Coastal Barrier Resources System: Status of Development That Has Occurred and Financial Assistance Provided by Federal Agencies
Published: 2007-03-19T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In 1982, Congress enacted the Coastal Barrier Resources Act. The Coastal Barrier Resources Act, as amended (CBRA), designates 585 units of undeveloped coastal lands and aquatic habitat as the John H. Chafee Coastal Barrier Resources System (CBRS). CBRA prohibits most federal expenditures and assistance within the system that could encourage development, but it allows federal agencies to provide some types of assistance and issue certain regulatory permits. In 1992, GAO reported that development was occurring in the CBRS despite restrictions on federal assistance. GAO updated its 1992 report and reviewed the extent to which (1) development has occurred in CBRS units since their inclusion in the system and (2) federal financial assistance and permits have been provided to entities in CBRS units. GAO electronically mapped address data for structures within 91 randomly selected CBRS units and collected information on federal financial assistance and permits for eight federal agencies.
section_title: What GAO Found
paragraphs: An estimated 84 percent of CBRS units remain undeveloped, while 16 percent have experienced some level of development. About 13 percent of the developed units experienced minimal levels of development--typically consisting of less than 20 additional structures per unit since becoming part of the CBRS, and about 3 percent experienced significant development--consisting of 100 or more structures per unit--since becoming part of the CBRS. According to federal and local officials, CBRA has played little role in the extent of development within the CBRS units that we reviewed because they believe that other factors have been more important in inhibiting development. These include (1) the lack of suitably developable land in the unit; (2) the lack of accessibility to the unit; (3) state laws discouraging development within coastal areas; and (4) ownership of land within the unit by groups, such as the National Audubon Society, who are seeking to preserve its natural state. In units that GAO reviewed where development had occurred, federal and local officials also identified a number of factors that have contributed to development despite the unit's inclusion in the CBRS. These include (1) a combination of commercial interest and public desire to build in the unit, (2) local government support for development, and (3) the availability of affordable private flood insurance. Multiple federal agencies have provided some financial assistance to property owners in CBRS units that is expressly prohibited by CBRA; some assistance allowed under CBRA; and hundreds of permits for federally regulated development activities within the unit. Specifically, four agencies--the Department of Housing and Urban Development, the Department of Veterans Affairs, the Federal Emergency Management Agency, and the Small Business Administration--provided financial assistance, such as flood insurance and loan guarantees, totaling about $21 million that is prohibited by CBRA to property owners in CBRS units. Although most of these agencies had processes in place to prevent such assistance from being provided, they cited problems with inaccurate maps as being a key factor leading to these errors. With regard to financial assistance allowed by CBRA, GAO found that three federal agencies have provided such assistance but did not track how much assistance they provided, so the total extent of this assistance is unknown. With regard to permits issued in CBRS units for federally regulated activities, GAO identified hundreds of permits issued by the Army Corps of Engineers and state agencies authorized to issue permits on behalf of the Environmental Protection Agency. These permits covered various activities such as the construction of piers, the discharge of dredged or fill material into federally regulated waters, and permits associated with water discharges from construction sites or wastewater treatment systems.

section_title: Letter
paragraphs: The U.S. coasts are among the most rapidly growing and developed areas  in the nation. From 1980 to 2003, the population in U.S coastal areas is  estimated to have increased by 33 million people and is projected to  increase by another 7 million people by 2008. Coastal barriers, such as  islands and broad sandy barrier beaches, serve as the mainland’s first line  of defense against the impacts of hurricanes and coastal storms. These  areas are also biologically rich and provide protection for a variety of fish  and wildlife species, including migratory birds, shellfish, and sea turtles.  While the geological composition of coastal barriers makes them highly  unstable areas on which to build, their desirable waterfront locations  make them attractive for development. As development and population  increase, the risk to human life, property, and valuable habitat increases,  and the natural buffers that minimize storm damage are degraded. For  example, when Hurricane Isabel made landfall along North Carolina’s  Outer Banks in 2003, it caused widespread wind and storm surge damage  to several piers, several thousand homes and businesses, and damaged or  washed away sections of a highway.
Recognizing that development in coastal barrier areas can be impacted by  the actions and programs of the federal government, Congress enacted the  Coastal Barrier Resources Act in 1982. The stated purpose of the Coastal  Barrier Resources Act as amended (CBRA) is to minimize (1) the loss of  human life; (2) wasteful expenditures of federal revenue; and (3) damage  to fish, wildlife, and other natural resources associated with coastal  barriers along the Atlantic and Gulf Coasts and the shores of the Great  Lakes by restricting future federal expenditures and financial assistance,  which have the effect of encouraging development of coastal barriers.  Through CBRA, Congress designated 585 units of undeveloped coastal  land and associated aquatic habitats comprising nearly 1.3 million acres as  the John H. Chafee Coastal Barrier Resources System (CBRS). Congress,  through the Coastal Barrier Improvement Act of 1990, also designated an  additional 1.8 million acres already held for conservation or recreation,  such as national wildlife refuges, national parks and seashores, and state  and county parks, as otherwise protected areas (OPA).
CBRA does not prohibit development in CBRS units by owners willing to  develop their properties without the benefit of federal financial assistance,  such as federal flood insurance, loans, grants, subsidies or other forms of  direct or indirect federal assistance. Instead, with certain exceptions,  CBRA prohibits federal expenditures or financial assistance within CBRS  units that might encourage development. The prohibition includes—but is  not limited to—the issuance of flood insurance policies, home loans, loan  guarantees, and new or expanded infrastructure construction within CBRS  units. However, the act does exempt certain federal expenditures or  financial assistance from the general prohibition, such as emergency  operations that are essential to saving lives, maintaining and replacing  existing publicly owned infrastructure, energy development, and activities  related to national security. In addition, CBRA allows agencies to issue  permits to entities within the CBRS for certain federally regulated  activities, such as the construction of bridges and docks or the discharge  of dredged or fill materials into waters that fall under federal jurisdiction.
Under CBRA, no single federal agency is assigned overall responsibility for  administering activities in the CBRS; instead, all federal agencies must  abide by the provisions of the act and are required to certify annually that  they are in compliance with CBRA. CBRA does assign the Secretary of the  Interior responsibility for, among other things, the tasks of consulting with  other federal agencies that propose spending funds within the CBRS,  maintaining maps for each CBRS unit, and recommending modifications to  CBRS unit boundaries, as needed. These maps are used by property  owners; federal, state, and local agencies; and other parties, such as  insurance agents, to determine whether a property or planned project is  within a CBRS unit and therefore whether it is ineligible for federal  financial assistance. Within the Department of the Interior (DOI) these  responsibilities belong to the U.S. Fish and Wildlife Service (FWS). The  existing maps that depict CBRS unit boundaries are outdated  technologically and present challenges to users.  In May 2006, the  Congress directed the Secretary of the Interior to initiate a map  modernization project for all of the units in the CBRS that is to be  completed by 2013. This effort is designed to create digital maps of all  CBRS units that are more accurate and less time consuming for agencies  and others to use than the maps currently available.
In 1992, we reported that development was occurring in some CBRS units  despite restrictions on federal assistance. CBRA has been amended  several times and the CBRS has expanded to include significantly more  units. In this context, you asked us to update our 1992 report and review  the extent to which (1) development has occurred in the CBRS and (2)  federal agencies have provided financial assistance and issued permits to  entities in CBRS units.
To determine the extent of development that has occurred within CBRS  units, we selected a stratified random sample of 91 units located  throughout the system. The sample included units designated as part of  the system in 1982 and 1990. We did not include otherwise protected areas  in our analysis. For each unit, we obtained and electronically mapped  address or parcel data for structures within the unit boundaries.  Throughout this report, the percentage of units that have experienced  development is a statistical estimate based on our analysis of the  development in the 91 randomly selected units, which can be projected to  the entire system. The random sample was stratified by region to select an  equal number of units in northern and southern regions. In addition, we  conducted site visits and/or interviewed officials for a subset of 59 units in  13 states to determine the extent of and reasons for development. To  determine the extent of federal expenditures and financial assistance  made to individuals and entities within CBRS units, we identified and  collected information on financial assistance provided in selected CBRS  units from those federal agencies that, based on our previous report and  our discussions with FWS, were the most likely to have provided  assistance. These agencies include the Department of Homeland Security’s  (DHS) Federal Emergency Management Agency (FEMA), Federal Highway  Administration (FHWA), Small Business Administration (SBA), U.S. Army  Corps of Engineers (the Corps), U.S. Department of Agriculture,  Department of Housing and Urban Development (HUD), and the  Department of Veterans Affairs (VA). We also interviewed officials with  these agencies about the agencies’ procedures for preventing prohibited  expenditures from being provided to individuals and entities in CBRS  units. To determine the extent to which federal agencies issued permits for  projects within selected CBRS units, we interviewed officials and analyzed  data provided by the Corps, the Environmental Protection Agency (EPA),  and state agencies authorized to administer EPA programs. The  information we gathered on federal financial assistance and permits  cannot be generalized to the entire universe of CBRS units. We determined  that the agency data were sufficiently reliable for the purposes of our  review. A more detailed description of our scope and methodology is  presented in appendix I. We performed our work between February 2006  and February 2007 in accordance with generally accepted government  auditing standards.
subsections: section_title: Background
paragraphs: Coastal barriers are unique land forms that function as buffers, protecting  the mainland against the destructive forces of hurricanes and other coastal  storms. Coastal barriers also provide habitat for migratory birds and other  wildlife; and they provide essential nesting and feeding areas for  commercially and recreationally important species of fish and other  aquatic organisms such as sea turtles. In the United States, coastal barriers  are predominantly distributed along the Atlantic and Gulf coasts but can  also be found in areas surrounding the Great Lakes, the Virgin Islands, and  Puerto Rico. From the Gulf of Maine to Padre Island, Texas, coastal  barriers form an almost unbroken chain along the coastline. Coastal  barriers are generally unsuitable for development because the movement  of unstable sediments undermines man-made structures. Despite this  threat, coastal areas that include coastal barriers are among the most  rapidly growing and developed areas in the nation, accounting for 53  percent of the total population in the United States according to a 2004  report by the National Oceanic and Atmospheric Administration (NOAA),  National Ocean Service.
