E-Newsletter: Sea Level Rise and Condominium Development
Hawaii's condominium law requires developers to disclose in their public reports any fact that "would have a material impact on the use or value of a unit or any appurtenant limited common elements or amenities of the project." (Haw. Rev. Stat. § 514B-83(8)). An environmental condition that may have an increasing impact on the use and value of condominium projects is sea level rise. Global sea level rise is predicted to reach between 3.2 and 6 feet by 2100. In Hawaii, sea levels could rise by 3 feet as early as 2070 and as late as 2090.
Are there existing laws and regulations addressing the issue of sea level rise?
Pursuant to Act 32 of 2017, the State Climate Change Mitigation and Adaptation Commission released the Hawai'i Sea Level Rise Vulnerability and Adaptation Report ("the Report") in December 2017. The Report recommends that the State and counties make efforts to incorporate sea level rise data into policy. In June 2018, Act 17 was signed into law, mandating the adoption of rules requiring environmental assessment and environmental impact statements to incorporate the best available data on sea level rise.
What are the impacts of sea level rise on the use and value of real property?
Physical impacts of sea level rise include rising ground water tables, increased flooding, accelerated coastal erosion, salt intrusion, saturated and weakened soils, and drainage problems. Damage due to flooding, hurricanes, and tropical cyclones are exacerbated by sea level rise. The Report estimates that 3.2 feet of sea level rise would result in $19 billion of lost land and structures across the State. Increased flooding and salt water intrusion may cause damage to underground utilities. Although flood insurance is available, some risks cannot be covered through insurance. Property owners must bear the costs of damage to personal property and temporary rehousing as a result of flooding and may pay higher maintenance fees for the costs of preventative construction and repairs to property.
As a condominium developer, why should I be concerned about rising sea levels?
The damage and costs associated with sea level rise may make condominium projects in Hawaii more difficult to build and sell in the future.
Construction in areas such as Waikiki would be made more difficult by rising ground water tables, which often require removal of water below the project surface. Structures and utilities will need to be elevated to minimize damage from flooding. Efforts to remove excess water and flood-proof property may increase the costs of construction.
Additionally, sea level rise and the damage it causes may lead to claims by disgruntled purchasers or owners. Courts in other jurisdictions have found that flooding and soil problems are among the types of conditions on property that are "material" and must be disclosed to purchasers. Developers of property in coastal areas could be held liable for failure to determine whether such land was appropriate for residential use. (Beri, Inc. v. Salishan Props., Inc., 580 P.2d 173 (Or. 1978)). As the risks associated with sea level rise become more prevalent, these risks are more likely to be considered "material facts."
What actions can I take to mitigate damage and claims arising from sea level rise?
In order to avoid property damage and disputes with purchasers or owners that may arise in connection with the costs of sea level rise, developers should consider taking the following preventative measures:
- For projects requiring an environmental assessment or environmental impact statement, prepare such statements with consideration of current sea level rise data;
- Undertake construction in a manner that will prevent damage from sea level rise. This may include elevating structures and utilities, retrofitting existing structures, and flood-proofing underground utilities; and
- Even if not specifically required, disclose the potential physical, economic, and other impacts of sea level rise on units in the project.
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