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entitled 'Coastal Barrier Resources System: Status of Development That 
Has Occurred and Financial Assistance Provided by Federal Agencies' 
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Report to the Honorable Wayne T. Gilchrest, House of Representatives: 
United States Government Accountability Office: 

GAO: 

March 2007: 

Coastal Barrier Resources System: 

Status of Development That Has Occurred and Financial Assistance 
Provided by Federal Agencies: 

GAO-07-356: 

GAO Highlights: 

Highlights of GAO-07-356, a report to the Honorable Wayne T. Gilchrest, 
House of Representatives 

Why GAO Did This Study: 

In 1982, Congress enacted the Coastal Barrier Resources Act. The 
Coastal Barrier Resources Act, as amended (CBRA), designates 585 units 
of undeveloped coastal lands and aquatic habitat as the John H. Chafee 
Coastal Barrier Resources System (CBRS). CBRA prohibits most federal 
expenditures and assistance within the system that could encourage 
development, but it allows federal agencies to provide some types of 
assistance and issue certain regulatory permits. In 1992, GAO reported 
that development was occurring in the CBRS despite restrictions on 
federal assistance. GAO updated its 1992 report and reviewed the extent 
to which (1) development has occurred in CBRS units since their 
inclusion in the system and (2) federal financial assistance and 
permits have been provided to entities in CBRS units. 

GAO electronically mapped address data for structures within 91 
randomly selected CBRS units and collected information on federal 
financial assistance and permits for eight federal agencies. 

What GAO Found: 

An estimated 84 percent of CBRS units remain undeveloped, while 16 
percent have experienced some level of development. About 13 percent of 
the developed units experienced minimal levels of development—typically 
consisting of less than 20 additional structures per unit since 
becoming part of the CBRS, and about 3 percent experienced significant 
development— consisting of 100 or more structures per unit—since 
becoming part of the CBRS. According to federal and local officials, 
CBRA has played little role in the extent of development within the 
CBRS units that we reviewed because they believe that other factors 
have been more important in inhibiting development. These include (1) 
the lack of suitably developable land in the unit; (2) the lack of 
accessibility to the unit; (3) state laws discouraging development 
within coastal areas; and (4) ownership of land within the unit by 
groups, such as the National Audubon Society, who are seeking to 
preserve its natural state. In units that GAO reviewed where 
development had occurred, federal and local officials also identified a 
number of factors that have contributed to development despite the 
unit’s inclusion in the CBRS. These include (1) a combination of 
commercial interest and public desire to build in the unit, (2) local 
government support for development, and (3) the availability of 
affordable private flood insurance. 

Multiple federal agencies have provided some financial assistance to 
property owners in CBRS units that is expressly prohibited by CBRA; 
some assistance allowed under CBRA; and hundreds of permits for 
federally regulated development activities within the unit. 
Specifically, four agencies—the Department of Housing and Urban 
Development, the Department of Veterans Affairs, the Federal Emergency 
Management Agency, and the Small Business Administration—provided 
financial assistance, such as flood insurance and loan guarantees, 
totaling about $21 million that is prohibited by CBRA to property 
owners in CBRS units. Although most of these agencies had processes in 
place to prevent such assistance from being provided, they cited 
problems with inaccurate maps as being a key factor leading to these 
errors. With regard to financial assistance allowed by CBRA, GAO found 
that three federal agencies have provided such assistance but did not 
track how much assistance they provided, so the total extent of this 
assistance is unknown. With regard to permits issued in CBRS units for 
federally regulated activities, GAO identified hundreds of permits 
issued by the Army Corps of Engineers and state agencies authorized to 
issue permits on behalf of the Environmental Protection Agency. These 
permits covered various activities such as the construction of piers, 
the discharge of dredged or fill material into federally regulated 
waters, and permits associated with water discharges from construction 
sites or wastewater treatment systems. 

What GAO Recommends: 

GAO recommends, among other things, that the four agencies that 
provided prohibited loan guarantees or insurance policies to CBRS units 
first verify and then cancel those that are in violation of CBRA. Three 
agencies agreed with our recommendation; VA did not, stating that it 
would inflict unfair harm to the affected veterans. 

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-356]. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Anu Mittal at (202) 512-
3841 or mittala@gao.gov. 

[End of section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

CBRS Remains Largely Undeveloped: 

The Extent to Which Federal Agencies Have Provided Financial Assistance 
and Permits to Entities in CBRS Units Varies: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: CBRS Units We Reviewed: 

Appendix III: Snapshots of Selected CBRS Units: 

Massachusetts: 

Rhode Island: 

South Carolina: 

Florida: 

North Carolina: 

Appendix IV: Programs and Types of Federal Assistance Analyzed: 

Appendix V: Comments from the Department of Housing and Urban 
Development: 

Appendix VI: Comments from the Department of the Interior: 

Appendix VII: Comments from the Department of Veterans Affairs: 

Appendix VIII: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Examples of FEMA Disaster Assistance Since 1998: 

Table 2: CBRS Units Included in Random Sample and Approximate Number of 
New Structures: 

Table 3: CBRS Units Included in GAO's Random Sample That Were Analyzed 
to Determine the Extent of Federal Expenditures and Permits: 

Table 4: Additional CBRS Units Suggested for Review by FWS That Were 
Analyzed to Determine the Extent of Federal Expenditures and Permits: 

Figures: 

Figure 1: Boat Meadow CBRS Unit in Massachusetts: 

Figure 2: CBRS Units We Visited in Massachusetts: 

Figure 3: House and Beach on the Squaw Island, CBRS Unit in 
Massachusetts: 

Figure 4: CBRS Units We Visited in Rhode Island: 

Figure 5: Home with a Backyard in the Prudence Island, Rhode Island 
CBRS Unit: 

Figure 6: Portion of the Prudence Island Complex CBRS Unit: 

Figure 7: Inlet Where Proposed Dredging Project Would Occur in the 
Prudence Island CBRS Unit: 

Figure 8: CBRS Units We Visited in South Carolina: 

Figure 9: CBRS Units We Visited in Florida: 

Figure 10: CBRS Units We Visited in North Carolina: 

Figure 11: House in North Topsail CBRS Unit on the Edge of the Ocean: 

Abbreviations: 

CBRA: Coastal Barrier Resources Act as amended: 

CBRS: John H. Chafee Coastal Barrier Resources System: 

DHS: Department of Homeland Security: 

DOI: Department of the Interior: 

EPA: Environmental Protection Agency: 

FEMA: Federal Emergency Management Agency: 

FHWA: Federal Highway Administration: 

FWS: Fish and Wildlife Service: 

HUD: Department of Housing and Urban Development: 

IHP: FEMA's Individuals and Households Program: 

NFIP: FEMA's National Flood Insurance Program: 

NOAA: National Oceanic and Atmospheric Administration: 

NPDES: EPA's National Pollutant Discharge Elimination System: 

OPA: Otherwise Protected Areas: 

SBA: Small Business Administration: 

VA: Department of Veterans Affairs: 

United States Government Accountability Office: 
Washington, DC 20548: 

March 19, 2007: 

The Honorable Wayne T. Gilchrest: 
House of Representatives: 

Dear Mr. Gilchrest: 

The U.S. coasts are among the most rapidly growing and developed areas 
in the nation. From 1980 to 2003, the population in U.S coastal areas 
is estimated to have increased by 33 million people and is projected to 
increase by another 7 million people by 2008. Coastal barriers, such as 
islands and broad sandy barrier beaches, serve as the mainland's first 
line of defense against the impacts of hurricanes and coastal storms. 
These areas are also biologically rich and provide protection for a 
variety of fish and wildlife species, including migratory birds, 
shellfish, and sea turtles. While the geological composition of coastal 
barriers makes them highly unstable areas on which to build, their 
desirable waterfront locations make them attractive for development. As 
development and population increase, the risk to human life, property, 
and valuable habitat increases, and the natural buffers that minimize 
storm damage are degraded. For example, when Hurricane Isabel made 
landfall along North Carolina's Outer Banks in 2003, it caused 
widespread wind and storm surge damage to several piers, several 
thousand homes and businesses, and damaged or washed away sections of a 
highway. 