In 1982, Congress enacted the Coastal Barrier Resources Act to minimize  (1) the loss of human life; (2) wasteful expenditures of federal revenue;  and (3) damage to fish, wildlife, and other natural resources associated  with coastal barriers along the Atlantic and Gulf coasts by restricting  future federal expenditures and financial assistance, which have the effect  of encouraging development of coastal barriers. The act designated 186  units, comprising about 453,000 acres along 666 miles of shoreline from  Maine to Texas, which would later be known as the John H. Chafee  Coastal Barrier Resources System (CBRS).
Subsequently, the CBRS was further expanded to include additional units  along coastal states from Maine to Texas, plus units in the Great Lakes, the  Virgin Islands, and Puerto Rico. Currently, the CBRS includes 585 units,  which consist of undeveloped coastal barrier lands and aquatic habitat  that comprises nearly 1.3 million acres of land and associated aquatic  habitat. The CBRS was also expanded to include 272 OPAs that comprise  an additional 1.8 million acres of land and associated aquatic habitat. Most  of the land in these OPAs is publicly held for conservation or recreational  purposes, such as national wildlife refuges, national parks and seashores,  and state and county parks; but some OPAs may also include some private  property that may or may not be held for conservation.
Under CBRA, no single federal agency has overall responsibility for  administering activities within the CBRS; instead, all federal agencies must  abide by the provisions of the act. CBRA does assign the Secretary of the  Interior responsibility for, among other things, maintaining maps of each  CBRS unit and recommending modifications to CBRS unit boundaries, as  needed. Within the Department of Interior, these responsibilities belong  to the FWS. Both agencies and property owners can request decisions  from FWS regarding whether specific properties are within CBRS  boundaries. Finally, agencies must consult with FWS to determine  whether a proposed project is within the CBRS, and if so, whether the  project is consistent with CBRA.
The Coastal Barrier Resources Reauthorization Act of 2000 directed the  Secretary of the Interior to complete a Digital Mapping Pilot Project for at  least 50 but not more than 75 units in the CBRS and submit a report to the  Congress that describes the results of the pilot project and the feasibility,  data needs, and costs of completing digital maps for the entire CBRS.  Currently, FWS is conducting a pilot project to create updated digital  CBRS maps that would provide federal agencies and others with an  enhanced tool for determining accurate boundary locations. Later, the  Coastal Barrier Resources Reauthorization Act of 2005 directed the  Secretary of the Interior to create digital maps by 2013 for all CBRS units  not included in the pilot project. However, according to agency officials,  the ability to conduct this project and the actual completion date will  depend upon the specific funding that the agency receives for this project.
CBRA does not prohibit development in CBRS units by owners who are  willing to develop their properties without the benefit of federal financial  assistance. Instead, with certain exceptions, CBRA prohibits federal  expenditures or financial assistance within CBRS units that might  encourage development. The prohibitions include, but are not limited to  the following:  the construction or purchase of any structure, facility, or related  infrastructure;  the construction or purchase of any road, airport, boat landing facility, or  other facility on, or bridge or causeway to, any CBRS unit;   any project to prevent the erosion of, or to otherwise stabilize, any inlet,  shoreline, or inshore area for the purpose of encouraging development;  and the issuance of flood insurance coverage under the National Flood  Insurance Act of 1968 for any new construction or substantially improved  property.
CBRA allows certain federal assistance within the CBRS for limited  activities after consultation with FWS. However, the act does not require  the agencies to obtain FWS’ approval before acting. Such assistance  includes, but is not limited to the following:  the exploration, extraction, or transportation of energy resources that can  be carried out only on, in, or adjacent to a coastal water area; the maintenance or construction of improvements of existing Federal  navigation channels and related structures; the maintenance, replacement, reconstruction, or repair, but not the  expansion, of publicly owned or operated roads, structures, or facilities  that are essential links in a larger network or system;   military activities essential to national security; and    assistance for emergency operations essential to saving of lives and  protecting property.
CBRA has no provisions prohibiting the administration of federal  regulatory activities, such as issuing certain permits, within the CBRS.  Three federal agencies—the Corps, EPA, and the U.S. Coast Guard—issue  permits that regulate, among other things, the discharge of dredged or fill  material into federally regulated waters, including wetlands; the discharge  of wastes into navigable waters; and the construction of bridges over  navigable waters. Because much of the CBRS is comprised of wetlands  and aquatic habitat, activities undertaken in these areas can require a  permit from one or more of these agencies. Federal legislation other than  CBRA provides the authority for issuing these permits. Among these are  the Clean Water Act, the Rivers and Harbors Appropriation Act of 1899,  and the Bridge Act of 1906, as amended.
section_title: CBRS Remains Largely Undeveloped
paragraphs: Despite the concentration of significant levels of development in a few  units, most of the CBRS remains undeveloped. Specifically, we found an  estimated 84 percent of all CBRS units remain undeveloped—with no new  structures built since the unit was included in the CBRS. We found that  factors such as the lack of suitably developable land in the unit and state  laws discouraging development were responsible for inhibiting  development. We also determined that an estimated 13 percent of CBRS  units experienced minimal levels of development—consisting of less than  20 additional structures per unit since becoming part of the CBRS—while  3 percent of CBRS units experienced significant development—100 or  more additional structures per unit. According to local officials,  commercial interest and public desire to build in some units and local  government support for development were some of the key factors  contributing to the development in the CBRS units we reviewed. Appendix  II lists the units in our review and the status of development in those units.
subsections: section_title: The Majority of CBRS Units Have Not Experienced Development
paragraphs: On the basis of our analysis of a random sample of CBRS units, we  estimate that 84 percent of the units experienced no new development  since their inclusion in the CBRS. For the units in our sample, the  undeveloped units were generally smaller in total acreage and had less  developable acreage than the developed units.
Although CBRA does not appear to have been a primary factor in  discouraging development in the units we reviewed, officials indicated  that in those areas where CBRA prohibitions are complemented by local  and state government objectives for development, it is unlikely that there  will be significant increases in development. Local officials cited several  factors as being primarily responsible for inhibiting development.
The Lack of Suitably Developable Land. This was a primary factor for the  lack of development in a number of CBRS units that we reviewed. For  example, the Boat Meadow unit in Massachusetts is comprised almost  entirely of salt marshes with small sand bars scattered throughout shallow  water, making the land unsuitable for development. Similarly, in the  Wrightsville Beach unit in North Carolina, the sand continuously shifts,  making the land too unstable for development. Figure 1 is an example of  the type of terrain generally found in the Boat Meadow CBRS unit in  Massachusetts.
Lack of Accessibility to the Unit. A number of federal and local officials  noted that some CBRS units are not easily accessible or are located in  remote locations that are not desirable to developers. For example, a  number of units, such as the Bay Joe Wise Complex in Louisiana, are only  accessible by boat. Other units, such as the Boca Chica unit in Texas, are  in such remote locations that an official said developers are not willing to  build there. In addition, several remote and inaccessible locations do not  currently have the infrastructure needed to develop the unit. For example,  an official said the lack of existing infrastructure and the high cost of  constructing development-quality water and sewage infrastructure have  discouraged development on the North Padre Island unit in Texas.
State Laws Discouraging Development. State laws were cited by a  number of officials as reasons why development had not occurred in some  CBRS units. Some states have adopted specific restrictions to prevent  development in coastal or wetland areas, which are often found in CBRS  units. For example, a number of units in Massachusetts—such as Black  Beach and Squaw Island—have not experienced development due in part  to wetland and coastal protection laws enacted by the state. In addition,  both Maine and Massachusetts do not allow state funds or grants to be  used for projects to encourage development in barrier beaches. In Rhode  Island, any coastal development project must receive a permit from the  Rhode Island Coastal Resources Management Council, and an official  explained that it was highly unlikely that permits would be issued for new  development in coastal regions of the state.
