5. REAL ESTATE ROULETTE
THE PÉREZ ART Museum Miami, which opened in 2013, was the first building in the city to acknowledge that Miami is a new Atlantis—even if it did so obliquely and unintentionally. Designed by the renowned Swiss firm Herzog & de Meuron, the museum, which cost $118 million to build, sits at the edge of downtown Miami, overlooking Biscayne Bay. The architects were inspired by Stiltsville, a collection of houses built on stilts in the bay in the 1930s, largely to give owners a place to party that was beyond the reach of the law. The museum seems to be suspended in midair, with the main structure supported by a series of thin concrete pillars. A flat pergola-like roof lets sunlight filter through, and a big deck overlooks the water, with hanging gardens dangling like seaweed. The ground floor is an open gravel parking lot—you can imagine a storm surge pushing through, then receding without much damage beyond a few banged-up cars. The entire building seems to hover at the edge of the bay, as if it were waiting for the water to come. The museum, which has been widely praised as a landmark in the cultural evolution of Miami, bears the name of developer Jorge Pérez (“the Trump of the Tropics,” Time dubbed him), who contributed $55 million in cash and artworks in exchange for the right to put his name on the building.
I visited the museum one night to hear a talk by artist Michele Oka Doner, who had a retrospective at the museum called How I Caught a Swallow in Midair. Oka Doner grew up in Miami Beach, where her father was a judge and later, in the 1950s, the mayor. Her work is deeply connected to Miami Beach, much of it inspired by years of walking along the shore: sargasso weed shaped into human figures, bronze casts of coral assembled into chairs, driftwood sculptures that suggest mythical sea creatures. Oka Doner is best known for her public art installations around Miami, including a piece called A Walk on the Beach, which covers more than a mile of the floor in Miami International Airport, where black terrazzo is embedded with bronze objects shaped like seashells and diatoms. I had walked over it many times before it occurred to me that it felt less like a walk on the beach than a walk underwater. As if she were suggesting that Miami airport—which is located in a particularly low-lying part of Miami-Dade County and floods regularly—had already been reclaimed by the sea. How subversive! When I mentioned this to Oka Doner, she said, with a twinkle in her eye, “Well, yes, that was what I intended.”
During the museum talk, she reflected on her work and how she was inspired by the natural world of South Florida. She didn’t say anything to this well-dressed crowd of Miami power brokers and art collectors about sea-level rise or climate change, despite the fact that she understood very well what was at stake—she had recently sold her home on Miami Beach in part because she believed it was time to get out before the waters rose.
When the talk was over, I wandered into the lobby and stood in line to purchase a catalogue of her show. In front of me, I noticed a man in a nice charcoal-gray suit. When he turned around, I recognized him immediately: Jorge Pérez, the namesake of the museum.
If any one person symbolizes the early-twenty-first-century building boom in Miami, it is Pérez. “He’s the eight-hundred-pound gorilla of Miami developers,” condo analyst Peter Zalewski told me. Pérez, who was sixty-six when we met at the museum, is a son of Cuban refugees who was born in Argentina, raised in Colombia, and educated at the University of Michigan. After college, he spent a few years in Miami’s city planning department, then got into the development business. Related Group of Florida, which he cofounded with New York developer Stephen Ross, is now the biggest builder in Miami—one out of every five condos in the city has been built by Related. Related’s buildings are known among architects for their unremarkable design and big profit-margins. (“He dares to dream, and to make those dreams real,” his pal Donald Trump wrote in an introduction to Powerhouse Principles, Pérez’s book about how to get rich in the real estate market. “The result is changed lives, and cities.”) Pérez is an influential figure in Florida Democratic politics and gave generously to both Clinton’s and Obama’s presidential campaigns. In 2017, Forbes estimated his personal wealth at $2.8 billion.
While reporting this book, I tried to contact Pérez several times through his office to discuss sea-level rise and its impact on his buildings, but I had no luck. Now here he was, his suit crisply tailored, his tie beautifully knotted, his face tan and inexpressive, his moustache and beard neatly trimmed, his dark hair impeccably combed. A controlled man, used to keeping his cool.
I introduced myself as a journalist who was working on a book about sea-level rise. His face hardened. We chitchatted a bit. He mentioned that he had been a collector of Oka Doner’s art for twenty years.
“I can’t pass up this opportunity to ask you a few questions,” I said to him. His face turned stony. “How is sea-level rise changing your thinking about the real estate business in South Florida?”
“We don’t think about it on a daily basis,” he replied.
