induced

Total

$115,912,902

$836,347,828

1,355

10,606

$34,180,006

$251,784,953

$69,372,473

$489,195,652 $22,782,917 $21,123,405


The top ten sectors affected by the hurricane are shown in the following table. This list shows the business interruption losses to output (BILO) for the industries by 3-digit NAICS codes. On top of the list are accommodation related industries with a total loss of $112.6 million, followed by real estate with $100.7 million, by ambulatory health care with $85.6 million. These three sectors show losses over $80 million while the rest of the list shows losses at or below $50 million.

Top Ten Sectors Impacted in the 4-County Area NAICS 721 531 621 524 541 813 561 92 722 42

Sectors in the 4-County Area Accomodations Real estate Ambulatory health care Insurance carriers and related Professional, scientific and technical services Religious, grantmaking, and similar organizations Admin support services Government and non NAICs Food services and drinking places Wholesale Trade

Total Output $112,627,634 $100,667,240 $85,553,633 $50,345,296 $48,982,803 $44,154,788 $42,960,621 $37,639,557 $30,412,943 $28,505,425


The following table makes it easier to compare some of these results with those from the Burrus et al. (2002) study. By comparing output direct impacts, similar to Burrus et al. (2002), the most impacted sectors are services oriented activities and not the heavy manufacturing type of sectors. But different from the previous study, health care, insurance industries, 36

professional services, and religious and grant-making organizations are more directly impacted. In the case of Dolly in these counties, the impacts are more widespread among service sectors. It also shows an important presence of government agencies. An important difference is the absence of the construction sector in South Texas when compared to the Burrus et al. study.

Impact rating 1 2 3 4 5 6 7 8 9 10

Output Direct Impact Accomodations Ambulatory health care Real estate Insurance carriers and related Religious, grantmaking, and similar orgs Professional, scientific and tech svcs Admin support svcs Government and non NAICs Repair and maintenance Clothing and accessories stores

Output Indirect Impact Real estate Professional, scientific and tech svcs Admin support svcs Broadcasting Monetary authorities Government and non NAICs Insurance carriers and related Food svcs and drinking places Telecommunications Wholesale Trade

Output Induced Impact Real estate Ambulatory health care Food svcs and drinking places Hospitals Government and non NAICs Wholesale Trade Monetary authorities General merch stores Religious, grantmaking, and similar orgs Food and beverage stores


Similar to the Burrus et al. (2002) study, output indirect impacts show real estate, wholesale trade, and support services as been more affected by the hurricane. Different from that study, professional services and government agencies appear in the top ten list of affected sectors. 40 The following table presents a description of three of the NAICS codes mentioned in these results.

NAICS 721: Accommodations

41

Industries in the Accommodation subsector provide lodging or short-term accommodations for travelers, vacationers, and others. There is a wide range of establishments in these industries. Some provide lodging only; while others provide meals, laundry services, and recreational facilities, as well as lodging. Lodging establishments are classified in this subsector even if the provision of complementary services generates more revenue. The types of complementary services provided vary from establishment to establishment.

40 41

It may be the case that the differences correspond to the relative importance of governments in the areas. This part is taken from the Census web site at http://www.census.gov/econ/industry/

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The subsector includes three industry groups: (a) traveler accommodation, (b) recreational accommodation, and (c) rooming and boarding houses. The traveler accommodation industry group represents establishments that mostly provide traditional lodging services. This group includes hotels, motels, and bed and breakfast inns. Furthermore, these establishments can provide other services to their guests. The RV (recreational vehicle) parks and recreational camps industry group includes establishments that operate lodging facilities primarily designed to accommodate outdoor type of people. Included are travel trailer campsites, recreational vehicle parks, and outdoor adventure retreats. The rooming and boarding houses industry group includes establishments providing temporary or longer-term accommodations, which for the period of occupancy, may serve as a principal residence. Board (i.e., meals) may be provided but is not essential. Establishments offering short-stay accommodation (e.g., hotels and motels) on a contractual basis are classified in this subsector if they both manage the operation and provide the operating staff. Such establishments are classified based on the type of facility managed and operated.

