by Richard O. Jacobs and Steven M. Hogan
What happens to Florida if sea levels rise? What happens to the infrastructure we rely on? And, more to the point of this article, how could we pay for the costs of sea-level rise without letting our future drown?
Our Temporary Borders
The civilization we have built assumes many things. One of these assumptions is that the coast will remain where it is. Upon this assumption are built millions of homes, billions in infrastructure, and a huge portion of our tax base.
Florida has not been here forever, though. We know that the face of our world has changed over time. Archaeological sites from our earliest residents were drowned when sea levels rose at the end of the last Ice Age, turning Florida’s coastal plains into submerged continental shelves.1 In the center of our state, the Lake Wales Ridge system “rose from ancient beach and dune systems that have stood above sea level for over a million years.”2 This area contains some of the highest elevations in Florida, places that were once islands when “ancient ocean levels rose and covered nearly all of the present-day peninsula.”3
Viewed on this timescale, our coastline is far from permanent. Our borders are temporary, at best. As stewards of this beautiful state, we must think hard about what this means.
Real Conversations About Hard Things
In our national discussion, environmental issues have become impossibly difficult to talk about. The internet-driven news cycle tends to drive out reasonable voices. Real conversations about hard things are stifled, while loud voices shout each other down.4
The authors of this article invite you, the reader, and all Florida citizens to push past the well-worn reactions that environmental issues tend to bring out. As reasonable people, as members of The Florida Bar, we all know that answers to difficult and nuanced questions are difficult and nuanced. This article invites discussion about the consequences of sea-level rise, with specific attention to our tax system.
In the spirit of that discussion, the authors ask you to consider: “What if?” What if the projections of sea-level rise are accurate? What if there is a chance that the worst-case scenario, or even the medium-case scenario, actually occurs?5 What tax policy options do we want to have available to us to handle those problems? What tools could we make available to address the “worst-case” scenarios?
A Critical Constitutional Juncture
When this article goes to print, the 2017-2018 Florida Constitution Revision Commission will have begun its work.6 This commission is tasked by Fla. Const. art. XI, §2 to “examine the constitution of the state, hold public hearings, and, not later than  days prior to the next election, file with the custodian of state records its proposal, if any, of a revision to this constitution or any part of it.”7 The commission will not meet again for 20 years.8
The commission will examine the Florida Constitution with an eye toward the future. The work of this group is critical to future generations. Given the consequence of potential sea-level rise to the future of our state, the authors offer this article as a frame for thinking through the tax implications of this issue as the commission progresses in its work.
With all this in mind, we turn to what the experts say Floridians are likely to face in the coming years with sea-level rise.
The Science We Rely On
Florida law requires local governments in coastal communities to include a “coastal management element” in their comprehensive plans.9 This coastal management element must include a component that addresses “development and redevelopment principles, strategies, and engineering solutions” that are aimed at reducing flood risk impacts related to sea-level rise.10 The coastal management element can, at the option of the local government, designate “adaptation action areas” that are especially vulnerable to the impacts of sea-level rise.11
A coastal management element that addresses sea-level rise under these laws must “be based on studies, survey, and data.”12 This begs the question: What studies, surveys, and data might be most useful?
A potential answer comes from the valuable work performed by the Southeast Florida Regional Climate Change Compact, which was enacted in 2010 by the local governments of Broward, Miami-Dade, Monroe, and Palm Beach counties.13 The compact, which has now expanded to include municipal partners in the region, has attracted national attention for the proactive work of its members addressing the challenges of sea-level rise.14
The compact offers the public a wealth of resources on sea-level rise issues, including its unified sea-level-rise projection, published in 2015.15 The projection provides an important planning tool for local Florida governments. To that end, the projection aggregates a number of resources to arrive at the following potential scenarios:
• Potential sea-level rise by 2030: six to 10 inches
• Potential sea-level rise by 2060: 14 to 26 inches
• Potential sea-level rise by 2100: 31 to 61 inches.16
Based on these projections, our grandchildren may be dealing with sea levels between three and five feet higher than they are today. The ways that coastal communities choose to address these issues, should they occur, are bound to be location-specific and dependent on the limits of technology. Ultimately, one thing is certain: addressing these issues will be expensive.