Recognizing that development in coastal barrier areas can be impacted 
by the actions and programs of the federal government, Congress enacted 
the Coastal Barrier Resources Act in 1982. The stated purpose of the 
Coastal Barrier Resources Act as amended (CBRA) is to minimize (1) the 
loss of human life; (2) wasteful expenditures of federal revenue; and 
(3) damage to fish, wildlife, and other natural resources associated 
with coastal barriers along the Atlantic and Gulf Coasts and the shores 
of the Great Lakes by restricting future federal expenditures and 
financial assistance, which have the effect of encouraging development 
of coastal barriers. Through CBRA, Congress designated 585 units of 
undeveloped coastal land and associated aquatic habitats comprising 
nearly 1.3 million acres as the John H. Chafee Coastal Barrier 
Resources System (CBRS).[Footnote 1] Congress, through the Coastal 
Barrier Improvement Act of 1990, also designated an additional 1.8 
million acres already held for conservation or recreation, such as 
national wildlife refuges, national parks and seashores, and state and 
county parks, as otherwise protected areas (OPA). 

CBRA does not prohibit development in CBRS units by owners willing to 
develop their properties without the benefit of federal financial 
assistance, such as federal flood insurance, loans, grants, subsidies 
or other forms of direct or indirect federal assistance.[Footnote 2] 
Instead, with certain exceptions, CBRA prohibits federal expenditures 
or financial assistance within CBRS units that might encourage 
development. The prohibition includes--but is not limited to--the 
issuance of flood insurance policies, home loans, loan guarantees, and 
new or expanded infrastructure construction within CBRS units. However, 
the act does exempt certain federal expenditures or financial 
assistance from the general prohibition, such as emergency operations 
that are essential to saving lives, maintaining and replacing existing 
publicly owned infrastructure, energy development, and activities 
related to national security. In addition, CBRA allows agencies to 
issue permits to entities within the CBRS for certain federally 
regulated activities, such as the construction of bridges and docks or 
the discharge of dredged or fill materials into waters that fall under 
federal jurisdiction. 

Under CBRA, no single federal agency is assigned overall responsibility 
for administering activities in the CBRS; instead, all federal agencies 
must abide by the provisions of the act and are required to certify 
annually that they are in compliance with CBRA.[Footnote 3] CBRA does 
assign the Secretary of the Interior responsibility for, among other 
things, the tasks of consulting with other federal agencies that 
propose spending funds within the CBRS, maintaining maps for each CBRS 
unit, and recommending modifications to CBRS unit boundaries, as 
needed. These maps are used by property owners; federal, state, and 
local agencies; and other parties, such as insurance agents, to 
determine whether a property or planned project is within a CBRS unit 
and therefore whether it is ineligible for federal financial 
assistance. Within the Department of the Interior (DOI) these 
responsibilities belong to the U.S. Fish and Wildlife Service (FWS). 
The existing maps that depict CBRS unit boundaries are outdated 
technologically and present challenges to users. In May 2006, the 
Congress directed the Secretary of the Interior to initiate a map 
modernization project for all of the units in the CBRS that is to be 
completed by 2013.[Footnote 4] This effort is designed to create 
digital maps of all CBRS units that are more accurate and less time 
consuming for agencies and others to use than the maps currently 
available. 

In 1992, we reported that development was occurring in some CBRS units 
despite restrictions on federal assistance.[Footnote 5] CBRA has been 
amended several times and the CBRS has expanded to include 
significantly more units. In this context, you asked us to update our 
1992 report and review the extent to which (1) development has occurred 
in the CBRS and (2) federal agencies have provided financial assistance 
and issued permits to entities in CBRS units. 

To determine the extent of development that has occurred within CBRS 
units, we selected a stratified random sample of 91 units located 
throughout the system. The sample included units designated as part of 
the system in 1982 and 1990. We did not include otherwise protected 
areas in our analysis. For each unit, we obtained and electronically 
mapped address or parcel data for structures within the unit 
boundaries.[Footnote 6] Throughout this report, the percentage of units 
that have experienced development is a statistical estimate based on 
our analysis of the development in the 91 randomly selected units, 
which can be projected to the entire system. The random sample was 
stratified by region to select an equal number of units in northern and 
southern regions. In addition, we conducted site visits and/or 
interviewed officials for a subset of 59 units in 13 states to 
determine the extent of and reasons for development. To determine the 
extent of federal expenditures and financial assistance made to 
individuals and entities within CBRS units, we identified and collected 
information on financial assistance provided in selected CBRS units 
from those federal agencies that, based on our previous report and our 
discussions with FWS, were the most likely to have provided assistance. 
These agencies include the Department of Homeland Security's (DHS) 
Federal Emergency Management Agency (FEMA), Federal Highway 
Administration (FHWA), Small Business Administration (SBA), U.S. Army 
Corps of Engineers (the Corps), U.S. Department of Agriculture, 
Department of Housing and Urban Development (HUD), and the Department 
of Veterans Affairs (VA). We also interviewed officials with these 
agencies about the agencies' procedures for preventing prohibited 
expenditures from being provided to individuals and entities in CBRS 
units. To determine the extent to which federal agencies issued permits 
for projects within selected CBRS units, we interviewed officials and 
analyzed data provided by the Corps, the Environmental Protection 
Agency (EPA), and state agencies authorized to administer EPA programs. 
The information we gathered on federal financial assistance and permits 
cannot be generalized to the entire universe of CBRS units. We 
determined that the agency data were sufficiently reliable for the 
purposes of our review. A more detailed description of our scope and 
methodology is presented in appendix I. We performed our work between 
February 2006 and February 2007 in accordance with generally accepted 
government auditing standards. 

Results in Brief: 

Most units within the CBRS remain undeveloped; however, about 3 percent 
of units have experienced significant levels of development. 
Specifically, an estimated 84 percent of all CBRS units have remained 
undeveloped (no new structures were built) since they were included in 
the system, while about 13 percent have experienced minimal levels of 
development--consisting of less than 20 additional structures per unit 
since becoming part of the CBRS. An estimated 3 percent of units 
experienced significant development--consisting of 100 or more 
structures per unit--since becoming part of the CBRS. According to 
federal and local officials, CBRA has played little role in the extent 
of development within the CBRS units that we reviewed. For those units 
that have remained undeveloped, officials identified the following 
factors as being primarily responsible for inhibiting development (1) 
the lack of suitably developable land in the unit; (2) the lack of 
accessibility to the unit; (3) state laws discouraging development 
within coastal areas; and (4) ownership of land within the unit by 
groups, such as the National Audubon Society, who are seeking to 
preserve the natural state of the unit. For those units that we 
reviewed where development has occurred, local officials said that CBRA 
did little to discourage development and identified the following 
factors as being primarily responsible for contributing to development: 
(1) a combination of commercial interest and public desire to build in 
the unit, (2) local government support for development to improve the 
economic base of the area, and (3) the availability of affordable 
private flood insurance. Overall, we found that CBRS units in the 
southern region of the United States are experiencing greater 
development than units in the north. This is largely because the amount 
of developable land is greater in the south. 