NAICS 531: Real estate Industries in the real estate subsector are mostly engaged in renting or leasing real estate to others; managing real estate for others; selling, buying, or renting real estate for others; and providing other real estate related services, such as appraisal services. This subsector includes equity real estate investment trusts (REITs) that are primarily engaged in leasing buildings, dwellings, or other real estate property to others. NAICS 621: Ambulatory health care services These industries provide health care services directly or indirectly to ambulatory patients, and they do not usually provide inpatient services. Health practitioners in this subsector provide outpatient services, with the facilities and equipment not usually being the most significant part of the production process.

On the other hand, the following table shows job losses in the area. On top of the list appear accommodations followed by ambulatory health care and administrative support services. These three sectors show relatively large losses compared to the rest of the list. These impacts show the importance of the accommodations and health care sectors in the area.

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NAICS 721 621 561 624 722 92 813 541 448 811

Sectors in the 4-County Area Accomodations Ambulatory health care Administrative support services Social assistance Food services and drinking places Government and others Religious, grantmaking, and similar organizations Professional, scientific and technical services Clothing and accessories stores Repair and maintenance

Total Employment 1,646 1,604 910 606 605 585 580 508 391 373


Counties specific impacts

The following tables show impacts by county. The two most affected counties were Cameron and Hidalgo. The two counties suffered relatively similar output, job, and tax losses. They also suffered similar losses among different sectors but with two distinctive differences. Cameron County is the most affected of all four counties. Its economy is dependent in agribusinesses, tourism, shipping, seafood processing, manufacturing, and government services. Brownsville is the county seat. Beaches in South Padre Island are very popular vacation sites; they host a convention center and a coastal guard station. The bulk of Dolly's destruction came on South Padre Island, the narrow, 6-mile island popular summer tourist destination. In the moderate scenario, because of business interruption in local firms, Cameron County lost $424.2 million in revenues, and 5,961 jobs (full- and part-time). It lost state revenues close to $9.9 million and local revenues for $10.7 million

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Cameron Estimated Impacts 2008

Direct

Economic Impacts Indirect

$307,331,402 Output 4,855 Employment Payroll $101,907,781 Gross Regional Product $176,294,803 Estimated Local Governments Revenue Estimated State Revenue

Induced

Total

$61,213,027 492 $14,809,206

$55,682,796 614 $16,141,609

$30,111,494

$32,217,385

$424,227,226 5,961 $132,858,595 $238,623,683 $10,743,808

$9,925,186


Not surprisingly, in Cameron, the most impacted sector, by large amounts, was accommodations with more than $111 million losses. In Hidalgo, this sector does not even show among the top ten affected by the hurricane.

NAICS 721 621 813 531 561 541 722 92 42 624

Cameron Sectors Accomodations

Total Impact Output $111,622,149

Ambulatory health care

$42,434,765

Religious, grantmaking, and similar organizations

$40,905,820

Real estate

$29,864,399

Administrative support services

$29,097,286

Professional, scientific and technical services

$20,958,862

Food services and drinking places

$16,341,640

Government and others

$14,061,483

Wholesale Trade

$14,047,010

Social assistance

$13,273,143


Hidalgo was next in terms of losses. Its economy depends on food processing and shipping, other agribusiness, tourism, and mineral operations. Edinburg is the county seat. In the moderate scenario, due to Hurricane Dolly, Hidalgo lost $368.3 million in revenues, and 4,407 jobs (full- and part-time). It also lost state revenues for $9.5 million and local revenues close to $10.2 million.

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Hidalgo Estimated Impacts 2008

Direct


$261,511,010 Output 3,236 Employment Payroll $81,915,119 Gross Regional Product $156,355,984 Estimated Local Governments Revenue Estimated State Revenue

Induced

Total

$48,334,522 457 $12,569,558

$58,415,501 714 $17,490,222

$28,033,497

$35,982,543

$368,261,033 4,407 $111,974,899 $220,372,025 $10,237,595

$9,467,998


Different from Cameron, this table shows in Hidalgo an evenly distribution of revenue losses among several sectors. Three sectors show losses in the $40 million range: insurance carriers and related, ambulatory health care, and real estate. Then a second group of sectors also shows similar revenue losses, close to the $20 million range. Among these sectors are: professional, scientific, and technical services; repair and maintenance; and government and others.