I was surprised he was so dismissive.
“Does it change your thinking about the kind of property you want to develop?” I asked.
“Does it change the design of buildings you’re building?”
“No,” he said, beginning to sound agitated. “We build to the building code.”
“Did it influence the design of this museum?”
“That is not something I gave any thought to,” he replied.
“Well, aren’t you worried that increased flooding in the city will impact the value of your real estate holdings? I mean, it’s inevitable, isn’t it?”
“No, I am not worried about that,” he said. “I believe that in twenty or thirty years, someone is going to find a solution for this. If it is a problem for Miami, it will also be a problem for New York and Boston—so where are people going to go?” He hesitated for a moment, then added: “Besides, by that time, I’ll be dead, so what does it matter?”
I wasn’t sure how to respond. I understood that he wasn’t thrilled about being questioned by a journalist at a social event. Nevertheless, his unwillingness to even nod to his responsibility for shaping the Miami of the future, or for the legacy of soon-to-be-swamped buildings that he was leaving behind, was startling. It is important to note that this encounter occurred in the spring of 2016, a time when Miami was already suffering sunny-day flooding at high tide and many major newspapers, magazines, and news programs were talking about the risks of sea-level rise in the city. It was impossible to imagine that Pérez didn’t think about this or consider how it might impact his business. But it was very possible to imagine, as a Miami architect who has worked with Pérez suggested to me, that Pérez was afraid that if he talked about sea-level rise or acknowledged the risk, it would call into question some of his waterfront projects and, ultimately, cost him money.
In any case, I didn’t have the opportunity to press him any further. We had by then inched to the front of the line, where Oka Doner was signing books. He turned away from me and said, “That was a wonderful talk, Michele.”
She greeted him warmly and signed his book with a theatrical scrawl.
More than three quarters of the population of Florida lives on the coast, where virtually every house, road, office tower, condo building, electrical line, water line, and sewer pipe is vulnerable to storm surges and high tides. As the seas rise in the coming years, the vast majority of that infrastructure will have to be rebuilt or removed. According to a report by the Risky Business Project, a group cofounded by billionaires Michael Bloomberg, Tom Steyer, and Henry Paulson, between $15 billion and $23 billion worth of Florida real estate will likely be underwater by 2050; by 2100, the value of the drowned property could go as high as $680 billion.
In Miami, an awareness of what’s to come is slowly percolating through the consciousness of property owners and real estate investors. For people who own a house or a condo, it mostly takes the form of a question: Should I sell or not? Can I get a few more years out of this place, or should I dump my condo on the beach now? Virtually everyone I know who owns property in Miami makes this calculation. It’s like a game of real estate roulette—how lucky do I feel? How big a bet do I want to make?
Everyone plays the game in a different way, based on some combination of rumor, science, instinct, emotional connection to where they live, and tolerance for risk. The night I attended the talk at the museum by Oka Doner (who, as I mentioned, had made her own calculation and decided to sell her place in Miami Beach), my Uber driver turned out to be keenly aware of the risks of sea-level rise. Kamel had emigrated to Florida from Turkey a decade ago. Now he owned several condos in Miami—“I rent them out on Airbnb,” he told me. When I asked him about sea-level rise, he didn’t dispute that it was happening—in fact, he mentioned reading a magazine article that said the city had until 2025 before it got really bad. “So I have another seven or eight years before I have to sell,” he said. “As long as people keep coming, I can make money on Airbnb.”
A few nights later, I had dinner with a wealthy retired businessman who owned a spacious condo on the seventeenth floor of a building in one of the most flood-prone neighborhoods of Miami Beach. On a warm evening, we stood on his balcony and looked out over the waters of Biscayne Bay and the lights of downtown Miami. “I love this place,” he said. “I feel so lucky to be here.” He looked at the yachts below. “I think it is all defensible until we get to three feet,” he said. “Even after that, I think we’ll be okay here—this building is worth too much to just let go. Something will be done about it.” But then he paused and pointed toward North Miami Beach, where property values are considerably lower. “But if you have an ordinary house on a lot by the golf course or something, I think you’re in trouble. Nobody will care about that.” A few weeks later, a friend who lives in the same building emailed me to tell me he had come to a different judgment. “I’m getting out while I still can,” he told me. “The party is over.” He had purchased his condo five years earlier for a million dollars. He ended up selling it for two million.