Preservation Efforts by Conservation Groups. A number of CBRS units  include land owned by entities seeking to preserve the area in its natural  state. In some cases, CBRS units have lands that are owned by federal,  state, or local governments, such as local parks or national forests. For  example, the Whitefish Point unit in Michigan is part of the Hiawatha  National Forest. In other cases, land in CBRS units is owned by  conservation groups seeking to prevent development. For example, a  significant portion of the Southgate Ponds unit in the U.S. Virgin Islands is  owned by the St. Croix Environmental Association; the Fox Islands unit in  Virginia is owned by the Chesapeake Bay Foundation; and the Pine Island  Bay unit in North Carolina is mostly owned by the National Audubon  Society. Although these owners have sought to prevent development  within the unit, as the land becomes more valuable, owners may  experience pressure to sell it for development purposes. Private home  owners have also taken actions to prevent continued development in one  CBRS unit we reviewed. Some portions of the Prudence Island Complex  unit in Rhode Island are located in private home owners’ backyards. Home  owners have voluntarily placed their land into a conservation easement to  formally protect it from future development.
section_title: A Small Percentage of Units Have Experienced Some Level of Development, but Significant Development Has Been Concentrated in a Few Units
paragraphs: Although the majority of CBRS units remain undeveloped, 16 percent have  experienced some level of development. While the range of development  varies between one additional structure for some units to over 400 new  structures for another unit, the amount of development in most of the  units has been small. Thirteen percent of the units have added less than 20  structures. Where there has been significant development, it has been  concentrated in a relatively small number of units. We estimate that only 3  percent of CBRS units have experienced the addition of 100 or more new  structures since their inclusion in the CBRS.
The majority of the CBRS units within our sample that have experienced  development are located in the southern United States. Two units  experiencing the most extensive development were the Topsail, North  Carolina unit and the Cape San Blas, Florida unit. Several other units in  the south, such as the Four Mile Village unit in Florida and Bird Key  Complex in South Carolina, have plans for continued development. None  of the units in our sample located in the northern United States had  experienced such extensive development. One factor contributing to  increased development in the south is the greater amount of developable  acres; 80 percent of the developable land in the CBRS is located in  southern units—those located south of New Jersey.
Local officials cited several factors as being primarily responsible for the  development that has occurred.
Commercial Interest and Public Desire to Build in the Unit. Officials  told us that development had occurred in several areas because the  public’s desire to develop in the unit was stronger than the disincentive of  CBRA. For example, the Currituck Banks unit in North Carolina has  experienced an increase of at least 400 new residential homes since its  inclusion in the CBRS. Although this unit only has beach access for four- wheel drive vehicles, approximately 75 percent of the land south of the  unit is currently built to capacity, and the increasing demand for  residential structures is sending developers into the adjoining CBRS unit.  Local officials stated that the lack of federal assistance did not appear to  have any affect on the rate of development in the area. Similarly, the Cape  San Blas unit in Florida has continued to experience increased  development with at least 900 new structures—primarily single family  vacation homes—being built since the unit’s inclusion in the CBRS.  Officials in Cape San Blas believe that as other coastal locations around  Florida became too expensive to find affordably priced ocean front homes,  the area of Cape San Blas became a highly desirable location. Accounting  for the significant development that has occurred in the Topsail unit in  North Carolina, officials stated that the basic reason was simply supply  and demand: people want to live on the coast of North Carolina, and the  area that includes the CBRS unit had developable land available.
Local Government Support for Development. Local officials explained that  local governments with a pro-development attitude aided in increasing  development in CBRS units. For example, local officials in Topsail, North  Carolina told us that most of the 1,600 structures located in the Topsail  CBRS unit were constructed after the unit’s inclusion in the CBRS. These  officials indicated that the county government had begun development  plans for land within the unit prior to its inclusion in CBRS. These officials  noted that the county had targeted the area for development to promote  tourism and increase the local tax base, and that certain infrastructure was  built to support this increased development. As the result of these pro- development policies, a large portion of the unit has been developed with  residential homes—many of which serve as vacation rentals during the  summer months. Similarly, in the Cape San Blas unit in Florida the local  government had development plans for the area prior to the adoption of  CBRA. Local officials there said that the area was already subdivided into  lots for development and that some existing infrastructure, such as roads,  water systems, and telephone systems, was already built when the unit  was added to the CBRS.
Availability of Affordable Private Flood Insurance. Officials familiar with  several CBRS units told us that initially restrictions on the availability of  federal flood insurance had little impact on the development that occurred  in some CBRS units. Lenders did not require flood insurance in order for  home owners to obtain mortgage loans at the time most of the  development occurred. According to these officials, home owners within  CBRS units that chose to get flood insurance could readily get private  flood insurance at rates comparable with federal flood insurance.  However, in the past few years FEMA has updated its flood-zone maps and  has designated some CBRS areas as special flood hazard areas. This  change in designation has made areas that once did not require owners to  obtain flood insurance in order to receive financing into areas where  owners are now required to have flood insurance prior to obtaining  mortgage loans. At the same time, officials said that in several CBRS units  the cost of private insurance has skyrocketed and is no longer comparable  to national flood insurance program rates. According to a local banker in  Cape San Blas, a $250,000 home outside the CBRS unit can obtain flood  insurance through the National Flood Insurance Program for $470 per  year, but private flood insurance for homes located in the CBRS unit that  are not eligible for national flood insurance could cost between $5,070 and  $12,500 a year, depending on the insurance company.
The new requirements mandating flood insurance for mortgages in some  units and the increased costs of private flood insurance may begin to  impact development in the CBRS in the future, according to local officials.  For example, officials in Currituck County noted that the flood zone  determination change had significantly reduced the number of building  permits issued for new development in the CBRS unit since 2005 and  suggested that the unit will now experience less future development.  Likewise, the Cape San Blas unit in Florida has also been affected by the  flood zone determination change. A local official stated that since FEMA  adopted a special flood hazard area for the CBRS unit in 2002, property  values in the unit have decreased by 30 percent. Because the cost of  private flood insurance has risen dramatically in the last couple of years, a  number of residents and officials representing areas within the CBRS,  including Cape San Blas and Topsail, have unsuccessfully attempted to  remove the areas from the CBRS, primarily so that residents would be  eligible to obtain flood insurance through the National Flood Insurance  Program.
Our review of CBRS units did not include OPAs because FWS officials  informed us that these areas were classified separately from system units  and that the land was already protected from development by other  mechanisms—such as its designation as a state or federal park. OPAs are  not under the same limitations as CBRS units; the only restriction placed  on federal spending within these areas is the prohibition on federal flood  insurance. However, we found instances where land within OPAs was sold  to private developers and development had increased in the area. For  example, in the St. Andrews Complex unit in Florida, the Bahia de  Tallaboa unit in Puerto Rico, and the Mustang Island unit in Texas,  development has continued despite the units’ designation as an OPA.
section_title: The Extent to Which Federal Agencies Have Provided Financial Assistance and Permits to Entities in CBRS Units Varies
paragraphs: We found that federal agencies have provided some financial assistance  prohibited by CBRA, some assistance allowed by CBRA, and hundreds of  permits for federally regulated construction projects to entities within the  CBRS units included in our review. Four agencies provided financial  assistance expressly prohibited by CBRA to property owners in CBRS  units. Three federal agencies also provided financial assistance to entities  in CBRS units that is allowed under CBRA, but they do not track the  amount of assistance they provided. As a result, we were unable to  determine the total extent of such assistance. Finally, the Corps and EPA- authorized state agencies have issued hundreds of permits for a variety of  federally regulated construction projects within CBRS units.
subsections: section_title: Four Federal Agencies Have Provided Some Financial Assistance That Is Prohibited by CBRA
paragraphs: Four federal agencies—FEMA, HUD, SBA, and VA—provided some  financial assistance that is expressly prohibited by CBRA to property  owners in CBRS units. Our review of approximately 4,500 addresses  uncovered 73 active FEMA flood insurance policies, 37 inappropriate  FEMA disaster assistance payments, 5 HUD home loan guarantees, 3 SBA  disaster loans, and 11 VA home loan guarantees that should not have been  made to property owners in CBRS units. Although three of the four  agencies have procedures to prevent and detect assistance to property  owners in CBRS units, agency officials cited several reasons why this  erroneous assistance was provided in violation of CBRA, including the  lack of updated CBRS maps, which makes determining the precise  locations of properties and CBRS unit boundaries difficult.
subsections: section_title: FEMA National Flood Insurance Program
paragraphs: FEMA provides federally backed flood insurance for home owners,  renters, and business owners in participating communities that are not in  the CBRS. Structures that are built or substantially improved following  their inclusion within the CBRS are not eligible for federal flood insurance.  However, our review of policies active as of May 2006 identified 73  National Flood Insurance Program (NFIP) policies for properties in CBRS  units. The flood insurance policies ranged from $26,500 to $350,000 and  totaled approximately $20 million. Although these policies violated the  CBRA, FEMA officials said it is unlikely that the agency would actually pay  a claim on these policies, because before paying a claim, FEMA adjusters  would first conduct a physical inspection of the property and determine  whether it was in a CBRS unit. If a property was found to be within the  CBRS, FEMA would deny the claim and refund the policy owner’s  insurance premium.
To prevent flood insurance policies from being issued for properties in  CBRS units, FEMA’s Flood Insurance Manual requires that private  insurance companies participating in the NFIP determine if a property is  eligible for flood insurance. Prior to issuing a policy, the agent is required  to review FEMA’s flood insurance maps to determine if the property is  located within the CBRS and collect information to determine if the  structure was built prior to the unit’s inclusion in the CBRS. However,  according to FEMA, insurance agents have made mistakes and issued  policies in violation of CBRA for two reasons:  It may be difficult to locate a property and determine whether it is in a  CBRS unit, especially when a property is near or adjacent to a CBRS  boundary. For example, at one location we visited, we identified homes  adjacent to each other where one property was in the CBRS and the other  was not. In other CBRS units, some homes had backyards that fell within  the CBRS. Furthermore, new streets may not be depicted on existing  maps. According to FEMA officials, the insurance agent must often make a  judgment call when determining whether a property is within the CBRS.
