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Posted by on Jan 2, 2020 in Featured

How Sea Level Rise is Affecting Commercial Real Estate Law

How Sea Level Rise is Affecting Commercial Real Estate Law

By Barrett Baker


To fully understand how rising sea levels may affect established real estate laws, you first need to understand a couple of things. First, by state law, no one can own what is known as subaqueous beds. In other words, every bit of land that lies below the surface of any navigable waterway in the Commonwealth of Virginia is owned by the state. There are a few exceptions for land owners that were given what was called a “King’s Grant” before the Commonwealth came into existence, which means ownership that was bestowed back in the 1600s, but those grants are few and far between. Second, there is a zone between what is known as the “mean low tide” and the “mean high tide” called the intertidal strip. By state law, any area that falls within that strip is open. In other words, the public has the right to hunt, fish and/or fowl along that zone without your permission, because you do not own that either.

However, when it comes to constructing a pier off of a commercial structure that’s on the water, anything that goes over state-owned beds can be constructed by obtaining a permit from the Virginia Marine Resources Commission. The application is then shared with the Army Corps of Engineers and the Virginia Department of Environmental Quality for approval.

“The definition of what is ‘navigable’ is a pretty low standard,” says Stewart J. “Skip” Sacks, Virginia State Counsel for Stewart Title Guarantee Company. “If you have a pond in your yard, you own that. No one can get there by navigating from another water source, so you’re protected by what’s called ‘riparian rights.’ However, even the smallest creek that works its way to a stream, that works its way to a river, that eventually winds its way to the bay, that little creek would be considered navigable. That also applies to any warehouses, factories or even a shipyard that has canals on their property that accesses larger bodies of water. So, with the issue of rising sea levels, it’s going to move the line where the state-owned subaqueous beds are, where the intertidal strip is, and it’s going to move land owners back. It doesn’t just affect their use, it affects their ability to encumber it, to get mortgages on it. It will also put commercial businesses more and more under the jurisdiction of various environmental groups and regulators.”

There is some good news, though. The Virginia PACE Authority is a group that is working to tackle environment issues that are leading to rising sea levels by providing 100% upfront capital to building owners who want to upgrade their structures with energy efficiency and renewable systems. Basically, it’s a way to incentivize businesses that want to cut down on their electricity use, which in turn is meant to reduce harmful emission being released into the atmosphere by power-generating companies. This is available to all businesses, not just those on the waterfront.

However, Virginia State Sen. Lynwood Lewis, a Democrat from Accomack, introduced legislation that recasts the Virginia Shoreline Resiliency Fund as the Virginia Coastal Protection Fund, which states: “Moneys generated by the sale of carbon dioxide emissions allowances through any auction program administered by the Commonwealth are directed to the Fund.” The measure also requires revenues from the sale of carbon allowances to be distributed to assist localities in implementing hazard mitigation projects in areas that are subject to recurrent flooding and to support energy efficiency programs. In other words, waterfront businesses may be able to apply for grants that would help protect their operations. “Businesses that were previously hesitant to build waterfront structures that could possibly benefit from this fund may now turn around and say, ‘Well, maybe now I can afford to do this site because there are going to be certain tax advantages derived from the money I’m going to invest in flooding mitigation.”

One other area that may eventually apply to commercial real estate law is the definition of wetlands. “There have been flooding events in southern Virginia Beach from the south winds that I assume will push wetlands further and further inland over time,” says Sacks. “I’m not a wetlands expert, but one has to also assume that more and more commercial projects will be impacted by this—both in terms of what is now going to be defined as wetlands and a municipality’s willingness to approve commercial projects that could potentially have an impact on those wetland areas.”

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