Can We Abandon Ship?
The potentially massive expense of upgrading and retrofitting our coastal infrastructure to accommodate sea-level rise may lead some to question whether the state must respond at all. Can state infrastructure be left to the seas? Or can coastal property owners force the government to maintain services, no matter what?
Prior authors in The Florida Bar Journal have addressed these issues directly. In “Drowning in Place: Local Government Costs and Liabilities for Flooding Due to Sea-Level Rise,” Thomas Ruppert and Carly Grimm walk through the question of whether maintenance of infrastructure in the face of disaster is a duty of our government, or whether such action is discretionary.17
If maintenance of infrastructure in the face of sea-level rise is a duty — which it may well be — then private citizens could bring inverse condemnation actions against local governments that fail to act.18 Therefore, whether local governments bear the costs up-front by taking action, or after the fact following litigation, the expense of responding to sea-level rise will likely be paid out of the public purse. The next question is which public purse will be directly responsible for paying the costs of sea-level rise.
Should Coastal Communities Go it Alone?
Should Orange County, nestled safely in the heart of our state, help pay for the costs of sea-level rise in Pinellas County? If so, why? If not, why not? These are the questions that we must ask and answer before sea-level rise becomes a clear and present danger. An emergency situation is not conducive to deliberate, reasoned discussion.
The authors of this article posit that the local governments along the coasts of Florida cannot be left to “go it alone” in paying the costs of sea-level rise. The problems inherent in relying on local communities to pay these costs on their own can be framed by two questions: 1) How will coastal communities in competition with each other for tourists and growth approach sea-level rise and storm surge problem-solving; and 2) what happens if a coastal community’s tax base erodes due to falling coastal property values and decreased tourism?
As to the first question, Florida’s delegation of coastal management planning to local communities, although allowing flexibility, also places the communities in competition with each other. If, for example, coastal community A uses a strategy to contain development and nearby coastal community B does not, B will attract continuing development and A will turn away development. Community A will then be disadvantaged in its competition for revenues to fund essential services. This competition could create political and financial difficulties.
As to the second question, the potential for a downward-spiraling feedback loop in local government revenues illustrates a central problem in local funding: sea-level rise may destroy the very amenities that counties rely on to bring in tourists, residents, businesses, and other sources of tax revenue. Counties so impacted could be left without the financial capability to address the problem.
Given the importance of this issue, Florida may want to consider a state-level “super fund” that could provide resources for addressing sea-level rise in all of our coastal communities.19
How Will We Pay?
We turn now to the question of what tools local governments presently have available to combat the impact of sea-level rise. A concise and reasoned review of these tools appears in a white paper produced by the City of Coral Gables on September 28, 2016.20 These tools are described as 1) ad valorem taxation; 2) special assessments; 3) user fees; 4) developmental impact fees; 5) municipal bonds; 6) grants and subsidies; and 7) public-private partnerships.21 Each is discussed in turn, below.
• Ad Valorem Taxation — Ad valorem taxes are a critical part of any local government’s approach to addressing financial issues. Local governments have the constitutional power to levy ad valorem taxes “for all municipal purposes.”22 The term “municipal purposes” is broadly defined, and would certainly encompass adaptation to sea-level rise.23
A question that arises in this context is how ad valorem taxation will be impacted in coastal counties if sea levels rise as predicted. This type of tax is levied against the assessed value of real and personal property. Consequently, if sea-level rise negatively impacts coastal property values, then the local governments of coastal communities will have less revenue to work with.24
• Special Assessments — Local governments can levy special assessments against real property to fund projects that provide a special benefit to the assessed properties.25 Such assessments must properly apportion the cost of providing the special benefit among the burdened properties.26 Ultimately, special assessments on coastal properties to fund sea-level rise adaptation efforts could be a way of “containing” such costs to the properties most directly affected.