Federal agencies have provided some financial assistance that is 
prohibited by CBRA, some assistance that is allowed under CBRA, and 
issued hundreds of permits for federally regulated construction 
projects to property owners and other entities in CBRS units. More 
specifically, 

* Four agencies--FEMA, HUD, SBA, and VA--provided financial assistance 
to property owners in CBRS units that is prohibited by CBRA. For 
example, we determined that 73 FEMA flood insurance policies with total 
policy values of $20 million and 5 HUD insured loans totaling $384,000 
were made to entities in CBRS units and were active in 2006. While 
FEMA, SBA, and VA have procedures in place intended to prevent 
prohibited financial assistance from being provided to property owners 
in CBRS units, HUD does not have such procedures. FEMA officials cited 
the lack of updated CBRS maps and limitations with mapping technology 
as the primary reasons why errors were made and assistance was provided 
to entities within the CBRS. FWS has begun a congressionally directed 
effort to modernize and correct CBRS unit maps. However, according to 
FWS officials, completing that effort is contingent upon receiving 
specific funding for the effort. In the meantime, FWS is working with 
FEMA to update the digital flood maps used by FEMA--an effort that 
should improve FEMA's, insurance agents' and other's ability to 
determine if a property is eligible for federal flood insurance. VA and 
SBA officials acknowledged that they had provided assistance prohibited 
by CBRA and told us that they will monitor compliance with their 
procedures more carefully in the future. HUD officials told us that 
they have no procedures under their single-family mortgage insurance 
programs related to CBRA because it would be unnecessary in practical 
terms. For example, agency officials believed it was unlikely that 
these programs would fund projects in the CBRS because of the high- 
priced homes generally found in these areas. In response to our 
findings, HUD officials said that they would be developing CBRA policy 
guidance and associated training to ensure future compliance. 

* Three federal agencies have provided some financial assistance that 
is allowed under CBRA, but the total extent of this assistance is 
unknown. For example, in the past 10 years, FEMA has provided at least 
$5.6 million in disaster assistance to the unit in North Topsail, North 
Carolina, for debris removal and repairs. Similarly, FHWA has provided 
$1.1 million for road repair to the unit in Cape San Blas, Florida. 
However, because these federal agencies do not track the amount of 
allowable financial assistance they provide to CBRS units, they could 
not provide us with the complete and reliable data needed to estimate 
the total extent of such assistance. 

* The Corps and states authorized by the EPA have issued hundreds of 
permits allowed by CBRA to entities within the CBRS. Since 1983, in 20 
CBRS units the Corps issued at least 194 permits to allow, among other 
things, the construction of piers, mosquito control ditches, erosion 
control areas, and the raising of fish and shellfish. Similarly, since 
1983, in 9 CBRS units EPA-authorized state agencies issued 41 permits, 
primarily for storm water runoff from construction activities and the 
discharge of water from treatment systems. 

We are recommending that FEMA, HUD, SBA, and VA obtain official 
determinations from FWS on whether the properties we identified as 
receiving federal assistance in violation of CBRA are in fact located 
within a CBRS unit and cancel all inappropriate loan guarantees and 
insurance policies. We are also recommending that these agencies 
examine their policies and procedures to ensure that they are adequate 
to prevent federal assistance from being provided to entities in CBRS 
units. In addition, so that federal agencies and other parties can more 
accurately determine whether a property is within CBRA and whether it 
is eligible for assistance, we recommend that FWS place a high priority 
on completing its efforts to develop digital maps that more accurately 
depict unit boundaries. In commenting on our report, DHS, DOI, and HUD 
generally agreed with our recommendations. SBA had no comment on the 
draft report. VA agreed with our findings and one of our 
recommendations but did not concur with the recommendation to cancel 
all inappropriate loan guarantees, stating that it would inflict 
disproportionate harm on lenders and veterans. While we understand VA's 
concerns about the adverse effect that this could have on the 
potentially affected parties, we believe that VA should rescind these 
loan guarantees because they were made in violation of CBRA. 

Background: 

Coastal barriers are unique land forms that function as buffers, 
protecting the mainland against the destructive forces of hurricanes 
and other coastal storms. Coastal barriers also provide habitat for 
migratory birds and other wildlife; and they provide essential nesting 
and feeding areas for commercially and recreationally important species 
of fish and other aquatic organisms such as sea turtles. In the United 
States, coastal barriers are predominantly distributed along the 
Atlantic and Gulf coasts but can also be found in areas surrounding the 
Great Lakes, the Virgin Islands, and Puerto Rico. From the Gulf of 
Maine to Padre Island, Texas, coastal barriers form an almost unbroken 
chain along the coastline. Coastal barriers are generally unsuitable 
for development because the movement of unstable sediments undermines 
man-made structures. Despite this threat, coastal areas that include 
coastal barriers are among the most rapidly growing and developed areas 
in the nation, accounting for 53 percent of the total population in the 
United States according to a 2004 report by the National Oceanic and 
Atmospheric Administration (NOAA), National Ocean Service. 

In 1982, Congress enacted the Coastal Barrier Resources Act to minimize 
(1) the loss of human life; (2) wasteful expenditures of federal 
revenue; and (3) damage to fish, wildlife, and other natural resources 
associated with coastal barriers along the Atlantic and Gulf coasts by 
restricting future federal expenditures and financial assistance, which 
have the effect of encouraging development of coastal barriers. The act 
designated 186 units, comprising about 453,000 acres along 666 miles of 
shoreline from Maine to Texas, which would later be known as the John 
H. Chafee Coastal Barrier Resources System (CBRS). 

Subsequently, the CBRS was further expanded to include additional units 
along coastal states from Maine to Texas, plus units in the Great 
Lakes, the Virgin Islands, and Puerto Rico. Currently, the CBRS 
includes 585 units, which consist of undeveloped coastal barrier lands 
and aquatic habitat that comprises nearly 1.3 million acres of land and 
associated aquatic habitat. The CBRS was also expanded to include 272 
OPAs that comprise an additional 1.8 million acres of land and 
associated aquatic habitat. Most of the land in these OPAs is publicly 
held for conservation or recreational purposes, such as national 
wildlife refuges, national parks and seashores, and state and county 
parks; but some OPAs may also include some private property that may or 
may not be held for conservation. 

Under CBRA, no single federal agency has overall responsibility for 
administering activities within the CBRS; instead, all federal agencies 
must abide by the provisions of the act. CBRA does assign the Secretary 
of the Interior responsibility for, among other things, maintaining 
maps of each CBRS unit and recommending modifications to CBRS unit 
boundaries, as needed.[Footnote 7] Within the Department of Interior, 
these responsibilities belong to the FWS. Both agencies and property 
owners can request decisions from FWS regarding whether specific 
properties are within CBRS boundaries. Finally, agencies must consult 
with FWS to determine whether a proposed project is within the CBRS, 
and if so, whether the project is consistent with CBRA. 