NAICS 524 621 531 541 811 92 441 448 42 722

Hidalgo Sectors Insurance carriers and related Ambulatory health care Real estate Professional, scientific and tech services Repair and maintenance Government and others Motor veh and parts dealers Clothing and accessories stores Wholesale Trade Food services and drinking places

Total Impact Output $48,915,272 $42,404,608 $42,184,147 $27,842,136 $18,168,074 $18,073,708 $16,619,449 $16,400,490 $14,395,921 $13,892,115


In the moderate scenario, Starr lost $41.2 million in revenues, and 221 jobs (full- and parttime). It lost state revenues $1.7 million and local revenues $1.8 million.

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Starr Estimated Impacts 2008

Direct


$36,055,885 Output 168 Employment Payroll $4,786,387 Gross Regional Product $25,595,308 Estimated Local Governments Revenue Estimated State Revenue

Induced

Total

$3,369,691 27 $789,768

$1,751,559 26 $532,966

$2,098,460

$1,132,687

$41,177,135 221 $6,109,121 $28,826,454 $1,765,687

$1,698,786


The most affected sector was the real estate with close to $28.3 million in lost revenues. Far below in terms of output lost are government and others, and repair and maintenance with close to $3.6 million losses. The rest of the sectors show significantly lower losses.

NAICS 531 92 811 522 621 521 452 813 541 722

Starr Sectors Real estate

Total Impact Output $28,305,497

Government and others

$5,499,646

Repair and maintenance

$3,595,368

Credit intermediation and related

$684,037

Ambulatory health care

$529,693

Monetary authorities

$468,924

General merchandise stores

$269,819

Religious, grantmaking, and similar organizations

$221,511

Professional, scientific and technical services

$177,244

Food services and drinking places

$176,506


In the moderate scenario, Willacy lost $2.7 million in revenues, and 16 jobs (full- and part-time). It lost state revenues $31.4 thousand and local revenues $35.8 thousand.

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Willacy Estimated Impacts 2008

Direct


$2,523,168 Output 14 Employment Payroll $811,883 Gross Regional Product $1,278,667 Estimated Local Governments Revenue Estimated State Revenue

Induced

Total

$96,220 1 $15,245

$63,046 1 $15,209

$54,965

$39,857

$2,682,434 16 $842,337 $1,373,490 $35,828

$31,435


The most affected sector was construction with close to $1.8 million in lost revenues. Far below in terms of output lost are real estate with $313 thousand losses, telecommunications with $218 thousand losses, and ambulatory health care with $184 thousand losses. The rest of the sectors show significantly lower losses.

NAICS 230 531 517 621 221 311 211 524 521 112

Willacy Sectors Construction Real estate Telecommunications Ambulatory health care Utilities Food products Oil & gas extraction Insurance carriers & related Monetary authorities Livestock

Total Impact Output $1,757,906 $313,198 $218,137 $184,568 $50,416 $43,943 $34,901 $10,117 $9,073 $5,352


Methodology

The study used a population of 36,630 businesses located in the 4-county area 42 and took a random stratified sample of 2,000 businesses. The stratification was based on the distribution of industries for each individual county. The combined list of businesses were surveyed by

42

The study used information from ReferenceUSA for Cameron, Hidalgo, Starr, and Willacy counties.

43

phone with respect to several short questions about disaster preparedness and about the amount of days it took them to return to normal business activity.43 The number of final businesses surveyed was 334 or 16.7 percent of the total number of surveys, which is a relatively low response rate but still important to help understand the effects of the hurricane in the area. The study estimated three scenarios: low, moderate, and high impacts. To determine the confidence interval with 95 percent level of accuracy for our given sample size, we assumed a percentage case (50 percent) that produces the largest confidence interval. 44 Given the sample size, to estimate a confidence interval, a percentage picking a choice value has to be defined. The maximum value for the confidence interval would be generated by using a 50 percent value or 0.5 in decimal form.