The agent may not be familiar with CBRA prohibitions and may not follow  procedures. According to FEMA officials and officials from a private  insurance agency with whom we spoke, some home owners obtain flood  insurance from insurance agents located inland, away from coastal areas,  who might not have been aware of the CBRA restrictions.
According to FEMA officials, the agency takes a number of steps to  identify properties that may have inappropriately received federal flood  insurance. Since 1998, FEMA has sought to assist private companies with  identifying flood insurance policies that potentially were ineligible for  flood insurance coverage because the property was within the CBRS. To  accomplish this task, FEMA uses computer mapping technology to plot  addresses and determine whether they are potentially in a CBRS unit.  However, the computer software FEMA relies on cannot always correctly  locate all addresses on the map. For example, this can occur if a street or  address range is not included in the software, which can happen when a  street or a range of addresses is new. Twenty of the 73 flood insurance  policies that we determined were issued for a property that was in a CBRS  unit could not be located on a map by FEMA’s computer software. In  addition, computer mapping technology has inherent inaccuracies and  may plot properties in the wrong location. For example, using our  mapping software, we determined another 20 of the 73 flood insurance  policies were for a property in the CBRS but were not identified as being  in a CBRS unit by FEMA’s mapping software. FEMA officials said they  recognize that their software may not always identify new addresses and  streets in CBRS units, and so the agency obtains quarterly updates of new  streets and addresses and rechecks insured properties against the updated  information to identify any that might be located in CBRS units.
When FEMA’s computer plotting reveals that a property for which a  federal flood insurance policy has been issued may be in a CBRS unit,  FEMA reports the error to the insurance company. Once an insurance  company receives notification in the form of an error message that they  may have written an ineligible policy, the company may take one of four  actions:  1.  The company can agree that the property is located in a CBRS unit and  cancel the policy back to the inception date of coverage.  2.  The company may agree that the property is located in a CBRS unit but  prove that the building was constructed prior to the CBRS designation.  In these cases, the policy is deemed valid and may remain in effect.  3.  The company can disagree that the property is located in a CBRS unit  and assume responsibility for the risk. In these cases, the policy would  remain active, FEMA would continue to collect the premiums, but the  insurance company would be responsible for paying any claims filed.  Insurance companies have assumed liability for the risks associated  with 29 of the 73 flood insurance policies that we identified had been  issued for properties located in CBRS units.  4.  The company can request that FWS make an official determination  regarding whether the property is in the CBRS. If FWS determines that  the property is in a CBRS unit, the policy is then cancelled back to the  inception date of coverage. However, FEMA officials expressed  concern about the length of time FWS takes to make a property  determination. Typically, it takes FWS a year to respond to inquiries  for a property determination. As of January 17, 2007, FEMA was  waiting for determinations on 544 addresses from FWS.
According to FWS officials, the process for making property  determinations is labor intensive because they are using CBRS maps that  were created more than 15 years ago and are not available in digital  format. FWS officials told us that modernized digital maps of the CBRS  would improve the accuracy and efficiency of the property determination  process, allowing its customers and partners, in many cases, to determine  within minutes whether a property is located within the CBRS. In 2000, the  Congress directed the Secretary of the Interior to create draft digital maps  for at least 50 and not more than 75 units, or nearly 10 percent of the  CBRS. FWS has created draft digital maps of 60 CBRS units that it must  submit to the Congress for its consideration. In May 2006, the Congress  also instructed the Secretary of the Interior to create maps for the rest of  the CBRS by May 2013. According to FWS, digital maps would replace the  paper maps currently being used that are (1) outdated technologically and  (2) sometimes inaccurate and may not align precisely with the natural or  man-made features that the Congress intended the boundaries to follow.  FWS officials believe that modernizing the CBRS maps will address the  inaccuracies of the existing maps.
To implement the map modernization project, FWS officials said that they  investigated several options for procuring data to produce the required  draft digital maps, including federal, state, local, and private sources. In  many cases, FWS was able to obtain data internally or from other federal  agencies at little or no cost, including wetlands data and national wildlife  refuge boundaries from within FWS, aerial imagery from the U.S.  Geological Survey, hydric soils data from the Department of Agriculture’s  Natural Resources Conservation Service, and digital boundaries for many  federally protected areas from NOAA.
FEMA is also conducting a map modernization effort that includes  preparing digital flood insurance maps. In 2006, FWS entered into an  interagency agreement with FEMA whereby FWS will place current CBRS  boundaries onto FEMA’s digital flood maps. FEMA provided FWS with  $40,000 for an initial set of maps for some units. While the FEMA maps are  not the “official” CBRS maps adopted by the Congress, FWS officials said  that these digital maps will allow property owners, insurance agents, and  others to have a much more accurate and precise tool for determining  whether a property or project site is located near a CBRS area and would  require an official determination from FWS.
section_title: FEMA Individuals and Households Program
paragraphs: FEMA’s Individuals and Households Program (IHP) provides housing  assistance and other assistance, such as medical or funeral assistance, for  needs arising from a declared emergency or major disaster. For owners or  renters residing in CBRS units, FEMA regulations allow providing  temporary housing assistance (rent) but generally do not allow providing  funds for housing repairs or construction assistance. However, we found  that since August 26, 1998, FEMA provided 37 disaster assistance  payments to individuals in CBRS units included in our review totaling  $25,393. Most of the payments were for purposes labeled by FEMA as  “Other Eligible Property Items.” According to FEMA officials, “Other  Eligible Property Item” payments were for post-disaster purchases for  emergency needs such as chainsaws, generators, heating fuel,  dehumidifiers, air purifiers, and wet/dry vacuums. These payments were  made under six different disaster declarations, all to individuals living in  CBRS units in North Carolina and Florida. The units included Coconut  Point, Cape San Blas, Blue Hole, Ponce Inlet, and Ormond-by-the-Sea in  Florida, and Currituck Banks and Topsail in North Carolina. In addition to  payments for “Other Eligible Property Items,” one payment of $645.95 was  made for home repairs. FEMA procedures require officials making  payment determinations in potential CBRS areas to document that the  property is not in a CBRS unit prior to approving assistance for those  types of assistance not allowed in such areas. However, according to a  FEMA official, in these cases the procedures were not followed when  these payments were approved.
section_title: Department of Housing and Urban Development
paragraphs: Through its Mortgage Insurance Homes program, HUD insures lenders  against losses on mortgage loans used to finance the purchase of  proposed, under construction, or existing housing, as well as to refinance  indebtedness on existing housing as long as these properties are not  located in the CBRS. In our review of insured home loans active as of June  2006, we identified five HUD-insured loans for properties located in CBRS  units. Three of the loans were for properties in the Prudence Island  Complex unit in Rhode Island; one in the Topsail unit in North Carolina;  and one in the Cape San Blas unit in Florida. These insured loans were  approved by HUD between 1985 and 2000, with loan amounts ranging from  approximately $50,000 to $137,000, for a total of about $384,000.
Despite the fact that all of HUD’s programs are subject to CBRA  restrictions, HUD officials said that they have no procedure under their  single family (one- to four-family property) mortgage insurance programs  related to CBRA. HUD officials further indicated that while they could  implement better controls for restrictions on providing single family  mortgage insurance in the CBRS, it would be unnecessary in practical  terms. HUD officials provided three primary reasons why it was unlikely  that a HUD-insured loan would be provided for a property in a coastal  area. First, HUD regulations require that flood insurance be obtained  under the NFIP before HUD will insure single family mortgages for  properties in FEMA-identified special flood hazard areas. HUD officials  stated that because properties located in the CBRS would likely be in  special flood hazard areas and the NFIP flood insurance is prohibited in  the CBRS, HUD would not be able to insure single family mortgages for  these properties. However, HUD’s explanation does not account for the  fact that portions of CBRS units may not be in a special flood hazard area  and that FEMA prohibitions are not universal as the NFIP flood insurance  may be available to homes built before the area’s inclusion in the CBRS.  Second, most HUD insurance for single family mortgages is for first-time  home owners who typically are not buying homes in the higher priced  ranges found in the CBRS. Third, property values in the CBRS are such  that mortgage amounts would likely exceed the program limits for typical  HUD-insured single family mortgages, as the mortgage limit for a one  family property ranges from approximately $170,000 to $310,000,  depending on the location. In response to our findings, HUD officials said  that the department would be developing CBRA policy guidance and  associated training to ensure future compliance.
section_title: Small Business Administration
paragraphs: Following the issuance of a disaster declaration, SBA provides disaster  loans to eligible home owners for repair or replacement of their primary  residences. However, residences located in CBRS units are ineligible for  this disaster loan assistance. During our review of the period January 1,  1990, through May 30, 2006, we found that SBA had made three disaster  loans for home repairs for properties in CBRS units. The three loans  ranged from $5,000 to $10,000 and totaled $24,200. These loans have been  paid in full and were made to individuals in the Florida CBRS units of Blue  Hole and Cape San Blas, and the Creek Beach unit in New York. To  prevent disaster loans from being provided to properties within the CBRS,  SBA procedures call for agency staff to consult FEMA’s flood maps to  determine whether a property is within a CBRS unit before approving  disaster loans. SBA officials acknowledge that two of these loans should  not have been approved, but did not agree that the third loan was for a  property within CBRS. These officials stated that it is sometimes difficult  for agency staff to determine if a property is within the CBRS with the  existing FEMA flood maps. SBA officials said that as a result of our review  the agency will increase the number of quality assurance reviews  conducted in any disaster area that includes a CBRS unit.
section_title: Department of Veterans Affairs
paragraphs: VA issues home loan guarantees to help eligible recipients obtain homes or  refinance home loans except in CBRS units. However, our review of home  loan guarantees active as of September 2006 found that VA had provided  11 loan guarantees for homes in a CBRS unit. Nine of these 11 loan  guarantees were issued to home owners in the Topsail unit in North  Carolina, while the other two were provided to home owners in the  Ormond-by-the-Sea unit in Florida. The amount of the 11 loan guarantees  ranged from a low of about $14,340 to a high of about $45,900 for a total  value of $352,188.