Everyone has their own strategy for real estate roulette. I met an artist who predicted that the Miami real estate market would tank when salt water upwelling through the limestone reached the roots of the trees and they started to die, which, in this artist’s view, would be a powerful visual sign of the coming inundation. A schoolteacher told me that she and her husband were planning to sell when the value of their $350,000 house dropped to $300,000 on Zillow. And I met more than a few people who told me they would never sell, that they loved their lives in Miami too much and were going down with the ship.
Swiss psychiatrist Elisabeth Kübler-Ross wrote about the five stages of grief: denial, anger, bargaining, depression, and acceptance. As far as I can tell, until about 2013, there were only about four people in all of Miami-Dade County who would openly admit that sea-level rise was a serious issue for the city in the near term. As recently as 2010, when the county finalized a new zoning plan called Miami 21, which was supposed to celebrate the values of New Urbanism and prepare Miami for the twenty-first century, sea-level rise wasn’t even mentioned. As one Miami-Dade County commissioner told me, “People thought that if they ignored the problem, it would go away.”
But that denial is fading. Many Floridians have skipped over the anger stage and moved on to bargaining—especially over real estate. The issue for most people I talked with was not whether Miami will someday be underwater—it surely will be. The more pressing question was, How long should I stick around?
If there is such a thing as the Miami Beach sea-level rise intelligentsia, they were all gathered one night in early 2016 in the banquet room at the W, one of the swankiest hotels on the beach. Officially, the event was hosted by Miami Beach Chamber of Commerce, and the theme of the evening as stated on the program was the Economic Impact of Sea Level Rise. The unstated theme of the evening was Holy shit, this is real—what are we going to do about it?
During cocktail hour, I talked with Thomas Ruppert, a lawyer who works on coastal planning with Florida Sea Grant, a nonprofit group that works with governments and universities. “Sea-level rise is like aging,” he told me. “You can’t stop it, you can only do it better or worse.” He talked about a guy in Key Largo who turned in his Bentley for a pickup truck because he was worried about saltwater corrosion, and about the complex legal issues surrounding the question of whether you still own your property when it goes underwater (in most cases, the answer is no). I chatted with a real estate broker who was apoplectic over a talk she’d heard that afternoon about whether real estate brokers should be required to disclose flood risks related to sea-level rise on properties they sell. “That would be idiotic,” she told me, gulping down a gin and tonic. “It would just kill the market.”
When the cocktail party ended, we moved into a banquet room, where a dozen or so tables were set up. The idea was that eight people would sit at each table, including two “influencers,” who would each make a brief presentation and then invite discussion. After fifteen minutes, the influencers would move on to the next table, and so on.
By chance, I was seated at a table with Miami developer David Martin, who was head of Terra Group, a boutique firm that specializes in high-end developments, including a pair of towers in Coconut Grove designed by architects like Danish enfant terrible Bjarke Ingels. Martin, who is Cuban-American, is in his early forties but still has the energy of a teenager. He was born and raised in the Miami area, and by all accounts, had a deep feeling for the place. At the W, he wore his dark hair swept back with gel, stylish black-rimmed glasses, and white jeans and a tight white dress shirt. Architect Reinaldo Borges later described Martin to me as “a developer with a conscience.”
The first speaker at our table was University of Miami geologist Hal Wanless, whom I had gotten to know several years earlier. As always, he looked like he’d just come in from a geology expedition, wearing a white short-sleeved shirt with a rumpled jacket thrown over it. He distributed a six-page handout called “The Coming Reality of Sea Level Rise—Too Fast Too Soon.” He said to all of us at the table, “First thing you need to know is that global warming is real.” He talked about how half the warming since 1997 has been stored in the ocean, which meant that even if we slowed CO2 pollution now, the climate would keep heating up for a long time. He talked about how the city of Coral Gables is developing a plan to deal with sea-level rise in six-inch increments. “That’s the kind of smart planning we need,” Wanless said.
“Okay, I understand that,” David Martin said. “But what I want to know is, how much sea level are we going to see—and how fast?”
“Well, consensus right now is three feet by 2100,” Wanless replied. “But that keeps going up. I don’t think it will be less than four feet by the end of the century. I personally believe it will be fifteen feet.”
There was a moment of silence at the table. Eyes widened.
An expensively dressed real estate broker who was seated near me challenged Wanless: “This can’t be a fear-fest!” she protested, sounding like a six-year-old on the verge of a temper tantrum. “Why is everyone picking on Miami? Why have we become the poster child on this? It is happening all over the East Coast, and the media is picking on Miami.”
“Well, Miami has a lot at stake,” Wanless said.
“I think scientists are pushing this because they want money,” the real estate broker argued.