The Coastal Barrier Resources Reauthorization Act of 2000 directed the 
Secretary of the Interior to complete a Digital Mapping Pilot Project 
for at least 50 but not more than 75 units in the CBRS and submit a 
report to the Congress that describes the results of the pilot project 
and the feasibility, data needs, and costs of completing digital maps 
for the entire CBRS.[Footnote 8] Currently, FWS is conducting a pilot 
project to create updated digital CBRS maps that would provide federal 
agencies and others with an enhanced tool for determining accurate 
boundary locations. Later, the Coastal Barrier Resources 
Reauthorization Act of 2005 directed the Secretary of the Interior to 
create digital maps by 2013 for all CBRS units not included in the 
pilot project. However, according to agency officials, the ability to 
conduct this project and the actual completion date will depend upon 
the specific funding that the agency receives for this project. 

CBRA does not prohibit development in CBRS units by owners who are 
willing to develop their properties without the benefit of federal 
financial assistance. Instead, with certain exceptions, CBRA prohibits 
federal expenditures or financial assistance within CBRS units that 
might encourage development. The prohibitions include, but are not 
limited to the following: 

* the construction or purchase of any structure, facility, or related 
infrastructure; 

* the construction or purchase of any road, airport, boat landing 
facility, or other facility on, or bridge or causeway to, any CBRS 
unit; 

* any project to prevent the erosion of, or to otherwise stabilize, any 
inlet, shoreline, or inshore area for the purpose of encouraging 
development; and: 

* the issuance of flood insurance coverage under the National Flood 
Insurance Act of 1968 for any new construction or substantially 
improved property. 

CBRA allows certain federal assistance within the CBRS for limited 
activities after consultation with FWS. However, the act does not 
require the agencies to obtain FWS' approval before acting. Such 
assistance includes, but is not limited to the following: 

* the exploration, extraction, or transportation of energy resources 
that can be carried out only on, in, or adjacent to a coastal water 
area; 

* the maintenance or construction of improvements of existing Federal 
navigation channels and related structures; 

* the maintenance, replacement, reconstruction, or repair, but not the 
expansion, of publicly owned or operated roads, structures, or 
facilities that are essential links in a larger network or system; 

* military activities essential to national security; and: 

* assistance for emergency operations essential to saving of lives and 
protecting property. 

CBRA has no provisions prohibiting the administration of federal 
regulatory activities, such as issuing certain permits, within the 
CBRS. Three federal agencies--the Corps, EPA, and the U.S. Coast Guard-
-issue permits that regulate, among other things, the discharge of 
dredged or fill material into federally regulated waters, including 
wetlands; the discharge of wastes into navigable waters; and the 
construction of bridges over navigable waters. Because much of the CBRS 
is comprised of wetlands and aquatic habitat, activities undertaken in 
these areas can require a permit from one or more of these agencies. 
Federal legislation other than CBRA provides the authority for issuing 
these permits. Among these are the Clean Water Act, the Rivers and 
Harbors Appropriation Act of 1899, and the Bridge Act of 1906, as 
amended. 

CBRS Remains Largely Undeveloped: 

Despite the concentration of significant levels of development in a few 
units, most of the CBRS remains undeveloped. Specifically, we found an 
estimated 84 percent of all CBRS units remain undeveloped--with no new 
structures built since the unit was included in the CBRS. We found that 
factors such as the lack of suitably developable land in the unit and 
state laws discouraging development were responsible for inhibiting 
development. We also determined that an estimated 13 percent of CBRS 
units experienced minimal levels of development--consisting of less 
than 20 additional structures per unit since becoming part of the CBRS-
-while 3 percent of CBRS units experienced significant development--100 
or more additional structures per unit. According to local officials, 
commercial interest and public desire to build in some units and local 
government support for development were some of the key factors 
contributing to the development in the CBRS units we reviewed. Appendix 
II lists the units in our review and the status of development in those 
units. 

The Majority of CBRS Units Have Not Experienced Development: 

On the basis of our analysis of a random sample of CBRS units, we 
estimate that 84 percent of the units experienced no new development 
since their inclusion in the CBRS.[Footnote 9] For the units in our 
sample, the undeveloped units were generally smaller in total acreage 
and had less developable acreage than the developed units. 

Although CBRA does not appear to have been a primary factor in 
discouraging development in the units we reviewed, officials indicated 
that in those areas where CBRA prohibitions are complemented by local 
and state government objectives for development, it is unlikely that 
there will be significant increases in development. Local officials 
cited several factors as being primarily responsible for inhibiting 
development. 

The Lack of Suitably Developable Land. This was a primary factor for 
the lack of development in a number of CBRS units that we 
reviewed.[Footnote 10] For example, the Boat Meadow unit in 
Massachusetts is comprised almost entirely of salt marshes with small 
sand bars scattered throughout shallow water, making the land 
unsuitable for development. Similarly, in the Wrightsville Beach unit 
in North Carolina, the sand continuously shifts, making the land too 
unstable for development. Figure 1 is an example of the type of terrain 
generally found in the Boat Meadow CBRS unit in Massachusetts. 

Figure 1: Boat Meadow CBRS Unit in Massachusetts: 

[See PDF for image] 

Source: GAO. 

[End of figure] 

Lack of Accessibility to the Unit. A number of federal and local 
officials noted that some CBRS units are not easily accessible or are 
located in remote locations that are not desirable to developers. For 
example, a number of units, such as the Bay Joe Wise Complex in 
Louisiana, are only accessible by boat. Other units, such as the Boca 
Chica unit in Texas, are in such remote locations that an official said 
developers are not willing to build there. In addition, several remote 
and inaccessible locations do not currently have the infrastructure 
needed to develop the unit. For example, an official said the lack of 
existing infrastructure and the high cost of constructing development- 
quality water and sewage infrastructure have discouraged development on 
the North Padre Island unit in Texas. 

State Laws Discouraging Development. State laws were cited by a number 
of officials as reasons why development had not occurred in some CBRS 
units. Some states have adopted specific restrictions to prevent 
development in coastal or wetland areas, which are often found in CBRS 
units. For example, a number of units in Massachusetts--such as Black 
Beach and Squaw Island--have not experienced development due in part to 
wetland and coastal protection laws enacted by the state.[Footnote 11] 
In addition, both Maine and Massachusetts do not allow state funds or 
grants to be used for projects to encourage development in barrier 
beaches.[Footnote 12] In Rhode Island, any coastal development project 
must receive a permit from the Rhode Island Coastal Resources 
Management Council, and an official explained that it was highly 
unlikely that permits would be issued for new development in coastal 
regions of the state. 

Preservation Efforts by Conservation Groups. A number of CBRS units 
include land owned by entities seeking to preserve the area in its 
natural state. In some cases, CBRS units have lands that are owned by 
federal, state, or local governments, such as local parks or national 
forests. For example, the Whitefish Point unit in Michigan is part of 
the Hiawatha National Forest. In other cases, land in CBRS units is 
owned by conservation groups seeking to prevent development. For 
example, a significant portion of the Southgate Ponds unit in the U.S. 
Virgin Islands is owned by the St. Croix Environmental Association; the 
Fox Islands unit in Virginia is owned by the Chesapeake Bay Foundation; 
and the Pine Island Bay unit in North Carolina is mostly owned by the 
National Audubon Society. Although these owners have sought to prevent 
development within the unit, as the land becomes more valuable, owners 
may experience pressure to sell it for development purposes. Private 
home owners have also taken actions to prevent continued development in 
one CBRS unit we reviewed. Some portions of the Prudence Island Complex 
unit in Rhode Island are located in private home owners' backyards. 
Home owners have voluntarily placed their land into a conservation 
easement to formally protect it from future development. 

