Shore Friendly: Financing Coastal Resilience on the Puget Sound | Article

Puget Sound, located in northwestern Washington state, is the second largest estuary in the United States, with 2,500 miles of shoreline. The Puget Sound supports a rich ecosystem of thousands of species, including several different species of whales. The land surrounding the estuary is also home to roughly 4.2 million people occupying 13 counties and several major cities, including Olympia and Seattle. Fifty-seven percent of Puget Sound’s shoreline is used for residential properties.

Like many people living near coastal areas in the United States and around the world, Puget Sound residents face an array of coastal hazards, including sea level rise and erosion. To mitigate the effects of these phenomena, “hard armor” (such as bulkheads—retaining walls placed at the edge of a shoreline) has been installed along 29 percent of Puget Sound’s shorelines.

However, hard armor is often not suitable against sea level rise and erosion, and can actually accelerate erosion by reflecting waves off of its hard surfaces. Additionally, bulkheads destroy natural habitats such as bird nesting grounds and fish nurseries.

Despite the negative environmental impacts of hard armor, there is little the government can do to remove bulkheads on private property. This dilemma led to the creation of Shore Friendly, a brand and program administered by the Washington State Departments of Fish and Wildlife and Natural Resources (with funding from the federal government).

Shore Friendly encourages homeowners to replace hard armor with natural solutions to erosion, or “soft shore protection,” such as gravel, logs, plants, or other proven nature-based methods of erosion control. Because removing bulkheads is voluntary, Shore Friendly programs work to educate residents on the harms of hard armor and provide technical assistance for initial property evaluation for soft shore suitability.

Should homeowners move forward with armor removal, Shore Friendly also works to provide some permitting, design, and restoration assistance. Through education and technical assistance initiatives, Shore Friendly supported the restoration of 14 miles of armor on private property between 2011 and 2017 during five pilot campaigns.

Expanding Program Access Through Financing

While educating homeowners on the more environmentally-friendly options for their properties remains key to removing hard armor, another major barrier is cost. Nine Puget Sound counties offer property tax reductions to residents who “preserve open space” on their private properties, but the initial financial burden of the project can be enough to discourage even the most interested homeowners.

The Puget Sound National Estuary Program regional policy board (Ecosystem Coordination Board) proposed creating a revolving loan fund (RLF) as a potential solution to this issue. An RLF is a self-replenishing financing mechanism that can be used to fund a variety of programs, ranging from small business development to clean water infrastructure. RLFs start with a base level of capital, often consisting of private investment or grants from the state or federal government. This capital is then loaned out to several borrowers. Over time, as these borrowers make repayments and pay interest on their loans, the capital is replenished. When enough repayments are made, the fund uses its reaccumulated capital to issue new loans.

RLFs have been used for decades for a variety of environmental programs. Two of the most well-known environmental RLFs are the Environmental Protection Agency's Clean Water State Revolving Loan Fund and the Drinking Water State Revolving Loan Fund, established by Congress in 1987 and 1996 respectively. There are 51 of each of these RLFs in the United States, one in every state and Puerto Rico, which are used to fund projects such as water supply improvements and wastewater facility construction.

Several RLFs fund shoreline resilience projects. One of the oldest and most established is the Maryland Shore Erosion Control RLF. Created nearly 50 years ago through an act of the Maryland legislature, this RLF has been the blueprint for many subsequent programs, including the Puget Sound RLF.

Creating a New RLF

With the Maryland Shore Erosion Control RLF as a guide, the Puget Sound Institute, Coastal Geologic Services, and Northern Economics (a consultancy) are conducting a feasibility study to determine the efficacy of a similar program for the Puget Sound, which is expected to be completed in 2021. According to Aimee Kinney, coastal law and policy research scientist at the Puget Sound Institute, the RLF would likely offer loans for four types of projects: armor removal, soft shore protection, structure relocation, and structure elevation.

Armor removal (with and without soft shore protection) both helps to rebuild Puget Sound’s marine ecosystems and naturally protects shorelines from erosion. Kinney noted that the other project options—structure elevation and relocation—are included to address concerns about the growing threat of coastal flooding and landslides associated with sea-level rise. By providing households with low-interest loans to undertake these projects, an RLF would help build community resilience to these environmental hazards.

There are multiple factors to consider when designing the RLF to maximize the fund’s impact. Staff will need to determine how many of each type of project they should fund annually, and potential project costs vary widely. Removing armor from a shoreline, for example, can cost between $10,000 and $20,000. Moving a house away from the shoreline, however, can cost upwards of $200,000. Given this range, the relative number of each type of project will greatly influence how funds are distributed.

There will also be several options to consider in regard to administering the loans, including the length of repayment periods, the interest percentage on loans, and eligibility requirements for potential borrowers. Loans would likely be administered through a not-for-profit community development financial institution, such as Craft3, a nonprofit that has experience in running a similar RLF that finances the replacement of failing septic systems in Oregon and Washington state.

The Shore Friendly model of educating and providing technical assistance to property owners has proven to be a winner in restoring local ecosystems and protecting shorelines from erosion. Similarly, RLFs are proven, decades-old financial mechanisms that enable private and public entities to undertake environmental projects with high up-front costs. Combined, the two have the potential to dramatically expand access to property improvement projects that can be a win-win for the environment and property owners.