“I don’t want money,” Wanless said, indignant.
“Maybe not you personally, but you want it for development, for your science program at the university. You can’t scare people, you can’t tell them that Miami is not going to exist. It’s not right. It’s not fair.”
“I’m just telling you what the science says,” Wanless deadpanned. Then it was time for him to rotate to a new table.
Our second speakers came to the table—one of them was Miami lawyer and climate change advocate Wayne Pathman, who had organized the event. “Sea-level rise is a game-changer,” he told us. He talked about the importance of thinking ahead, especially on big building projects. As an example of how not to do it, he mentioned the renovation of the Miami Beach convention center, a $600-million project that does not take sea-level rise into account. “Why would we spend all that money and not elevate it? We could have built water retention areas to help with the flooding, but we didn’t—how crazy is that?” He also brought up the causeways linking Miami Beach with the rest of the city: “We have three bridges, and they’re all vulnerable—with just one and a half feet of sea-level rise, you won’t be able to get to Miami Beach.”
There was much discussion about building codes and height restrictions on buildings. The speakers rotated again, and Josh Sawislak, global director of resilience at AECOM, a global engineering company that specializes in big infrastructure projects, arrived at our table. He was a big guy with glasses and a cheerful manner. Before joining AECOM, Sawislak had been an assistant director of the White House Council on Environmental Quality. He made the case that Miami Beach drives the entire economy of South Florida, and that Florida depends on what happens here. “It’s vital that we keep Miami Beach thriving.”
“Yeah, it is, bro,” David Martin said, looking up from the notes he had been scribbling. “We need a team of fifty people, living and breathing this, who can go away for a year and come up with a solution for this. We need to show the world that there are solutions.” Martin pointed out that some roads are only five to eight feet above sea level, but that the new buildings he was putting up were fifteen to eighteen feet above. “How does that make sense?”
Nobody had a good explanation.
A moment later, Sawislak said, “Miami needs to rebrand itself as capital of resilience.”
“Very true!” the real estate broker exclaimed.
Martin, in his blunt way, turned to Sawislak: “How much will it cost to fix the city?”
“I don’t know,” Sawislak said.
“Can you raise the city up?”
“Yes, but…”
“Can you do it?” Martin pressed.
“Yes, we can do it,” Sawislak said.
“So how much will it cost? Give me a number. A billion? Five billion?” Martin was growing impatient. “I want to know what it would cost to fix the city,” he insisted.
“Well, you have to start from the top, and then work down to local implementation….”
Martin was not satisfied. “The problem is, how do you make budget decisions, how do you allocate tax dollars, if you don’t know what it costs?”
“Well, we could do a study, give you an estimate….”
“We need hard numbers, then we can get something done. I just want to know what it’s going to cost.”
“Well, it’s a big number.”
“I know. But we’re not a Third World country.”
“No, we are not,” Sawislak said.
Shortly after that, the meeting broke up.
There are few corporate headquarters in South Florida, no manufacturing to speak of, no entertainment industry (except sports and porn). Even the illegal drug market, which powered the Miami economy in the 1970s and 1980s, has declined. The core business of Miami is real estate and tourism. It is an empire of property and pleasure.
That makes Miami especially poorly suited to deal with sea-level rise. You go to the beach to escape problems, not to submerge yourself in them. Away from the coasts, Miami is a poor, gritty city with a long history of racial conflict, but all that isn’t part of the economic engine of the region, it’s the exhaust fumes. Miami is about fantasy, about reimagining yourself. It’s not about contemplating the moral implications of choosing to drive an SUV or worrying about water damage to your leather sofa.
A second problem, which is connected to the first, is that there is no state income tax in Florida. State and local governments are largely funded by property taxes. In Miami-Dade County, for example, about one third of the county’s operating budget comes from property taxes, which means that property taxes are hugely important to keeping schools open and police officers happy. And for all intents and purposes, there are only two ways to raise property tax revenue: increase the tax rate or build more and more expensive real estate. In Florida, which prides itself on being a low-tax state, even talking about raising rates is a likely career-ender for any politician who suggests it. So the incentive here has been to keep building and building and not do anything to rock the boat or to make investors fear that the money they’ve parked in that oceanfront condo is not safe.