A Small Percentage of Units Have Experienced Some Level of Development, 
but Significant Development Has Been Concentrated in a Few Units: 

Although the majority of CBRS units remain undeveloped, 16 percent have 
experienced some level of development. While the range of development 
varies between one additional structure for some units to over 400 new 
structures for another unit, the amount of development in most of the 
units has been small. Thirteen percent of the units have added less 
than 20 structures. Where there has been significant development, it 
has been concentrated in a relatively small number of units. We 
estimate that only 3 percent of CBRS units have experienced the 
addition of 100 or more new structures since their inclusion in the 
CBRS. 

The majority of the CBRS units within our sample that have experienced 
development are located in the southern United States. Two units 
experiencing the most extensive development were the Topsail, North 
Carolina unit and the Cape San Blas, Florida unit. Several other units 
in the south, such as the Four Mile Village unit in Florida and Bird 
Key Complex in South Carolina, have plans for continued development. 
None of the units in our sample located in the northern United States 
had experienced such extensive development. One factor contributing to 
increased development in the south is the greater amount of developable 
acres; 80 percent of the developable land in the CBRS is located in 
southern units--those located south of New Jersey. 

Local officials cited several factors as being primarily responsible 
for the development that has occurred.[Footnote 13] 

Commercial Interest and Public Desire to Build in the Unit. Officials 
told us that development had occurred in several areas because the 
public's desire to develop in the unit was stronger than the 
disincentive of CBRA. For example, the Currituck Banks unit in North 
Carolina has experienced an increase of at least 400 new residential 
homes since its inclusion in the CBRS. Although this unit only has 
beach access for four-wheel drive vehicles, approximately 75 percent of 
the land south of the unit is currently built to capacity, and the 
increasing demand for residential structures is sending developers into 
the adjoining CBRS unit. Local officials stated that the lack of 
federal assistance did not appear to have any affect on the rate of 
development in the area. Similarly, the Cape San Blas unit in Florida 
has continued to experience increased development with at least 900 new 
structures--primarily single family vacation homes--being built since 
the unit's inclusion in the CBRS. Officials in Cape San Blas believe 
that as other coastal locations around Florida became too expensive to 
find affordably priced ocean front homes, the area of Cape San Blas 
became a highly desirable location. Accounting for the significant 
development that has occurred in the Topsail unit in North Carolina, 
officials stated that the basic reason was simply supply and demand: 
people want to live on the coast of North Carolina, and the area that 
includes the CBRS unit had developable land available. 

Local Government Support for Development. Local officials explained 
that local governments with a pro-development attitude aided in 
increasing development in CBRS units. For example, local officials in 
Topsail, North Carolina told us that most of the 1,600 structures 
located in the Topsail CBRS unit were constructed after the unit's 
inclusion in the CBRS.[Footnote 14] These officials indicated that the 
county government had begun development plans for land within the unit 
prior to its inclusion in CBRS. These officials noted that the county 
had targeted the area for development to promote tourism and increase 
the local tax base, and that certain infrastructure was built to 
support this increased development. As the result of these pro- 
development policies, a large portion of the unit has been developed 
with residential homes--many of which serve as vacation rentals during 
the summer months. Similarly, in the Cape San Blas unit in Florida the 
local government had development plans for the area prior to the 
adoption of CBRA. Local officials there said that the area was already 
subdivided into lots for development and that some existing 
infrastructure, such as roads, water systems, and telephone systems, 
was already built when the unit was added to the CBRS. 

Availability of Affordable Private Flood Insurance. Officials familiar 
with several CBRS units told us that initially restrictions on the 
availability of federal flood insurance had little impact on the 
development that occurred in some CBRS units. Lenders did not require 
flood insurance in order for home owners to obtain mortgage loans at 
the time most of the development occurred. According to these 
officials, home owners within CBRS units that chose to get flood 
insurance could readily get private flood insurance at rates comparable 
with federal flood insurance. However, in the past few years FEMA has 
updated its flood-zone maps and has designated some CBRS areas as 
special flood hazard areas. This change in designation has made areas 
that once did not require owners to obtain flood insurance in order to 
receive financing into areas where owners are now required to have 
flood insurance prior to obtaining mortgage loans. At the same time, 
officials said that in several CBRS units the cost of private insurance 
has skyrocketed and is no longer comparable to national flood insurance 
program rates. According to a local banker in Cape San Blas, a $250,000 
home outside the CBRS unit can obtain flood insurance through the 
National Flood Insurance Program for $470 per year, but private flood 
insurance for homes located in the CBRS unit that are not eligible for 
national flood insurance could cost between $5,070 and $12,500 a year, 
depending on the insurance company. 

The new requirements mandating flood insurance for mortgages in some 
units and the increased costs of private flood insurance may begin to 
impact development in the CBRS in the future, according to local 
officials. For example, officials in Currituck County noted that the 
flood zone determination change had significantly reduced the number of 
building permits issued for new development in the CBRS unit since 2005 
and suggested that the unit will now experience less future 
development. Likewise, the Cape San Blas unit in Florida has also been 
affected by the flood zone determination change. A local official 
stated that since FEMA adopted a special flood hazard area for the CBRS 
unit in 2002, property values in the unit have decreased by 30 percent. 
Because the cost of private flood insurance has risen dramatically in 
the last couple of years, a number of residents and officials 
representing areas within the CBRS, including Cape San Blas and 
Topsail, have unsuccessfully attempted to remove the areas from the 
CBRS, primarily so that residents would be eligible to obtain flood 
insurance through the National Flood Insurance Program. 

Our review of CBRS units did not include OPAs because FWS officials 
informed us that these areas were classified separately from system 
units and that the land was already protected from development by other 
mechanisms--such as its designation as a state or federal park. OPAs 
are not under the same limitations as CBRS units; the only restriction 
placed on federal spending within these areas is the prohibition on 
federal flood insurance. However, we found instances where land within 
OPAs was sold to private developers and development had increased in 
the area. For example, in the St. Andrews Complex unit in Florida, the 
Bahia de Tallaboa unit in Puerto Rico, and the Mustang Island unit in 
Texas, development has continued despite the units' designation as an 
OPA. 

The Extent to Which Federal Agencies Have Provided Financial Assistance 
and Permits to Entities in CBRS Units Varies: 

We found that federal agencies have provided some financial assistance 
prohibited by CBRA, some assistance allowed by CBRA, and hundreds of 
permits for federally regulated construction projects to entities 
within the CBRS units included in our review. Four agencies provided 
financial assistance expressly prohibited by CBRA to property owners in 
CBRS units. Three federal agencies also provided financial assistance 
to entities in CBRS units that is allowed under CBRA, but they do not 
track the amount of assistance they provided. As a result, we were 
unable to determine the total extent of such assistance. Finally, the 
Corps and EPA-authorized state agencies have issued hundreds of permits 
for a variety of federally regulated construction projects within CBRS 
units. 

Four Federal Agencies Have Provided Some Financial Assistance That Is 
Prohibited by CBRA: 

Four federal agencies--FEMA, HUD, SBA, and VA--provided some financial 
assistance that is expressly prohibited by CBRA to property owners in 
CBRS units. Our review of approximately 4,500 addresses uncovered 73 
active FEMA flood insurance policies, 37 inappropriate FEMA disaster 
assistance payments, 5 HUD home loan guarantees, 3 SBA disaster loans, 
and 11 VA home loan guarantees that should not have been made to 
property owners in CBRS units. Although three of the four agencies have 
procedures to prevent and detect assistance to property owners in CBRS 
units, agency officials cited several reasons why this erroneous 
assistance was provided in violation of CBRA, including the lack of 
updated CBRS maps, which makes determining the precise locations of 
properties and CBRS unit boundaries difficult. 

