GALVESTON — Only three of the 23 homeowners who have signed contracts with the city as part of the Hazard Mitigation Grant Program will walk away from their houses with considerable amounts of cash to reinvest on the island.
The rest, depending on how much they owed on their houses when Hurricane Ike barreled ashore last year, might have to come up with more money to pay off their mortgages, based on information gathered from sales contracts released earlier this month by the city of Galveston under the Texas Open Records Act.
The city council has so far agreed to buy 64 houses, all on the beach front.
The federal government agreed to pay for 75 percent of the appraised value of each house, and the state agreed to cover the 25 percent local match. But the Texas General Land Office limited its contribution to no more than $65,000 per house because the limited state funds had to include buyouts on the Bolivar Peninsula as well.
Property owners who didn’t get good insurance payouts ended up paying a significant portion of the 25 percent local match themselves.
Almost all of the homeowners who came to city hall to beg the city council to approve their buyouts said they intended to take the payout and buy more property in Galveston.
But most of them will have to find a way to pay off the balance of their mortgages, assuming they owe about as much on the property as it was worth. Property owners who don’t have a mortgage or who have been paying on a mortgage for several years may not owe anything more than they got from the government.
The buyout amount is calculated by subtracting any insurance proceeds the property owner received from the appraised value.
Homeowners also get reimbursed for any money they spend repairing or securing the home after the storm.
The only owners who definitely got more than enough money from the program to pay off their mortgages got a bigger insurance payout than the house was worth. In those three cases, the city agreed to give the owners the value of the land — $120,000.
The owner who benefitted the most from the arrangement got $80,480 more from the program than an appraiser said her house was worth.
After collecting $280,480 from her insurance policies, the owner then got $120,000 from the government, for a total of $400,480.
Her house was appraised for only $320,000.
The property owners who had to contribute the most to make up the 25 percent local match had the two most expensive properties of the 23 purchased so far.
The owner with the most expensive house, valued at $1.1 million, got $686,675 in buyout funds.
But because he received only $280,000 in insurance proceeds and the state contributed only $65,000 toward the 25 percent local match, his buyout was $142,225 short of what his property was worth.
The owner who got the biggest buyout, $715,536, received only $78,217 in insurance proceeds, 8 percent of his house’s $930,000 appraised value. His buyout was $151,854 less than the house was worth.
On average, the federal flood insurance policies and the state windstorm policies paid out only 40 percent of what the homes in the buyout program were worth, according to private appraisals.