The third and biggest issue is, nobody wants to spend money to build a more resilient city because nobody owns the risk. When a developer like Jorge Pérez builds a new condo building, the units are typically all sold before he even breaks ground. Soon after the building is completed, he passes it off to the condo association, which is like a corporation that runs the building. And they don’t care about it, because most condo owners keep their units for about four or five years—as long as they think they can get their money out, who cares what becomes of the place in twenty years? Home mortgages have a similar problem. Banks give out thirty-year loans, but in most cases they are quickly sold off and sliced and diced and securitized. At that point, nobody will hold a mortgage for more than a year or so before swapping it with some other bank or financial firm. Why should these firms worry about what’s going to happen to a house or a condo a decade in the future?
The condo boom in Miami and other hotspots like Atlanta and Austin has been fueled in part by young people wanting to live in a sunny city. But in Miami, most of the cash is from overseas. Foreign nationals bought nearly $6 billion worth of real estate in Miami-Dade, Broward, and Palm Beach counties in 2015, more than a third of all local home spending there. Most of these people pay in cash. Cash deals accounted for more than half of all Miami-Dade home and condo sales in 2015—double the national average. The money comes from Venezuela, Brazil, Argentina, Russia, Turkey, you name it. Some of it is clean money, but some not-insignificant part of it is also dirty money, laundered through offshore accounts and other financial shenanigans. For foreign investors, a Miami condo is like a safe-deposit box—park your money here and it’s protected by the US legal system and the basic trustworthiness of the American economy.
Being tied to foreign investment makes the Miami condo market different from the markets in other places (although, to be sure, other big US cities like San Francisco and New York all attract plenty of foreign capital). For one thing, the strength of the Miami market largely depends on the strength of foreign economies—especially those that are tied to commodities like oil. It’s one of the great ironies that when the oil and gas barons of Russia and Brazil make money, they have been sinking it into Miami, a city that is literally drowning as a result of the combustion of the fossil fuels that made them rich. The whole point is that Miami is considered a safe investment. But what if it’s not a safe investment? Foreign money can flow in quickly, as it has in Miami—but it can flow out even faster.
Add all this up, and you get a real estate game in Miami that looks something like this: In a winning scenario, civic leaders address the risk of sea-level rise in a proactive way, lobbying hard for state and federal funds and demonstrating enough political courage to raise taxes so that the city will have the money to elevate streets and causeways, invest in better sewer systems, and keep the low-lying airport functioning smoothly. Foreign investors don’t panic, property values don’t plummet. Population declines and some buildings are abandoned, but innovation flourishes and new ways of living with water emerge—houses float, canals replace streets, rooftops host gardens. The water keeps rising and people keep leaving, but it is a slow, stable retreat buffered by waves of innovation and civility.
In the losing scenario, the more investors understand the risk of sea-level rise to buildings and infrastructure, the less willing they will be to invest in the region. As people sell, the supply of houses and condos rises and prices fall. Property tax revenues decline. Even a modest drop has enormous consequences for the city and county budgets. This means cuts in teachers and cops and firefighters, but it also means less money to buy pumps, fix roads, build seawalls, and build and maintain all the other infrastructure needed to deal with rising seas. Instead of having the courage to raise taxes to make up for the shortfall, politicians, fearful of spooking the market further, fight to keep taxes low. With no money for repairs or upgrades, infrastructure crumbles. And that, in turn, causes more people to sell, and the downward spiral continues. People with money leave, pirates and con artists arrive. Instead of innovation and civility, you get crime and lawlessness. Long before Miami is the New Atlantis, it will be broke and waterlogged and full of half-abandoned neighborhoods where mosquitoes breed and leaking septic systems turn Biscayne Bay into an algae-filled lagoon.
But there’s one other factor in this roulette game that could have a big impact in Miami, especially in the inland areas where, as one condo analyst said to me, “the people who care about the price of diapers live.”
It’s called flood insurance.
In the fall of 2016, I stood on the seawall in St. Augustine, Florida, and watched Hurricane Matthew push the Atlantic into the historic city. Over the course of about two hours, the storm surge overtopped the seawall and flowed across parking lots, down streets, and over curbs, rising higher and higher. Within a half hour, the old city was under several feet of water. It was frightening to witness how fast it happened. As I drove around the abandoned-feeling city, the cold, dark water flowed everywhere, knocking down trees, swirling into and around buildings and homes, carrying branches and debris. The only people I saw were faces in upstairs windows, looking out at the rising water, and a police officer sitting in his car on the Bridge of Lions, blocking access in case anyone was so foolish as to try to get to the beach.
The next morning, the water was gone. People were out surveying the damage. The local radio station was already streaming endless commercials by sleazy lawyers offering help, as one ad put it, “to secure maximum compensation” from the government and insurance companies for storm damage.