• User Fees — User fees are similar to special assessments, in that they allow a local government to pay for services in a way that only levies the charge on persons who benefit from the service.27 User fees could be imposed for certain sea-level-rise adaptation efforts. An example is tolls on bridges to pay for the costs of raising them higher above the water line.
Charges for storm-water utilities are another example of user fees. Storm-water utilities can be created by local governments and specifically funded by storm-water user fees.28 Much of the sea-level-rise adaptation efforts that local governments undertake could arguably be connected to storm-water problems caused by a higher water table.29
• Developmental Impact Fees — Local governments often rely on impact fees imposed on new development as a way to offset the cost of infrastructure needed to service such development. These impact fees can be dedicated to the infrastructure costs that would otherwise be borne by the local government’s general revenues. Local governments may be able to create impact fees directed toward payment for sea-level rise adaptation costs. This is another option for requiring coastal development to pay the cost of protecting such developments against sea-level rise.30
• Municipal Bonds — Local governments have the power to issue bonds to finance infrastructure projects. Bonds can be used by local governments as ways of super-charging their existing revenue sources to pay for infrastructure projects over time. Of course, every bond must eventually be paid off. Therefore, bonds secured by ad valorem revenues could suffer from the valuation problems stemming from rising sea levels. Bonds tied to other revenue sources vulnerable to sea-level rise may be similarly compromised.31 Local governments must think carefully about future impacts to their revenue sources when considering bond-financed adaptation efforts.
• Grants and Subsidies — Grants and subsidies from the federal government or private foundations are currently available for local governments seeking to address the impact of sea-level rise.32 However, these funding sources may be depleted in the future as coastal communities around the U.S. seek funding for their adaptation costs. Local governments would be well advised to avail themselves of grant and subsidy opportunities in the short term, while understanding that such funding sources may not be as available in the coming years.
State-level grants for coastal communities are an intriguing option. If the state takes action to create a “super fund” system to assist in sea-level-rise adaptation efforts, these revenues could mitigate the costs for local governments addressing such problems. Creating a system like this could be a path our state chooses to take.33
• Public-Private Partnerships — Our governments are not the only stakeholders in protecting Florida against sea-level rise. Private entities and private citizens have skin in the game, as well.
Because of this, public-private partnerships may offer a way for private capital to participate in protecting our coasts against the worst-case scenarios. Such partnerships generally allow private entities to contribute to public infrastructure projects in return for revenue sharing opportunities or completion bonuses. The legislature has authorized public-private partnerships for public infrastructure projects.34 Such creative solutions may ease the burden on local governments grappling with sea-level rise.
When the Constitution Revision Commission meets this year, they will have the power to suggest changes to our constitution that could impact the ability of local governments to raise revenue. In an ideal world, the commission would refrain from suggesting changes that would limit the flexibility of our state to find creative solutions to the problem of sea-level rise.
Our constitution prohibits state taxes on personal income and inheritances.35 These are policy choices that were made in the past by lawmakers and the public. They may be the right policy choices for our future, or they may not. We cannot necessarily assume that the status quo will serve us well forever. This is a hard conversation that would be better to have now than later.
Our constitution limits the amount of bonds that can be issued that are backed by the “full faith and credit” of the state.36 The limit is set at “ percent of the total tax revenues of the state for the two preceding fiscal years, excluding any tax revenues held in trust under the provisions of this constitution.”37 A hard conversation about whether this limit should be relaxed in emergency situations, such as in mitigating the costs of sea-level rise, may be in order for the commission.
What Happens Next?
This article is a starting point for a broader conversation. The policy discussion surrounding sea-level rise requires smart, committed Floridians to contribute their perspectives and collective wisdom. Only by sharing the best we have to offer can we equip ourselves for tomorrow while safeguarding prosperity today.
If you have read this far, you are now part of that conversation. We look forward to a conversation that helps our state realize its best possible future.
1 Florida Department of State Division of Historical Resources, Drowned Prehistoric Sites, http://dos.myflorida.com/historical/archaeology/underwater/sites/drowned-prehistoric-sites/. The division reports that research on such sites is continuing offshore in the Gulf of Mexico, “where ancient river basins are now under water.”
