Residential shoreline loan program feasibility study: Developing a new Shore Friendly incentive to help Puget Sound homeowners finance beach restoration and sea level rise adaptation

The 2018 Shoreline Armoring Implementation Strategy identified development of new financial incentives as a near-term priority. This report assesses the feasibility of developing a Shore Friendly residential shoreline loan program.

Waves crashing in front of a house. Photo: James Kinney
Waves crashing in front of a house in Seattle. Photo: James Kinney

Summary

Several regional recovery plans and strategies seek to accelerate the removal of unnecessary hard armor from Puget Sound marine shorelines. The Shore Friendly program supports this priority by offering technical assistance and financial incentives to encourage voluntary armor removal projects on residential parcels. Since 2014, local Shore Friendly programs have engaged with hundreds of waterfront homeowners and facilitated restoration of roughly 4,000 linear feet of critical beach habitat. However, existing financial incentives are not sufficient to address the cost barrier associated with expensive marine construction projects. The 2018 Shoreline Armoring Implementation Strategy identified development of new financial incentives as a near-term priority. This feasibility study is a response to that recommendation. Establishment of a revolving loan fund to provide low-cost financing has been suggested as a promising incentive approach since Shore Friendly was first developed.

At the same time, homeowners are growing more concerned about hazards associated with climate change and resource managers recognize the extent to which sea level rise is expected to exacerbate the negative impacts of existing shoreline armor on Puget Sound beaches and the species dependent on them. Therefore, this feasibility study also explores raising homes to reduce coastal flooding risk and moving homes away from retreating bluffs as target activities that could be financed through a residential shoreline loan program.

This report assesses the feasibility of developing a Shore Friendly residential shoreline loan program and includes the following elements:

  • An overview of research related to shoreline armoring and projected impacts of sea level rise in the Puget Sound region.
  • Technical analyses to estimate market size, potential demand, expected project costs, and the amount of funding needed to establish a self-sustaining revolving loan fund.
  • A review of model programs to inform design of a loan program.
  • An evaluation of potential sources of seed money for a loan fund.
  • A compilation of partner input and key considerations regarding program administration, including potential state/local partners and project eligibility criteria.

These assessments demonstrate that a loan program is a viable mechanism to advance residential shoreline projects and improve ecological outcomes. Since revolving loan funds are replenished as loans are repaid, a relatively low initial investment can have a large impact. Financial modeling indicates that $4.5 million in seed money could fund $9.7 million in project sover the first 15 years of a loan program. Seed money could be added over several years; $600,000 should be enough to cover program start-up costs and initial fund capitalization in year one. Existing institutional authorities and expertise, as well as established local Shore Friendly programs, can be leveraged to administer a loan program.

Citation

Kinney et al. (2021). Residential Shoreline Loan Program Feasibility Study: Developing a New Shore Friendly Incentive to Help Puget Sound Homeowners Finance Beach Restoration and Sea Level Rise Adaptation. Encyclopedia of Puget Sound. 67 pgs.

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Appendices

Appendix 1. Potential Market Estimates

Appendix 2. Market Analysis Memo

Appendix 3. Cost Analysis Memo

Appendix 4. Financial Analysis Memo

About the Author: 
Aimee Kinney, Puget Sound Institute; Jim Johannessen, Coastal Geologic Services; Michael Fisher, Northern Economics; Avery Maverick, Coastal Geologic Services; Lauren Øde-Giles, Coastal Geologic Services; and Brock Lane, Northern Economics