This is, of course, an old story in Florida. The biggest risk of living on the Florida coast has always been hurricanes, as residents learned in 1926 and again in 1992, when Hurricane Andrew caused $25 billion in damage. Every year, when hurricane season starts, the question hovers out there—Is this the year? Sea-level rise only increases the risk of damage from hurricanes: the higher the ocean is to begin with, the higher the storm surge will be pushed onto land. When Hurricane Sandy hit New York City in 2012, increased wave height caused by sea-level rise resulted in about $2 billion in additional damage to the city.
Property owners deal with this risk by purchasing hurricane insurance. But hurricane insurance only covers damage from wind events, not water. If a building is damaged by surging waters that were driven by wind (i.e ., a hurricane), then yes, it may be covered. But in most cases flooding from big rains or swollen rivers or high tides is excluded.
In the United States, virtually all flood insurance is provided through the National Flood Insurance Program, which was created in 1968 in the wake of Hurricane Betsy, which caused massive flooding in the Gulf states. In the aftermath, many commercial insurers refused to sell insurance to people who lived in flood zones. To fill the gap, and to give protection to the often poor homeowners who lived in low-lying areas, the NFIP was born.
For the NFIP, flood risks are determined by the Federal Emergency Management Agency, which draws up maps of areas likely to flood based on ground elevations and other factors. Every building within those flood zones that has a mortgage backed by Freddie Mac or Fannie Mae—that is, the two government-sponsored agencies that securitize mortgages made by banks and other lenders—must carry flood insurance. For practical purposes, this means that every building with a mortgage in a low-lying area near the coast or a river must carry flood insurance. Right now, the maximum allowable coverage under NFIP is $250,000 for residential properties and $500,000 for commercial properties.
NFIP was a good idea at the time. But it has grown into a bureaucratic, outdated, mismanaged program that subsidizes insurance rates for homeowners who live in high-risk areas. Whatever its virtues, the program has encouraged building in flood-prone areas and conditioned a generation of American homeowners into thinking that a cheap rate for flood insurance is their natural-born right as US citizens. In 2012, Congress passed bipartisan legislation to reform the program, including a number of measures that would allow insurance rates to rise to better reflect the true cost of the risk. But the political outrage was so ferocious that even the bill’s two sponsors—California Democrat Maxine Waters and Illinois Republican Judy Biggert, neither of whom is known for her political cowardice—voted to repeal it within a year. Since then, Congress has tinkered with some of the rules, but the program is still woefully outdated, using flood maps that have only a vague connection to reality and do not even factor in future sea-level rise. The program is also $23 billion in debt.
“The NFIP is bankrupt,” Wayne Pathman told me, sitting in his office with the Port of Miami behind him. “When I think about the future of South Florida, it’s flood insurance that scares me the most.” As Pathman knows as well as anyone, more than 1.7 million people in Florida have flood insurance policies—the most in America. Those policies cover roughly $428 billion in property value. Miami-Dade County alone contains 346,742 policies, which protect about $74 billion in assets. (Miami-Dade contains more policies than every state except Florida, Texas, and Louisiana.)
To illustrate the risks, Pathman showed me a few slides from a presentation he gives to investors and civic groups in South Florida. The most dramatic slides show the economic impact of a steady rise in flood insurance rates on yearly premiums and home values. In one of Pathman’s examples, for a house that is worth $350,000, a homeowner might pay $2,500 a year in flood insurance. If rates go up by 18 percent a year (the maximum allowed by current law), then in ten years, the homeowner will be paying more than $11,000 for insurance. At the same time, higher premiums decrease the value of the home. If rates went up 18 percent a year, a home that was worth $350,000 in 2016 would lose $172,000 in value and only be worth $177,000 in 2026.
“That would just kill the real estate market here,” Pathman said, point-blank.
Recently, Congress has allowed modest reforms in the NFIP, and insurance rates have started to go up—but nowhere near fast enough to make the program solvent. Still, rising rates are a big challenge for people who own property in flood zones. To make matters worse, the rates are dependent on some mix of luck, bad mapping, and political influence. I met one resident of South Miami who lives in a house that is ten feet above sea level and worth about $500,000. Flood insurance wasn’t required when he bought it in 2002. But then FEMA decided it was in a flood zone and hit him with a bill for $600. He contested the amount, arguing that the house was higher than they thought, which knocked the bill down to $275. But in the last few years, it has gone up again, to $475. In another part of Miami, not far away, I met a middle school teacher who pays $1,873 a year for flood insurance on a house that is worth about $350,000 and is seven feet above sea level. A lawyer I know has a house at the same elevation that is worth $22 million, and he pays $600 a year. Another friend has a house eight feet above sea level in an unfashionable neighborhood south of Miami. His house is only worth $250,000, but he pays $2,500 a year for his flood insurance.