FEMA National Flood Insurance Program: 

FEMA provides federally backed flood insurance for home owners, 
renters, and business owners in participating communities that are not 
in the CBRS. Structures that are built or substantially improved 
following their inclusion within the CBRS are not eligible for federal 
flood insurance. However, our review of policies active as of May 2006 
identified 73 National Flood Insurance Program (NFIP) policies for 
properties in CBRS units. The flood insurance policies ranged from 
$26,500 to $350,000 and totaled approximately $20 million. Although 
these policies violated the CBRA, FEMA officials said it is unlikely 
that the agency would actually pay a claim on these policies, because 
before paying a claim, FEMA adjusters would first conduct a physical 
inspection of the property and determine whether it was in a CBRS unit. 
If a property was found to be within the CBRS, FEMA would deny the 
claim and refund the policy owner's insurance premium. 

To prevent flood insurance policies from being issued for properties in 
CBRS units, FEMA's Flood Insurance Manual requires that private 
insurance companies participating in the NFIP determine if a property 
is eligible for flood insurance. Prior to issuing a policy, the agent 
is required to review FEMA's flood insurance maps to determine if the 
property is located within the CBRS and collect information to 
determine if the structure was built prior to the unit's inclusion in 
the CBRS. However, according to FEMA, insurance agents have made 
mistakes and issued policies in violation of CBRA for two reasons: 

* It may be difficult to locate a property and determine whether it is 
in a CBRS unit, especially when a property is near or adjacent to a 
CBRS boundary. For example, at one location we visited, we identified 
homes adjacent to each other where one property was in the CBRS and the 
other was not. In other CBRS units, some homes had backyards that fell 
within the CBRS. Furthermore, new streets may not be depicted on 
existing maps. According to FEMA officials, the insurance agent must 
often make a judgment call when determining whether a property is 
within the CBRS. 

* The agent may not be familiar with CBRA prohibitions and may not 
follow procedures. According to FEMA officials and officials from a 
private insurance agency with whom we spoke, some home owners obtain 
flood insurance from insurance agents located inland, away from coastal 
areas, who might not have been aware of the CBRA restrictions. 

According to FEMA officials, the agency takes a number of steps to 
identify properties that may have inappropriately received federal 
flood insurance. Since 1998, FEMA has sought to assist private 
companies with identifying flood insurance policies that potentially 
were ineligible for flood insurance coverage because the property was 
within the CBRS. To accomplish this task, FEMA uses computer mapping 
technology to plot addresses and determine whether they are potentially 
in a CBRS unit.[Footnote 15] However, the computer software FEMA relies 
on cannot always correctly locate all addresses on the map. For 
example, this can occur if a street or address range is not included in 
the software, which can happen when a street or a range of addresses is 
new. Twenty of the 73 flood insurance policies that we determined were 
issued for a property that was in a CBRS unit could not be located on a 
map by FEMA's computer software. In addition, computer mapping 
technology has inherent inaccuracies and may plot properties in the 
wrong location. For example, using our mapping software, we determined 
another 20 of the 73 flood insurance policies were for a property in 
the CBRS but were not identified as being in a CBRS unit by FEMA's 
mapping software.[Footnote 16] FEMA officials said they recognize that 
their software may not always identify new addresses and streets in 
CBRS units, and so the agency obtains quarterly updates of new streets 
and addresses and rechecks insured properties against the updated 
information to identify any that might be located in CBRS units. 

When FEMA's computer plotting reveals that a property for which a 
federal flood insurance policy has been issued may be in a CBRS unit, 
FEMA reports the error to the insurance company. Once an insurance 
company receives notification in the form of an error message that they 
may have written an ineligible policy, the company may take one of four 
actions: 

1. The company can agree that the property is located in a CBRS unit 
and cancel the policy back to the inception date of coverage. 

2. The company may agree that the property is located in a CBRS unit 
but prove that the building was constructed prior to the CBRS 
designation. In these cases, the policy is deemed valid and may remain 
in effect. 

3. The company can disagree that the property is located in a CBRS unit 
and assume responsibility for the risk. In these cases, the policy 
would remain active, FEMA would continue to collect the premiums, but 
the insurance company would be responsible for paying any claims filed. 
Insurance companies have assumed liability for the risks associated 
with 29 of the 73 flood insurance policies that we identified had been 
issued for properties located in CBRS units. 

4. The company can request that FWS make an official determination 
regarding whether the property is in the CBRS. If FWS determines that 
the property is in a CBRS unit, the policy is then cancelled back to 
the inception date of coverage. However, FEMA officials expressed 
concern about the length of time FWS takes to make a property 
determination. Typically, it takes FWS a year to respond to inquiries 
for a property determination. As of January 17, 2007, FEMA was waiting 
for determinations on 544 addresses from FWS. 

According to FWS officials, the process for making property 
determinations is labor intensive because they are using CBRS maps that 
were created more than 15 years ago and are not available in digital 
format. FWS officials told us that modernized digital maps of the CBRS 
would improve the accuracy and efficiency of the property determination 
process, allowing its customers and partners, in many cases, to 
determine within minutes whether a property is located within the CBRS. 
In 2000, the Congress directed the Secretary of the Interior to create 
draft digital maps for at least 50 and not more than 75 units, or 
nearly 10 percent of the CBRS.[Footnote 17] FWS has created draft 
digital maps of 60 CBRS units that it must submit to the Congress for 
its consideration.[Footnote 18] In May 2006, the Congress also 
instructed the Secretary of the Interior to create maps for the rest of 
the CBRS by May 2013.[Footnote 19] According to FWS, digital maps would 
replace the paper maps currently being used that are (1) outdated 
technologically and (2) sometimes inaccurate and may not align 
precisely with the natural or man-made features that the Congress 
intended the boundaries to follow. FWS officials believe that 
modernizing the CBRS maps will address the inaccuracies of the existing 
maps. 

To implement the map modernization project, FWS officials said that 
they investigated several options for procuring data to produce the 
required draft digital maps, including federal, state, local, and 
private sources. In many cases, FWS was able to obtain data internally 
or from other federal agencies at little or no cost, including wetlands 
data and national wildlife refuge boundaries from within FWS, aerial 
imagery from the U.S. Geological Survey, hydric soils data from the 
Department of Agriculture's Natural Resources Conservation Service, and 
digital boundaries for many federally protected areas from NOAA. 

FEMA is also conducting a map modernization effort that includes 
preparing digital flood insurance maps. In 2006, FWS entered into an 
interagency agreement with FEMA whereby FWS will place current CBRS 
boundaries onto FEMA's digital flood maps. FEMA provided FWS with 
$40,000 for an initial set of maps for some units. While the FEMA maps 
are not the "official" CBRS maps adopted by the Congress, FWS officials 
said that these digital maps will allow property owners, insurance 
agents, and others to have a much more accurate and precise tool for 
determining whether a property or project site is located near a CBRS 
area and would require an official determination from FWS. 

