Village of Shorewood, Illinois Loss Avoidance Study

When public funding advances mitigation projects, local, state, and federal agencies should regularly review the efficacy of these projects by evaluating the losses avoided and implementation challenges. By conducting this type of study, the benefits of the mitigation projects in terms of economic performance using actual events can be identified. The results demonstrate the effectiveness of the projects and can be used to promote the value of investing in mitigation measures.Hazard mitigation is defined by the Federal Emergency Management Agency (FEMA) as “any action taken to reduce or eliminate long-term risk to people and property from natural disasters.” This loss avoidance study estimates flood damages along the DuPage River that would have occurred in Shorewood, Illinois, if at-risk properties had not been mitigated. The 56 properties at the center of this loss avoidance study were acquired and demolished over 15 years using a variety of public funds following the 1996 northeast Illinois floods that resulted in federal disaster declaration DR-1129. This loss avoidance study is funded through the Illinois Department of Commerce and Economic Opportunity (ILDCEO), which administers the Community Development Block Grant Disaster Recovery program (CDBG-DR). Following a wave of federal disaster declarations in 2008, Congress enacted a 6.1 billion dollar nationwide CDBG-DR program tasked to assist with “necessary expenses related to disaster relief, long-term recovery, and restoration of infrastructure, housing and economic revitalization...” in areas affected by natural disasters that year (ILDCEO, 2009). This study investigates 56 properties along the DuPage River in the Village of Shorewood that were acquired and demolished between 1996 and 2010 through four different public sources for a total project investment of 8,035,187, adjusted for 2020 dollars. The calculated total losses avoided are 13,677,575 dollars, resulting in a loss avoidance ratio of 1.70. Additionally, the environmental benefits total 4,339,726 dollars, bringing the total return on investment to 224 percent. This means that at the time of this publication, for every dollar invested in the purchase and removal of the properties, 2.24 dollars of losses avoided and additional benefits were realized. The mitigation benefits, or return on investment, have already surpassed the initial investment, and they will continue to accrue into perpetuity. During the past century, the Village of Shorewood transitioned from a sleepy summer cottage respite along the DuPage River to a rapidly expanding suburban community. The village pays homage to its founding through multiple plans that aim to preserve the floodplain and a small-town community identity while enriching residents and businesses through public parks and recreational opportunities. The village has invested in financial mechanisms to facilitate long-term capital improvement projects, including buyouts, and has local champions who seizethe momentum following events to guide the village to successfully mitigate losses.