Often mayors and civic leaders argue to have neighborhoods removed from designated flood zone areas simply to keep the real estate market alive. In St. Augustine, ten thousand properties had been removed from a flood zone a few weeks before the hurricane. Many of them were inundated. In 2015, large parts of New Orleans, which are below sea level and protected only by levees, were removed from flood maps. In Broward County, Florida, which is just north of Miami and just as vulnerable, two hundred thousand people’s properties were recently removed from flood zones.
NFIP is such a disaster that Congress ultimately will have no choice but to reform it, allowing rates to rise and more accurately reflect the risk. But as Pathman explained, rising rates are not the only thing that is going to change in years to come. “So far, banks don’t require any more than the minimum of insurance to get a mortgage,” Pathman said. “But in the next decade or so, as the risks of flooding from sea-level rise get clearer, that is probably going to change. They will begin to require that some larger percentage of an asset be insured. Banks will say, ‘What you have now doesn’t cover the risk. We need insurance for thirty to fifty percent of the value of the property.’ If you have a two-million-dollar home, you will need to carry eight hundred thousand dollars in insurance. What happens if insurers don’t want to write that? Maybe they stop giving thirty-year mortgages. And if that happens, this city is in big trouble.”
As Pathman knows, private insurers are starting to get into the flood insurance market now, using sophisticated mapping technologies to pick off low-risk properties and sell their owners policies at competitive rates. But there is no question that as waters rise, insurance rates will go up and up and up. And that is likely to have a profound effect on places like Miami. As Alex Kaplan, a catastrophic risk expert at Swiss Re, the global reinsurance company, told me, in a masterpiece of understatement, “When people have to pay more and own more of the risk themselves, their decisions about where and how they live will change.”
The city of Sweetwater, like most of Miami-Dade County, used to be part of the Everglades. It was a paradise of mosquitoes and alligators, entirely uninhabitable for humans until canals were built in the early twentieth century and the swamp draining began. In the late 1930s, a group of Russian-born circus dwarfs were looking for a place to call home and settled in Sweetwater. The Royal Russian Midgets, as they were called, had big plans, including the development of a Russian midget tourist attraction. It never happened. Today Sweetwater is a city of 21,000 people, mostly Hispanic, with a median household income of $32,000, making it one of the poorest cities in Miami-Dade County. It is also one of the most corrupt. The Miami Herald called Sweetwater “ground zero for Miami-Dade sleaze,” chronicling a long history of dirty cops and city commissioners. In 2014, Mayor Manny Maroño was sentenced to three years in prison for accepting bribes.
Sweetwater is twenty miles from the Atlantic Ocean, so you wouldn’t think sea-level rise would be an issue. But it is. For one thing, Sweetwater sits in a particularly low spot in the region. When it rains, it floods. And because there is no municipal sewer system in Sweetwater, the flooded water carries bacteria from septic system drainage lines, potentially creating a public health hazard. As the seas rise, the water in the drainage canals that open into the bay will rise with them, making the flooding problem in the city worse. More important, water levels in the Everglades, which are just a few miles to the west of Sweetwater, will rise too—and that means the city will flood from both sides. In the not-too-distant future, city officials in Sweetwater may be faced with the same decision that officials in other South Florida cities are confronting: elevate streets, buildings, and critical infrastructure. Or stand by as property values plummet and people leave.
I spent a lot of time in Sweetwater while I was reporting this book. I met engineers with the South Florida Water Management District who were raising the walls of the canals to help reduce flooding. I ate lunch at Nicaraguan and Cuban restaurants and talked to waiters and waitresses about flooding and sea-level rise. I talked to people who were washing their cars and walking their dogs. And my conclusion from all this is that the vast majority of the people who live in Sweetwater have no idea about the risks they face from rising waters. Most of the people I talked to were working two jobs—balancing kids, elderly parents, medical bills, car troubles. They had no time to worry about the future.
But Xavier Cortada does worry. “I’m afraid my people are going to lose everything,” Cortada told me as we drove through the city one sunny afternoon. Cortada is a well-known Miami artist who spends a lot of time trying to raise awareness of the risks of sea-level rise in working-class communities that are far from the glittering coast. I had spent enough time with Cortada to know that when he said “my people,” he meant not just the people in Sweetwater, but also the people in nearby Hialeah, Cuban immigrants, Brazilian immigrants, African-Americans—basically everyone who struggled to get by, living in a flimsy stucco building and driving a car with a rusty undercarriage and working to feed their families with a bank account filled with zeroes.