VA officials told us that the agency’s Lenders Handbook includes  provisions that inform readers that properties in CBRS units are ineligible  as security for a VA-guaranteed loan. VA appraisers are instructed during  training sessions to reject assignments appraising such properties. Also, to  verify that loan guarantees are provided lawfully, agency officials said that  they or their designees (1) examine appraisal paperwork for all loan  applications looking for anomalies; (2) inspect 10 percent of all loan  applicant properties to verify, among other things, that they are not in  CBRS units; (3) review paperwork for 10 percent of all closed loans; and  (4) visit lender offices and sample VA loans for compliance. In reviewing  the provisions included in VA’s handbook, we determined that it  inaccurately instructs appraisers to obtain the maps for determining the  location of a property from the U.S. Geological Survey rather than from  FWS.
VA officials acknowledge that agency staff should have identified the 11  properties we discovered as located within the CBRS during their initial  review of the appraisal paperwork. VA officials explained that as a result  of our findings, they have (1) corrected the Lenders Handbook provisions  to instruct staff to use maps maintained by FWS and (2) instructed  officials at VA regional loan centers to modify their training to both  lenders and appraisers to emphasize the procedures designed to prevent  issuing loans to persons who reside in CBRS units.
section_title: Federal Agencies Have Provided Assistance That Is Allowable under CBRA, but the Extent of Such Assistance Is Unknown
paragraphs: We found that three federal agencies had provided financial assistance  allowable under CBRA to entities within the CBRS. We were unable to  determine the total extent of such assistance, because these federal  agencies do not track the amount of allowable financial assistance they  provide to entities in CBRS units, and they could not provide us with the  data necessary to estimate the total assistance provided.
subsections: section_title: Federal Emergency Management Agency
paragraphs: After a disaster, FEMA may provide disaster funding in CBRS units for  emergency assistance such as debris removal and emergency protection  measures. FEMA may also provide disaster funding following an  emergency for activities like repairing roads or utilities, repairing existing  water channels, or disposing of sand. Because FEMA could not provide  reliable data on whether this disaster assistance was within a CBRS unit  for each project, we could not determine the full extent of the allowable  disaster assistance provided by FEMA. However, with FEMA’s data, we  were able to identify that some of the projects were within CBRS units.  For example, since 1998, FEMA provided at least $5.6 million in disaster  assistance to the Topsail unit in North Carolina to fund projects to remove  debris, replace signs, and repair beach access crosswalks and public  beach facilities after Hurricanes Ophelia, Floyd, Irene, and Isabel.  Similarly, in both the Cape San Blas, Florida and Topsail, North Carolina  CBRS units, FEMA provided funds to construct an emergency berm in  order to protect existing development after storms destroyed protective  dunes and caused beach erosion. Table 1 provides examples of some of  the disaster assistance FEMA has provided to CBRS units since 1998.
As mentioned earlier, FEMA is also allowed to provide limited disaster  assistance to individuals through the IHP after the President declares an  emergency or major disaster in an area, including CBRS units. We found  that since August 26, 1998, FEMA provided $8,237 to 16 individuals in  CBRS units for emergency rental assistance. These payments were made  to individuals in CBRS units in Florida and North Carolina.
section_title: Federal Highway Administration
paragraphs: An exception to the limitations within CBRA allows FHWA to administer  federal funding for projects on publicly owned or operated roads that are  essential links in a larger transportation network and do not expand the  existing transportation system. Because, as stated in agency guidance,  FHWA determined that all roads within the federal highway system,  including those in CBRS units, are usually “essential links” in a larger  transportation network, most projects within CBRS units are permissible  under CBRA after a consultation process with FWS. Although FHWA does  not maintain data on which projects were located within CBRS units, we  were able to identify—based on information provided by state officials— some examples of allowable projects in CBRS units that received federal  funds from FHWA. For example, according to data from the Florida  Department of Transportation, federal funding totaling approximately $1.1  million was provided to repair a road in the Cape San Blas unit after each  of three hurricanes—Opal, Earl, and Ivan.
section_title: Corps of Engineers
paragraphs: An exception to the limitations within CBRA allows the Corps to provide  assistance in CBRS units after consultation with FWS as part of its mission  to maintain and improve existing navigation channels. We found that since  1983, the Corps performed at least 24 such projects in CBRS units, and  most were to dredge channels. Many of these projects occurred along the  Atlantic Intracoastal Waterway or in channels connecting this waterway to  the Atlantic Ocean. Of the 24 projects, two-thirds occurred in CBRS units  in South Carolina while the others were located in North Carolina, Florida,  and Massachusetts. However, it is difficult to calculate the value of the  Corps’ assistance to CBRS units because nearly all of the Corps’ projects  involve activities both inside and outside CBRS units, and the Corps does  not breakout project costs based on CBRS boundaries.
section_title: EPA-Authorized State Agencies and the Corps Have Issued Permits for Federally Regulated Construction Projects in CBRS Units
paragraphs: EPA-authorized state agencies and the Corps have issued permits to  property owners and entities within CBRS units for a number of different  projects. Since 1983, EPA-authorized state agencies issued at least 41  permits to property owners and entities in nine different CBRS units. All of  the permits were associated with the National Pollutant Discharge  Elimination System (NPDES), primarily to allow storm water discharges  from construction sites or for discharges from water or wastewater  treatment systems. Florida, as an EPA-authorized permitting state, issued  38 of the 41 permits. Of the remaining three permits, two were issued by  New York and one by the U.S. Virgin Islands, both of which are authorized  by EPA to issue NPDES permits.
The Corps was unable to provide a complete list of all the permits it had  issued since CBRA was enacted. However, we have determined that since  1983, the Corps issued at least 194 permits in 20 different CBRS units for  purposes such as erosion control, constructing piers and mosquito control  ditches, filling wetlands, and raising fish and shellfish. Of these 194  permits:    Eighty-three were authorized under Section 10 of the Rivers and Harbors  Appropriation Act of 1899. The act gives the Corps authority to issue  permits to construct piers or marinas in navigable waters.
Eighty-seven were authorized under Section 404 of the Clean Water Act.
Section 404 provides the Corps with the authority to issue or deny permits  for discharges of dredged or fill material into waters under federal  jurisdiction, including wetlands.
Twenty-four involved activities covered by both Section 10 of the Rivers  and Harbors Appropriation Act and Section 404 of the Clean Water Act.  Almost two-thirds of these permits were issued to property owners and  entities in CBRS units in Florida; the remaining permits were issued to  entities in units in the Carolinas and New England.
section_title: Conclusions
paragraphs: Although CBRA has limited the amount of federal financial assistance  provided to some CBRS units, it does not appear to have been a major  factor in discouraging development in those CBRS units that have  developable land, local government and public support for development,  and access to affordable private flood insurance. Despite CBRA’s  prohibitions on federal assistance to units in the CBRS, four federal  agencies—FEMA, HUD, SBA, and VA—have provided such assistance.  While the amount of assistance provided in violation of CBRA is not large,  it does raise concerns about the ability of federal agencies to fully comply  with the requirements of the act. Unless federal agencies follow the  procedures they have established to prevent the provision of prohibited  assistance and have access to up-to-date and reliable maps to ensure that  accurate determinations are made for properties located in CBRS units, it  is likely that some violations of CBRA may continue to occur.
section_title: Recommendations for Executive Action
paragraphs: In light of the federal financial assistance that was provided in violation of  CBRA, we are recommending that the Secretaries of DHS, HUD, and VA,  and the Administrator of SBA direct their agencies to (1) obtain official  determinations from the FWS on whether the properties we identified as  receiving federal assistance in violation of CBRA are in fact located within  a CBRS unit and if they are, cancel all inappropriate loan guarantees and  insurance policies that have been made to the owners of these properties  and (2) examine their policies and procedures to ensure that they are  adequate to prevent federal assistance that is prohibited by CBRA from  being provided to entities in CBRS units.