Where: = z value (e.g. 1.96 for 95% confidence level) = percentage picking a choice, expressed as decimal. Assumed to be 0.5 as worst case = confidence interval, expressed as decimal (e.g., .04 = ± 4) = sample size. Here it is 334 Businesses surveyed answered to the question: “How many days did it take you to return to 25%, 50%, 75%, and 100% of normal operations?” As explained by Burrus et al. (2002), 45 this question addresses the net effects of different factors that affect the ability of the business to return to normal operations (like lack of supplies or temporary employee absenteeism after the hurricane). There is some ambiguity in understanding what “normal operations” means for some of the people surveyed. Some could understand “normal operations” as been able to operate with the same number of workers and installations as before the hurricane even though sales are lower than before. On the other hand, some people could understand “normal operations” as both, having the same operations capabilities and the sales that existed before the hurricane. For the

43

As mentioned in Robert T. Burrus et al. (2002), at least two interpretations of normalcy could be used. In our study we emphasize the one that refers to total impacts. In Appendix A we present a short summary of an alternative definition using direct impacts as the normal scenario. 44 We used the online calculator from Macorr http://www.macorr.com/ss_calculator.htm 45 Burrus, et al. (2002).

44

present study, the second interpretation is the one that best captures the idea of impact studies and, therefore, the effects of the hurricane are measured in terms of total impacts, that is, including direct, indirect, and induced effects. 46 Because some people could understand “normal operations” as been able to operate with the same number of workers and installations as before the hurricane even though sales are lower than before, and this is a definition closer to what economic impact studies refer as to direct impacts, the following table shows the possible impacts of this definition of “normal operations.”

Output Employment Payroll

Direct Impacts Three Scenarios Low estimate Moderate estimate $575,228,129 $607,421,466 7,835 8,274 $179,381,848 $189,421,170

High estimate $639,614,804 8,713 $199,460,492


The calculations of business interruptions and their corresponding days of activity lost follow Burrus et al. (2002). To estimate business interruptions for businesses in the area, a formula was used to measure full-day equivalents lost (FDEL). With this equation, the information of how many days took businesses to return to 25, 50, 75, and 100 percent normal operations is transformed into FDELs. The percentages for normal operations: 25, 50, 75, 100 percent are converted into decimal form ( ) The number of days reported by respondent i necessary to reach a percentage of normal operations indexed j is denoted by Therefore, the formula for FDEL is: ) The average number of full-day equivalents lost for industry n is defined as:

46

Appendix A shows the alternative measurement for the three scenarios.

45

Where N denotes the set of observation index numbers for respondents from industry n and s=number of elements of N. After measuring FDEL for different industries, by county, the business interruption losses to output (BILO) are calculated by multiplying business interruption times by the average daily revenue per industrial sector.

46

Some Survey Results from Hurricane Dolly

A randomized telephone survey of more than 2,000 businesses in Starr, Willacy, Cameron and Hidalgo Counties yielded some surprising results. Of those businesses in operation during the time of Hurricane Dolly in the four-county area, more than a quarter experienced significant to devastating business outcomes. Hurricane Dolly Impact on Business

When asked how long it took each company to return to full operations, the answers ranged from less than a week to more than two years. Time to Return to Full Operations Following Hurricane Dolly

Before Hurricane Dolly struck, roughly one-half of the companies surveyed report that they did not have any emergency or business continuity plans in place in case of a natural disaster. This is in a known hurricane and flood prone area! On a positive note, one-third of the businesses surveyed report creating or improving emergency and business continuity plans since this hurricane. 47

Experiences varied by location, proximity to the coast, and by business type. Sources of damage and difficulties faced were widely varied. Some examples follow:

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Community Resiliency Community resiliency, both among the residential and the business community, is the result of effective disaster preparedness. One incentive for businesses and individuals to create better disaster preparedness plans is in response to a natural disaster, at which point an individual or business may realize that a gap exists which should be resolved through planning, training, or building resources. The telephone survey conducted among Lower Rio Grande Valley businesses did reveal that some members of the local business community used Hurricane Dolly as their needed incentive to build their disaster preparedness planning efforts or reflect on further changes needed. Some business responses follow here: “The store had to be remodeled, due to rain damage. Roofing was blown off and the store had to be closed for about two months.” – Chain Retailer “Completely closed for eight months. Loss of customers and damaged building – there were 5 feet of water to deal with. More than 2 years to return to full operations.” – Lodging “No physical damage, but the customer flow was affected. People in the area were out of electricity for about a week. That and there was flooding in the area, so a lot of people were stuck at home.” – Hair Salon “Damage from trees, leaks in ceiling, without power for a week and a half. One year to return to full operations.” – Pest Control Business “Very significant damage; debris falling on stored vehicles.” – Auto Sales Business “Almost total loss on the building.” – Accountant “Closed for 3 or 4 weeks; lost business; employees were temporarily sent to another store.” Chain Retail Store “The valley is very small. When one community is affected, we are all affected. If one area is flooded, then we couldn’t deliver to that area. Since Dolly, we have had rains that have kept us from recovering.” –Concrete Company “Lost out on 90 percent of sales for two weeks; instead of processing orders had to reorganize business and regroup.” – Retailer “Loss of supplies and business. Water damage. Had to sell that property and move to a new location; now trying to rebuild business; still not at full capacity.” – Retailer

