Charlie Dill’s dose of reality about living on the Connecticut shoreline hit right in the bank account this past summer. That’s when he discovered his 1920s-era home, four houses off the water on the peninsula in Stamford known as Shippan Point, had been reclassified into a flood zone.
It meant even though the house went through both Tropical Storm Irene and storm Sandy without taking on a drop of water, his mortgage lender would now require flood insurance.
“The tax and insurance for me now is more than the principal and interest on a monthly basis,” said Dill on a hot and sunny early fall morning that underscored why he lives near the water.
And that’s with a low insurance premium. Dill expects it eventually will rise dramatically as part of a nationwide increase in National Flood Insurance Program rates.
“Personally, I understand it,” he said. “If I’m the one that lives in the risky area, then I pay it and it shouldn’t be up to someone who’s chosen to live in a less risky section.” 
Such a sanguine approach to who foots the bill for those who live in harm’s way is likely not widely shared among shoreliners these days. As the U.S. coastline -– including Connecticut’s -– is increasingly at risk, if not battered, by the effects of climate change, the extreme weather that comes with it and the insidious creep of sea level rise, shoreline inhabitants are being asked to pay more of that bill.
In Connecticut, the fallout from that prospect is already apparent from changes to flood insurance and flood zones. But who pays also is sparking a philosophical discussion of not only that question, but of how to pay and whether the socioeconomics of shoreline living are turning the state into a population of haves and have-nots.
“We need to get rid of all these federal subsidies,” said Rob Young, director of the Program for the Study of Developed Shorelines at Western Carolina University in North Carolina and an international expert on shoreline development. “That may sound cruel, but it’s pretty ridiculous for the federal government to be bailing out some coastal communities six or seven times in 25 years as they have in some places.
“There needs to be a real serious debate within the state about who should be paying for it and how it should be paid for and who’s really getting the benefit.”
When the federal government pays, Young said, communities don’t always think through what they should put back or whether they should put anything back. If the community or individuals have to pay, they’re more likely to consider the ramifications.
Who takes the risk?
“This is an issue of fairness,” he said. “It’s an issue of allowing free markets to function and pulling back public subsidies for risk. And it’s an issue of protecting the environment.”
In the meantime, the first line of offense on who pays has fallen to flood insurance. A national program that began in 1968, it gave subsidized rates to homes built before then that did not meet Federal Emergency Management Agency code for shoreline building.
Such artificially low rates combined with huge payouts from hurricanes like Andrew in 1992 and Katrina in 2005 left the insurance program short on cash. A legislative effort to remedy that began before Irene and was completed as the Biggert Waters Flood Insurance Reform Act of 2012, signed into law four months before Sandy hit. It sets out a schedule for moving many, if not most, shoreline properties from subsidized rates to ones that more accurately reflect their flood risk. 
For non-primary residences with subsidies, rates began to increase Jan. 1. On Oct. 1, other types of properties, such as those that have had severe repetitive losses due to flooding, began rate increases. The overall cap on rate increases has also doubled from 10 percent to 20 percent.
Compounding the rising flood insurance rates are FEMA’s new flood zone maps along the immediate coast that went into effect earlier this year. In Connecticut it’s meant that thousands of residents are now in flood zones. (A vastly smaller number have had their flood zones downgraded.) Moving into a flood zone, as people like Charlie Dill learned, means if you have any kind of federally backed loan -– a mortgage, a home equity loan or you used FEMA funds to rebuild from a storm -– you will be required to have flood insurance.
So while the remapping is unrelated to the flood insurance issue or the recent storms -– it began in 2003 –- their coincidental confluence of timing is increasing the financial burden of those living on the coast.
Connecticut shoreline property owners can expect to be especially hard hit. With an older housing stock, about 45 percent of the state’s shoreline properties -– among the highest in the nation -– are subsidized. The national average is 20 percent.
About 18,500 of the more than 41,500 flood insurance policies in the state are likely to be affected by the flood insurance rate changes, said Diane Ifkovic, an environmental analyst with the Department of Energy and Environmental Protection and the state’s flood insurance coordinator.
She said she sometime hears from inland people who “are not happy that we are spending money bailing people out.”
After Irene, there were more than 3,500 flood insurance claims in the state with a total payout of nearly $84 million. Sandy prompted about 6,000 claims and nearly $220 million in payouts so far.
But Ifkovic constantly warns that post-storm FEMA payments and insurance compensation were never designed to pay for everything. Public funds to help rebuild or fortify a home through elevation, which often results in lower insurance premiums, generally will not cover the entire bill. And those bills can be expensive especially for older homes, many of which have passed down through families over generations.
More exclusive than ever
All of it raises the specter that the state’s shoreline, already very income exclusive, will become even more so: the domain of those who can afford the property taxes, generally much higher than inland; the insurance; and the depth of income to rebuild after storms and other environmental calamities.
“A lot of it is going to be on you to protect your house and so you have to factor in that expense,” Ifkovic said. “I think it is going to add to that already kind of high-bar finances.”