2 Florida Fish and Wildlife Conservation Commission, Lake Wales Ridge — History, http://myfwc.com/viewing/recreation/wmas/lead/lake-wales-ridge/history/.
3 Florida Department of Agriculture and Consumer Services, Lake Wales Ridge State Forest, http://www.freshfromflorida.com/Divisions-Offices/Florida-Forest-Service/Our-Forests/State-Forests/Lake-Wales-Ridge-State-Forest.
4 Ryan Holiday expertly chronicled the dynamics of this modern news cycle and the cloud of unreality it creates, in his book, Trust Me, I’m Lying: Confessions of a Media Manipulator (Portfolio, 2013). His book will cure you forever of believing, at first glance, the sensational headlines on your social media feed.
5 A similar approach was taken by President Reagan with regard to the “shrinking ozone layer” in the 1980s. According to former Secretary of State George P. Shultz, the president framed the issue as taking out an “insurance policy” against uncertain environmental harm. Instead of taking decades to review the problem, the president engaged private industry to find potential solutions in the event that the ozone layer really was shrinking. The result — a solved problem — offers a model for framing the issue of potential sea-level rise in Florida. See George P. Shultz, A Reagan Approach to Climate Change, Washington Post, Mar. 13, 2015, available at https://www.washingtonpost.com/opinions/a-reagan-model-on-climate-change/2015/03/13/4f4182e2-c6a8-11e4-b2a1-bed1aaea2816_story.html.
6 Partnership for Revising Florida’s Constitution, 2017-2018 CRC, http://revisefl.com/index.php/2017-2018-crc (setting forth the timeline for the commission’s work).
7 Fla. Const. art. XI, §2(c).
8 Fla. Const. art. XI, §2(a) (The commission is to meet every “twentieth year” after the 2017-2018 group is convened.).
9 Fla. Stat. §163.3177(6)(g) (requiring the “coastal management element” for local governments identified in Fla. Stat. §380.24); Fla. Stat. §380.24 (defining the local
governments subject to §163.3177 as those abutting the Gulf of Mexico or the Atlantic Ocean, as well as those that include or are contiguous to certain state waters where certain marine species of vegetation occur).
10 Fla. Stat. §163.3178(2)(f)1; Fla. Stat. §163.3177(6)(g) (coastal management element must be in accord with §§163.3178(2) and (3)).
11 Fla. Stat. §163.3177(6)(g)10; Fla. Stat. §163.3164(1) (defining “adaptation action area” or “adaptation area” as “a designation in the coastal management element of a local government’s comprehensive plan which identifies one or more areas that experience coastal flooding due to extreme high tides and storm surge, and that are vulnerable to the related impacts of rising sea levels for the purpose of prioritizing funding for infrastructure needs and adaptation planning”).
12 Fla. Stat. §163.3178(2).
13 Southeast Florida Climate Change Compact, Who We Are, http://www.southeastfloridaclimatecompact.org/who-we-are/.
14 Southeast Florida Climate Change Compact Flier, available at, https://southeastfloridaclimatecompact.files.wordpress.com/2014/05/compact-1-page-flyer-ia-final-sa.pdf. The attention garnered by the compact from the White House, academia, and other sectors is detailed in the flier.
15 Southeast Florida Climate Change Compact, Unified Sea Level Rise Projection — Southeast Florida (Oct. 2015), available at http://www.southeastfloridaclimatecompact.org/wp-content/uploads/2015/10/2015-Compact-Unified-Sea-Level-Rise-Projection.pdf.
16 Southeast Florida Climate Change Compact, Projection at 1 (executive summary). The authors recommend that readers review the projection in its entirety.
17 Thomas Ruppert & Carly Grimm, Drowning in Place: Local Government Costs and Liabilities for Flooding Due to Sea-Level Rise, 87 Fla. B. J. 9, 29 (Nov. 2013).