FEMA Individuals and Households Program: 

FEMA's Individuals and Households Program (IHP)[Footnote 20] provides 
housing assistance and other assistance, such as medical or funeral 
assistance, for needs arising from a declared emergency or major 
disaster. For owners or renters residing in CBRS units, FEMA 
regulations allow providing temporary housing assistance (rent) but 
generally do not allow providing funds for housing repairs or 
construction assistance. However, we found that since August 26, 1998, 
FEMA provided 37 disaster assistance payments to individuals in CBRS 
units included in our review totaling $25,393. Most of the payments 
were for purposes labeled by FEMA as "Other Eligible Property Items." 
According to FEMA officials, "Other Eligible Property Item" payments 
were for post-disaster purchases for emergency needs such as chainsaws, 
generators, heating fuel, dehumidifiers, air purifiers, and wet/dry 
vacuums.[Footnote 21] These payments were made under six different 
disaster declarations, all to individuals living in CBRS units in North 
Carolina and Florida. The units included Coconut Point, Cape San Blas, 
Blue Hole, Ponce Inlet, and Ormond-by-the-Sea in Florida, and Currituck 
Banks and Topsail in North Carolina. In addition to payments for "Other 
Eligible Property Items," one payment of $645.95 was made for home 
repairs. FEMA procedures require officials making payment 
determinations in potential CBRS areas to document that the property is 
not in a CBRS unit prior to approving assistance for those types of 
assistance not allowed in such areas. However, according to a FEMA 
official, in these cases the procedures were not followed when these 
payments were approved.[Footnote 22] 

Department of Housing and Urban Development: 

Through its Mortgage Insurance Homes program, HUD insures lenders 
against losses on mortgage loans used to finance the purchase of 
proposed, under construction, or existing housing, as well as to 
refinance indebtedness on existing housing as long as these properties 
are not located in the CBRS. In our review of insured home loans active 
as of June 2006, we identified five HUD-insured loans for properties 
located in CBRS units. Three of the loans were for properties in the 
Prudence Island Complex unit in Rhode Island; one in the Topsail unit 
in North Carolina; and one in the Cape San Blas unit in Florida. These 
insured loans were approved by HUD between 1985 and 2000, with loan 
amounts ranging from approximately $50,000 to $137,000, for a total of 
about $384,000. 

Despite the fact that all of HUD's programs are subject to CBRA 
restrictions, HUD officials said that they have no procedure under 
their single family (one-to four-family property) mortgage insurance 
programs related to CBRA. HUD officials further indicated that while 
they could implement better controls for restrictions on providing 
single family mortgage insurance in the CBRS, it would be unnecessary 
in practical terms. HUD officials provided three primary reasons why it 
was unlikely that a HUD-insured loan would be provided for a property 
in a coastal area. First, HUD regulations require that flood insurance 
be obtained under the NFIP before HUD will insure single family 
mortgages for properties in FEMA-identified special flood hazard areas. 
HUD officials stated that because properties located in the CBRS would 
likely be in special flood hazard areas and the NFIP flood insurance is 
prohibited in the CBRS, HUD would not be able to insure single family 
mortgages for these properties. However, HUD's explanation does not 
account for the fact that portions of CBRS units may not be in a 
special flood hazard area and that FEMA prohibitions are not universal 
as the NFIP flood insurance may be available to homes built before the 
area's inclusion in the CBRS. Second, most HUD insurance for single 
family mortgages is for first-time home owners who typically are not 
buying homes in the higher priced ranges found in the CBRS. Third, 
property values in the CBRS are such that mortgage amounts would likely 
exceed the program limits for typical HUD-insured single family 
mortgages, as the mortgage limit for a one family property ranges from 
approximately $170,000 to $310,000, depending on the location. In 
response to our findings, HUD officials said that the department would 
be developing CBRA policy guidance and associated training to ensure 
future compliance. 

Small Business Administration: 

Following the issuance of a disaster declaration, SBA provides disaster 
loans to eligible home owners for repair or replacement of their 
primary residences. However, residences located in CBRS units are 
ineligible for this disaster loan assistance. During our review of the 
period January 1, 1990, through May 30, 2006, we found that SBA had 
made three disaster loans for home repairs for properties in CBRS 
units.[Footnote 23] The three loans ranged from $5,000 to $10,000 and 
totaled $24,200. These loans have been paid in full and were made to 
individuals in the Florida CBRS units of Blue Hole and Cape San Blas, 
and the Creek Beach unit in New York. To prevent disaster loans from 
being provided to properties within the CBRS, SBA procedures call for 
agency staff to consult FEMA's flood maps to determine whether a 
property is within a CBRS unit before approving disaster loans. SBA 
officials acknowledge that two of these loans should not have been 
approved, but did not agree that the third loan was for a property 
within CBRS. These officials stated that it is sometimes difficult for 
agency staff to determine if a property is within the CBRS with the 
existing FEMA flood maps. SBA officials said that as a result of our 
review the agency will increase the number of quality assurance reviews 
conducted in any disaster area that includes a CBRS unit. 

Department of Veterans Affairs: 

VA issues home loan guarantees to help eligible recipients obtain homes 
or refinance home loans except in CBRS units. However, our review of 
home loan guarantees active as of September 2006 found that VA had 
provided 11 loan guarantees for homes in a CBRS unit. Nine of these 11 
loan guarantees were issued to home owners in the Topsail unit in North 
Carolina, while the other two were provided to home owners in the 
Ormond-by-the-Sea unit in Florida. The amount of the 11 loan guarantees 
ranged from a low of about $14,340 to a high of about $45,900 for a 
total value of $352,188. 

VA officials told us that the agency's Lenders Handbook includes 
provisions that inform readers that properties in CBRS units are 
ineligible as security for a VA-guaranteed loan. VA appraisers are 
instructed during training sessions to reject assignments appraising 
such properties. Also, to verify that loan guarantees are provided 
lawfully, agency officials said that they or their designees (1) 
examine appraisal paperwork for all loan applications looking for 
anomalies; (2) inspect 10 percent of all loan applicant properties to 
verify, among other things, that they are not in CBRS units; (3) review 
paperwork for 10 percent of all closed loans; and (4) visit lender 
offices and sample VA loans for compliance. In reviewing the provisions 
included in VA's handbook, we determined that it inaccurately instructs 
appraisers to obtain the maps for determining the location of a 
property from the U.S. Geological Survey rather than from FWS. 

VA officials acknowledge that agency staff should have identified the 
11 properties we discovered as located within the CBRS during their 
initial review of the appraisal paperwork. VA officials explained that 
as a result of our findings, they have (1) corrected the Lenders 
Handbook provisions to instruct staff to use maps maintained by FWS and 
(2) instructed officials at VA regional loan centers to modify their 
training to both lenders and appraisers to emphasize the procedures 
designed to prevent issuing loans to persons who reside in CBRS units. 

Federal Agencies Have Provided Assistance That Is Allowable under CBRA, 
but the Extent of Such Assistance Is Unknown: 

We found that three federal agencies had provided financial assistance 
allowable under CBRA to entities within the CBRS. We were unable to 
determine the total extent of such assistance, because these federal 
agencies do not track the amount of allowable financial assistance they 
provide to entities in CBRS units, and they could not provide us with 
the data necessary to estimate the total assistance provided. 