But Gary Yohe sees a path out. He is the Huffington Foundation professor of economics and environmental studies at Wesleyan University, a member of the Intergovernmental Panel on Climate Change, and for decades he has studied the economics of climate change.
On the issue of coastline inequity, Yohe and a colleague at the Wharton School at the University of Pennsylvania see potential in a model already in use to finance energy upgrades by using the resulting savings to pay for them. 
Yohe suggests allowing shoreline homeowners to borrow money -– possibly supplied by the state — for climate change adaptations that would help lower their insurance premiums. Then they would use the savings to pay back the loans.
“We provide mechanisms by which the wealthy coastline and the less wealthy part of the coastlines have the same opportunity to take advantage of the ability to spread risk through market mechanisms,” he said. “With any luck it actually wouldn’t cost the state any money.”
For financially strapped towns needing climate change-related infrastructure upgrades: “That’s a really hard one,” Yohe said. “I think that the private sector response is probably a good one.”
As facilities wear out, replace them with more climate-resistant ones. he said. He also pointed to railroad tracks. Instead of replacing them in the salt marsh where they were, spend a little extra money and raise them.
“Who’s responsible or who should pay for it? The answer to every economic question is, it depends,” Yohe said. “Depending on the degree to which the government has created mal-adaptation, they should take some responsibility. To the extent that it’s private risk, individuals should take that into account.”
And the survey said…
A first-of-its-kind national survey by the Stanford Woods Institute for the Environment at Stanford University released earlier this year showed that by nearly 2-1, people said those affected, not the government, should pay for climate adaptation. By more than 5-1, in some cases, respondents said costal property taxes as opposed to all property taxes should be used to pay for specific types of remediation including retreat, seawalls, sand dunes and sand replenishment.
More people felt that coastal state governments, local governments near the coast and businesses near the coast should pay for efforts to reduce the effects of sea level rise rather than the federal government. 
But, said Meg Caldwell, executive director of the Center for Ocean Solutions, which collaborated in the survey, people still wanted government to set policy.
“The public is saying very squarely government has a significant role here,” she said. “And there are policies the government can and should be pursuing.”
Connecticut state Sen. Len Fasano, a Republican whose East Haven district, including his own beach club, was hit hard by both Irene and Sandy, said the government subsidizes all sorts of things from farm programs to home purchases. “This is no different,” he said, though he drew a line at using state money for private beaches.
“As far as the federal programs — we do it for tornado victims, we do it in snow country,” he said. “I don’t think anybody’s going to advocate that in disaster areas our government should turn their backs.”
Connecticut’s shoreline real estate industry is definitely feeling it as policies are debated and shift. While most brokers were reluctant to talk publicly, privately they voiced pervasive concern that buyers now face an increased overhead for shoreline properties and that sellers face lower home values due to the increased risk, insurance and taxes. All of this makes their properties a tougher sell.
“We work with a lot of networks of real estate agents, and they’re finding it’s a concern of people buying homes,” said Scott Tuttle of Tuttle Insurance in Seymour. “These mom and pops, they’re not going to be able to afford these new rates. It is going to be an exclusive area along the coasts.”
Up dramatically
Real estate agent Sandra Reiners in the Guilford and Madison office of William Raveis Real Estate said the bottom line is insurance will go up and go up dramatically sometimes. “It IS an issue,” she said. “It’s certainly a factor that is not a minimal factor anymore.”
What a person can now afford is likely to go down, she and others said. “I had one buyer,” Reiners said. “With all the changes he said he’s going to sit this one out for a year or two.”
Rosemarie Sibilio understands the cost all too well. Her 88-year-old home right on the beach on Shippan Point took a brutal hit in Sandy, leaving the second story sitting on a pair of two-by-fours. “A lot of debris in the house; a lot of seaweed everywhere,” she said. “Seven feet of sand in the front of the house and generally just chaos everywhere.”
She is the third generation of Sibilios to own the house her grandparents bought in 1947, but with $3,500 in insurance every year plus sky-high taxes, she said she can’t afford to stay. Her rebuilt, though not elevated, house goes on the market soon.
“A tough decision to make,” she said. “But I really have to because I’m going to be 65 years old, and my son and my daughter are NEVER going to be able to afford to live here.”
Sibilio understands that owners have to accept a financial burden to live on the coast, but there should be a limit. “I am concerned that there are young people and anybody who would love to have a place on the water, but Connecticut is becoming very exclusive,” she said. “Anybody should be able to look at a place and say I could live there, I’d like to live there.”
Up the block, Charlie Dill said knowing what he knows now, he’d still buy a home near the water, but not in a flood zone.
“For 17 years I’ve lived here and I don’t think I’ve ever, not for a minute, not appreciated the fact that I live at the beach. I mean people go on vacation to the beach and I live at the beach,” he said. “So you just tighten the belt, whatever they say, and make ends meet.”