Waterfront property owners can’t catch a break

Land use policy could hike insurance rates, dent resale value

Tom Kelly
Inman News™

An older couple in Washington state had finally decided to move. Their landmark lakefront home, the headquarters for family reunions, community events and Sunday religious services, would soon be offered for sale.

They’d retired there after decades in their in-city residence, where they raised their children, and now it was time to move closer to the city for in-home care and proximity to a specific hospital.

The couple’s two children had grown and moved away. As much as they wanted to keep their parents’ home in the family, the distance, maintenance and property taxes proved too much for them to handle. It’s difficult to justify a cross-country plane trip and two weeks’ vacation time every year just to visit the lake home, they said.

The family contacted a longtime Realtor friend to conduct a preliminary market evaluation in order to ascertain what amount of money the older couple could expect at sale. The lakefront home’s value comprised more than half of their assets.

The couple was surprised and confused when the Realtor told them: "It depends what happens under the shoreline master plan update."

The original intent of shoreline master plans was to protect and manage a state’s vast and varied lakes, rivers, coastlines and wetlands. It was not a deliberate attempt to devalue the properly permitted structures originally built within the legal boundaries set by local codes.

In some cases, homes built outside new buffer zones have been deemed "nonconforming" and have been difficult to rebuild, even after a fire.

"It just did not make sense to me," said Kevin Ranker, a Washington state legislator from Orcas Island, one of the many islands of the San Juan chain in north Puget Sound. "But it was more than simply not being able to rebuild your house if it burned down. It was the negative perception of ‘nonconforming.’"

Ranker is a self-described "staunch environmentalist" not known for wanting to knock down trees or bulldoze buffers. ("There are people opposed to anything that I do, regardless if it helps property owners.") However, he does get that some older homes were legally built outside present buffer guidelines and should not be penalized for doing so.

"Let’s say a Realtor is showing a gorgeous piece of property to a client and is forced to say, ‘Well, it’s the nicest property I’m going to show you today, but it’s "nonconforming." ‘ That would immediately throw up a red flag to any potential buyer and reduce interest in the home."

In an attempt to resolve the problem, Ranker helped draft a bill that allows local jurisdictions to include in their mandatory shoreline updates the ability for existing owners to replace their structures as long as there is no net loss of shoreline.

"Sen. Ranker is certainly a guy who cares a lot about protecting existing shorelines," said Nathan Gorton, government affairs director for the Washington Association of Realtors. "He would not have run a bill if it would have led to additional encroachment, but he does agree that existing use shouldn’t be discriminated against."

Ranker said the "nonconforming" tag on homes could increase home insurance rates (a hardship, especially for retirees on a fixed income), possibly impose higher home-loan rates, and possibly reduce opportunity for future appreciation.

"It just makes sense for local jurisdictions to adopt because it protects homeowners who followed the rules when they originally built their homes," he said.

Tom Kelly’s book "Cashing In on a Second Home in Central America: How to Buy, Rent and Profit in the World’s Bargain Zone" was written with Mitch Creekmore,  enior vice president of Stewart International, and Jeff Hornberger, the National Association of Realtors’ international market development manager. The book is available in retail stores, on Amazon.com and on tomkelly.com.

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