In addition, given the importance of digital maps to making accurate CBRS  determinations, we are recommending that the Secretary of the Interior  direct FWS to place a high priority on completing its efforts to develop  digital maps that more accurately depict unit boundaries.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to the Department of Defense, DHS,  DOI, HUD, SBA, and VA. We received comments via e-mail from the  Department of Defense, DHS, and SBA, and we received written  comments from the DOI, HUD, and VA.
The Department of Defense and the SBA stated that they had no  comments on the draft report, and DHS provided only technical comments  and stated that it concurred with the report’s recommendations. In its  written comments, DOI stated that it supports efforts to improve CBRS  property determinations and ensure compliance with CBRA. DOI also  indicated that it will consider our recommendation concerning  prioritization of the completion of digital maps as it develops future  budget requests. In its written comments, HUD stated that the loan  guarantees in question have already been terminated. HUD also noted that  it is now developing policy guidance and associated training to ensure that  no future violations of CBRA occur. In its written comments, VA stated  that it agreed with our findings and one of our recommendations but did  not agree with our recommendation to cancel the inappropriate loan  guarantees that it had made in violation of CBRA. VA stated that it did not  believe that the small number of loan guarantees that we found indicated a  pattern of abuse of CBRA and that canceling these guarantees would  inflict a disproportionate harm on lenders and veterans who were not  responsible for the erroneous property determinations that the loan  guarantees were based on. While we understand VA’s concerns for the  adverse impacts that could affect the parties involved, we believe that  because these loan guarantees violate CBRA they should be rescinded.
We have also incorporated the technical comments provided by DHS and  DOI, as appropriate, throughout this report. HUD’s written comments are  presented in appendix V, DOI’s written comments are presented in  appendix VI, and VA’s written comments are presented in appendix VII.
We are sending copies of this report to interested congressional  committees as well as the Administrator, Small Business Administration;  the Commander, U.S. Army Corps of Engineers; and the Secretaries of the  Army, Defense, Homeland Security; Housing and Urban Development,  Interior, and Veterans Affairs. We also will make copies available to others  upon request. In addition, the report will be available at no charge on the  GAO Web site at http://www.gao.gov.
If you have any questions about this report, please contact me at (202) 512- 3841 or mittala@gao.gov. Contact points for our Offices of Congressional  Relations and Public Affairs may be found on the last page of this report.  GAO staff who made major contributions to this report are listed in  appendix V.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: We were asked to address issues related to the Coastal Barrier Resources  Act, as amended, (CBRA) by reviewing development that has occurred and  federal funding that has been provided within the John H. Chafee Coastal  Barrier Resources System (CBRS). Specifically, we were asked to  determine (1) the extent of development within the CBRS and (2) the  extent of federal assistance provided to CBRS units.
subsections: section_title: Determining the Extent of Development in CBRS Units
paragraphs: To determine the extent of development in the system, we determined the  number of structures within each unit. We accomplished the task by  electronically mapping addresses with MapInfo and layering electronic  boundaries of CBRS units from the Federal Emergency Management  Agency’s (FEMA) Q3 Digital Flood Insurance Rate Map data product with  the mapped addresses. FEMA’s Q3 data provides the external boundaries  for CBRS units, though it is not an exact replica of the boundaries. Our  results are representative of the extent of development within the CBRS.
We focused our review on a stratified random sample of 91 units drawn  from the 584 total units in the system, excluding otherwise protected  areas. The sample was drawn so that the results from the sample would  have a precision margin of about plus or minus 10 percentage points at the  95 percent confidence interval. We were able to collect and analyze data  for 84 of the 91 CBRS units, representing a weighted response rate of 92  percent. Of the 84 units, 42 units are located in the north and 42 units are  located in the south. Northern units include those located in Connecticut,  Maine, Massachusetts, Michigan, New Jersey, New York, and Rhode  Island. Southern units are those located in Alabama, Florida, Louisiana,  Maryland, Mississippi, North Carolina, South Carolina, Virginia, Texas,  Puerto Rico, and the Virgin Islands. As a result of the high response rate,  we reweighted the sample to represent the entire population of units.
Because we followed a probability procedure based on random selections,  our sample is only one of a large number of samples that we might have  drawn. Since each sample could have provided different estimates, we  express our confidence in the precision of our particular sample’s results  as a 95 percent confidence interval. This is the interval that would contain  the actual population value for 95 percent of the samples we could have  drawn. As a result, we are 95 percent confident that each of the confidence  intervals in this report will include the true values in the study population.  All percentage estimates from the sample have margins of error of plus or  minus 10 percentages points or less.
To identify the number of structures within the CBRS units in our sample,  we obtained address or parcel data from local government offices— including tax assessor’s offices and on-line databases, geographic  information system departments, and information technology  departments. The exact dates for the parcel and address datasets vary by  location—however, we requested the most recent available data. We also  collected year-built data, value, and type of structure when available. After  determining whether the structure was within the CBRS unit, we reviewed  the year-built data to determine how many structures were built since the  unit’s inclusion in the CBRS. We did not independently assess the  reliability of each address dataset provided by the local governments.  However, for a number of address datasets we assessed the reliability of  the data through interviews with knowledgeable local officials and  verification of the addresses in the dataset by visual inspection during site  visits.
The electronic mapping was performed using roads and highways data  provided by MapInfo’s 2002 StreetSmart program. As a result, our analysis  would not be able to map structures located on a street not included in the  2003 roads and highways dataset. Once the addresses were mapped, they  were layered in MapInfo with FEMA’s Q3 data. On the basis of  conversations with FEMA and FWS officials, we believe these data are  sufficiently reliable for the purposes of this study. Since the FEMA Q3 data  CBRS boundaries may not be precise, the results of our analysis could  incorrectly reflect whether a structure is within a CBRS unit. As with any  electronic mapping technology, accuracy issues are inherent and may  impact reliability of the results.
We conducted site visits to 18 CBRS units in Florida, Massachusetts, North  Carolina, Rhode Island, and South Carolina. During the site visits, we  observed the CBRS units and interviewed local, state, and federal officials,  home owners, realtors, insurance agents, and environmental officials to  discuss the extent of development and factors encouraging or  discouraging development in the units.
In addition to the site visits, we conducted telephone interviews with local,  state, or federal officials in Louisiana, Massachusetts, Maryland, Michigan,  Rhode Island, Texas, Virginia, and Puerto Rico. Using the data collected  during the site visits and the telephone interviews, we were able to  determine reasons why development has or has not occurred in those  units.
section_title: Determining the Extent of Federal Assistance Provided to CBRS Units
paragraphs: To determine the extent of federal assistance provided to CBRS units, we  identified eight agencies with programs that may have provided assistance  to these areas. Appendix IV includes a complete list of these programs. We  reviewed and analyzed federal legislation and regulations that are  applicable to federal assistance to CBRS units, including the CBRA. For  each of the programs that provide assistance that is prohibited in a CBRS  unit, we interviewed officials regarding their agency procedures for  preventing assistance to CBRS units. In instances where we identified  violations, we collected additional information about the assistance  provided and interviewed agency officials regarding the agency’s plans to  prevent prohibited assistance from being provided in the future.
We compiled a list of 4,472 addresses in 37 CBRS units that had at least  one address. (See app. II for a list of CBRS units in our review.) As the  section above details, we obtained address data from local county  government sources and electronically mapped addresses within the  boundaries of CBRS units. Next, we obtained data from each agency on  program assistance provided and determined whether this assistance was  provided within one of the CBRS units or to an address in a CBRS unit.
We gathered additional data to determine whether civil works projects  administered by the Corps and permits issued by the Corps or EPA- authorized state agencies were for an activity within a CBRS unit. We  asked agency officials to provide latitude and longitude data for every  project that occurred or permit that was issued in any of the counties that  contained at least one of the 37 CBRS units. Then we electronically  mapped the coordinates to determine if the activity occurred within the  boundaries of a CBRS unit. Corps officials, however, were unable to  provide latitude and longitude data for a large percentage of the permits  issued.
For each agency program, we assessed the accuracy and reliability of the  data system by obtaining from the agency written responses regarding (1)  the agency’s methods of data collection and quality control reviews, (2)  practices and controls over accuracy of data entry, and (3) any limitations  of the data. We determined that the agencies’ data were sufficiently  reliable for the purposes of our review unless noted below. The details of  our analysis for each agency program are provided below.
subsections: section_title: FEMA National Flood Insurance Program
paragraphs: To identify flood insurance policies in CBRS units, we obtained data from  FEMA’s National Flood Insurance Program for all policies as of May 8,  2006. As mentioned above, we compiled a list of 4,472 addresses in 37  CBRS units. Because structures built prior to a CBRS unit’s inclusion in  the system may still obtain flood insurance, we had to determine whether  each structure was built prior to the unit’s inclusion in the CBRS. Of the  4,472 addresses, we were able to determine that 648 structures were built  prior to the unit’s inclusion in the CBRS, and we deleted these addresses  from our analysis. We reviewed the addresses of all the structures built  after the unit’s inclusion in the CBRS and addresses where we could not  determine the year built in our flood insurance analysis. Thus, we  reviewed 3,824 addresses in 21 units to determine if the structure had  federal flood insurance. Structures that were built prior to the CBRS unit’s  inclusion in the system cannot obtain federal flood insurance if the  property has been substantially improved. We did not collect data on  whether properties had been improved. If we identified a flood insurance  policy among the addresses where we were unable to determine the year  built, we reviewed the year-built data in FEMA’s database. If FEMA’s data  revealed that the structure was built prior to the unit’s inclusion in CBRA,  we eliminated the match from our review.
section_title: FEMA IHP Program
paragraphs: We provided FEMA our list of addresses located in 37 CBRS units. FEMA  compared our list of addresses with addresses for which Individuals and  Households Program (IHP) payments had been provided from its National  Emergency Management Information System. FEMA reviewed payments  from the system from August 26, 1998, to August 2, 2006.