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Steps taken since Dolly Representatives from the three LRGVDC counties and cities within met to develop a regional approach to address the flooding and drainage issues. The representatives agreed that addressing the flooding issues would help the Dolly impacted areas, future planning and recovery, and economic sustainability goals. A Building Disaster Resilient Communities Planning Committee was formed from members of the LRGVDC Board of Directors and the Rio Grande Regional Water Authority and tasked with developing a regional drainage project. The committee created a project and strategy totaling around $106 million. To address funding constraints the committee divided the regional project into sub-projects to be prioritized. Prioritization was based on the following characteristics: which areas received the majority of the impact of flooding during Hurricane Dolly (based on total precipitation), low moderate income (LMI) that the sub projects would serve, and whether the drainage sub-project would be ready for implementation in the allotted two year TDRA time-frame. The committee gave their recommendations to the LRGVDC Board of Directors resulting in a sub-project ranking that was included with the MOD. The goal of the drainage project was obvious: to reduce the regional impact of flooding to avoid repeat damage in future disasters. The reason the committee created a priority list was because the funding came in about $50 million short of the goals, so priority was given to the most relevant sub-projects. Additional drainage projects in the region are needed but will only be done if a surplus in allocated funding exists. 47 Still in consideration, as of July 1, 2011, is the allocation of the remainder of nearly $125 million. The allocation is pending until the Phase 2 A.I. is released and a full MOD can be formulated by the region.

47

Partial MOD for Round 2 DR supplemental Allocation. http://www.lrgvdc.org/downloads/disasterrecovery/REVISED_Partial_MOD_LRGVDC_10-06-2010.pdf

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Best Practices There are numerous areas in which best practices can be identified and employed with regard to hurricane preparedness and resiliency. These include:     

Modifying residential and industrial building codes on a local and/or statewide level Providing financial support to those interested in making improvements to their homes and businesses in order to make them more disaster resilient Providing financial support to municipalities interested in making infrastructural improvements on a community-wide level, such as drainage or roadway improvements Providing resources for floodplain study and management Building disaster preparedness resources locally so that immediate attention after a natural disaster can be devoted to getting the community’s electricity, water, and other necessary functions operating as quickly as possible

Kinston, North Carolina One best practices by a community was identified as a case study by FEMA; it offers particular relevance to the Lower Rio Grande Valley, based on its proximity to the ocean and resulting hurricane vulnerability, the serious destruction experienced and response to a number of lowintensity but high-impacting hurricanes, and previously ineffective drainage. Kinston, North Carolina was featured for study by FEMA 48 because of its responsiveness to these disasters and its innovative floodplain management systems put in place to mitigate the future impacts of low-intensity hurricanes like those that have caused so much damage in the Lower Rio Grande Valley area. During the late 1990s Kinston, North Carolina was hit by three hurricanes, resulting in repeated flooding that left more than 75 percent of homes in the floodplain substantially damaged. After the repeated losses the city of Kinston and Lenoir County made a commitment to reduce their risks and incorporate floodplain management planning into their community. Using GIS as the technical foundation for their plan, officials developed and utilized databases and tracking functions to produce graphical images to aid in planning, implementing, and tracking floodplain management. The City of Kinston regularly updates the GIS data and uses the information in the four steps of project planning and management: Pre-Disaster Mitigation Planning, Risk Reduction, Disaster Response, and Disaster Recovery.