18 Id. The case of Jordan v. St. Johns County, 63 So. 3d 835 (Fla. 5th DCA 2011), is instructive. In Jordan, the county government stopped maintaining a seaside road but did not go through the statutory “abandonment” process. The Fifth District held that property owners that sued the county over this “inaction” could state a claim for inverse condemnation, as the failing road could cut off access to their properties. The same concept could apply in the case of sea-level rise if a local government deliberately fails to maintain or upgrade infrastructure in a way that causes damage to coastal properties. The authors defer to Ruppert & Grimm, Drowning in Place: Local Government Costs and Liabilities for Flooding Due to Sea-Level Rise, 87 Fla. B. J. 9, for a deeper treatment of this issue.
19 The authors invite comment on the issue of whether a statewide, coordinated response is warranted. Though the authors posit that such an approach appears to be a useful solution, they are prepared to be persuaded by the virtues of alternative views. This issue is too critical for anyone to be “stuck” in a particular position with an unwillingness to change.
20 City of Coral Gables, Legal Considerations Surrounding Adaptations to the Threat of Sea Level Rise (Sept. 28, 2016), available at http://www.southeastfloridaclimatecompact.org/wp-content/uploads/2016/12/Legal-Considerations-Surrounding-Adaptation-to-the-Threat-of-Sea-Level-Rise.pdf (hereinafter, “Coral Gables White Paper”).
21 Coral Gables White Paper at 18-24. The paper also addresses municipal risk financing options, or insurance, and describes examples of what local governments are already doing to finance sea-level-rise adaptation efforts. Those topics are outside the scope of this article, but are well worth considering.
22 Fla. Const. art. VII, §9(b).
23 See Islamorada, Vill. of Islands v. Higgs, 882 So. 2d 1009, 1011 (Fla. 3d DCA 2003) (“The term ‘municipal purpose’ embraces all activities essential to the health, morals, protection and welfare of the municipality.”).
24 Fla. Stat. §192.001(1) (“‘Ad valorem tax’ means a tax based upon the assessed value of property.”). The Coral Gables White Paper raises a separate issue of whether inland property owners in a coastal county would be politically willing to pay higher ad valorem taxes to subsidize sea-level-rise adaptation efforts for coastal properties. See Coral Gables White Paper at 18. This is a microcosm of the statewide question: Must coastal properties themselves bear the full brunt of sea-level rise? This conversation is better to have now, rather than when an emergency is on our doorstep.
25 Collier County v. State, 733 So. 2d 1012, 1017 (Fla. 1999).
27 City of Gainesville v. State, 863 So. 2d 138, 144 (Fla. 2003).
28 Fla. Stat. §403.0893.
29 See Ruppert & Grimm, Drowning in Place: Local Government Costs and Liabilities for Flooding Due to Sea-Level Rise, 87 Fla. B. J. 9 at 29 (discussing how rising sea levels can cause storm-water systems to drain more slowly than anticipated, resulting in more frequent flooding).
30 See Coral Gables White Paper at 20. The authors note above that local communities compete for growth and tourists and charging impact fees may compete with short-term objectives. This factor may weigh in favor of state-level funding solutions.
31 See Coral Gables White Paper at 20-21.
32 Id. at 21-22.
33 If residents in coastal communities have to relocate to higher ground, state funds could be invaluable in mitigating the costs of that migration.
34 Fla. Stat. §255.065(1)(i) ([A] “qualifying project” for a public-private partnership includes any “public facility or infrastructure that is used or will be used by the public at large or in support of an accepted public purpose or activity.”).
35 Fla. Const. art. VII, §5(a)-(b).
36 Fla. Const. art. VII, §11(a).
Steven M. Hogan is an attorney with Ausley McMullen in Tallahassee. His practice focuses on tax litigation, commercial litigation, and commercial drone law. Hogan serves as co-director of the Tax Section’s State Tax Division and as an adjunct professor at the Florida State University College of Law.
Richard O. Jacobs is senior counsel in St. Petersburg with Johnson, Pope, Bokor, Ruppel & Burns, former trustee of Stetson University College of Law, and former chair of The Florida Bar Tax Section (1978-1979).
This column is submitted on behalf of the Tax Law Section, Joseph B. Schimmel, chair, and Christine Concepcion, Michael D. Miller, and Benjamin A. Jablow, editors.