The Small Business Administration (SBA) provided loan data for business  and disaster loans in all states with CBRS units from its Loan Accounting  System. SBA provided us records for loans approved January 1, 1990,  through May 30, 2006. While we did not find any matches for business  loans, SBA officials told us that the address in the database could be a  mailing address and not the physical address of the business. For SBA  disaster loans, the SBA officials said that the address in the database is the  location where the assistance was provided.
section_title: HUD Housing Programs
paragraphs: We obtained data for 13 of the Department of Housing and Urban  Development’s (HUD) single family and multifamily housing programs.  (See app. IV for a list of the programs reviewed.) HUD provided data from  its Real Estate Management System and Single Family Housing Enterprise  Data Warehouse database for loans as of June 2006.
section_title: VA Home Loan Guaranty Program
paragraphs: The Department of Veterans Affairs (VA) provided loan guarantee data  from its Home Loan Guaranty database. VA provided us records for active  loan guarantees as of October 2006.
section_title: USDA Business and Industry, Community Facilities, and Housing Programs
paragraphs: We obtained data for 22 of the U.S. Department of Agriculture’s (USDA)  business and industry, community facilities and single family and  multifamily housing programs. USDA provided this information from its  Automated Multi-Family Housing Accounting System, Guaranteed Loan  System, MortgageServ Loan Servicing System databases, and Multi-Family  Information System. The information was as of July 2006.
section_title: USDA Utility Programs
paragraphs: For USDA’s utility programs, we used a different methodology because the  projects are not associated with one structure as with a flood insurance  policy or a housing loan. For USDA’s electric programs, USDA officials  reviewed the construction work plans and the environmental reports for  recent loans to electric service providers who provide service to selected  counties in Florida, North Carolina, and Virginia that include one or more  of the CBRS units included in our review. USDA officials determined that  it does not appear that they have financed projects serving a CBRS unit.
For USDA’s water and waste programs, we requested the environmental  assessment forms statements for the projects in the counties that included  a CBRS unit we identified as having 100 or more structures. We then  reviewed these records to determine if they indicated that USDA officials  had considered whether the projects would impact a CBRS unit when  reviewing them.
section_title: FEMA Public Assistance Grant Program
paragraphs: FEMA provided data from its National Emergency Management  Information System on disaster assistance provided to counties and  territories in our review, including data for the U.S. Virgin Islands and  Puerto Rico. The data were from November 1998 through July 2006. We  reviewed assistance designated by FEMA as being within a CBRS unit.  However, we determined that this designation was not sufficiently reliable  to identify all projects within the CBRS. We could not determine the full  extent of assistance provided to CBRS units because the CBRS  designation in the data was not always reliable. In addition, some  assistance was provided countywide, and we could not determine if this  assistance was provided to the unit. As a result, we provide examples of  disaster assistance in our report. Where data were available, we  electronically mapped the location of the assistance to verify it was within  a CBRS unit.
section_title: Federal Highway Administration
paragraphs: We obtained data for projects receiving federal aid that received federal  funds between January 1996 and July 2006 in counties with a CBRS unit  that we identified as having 10 or more structures. Federal Highway  Administration (FHWA) officials extracted the data for these projects from  the Financial Management Information System—-a database that tracks  projects that receive federal funding. To determine whether assistance  was provided that is prohibited by law, we identified new construction  projects or projects that added capacity to existing roadways. To  determine whether these projects were within a CBRS unit, we relied upon  interviews and location analysis provided by FHWA officials and  Department of Transportation officials from New Jersey, North Carolina,  Puerto Rico, Rhode Island, South Carolina, and the Virgin Islands. For  projects in New Jersey, state officials provided aerial photographs with the  location of federally funded projects. For North Carolina, we met with  FHWA officials to review maps displaying the location of federally funded  projects. For Puerto Rico, FHWA and Puerto Rico Department of  Transportation officials electronically mapped the location of projects. For  Florida, we relied upon analysis conducted by an official at the Florida  FHWA division office. For Rhode Island, South Carolina, and the U.S.  Virgin Islands, Department of Transportation officials or public works  department officials provided a paper map marked with the location of the  projects.
Because of the volume of projects that are allowable, we did not  determine the number of allowable projects in every CBRS unit. However,  we did review the allowable projects in Gulf County, Florida, and Onslow  County, North Carolina.
section_title: Appendix II: CBRS Units We Reviewed
paragraphs: This appendix provides information on the CBRS units that we reviewed.  Table 2 shows the units included within our random sample and the  approximate number of new structures in each unit.
Tables 3 and 4 show the CBRS units we included in our analysis to  determine the extent of federal expenditures and permits made to entities  in the CBRS. Table 3 displays the CBRS units included within our sample  that had structures—regardless of whether the structures were built prior  to or after the units inclusion in the CBRS. Table 4 lists the additional  CBRS units that were suggested for inclusion in our review by FWS  because the agency had information suggesting that development was  occurring in these areas.
section_title: Appendix III: Snapshots of Selected CBRS Units
subsections: section_title: Massachusetts
paragraphs: Within the state of Massachusetts, there are 62 CBRS units. The units  consist of 64,076 total acres of land, with 88 percent of the land considered  wetlands by FWS. We visited six CBRS units—Black Beach, Boat  Meadow, Centerville, Herring Brook, Sandy Neck, and Squaw Island.  These units were primarily salt marsh or wetland areas with narrow  coastal beach areas. Only the Boat Meadow unit had experienced any new  development since inclusion in the CBRS. Figure 2 displays the CBRS  units we visited during our site visit.
The Herring Brook and Sandy Neck units both include land used as a  public beach destination. The Sandy Neck unit is a coastal barrier beach,  with both public and private beach areas, approximately 6 miles long  varying in width from 200 yards to one-half mile. The unit is classified by  the local government as a conservation and recreation area. Several homes  are located on the unit, but one local official noted they are all registered  by the state as historic places.
The Centerville unit and the Squaw Island unit each have a barrier beach,  but the beach is privately owned. The Centerville unit serves as a private  beach and protective buffer for the homes bordering the unit. A local  official noted the residents annually pay for a beach nourishment project  in order to keep the protective buffer for their homes. The Squaw Island  unit is a barrier beach and wetlands surrounding an area of developed land  that was excluded from CBRS. The excluded area consists of homes  valued between $1.7 and $6.9 million. Figure 3 displays a portion of Squaw  Island.
Both the Black Beach and Boat Meadow units consist primarily of salt  marshes and wetlands. The southern portion of the Black Beach unit has  one street of homes that were built prior to CBRA. One local official  described the homes as “traditional Cape Cod” style houses. The Boat  Meadow unit has several neighborhoods bordering the unit with one  neighborhood partially included in the unit. It is within this area that new  development—three single-family homes—has occurred since the unit’s  inclusion in the CBRS.
section_title: Rhode Island
paragraphs: Within the state of Rhode Island, there are 21 CBRS units. The CBRS units  consist of 10,320 total acres, with 83 percent considered wetlands by the  FWS. During our site visit to Rhode Island, we focused our review on the  Prudence Island Complex unit. The Prudence Island Complex unit  consists of numerous separate pieces of land all included in one CBRS  unit. The unit is located in residential neighborhoods in several counties  around the Narragansett Bay. Although approximately 50 homes are  located within the CBRS unit, only 8 of the homes have been built since  inclusion within CBRS. Figure 4 shows the CBRS units that we visited in  Rhode Island.
Several areas included in the Prudence Island Complex are backyards of  private homes. Home owners voluntarily included the CBRS land in their  backyards in conservation easements, limiting the right of future owners  of the property to develop the land. Figure 5 is one of the homes with a  backyard that falls in the CBRS unit boundaries.
Another area included in the unit is owned by the Rhode Island Country  Club and serves as a golf practice area. Figure 6 is the country club land  that is included in the CBRS.
The unit also includes a small beach and a wetland inlet located in a  residential neighborhood. The inlet leads to the Rhode Island Country  Club. A local official stated that the County Club has asked the U.S. Army  Corps of Engineers to re-dredge the inlet to improve the playability of the  golf course—which gets heavily saturated during rains. Dredging within  the CBRS unit would allow water to run off the course faster. Figure 7  shows the area within the CBRS unit that would be dredged.
section_title: South Carolina
paragraphs: Within the state of South Carolina, there are 16 CBRS units. FWS officials  determined that the units consist of 97,856 total acres, with 90 percent of  land considered wetlands. We visited two units in South Carolina—Bird  Key Complex and Captain Sams Inlet (see fig. 8). Each of the units has  experienced the addition of 10 or fewer residential homes since its  inclusion in the CBRS. The developed portions of both of these units are  located on coastal islands—the Captain Sams Inlet homes are located on  Seabrook Island, and the Bird Key Complex homes are located on Kiawah  Island.