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FEMA mitigation case studies: Kinston, North Carolina

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Pre-Disaster Mitigation - Planners can use GIS to predict the impacts on the infrastructure, buildings and people for a variety of disaster scenarios. The City of Kinston-Lenoir County used GIS to show the 100- and 500-year floodplains and identify susceptible structures. Risk Reduction – Using GIS to track mitigation efforts. Kinston used GIS to track the progress of floodplain property acquisitions. Disaster Response - Emergency responders can use GIS to access critical information to aid in disaster response. The City of Kinston Fire Department uses GIS to obtain critical information for responding to emergency calls. Disaster Recovery – Local officials can use GIS to access the community’s needs. Kinston developed a demographic profile that helped identify how many homes and in what price range were needed to accommodate residents wishing to relocate outside of the floodplain. Local officials used GIS to graphically illustrate the 100 and 500 year floodplains and the Hazard Mitigation Grant Program (HMGP) acquired lots to show the benefits of proactive floodplain management and plan for future acquisitions. Through systematic efforts the city and county have already acquired over 1,000 properties with FEMA’s HMGP funds, leaving 225 remaining to acquire. For an acquisition plan to be successful a thorough, coordinated relocation plan is required. The resulting acquisition program was structured in a way that allowed residents to move into the same neighborhoods together, maintaining social contacts for families. Since the HMGP acquisitions are voluntary, residents must be interested and understand the implications of their decisions. The area implemented a strategy using GIS as an educational and marketing tool to illustrate the benefits and plans, and generated community support. Ninety-seven percent of the homeowners in acquired homes relocated to housing in Kinston, resulting in minimal impact on the tax base. A requirement of FEMA’s HMGP is that the purchased property must be maintained as open space. Lenoir County once again used GIS to analyze floodplain areas and assess its suitability for conservation or recreation areas. The Kinston mitigation strategies have resulted in marked reduction in flooding risk. GIS technology provided integral documentation, planning and educational and marketing tools to produce, implement, and track a comprehensive floodplain mitigation plan. 49 Localities may adopt and enforce more stringent building codes and regulations whether or not the respective state provides guidance or specific requirements to do so. The city of Mandeville,

49

Innovative Floodplain Management. http://www.fema.gov/library/viewRecord.do?id=1790

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Louisiana is a small community located directly across Lake Ponchatrain from New Orleans. The city has been a member of the National Flood Insurance Program since 1979, and has instituted strict residential building codes. For instance, when a homeowner located in the 100-year floodplain wishes to make improvements to their building, and the cost of that improvement is more than 50 percent of the current value of the structure, the homeowner is required to comply with the building code as though constructing a new building. Mandeville and other cities in the New Orleans area, like Houma, also provide financial support for those who have suffered substantial flood damage and, as a result, are required to elevate their homes. 50

Virginia The southeastern areas of the Commonwealth of Virginia suffered extensive flooding of up to 18 inches of rain from severe storms in late 2009. A high level of insurance precluded the need for an Individual Assistance declaration coupled with construction requirements enabled the region to recover from the disaster efficiently. It was determined that around 80 percent of damage was covered by flood insurance sparing taxpayers the expense of federal assistance and avoiding extra processes. In the Tidewater, Hampton Roads areas of southeastern Virginia, which were damaged by the November 2009 severe weather, there has been an average increase of approximately 45 percent in the number of flood insurance policies in force between Hurricane Isabel (2003) to Tropical Depression Ida and the Nor’easter in 2009. This increase reflects the ultimate goal of hazard mitigation: A flood occurred, private property was damaged, and taxpayer dollars were not needed to support their recovery efforts because the property was adequately insured. Another important factor was incorporating freeboard requirements into a community’s regulations. Freeboard is an additional amount of height above the Base Flood Elevation (the elevation of 100-year flood event that has a one-percent-annual-chance of occurring in any given year). It is used as a factor of safety (e.g., two feet above the base flood) in determining the level at which a structure’s lowest floor must be elevated or flood proofed to be in accordance with the Commonwealth or community floodplain management regulations. Freeboard reduces flood damage and results in significantly lower flood insurance rates due to lower flood risk.

50

Improve Residential Building Codes. http://www.housingpolicy.org/toolbox/strategy/policies/regulations_planning.html?tierid=113289

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The case of southeastern Virginia offers valuable insight and possible solutions to flood damage assistance. Flood insurance and mitigation saved taxpayer dollars and expedited flooding recovery. Dissemination of information for adequate insurance and practical mitigation requirements could be useful in the Lower Rio Grande Valley.51

51

Flood Insurance and Mitigation save Taxpayer Dollars for Tidewater and Poquoson. http://www.fema.gov/mitigationbp/brief.do?mitssId=7170

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