Cortada was then fifty-two. He is a solidly built man with a large round face and short gray hair; he is openly gay. He somehow manages to grasp the full extent of the tragedy that is facing us, while at the same time maintaining a buoyant and almost cheerful manner. He is the child of Cuban refugees and, before he became an artist in his late twenties, had been a law school student, a street gang counselor, and a mental health counselor. He thinks of art as a continuation of that work—a way to raise awareness and make people think differently about the world around them. He has painted mangroves on city overpasses, created banners that celebrate the discovery of the Higgs boson at the Large Hadron Collider in Switzerland, and led a ten-year tree-planting campaign for schoolchildren in Miami.
Given his background, it’s not surprising that Cortada was acutely aware of the parallels between political refugees of the past and climate refugees of the future. In his painting called Testamento, words from the will of a Cuban grandfather and words from the property deed of a Cuban-American granddaughter are depicted sinking beneath the waves. The grandfather’s property was lost to his grandchildren because of the rise of Fidel Castro and his Communist regime; in a similar way, Cortada believes the woman’s house will be lost to her grandchildren because of the rise of the seas. “We are all displaced people here in Miami,” he told me.
As we drove through Sweetwater, Cortada pointed to strip-mall pawnshops and the low stucco apartment buildings and a few little flat-roofed bungalows. “Despite the corrupt politicians, this is a place where the vast majority of people still believe in the American dream,” he said. “They still believe the way you get ahead is by working hard, saving all your money, then buying a house and working to pay it off. If you get lucky and make some money, you buy a second house. These are the people who are going to get screwed. If you have all your wealth tied up in your house, and your house is underwater, then you have lost everything.”
A section of Testamento by Xavier Cortada, depicting property deeds being lost beneath the waves. (Photo courtesy of Xavier Cortada)
We drove onto the campus of Florida International University, which is at the edge of the city. Cortada had arranged a group discussion about sea-level rise with a small group of community members—students, the city manager, teachers. They talked about being scared whenever it rains. They talked about the city’s $17-million budget, nearly all of which went to cops and schools and elder care, with nothing left for “luxuries” like improved septic systems. Janet Olivera, the principal of Sweetwater Elementary School, described her desire to instill bigger dreams in her kids, 93 percent of whom come from families with incomes below the poverty level. For her students and her school, flooding was just one problem among many. “Some of our kids had to paddle out of after-school classes in canoes,” she told me.
When the meeting was over, Cortada and I walked back to his car. He seemed shaken up. We sat in the parking lot. “What happens when the city commissioners have to choose between senior lunches and flood protection?” he wondered aloud. “What happens when they try to increase the tax rate? Where is the money going to come from? What happens when real estate prices start falling? What happens when people start abandoning their homes? Who do you think is going to bail them out? Nobody. When the water comes, it will come everywhere, to cities up and down the coast. Everyone will be crying for help. Who is going to care about Sweetwater?”
There are people with money, of course, who might want to save Sweetwater when things get desperate. If the price was right and zoning restrictions loosened, they might buy up entire city blocks, knock everything down, build more expensive apartments and condos targeted at FIU students. These new buildings would be higher and more resilient and might buy a few more decades. Then again, maybe not. Maybe putting money into a low-lying place like Sweetwater will just seem foolish, and people with cash will buy up homes for pennies on the dollar and rent them out to poor people who can’t afford to live anywhere else and just let the houses fall into the water, returning the land to the alligators and mosquitoes that lived here before the Russian midgets arrived.
Who knows? But when it comes to dealing with the impacts of sea-level rise, two things matter: money and elevation. Sweetwater has neither.
Eventually Cortada started up his car, and we drove along in silence for a while. The sun was going down. Afternoon traffic was heavy. “I’m worried about what the human response will be to this,” he said as he drove. “If there is enough time and if we can start planning now to make a graceful retreat, it might be manageable. But if people panic and start selling their homes and leaving the city and it becomes every man and woman for themselves, it will be a disaster. My biggest fear is mayhem—the Mad Max response.”
“How about you?” I asked a few moments later. “Are you making plans to sell your house and get out of South Florida?”
“No, not me,” he said, inching his way onto a highway full of distracted commuters. “I’m never selling. I’m going down with the ship.”