Development in the Captain Sams Inlet CBRS unit is located in the  Seabrook Island Resort—a 2,200-acre, privately gated, beachfront  community on Seabrook Island. According to local officials, the title to the  land where these homes are located was in dispute for years, which  delayed its development, unlike the rest of the island. Local officials also  stated that they believe that if the title to the land had not been in dispute,  the area would have developed at the time of the CBRS unit designations  and most likely would not have been included in the CBRS. Because of the  CBRS inclusion, the property owners in the unit are no longer eligible for  certain types of federal assistance, in particular federal flood insurance,  which they noted is much less expensive than privately available  insurance. Officials with whom we met on neighboring Kiawah Island  stated that a developer has plans to build up to 50 units on a 20-acre  portion of the Captain Sams Inlet CBRS unit that is located on Kiawah  Island.
Development in the Bird Key Complex CBRS unit is located on the  northeast portion of Kiawah Island, which is also a privately gated,  beachfront community with approximately 3,000 homes. The southern  portion of the CBRS unit includes a few homes that we identified as being  located in the unit, an 18-hole golf course, and an area of land called  “Cougar Island.” Kiawah officials told us that a private developer has plans  to build 360 homes on 24 acres of Cougar Island at a future date.
section_title: Florida
paragraphs: Within the state of Florida, there are 67 CBRS units. The units range  extensively in size and composition and encompass 285,937 total acres  along both the Atlantic and Gulf Coasts. Overall, 87 percent of the land  within the units is considered wetlands by FWS. We visited three units— Four Mile Village, Cape San Blas, and Deer Lake Complex (see fig. 9). All  three units we visited had experienced some level of development.  However, the development ranged from 11 new structures in Deer Lake  Complex to at least 900 new structures in Cape San Blas since the units  inclusion in the CBRS.
The Four Mile Village unit in Florida has experienced an increase of at  least 100 new residential structures since its inclusion in CBRS. This unit  is expected to continue to experience development, as a 167-home private  development project called Cypress Dunes is completed. The Cypress  Dunes project consists of a 44-acre gated community and will include a  clubhouse, pool, exercise center, dining facility, and tennis courts, all  entirely within the CBRS unit.
The 1,637-acre Topsail Hill Preserve State Park makes up more than one- half of the Four Mile Village CBRS unit. The preserve was purchased in  1992 with funds from the Conservation Acquisition of Recreation Lands  program, also known as Forever Florida. Topsail was purchased for its  unique natural ecosystems, including freshwater coastal dune lakes, wet  prairies, scrub, pine flatwoods, marshes, cypress domes, seepage slopes  and 3.2 miles of sparkling white sand beaches. The park also includes  areas to bike, walk, swim, fish, and access to the beach, plus a full-facility  campground features a swimming pool, tennis courts, and shuffleboard  courts.
The Cape San Blas CBRS unit is located on a peninsula in the Florida  panhandle. It has experienced significant development since its inclusion  within the CBRS with the addition of at least 900 new homes. Primarily,  the homes are single-family residences used as vacation homes and  rentals.
In November 2002, FEMA designated parts of Cape San Blas as a special  flood hazard area. Mortgage lenders require home owners in these zones  to obtain flood insurance. Because federal flood insurance is not available  in CBRS, home owners with mortgages must obtain private flood  insurance. At the same time, officials told us that the cost of private  insurance has skyrocketed and is no longer comparable to national flood  insurance program rates. According to local officials, tourism in the Cape  San Blas area is important to the economy of the county. They told us that  property values in the unit have decreased since FEMA adopted a special  flood hazard area for the CBRS unit. Residents and local officials have  unsuccessfully attempted to remove Cape San Blas from the CBRS so that  residents would be eligible to obtain flood insurance through the National  Flood Insurance Program. In the 109th Congress, legislation was  introduced in the House of Representatives that would exempt Cape San  Blas, along with another unit, from CBRA’s prohibitions and the  limitations on flood insurance. However, the bill never came to a vote.
We identified some development in the Deer Lake Complex unit since its  inclusion within the CBRS. A total of 11 new single-family homes have  been constructed within the unit.
section_title: North Carolina
paragraphs: Within the state of North Carolina, there are 10 CBRS units consisting of  52, 215 total acres—approximately 6,809 of those are considered  developable acres by FWS. We visited four CBRS units—Topsail, Lea  Island, Currituck Banks, and Wrightsville Beach (see fig. 10). Both Topsail  and Currituck have experienced significant levels of development since  inclusion within the CBRS. In contrast, Lea Island and Wrightsville Beach  are impractical locations for development as they are significantly affected  by erosion and shifting sands.
The Topsail unit in North Topsail is a barrier island with low elevation  without the protection of substantial dunes. It has a total of approximately  1,600 structures and local officials stated that most of the structures were  built after CBRA was enacted. The unit consists of single and multifamily  homes, a few hotels/motels, a convenience store, and the North Topsail  Beach Town Hall.
In recent years, the unit has been hit several times by hurricanes. For  example, in 1996, Hurricanes Bertha and Fran caused significant damage.  The storms leveled dunes, cut new channels across the island, dumped  tons of sand, and destroyed more than 300 buildings. The federal  government provided funds that assisted in repairing the streets, repairing  water and sewer lines, replacing signs, and removing substantial debris.  Since that time, the area has been rebuilt, but other storms have continued  to cause damage. We identified at least $5.6 million in disaster assistance  that was provided to entities in the unit since November 1998.
Portions of the Topsail CBRS unit have experienced substantial levels of  erosion. As the soil erodes, the ocean becomes dangerously close to the  homes. Figure 11 pictures one of several homes in the Topsail area where  the ocean waves make contact with the home’s foundation.
Several areas outside of the CBRS unit have approved plans for a federally  funded Corps beach renourishment project. However, because areas  within the CBRS unit are ineligible for federal funding for a beach  renourishment project, local officials are pursuing other opportunities to  fund the portion of the project that falls within the CBRS boundaries. For  example, the Town of North Topsail Beach recently proposed a $34  million bond package to pay for the beach renourishment project, but the  voters rejected the proposal in November 2006.
According to local officials, during the time when much of the  development occurred in the Topsail unit, affordable private flood  insurance was generally available. However, in recent years the cost of  private flood insurance has increased tremendously. Currently, these  officials said that many residents are frustrated with CBRA’s prohibitions  on the availability of federal flood insurance and federal funding for beach  renourishment projects.  According to these officials, residents in the  Topsail CBRS unit are upset that they must pay significantly higher  insurance premiums than their neighbors who own properties just outside  of the unit who can obtain federal flood insurance.
The Currituck Banks CBRS unit is located on the outer banks of North  Carolina, with the northern boundary at the Virginia state line. The unit  has also experienced significant new development, with at least 400 new  residential homes built since inclusion in CBRS. Local officials stated that  rapid development has occurred in the area since the late 1980s and that  as of June 2006, there were 550 single-family dwellings within the unit.  However, officials noted this only represents 18 percent of the total  capacity of homes that can be built in the unit. County planning staff noted  that the area currently has 3,088 actual or planned building lots available.  Although the Currituck Banks unit does not have any paved roads and is  only accessible by four-wheel drive vehicle or boat, it still continues to be  developed, partly because people on the Outer Banks are seeking the  solitude that living in the CBRS unit can provide. Moreover, the unit has an  extensive canal system that allows residents direct boat access to their  homes and the mainland.
The Lea Island CBRS unit is a tiny barrier island, accessible only by boat,  and located south of the Figure Eight Island. The island is privately owned,  but local officials stated that conservation groups are slowly trying to buy  more of the island. The island is approximately 60 acres long with most of  the land less than 10 feet above sea level. The island is in a constant state  of flux due to erosion and shifting sand. According to a local coastal  official, 15 homes previously existed on Lea Island, but all of them— except for one small cabin—had been destroyed by natural disasters.
At the time CBRA was enacted, FWS determined that the Wrightsville  Beach unit had 83 developable acres of land. However, sand continuously  shifts within the unit. At one point, the majority of sand in the unit had  shifted to such an extent that the entire unit was under water. According  to local officials, to keep the unit above water, local entities must  continually dredge an inlet adjacent to the unit to replenish the unit with  sand.
section_title: Appendix IV: Programs and Types of Federal Assistance Analyzed
subsections: section_title: U.S. Army Corps of Engineers
section_title: U.S. Department of Agriculture
section_title: Department of Homeland Security
paragraphs: National Flood Insurance Program  Individuals and Households Program  Public Assistance Program (Disaster)
section_title: U.S. Coast Guard
section_title: Department of Housing and Urban Development
section_title: Environmental Protection Agency
section_title: Federal Highway Administration
section_title: Department of Veterans Affairs
section_title: Appendix V: Comments from the Department of Housing and Urban Development
section_title: Appendix VI: Comments from the Department of the Interior
section_title: Appendix VII: Comments from the Department of Veterans Affairs
section_title: Appendix VIII: GAO Contact and Staff Acknowledgments
subsections: section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Sherry McDonald, Assistant  Director; Natalie Herzog; Stuart Ryba; Jay Spaan; Amy Ward-Meier; and  Leigh M. White made key contributions to this report. Also contributing to  this report were Kevin Bray, John Delicath, Nancy Hess, Gloria Saunders  and Jay Smale.