Federal Emergency Management Agency: 

After a disaster, FEMA may provide disaster funding in CBRS units for 
emergency assistance such as debris removal and emergency protection 
measures. FEMA may also provide disaster funding following an emergency 
for activities like repairing roads or utilities, repairing existing 
water channels, or disposing of sand. Because FEMA could not provide 
reliable data on whether this disaster assistance was within a CBRS 
unit for each project, we could not determine the full extent of the 
allowable disaster assistance provided by FEMA. However, with FEMA's 
data, we were able to identify that some of the projects were within 
CBRS units. For example, since 1998, FEMA provided at least $5.6 
million in disaster assistance to the Topsail unit in North Carolina to 
fund projects to remove debris, replace signs, and repair beach access 
crosswalks and public beach facilities after Hurricanes Ophelia, Floyd, 
Irene, and Isabel. Similarly, in both the Cape San Blas, Florida and 
Topsail, North Carolina CBRS units, FEMA provided funds to construct an 
emergency berm in order to protect existing development after storms 
destroyed protective dunes and caused beach erosion. Table 1 provides 
examples of some of the disaster assistance FEMA has provided to CBRS 
units since 1998. 

Table 1: Examples of FEMA Disaster Assistance Since 1998: 

Storm and year: Floyd and Irene, 1999; 
Unit: Topsail Beach, North Carolina; 
Project description: Replace traffic control signage; 
Total obligated: $13,979. 

Storm and year: Floyd and Irene, 1999; 
Unit: Topsail Beach, North Carolina; 
Project description: Debris removal; 
Total obligated: 1,304,417. 

Storm and year: Charley and Bonnie, 2004; 
Unit: Ormond-by-the Sea, Florida; 
Project description: Restore an electrical substation; 
Total obligated: 11,361. 

Storm and year: Ivan, 2004; 
Unit: Cape San Blas, Florida; 
Project description: Construct an emergency berm; 
Total obligated: 1,423,766. 

Storm and year: Frances, 2004; 
Unit: Ponce Inlet, Florida; 
Project description: Restore Turtle Rehabilitation Laboratory at the 
Marine Science Center; 
Total obligated: 23,666. 

Storm and year: Dennis, 2005; 
Unit: Dog Island, Florida; 
Project description: Repair damaged road surfaces; 
Total obligated: 37,372. 

Storm and year: Dennis, 2005; 
Unit: Dog Island, Florida; 
Project description: Debris removal; 
Total obligated: 470,833. 

Storm and year: Ophelia, 2005; 
Unit: Topsail Beach, North Carolina; 
Project description: Construct emergency berms; 
Total obligated: $1,167,146. 

Source: GAO analysis of FEMA data. 

[End of table] 

As mentioned earlier, FEMA is also allowed to provide limited disaster 
assistance to individuals through the IHP after the President declares 
an emergency or major disaster in an area, including CBRS units. We 
found that since August 26, 1998, FEMA provided $8,237 to 16 
individuals in CBRS units for emergency rental assistance. These 
payments were made to individuals in CBRS units in Florida and North 
Carolina. 

Federal Highway Administration: 

An exception to the limitations within CBRA allows FHWA to administer 
federal funding for projects on publicly owned or operated roads that 
are essential links in a larger transportation network and do not 
expand the existing transportation system. Because, as stated in agency 
guidance, FHWA determined that all roads within the federal highway 
system, including those in CBRS units, are usually "essential links" in 
a larger transportation network, most projects within CBRS units are 
permissible under CBRA after a consultation process with FWS. Although 
FHWA does not maintain data on which projects were located within CBRS 
units, we were able to identify--based on information provided by state 
officials--some examples of allowable projects in CBRS units that 
received federal funds from FHWA. For example, according to data from 
the Florida Department of Transportation, federal funding totaling 
approximately $1.1 million was provided to repair a road in the Cape 
San Blas unit after each of three hurricanes--Opal, Earl, and Ivan. 

Corps of Engineers: 

An exception to the limitations within CBRA allows the Corps to provide 
assistance in CBRS units after consultation with FWS as part of its 
mission to maintain and improve existing navigation channels. We found 
that since 1983, the Corps performed at least 24 such projects in CBRS 
units, and most were to dredge channels. Many of these projects 
occurred along the Atlantic Intracoastal Waterway or in channels 
connecting this waterway to the Atlantic Ocean. Of the 24 projects, two-
thirds occurred in CBRS units in South Carolina while the others were 
located in North Carolina, Florida, and Massachusetts. However, it is 
difficult to calculate the value of the Corps' assistance to CBRS units 
because nearly all of the Corps' projects involve activities both 
inside and outside CBRS units, and the Corps does not breakout project 
costs based on CBRS boundaries. 

EPA-Authorized State Agencies and the Corps Have Issued Permits for 
Federally Regulated Construction Projects in CBRS Units: 

EPA-authorized state agencies and the Corps have issued permits to 
property owners and entities within CBRS units for a number of 
different projects.[Footnote 24] Since 1983, EPA-authorized state 
agencies issued at least 41 permits to property owners and entities in 
nine different CBRS units. All of the permits were associated with the 
National Pollutant Discharge Elimination System (NPDES), primarily to 
allow storm water discharges from construction sites or for discharges 
from water or wastewater treatment systems. Florida, as an EPA- 
authorized permitting state, issued 38 of the 41 permits. Of the 
remaining three permits, two were issued by New York and one by the 
U.S. Virgin Islands, both of which are authorized by EPA to issue NPDES 
permits. 

The Corps was unable to provide a complete list of all the permits it 
had issued since CBRA was enacted. However, we have determined that 
since 1983, the Corps issued at least 194 permits in 20 different CBRS 
units for purposes such as erosion control, constructing piers and 
mosquito control ditches, filling wetlands, and raising fish and 
shellfish. Of these 194 permits: 

* Eighty-three were authorized under Section 10 of the Rivers and 
Harbors Appropriation Act of 1899. The act gives the Corps authority to 
issue permits to construct piers or marinas in navigable waters. 

* Eighty-seven were authorized under Section 404 of the Clean Water 
Act. Section 404 provides the Corps with the authority to issue or deny 
permits for discharges of dredged or fill material into waters under 
federal jurisdiction, including wetlands. 

* Twenty-four involved activities covered by both Section 10 of the 
Rivers and Harbors Appropriation Act and Section 404 of the Clean Water 
Act. Almost two-thirds of these permits were issued to property owners 
and entities in CBRS units in Florida; the remaining permits were 
issued to entities in units in the Carolinas and New England. 

Conclusions: 

Although CBRA has limited the amount of federal financial assistance 
provided to some CBRS units, it does not appear to have been a major 
factor in discouraging development in those CBRS units that have 
developable land, local government and public support for development, 
and access to affordable private flood insurance. Despite CBRA's 
prohibitions on federal assistance to units in the CBRS, four federal 
agencies--FEMA, HUD, SBA, and VA--have provided such assistance. While 
the amount of assistance provided in violation of CBRA is not large, it 
does raise concerns about the ability of federal agencies to fully 
comply with the requirements of the act. Unless federal agencies follow 
the procedures they have established to prevent the provision of 
prohibited assistance and have access to up-to-date and reliable maps 
to ensure that accurate determinations are made for properties located 
in CBRS units, it is likely that some violations of CBRA may continue 
to occur. 

Recommendations for Executive Action: 

In light of the federal financial assistance that was provided in 
violation of CBRA, we are recommending that the Secretaries of DHS, 
HUD, and VA, and the Administrator of SBA direct their agencies to (1) 
obtain official determinations from the FWS on whether the properties 
we identified as receiving federal assistance in violation of CBRA are 
in fact located within a CBRS unit and if they are, cancel all 
inappropriate loan guarantees and insurance policies that have been 
made to the owners of these properties and (2) examine their policies 
and procedures to ensure that they are adequate to prevent federal 
assistance that is prohibited by CBRA from being provided to entities 
in CBRS units. 

In addition, given the importance of digital maps to making accurate 
CBRS determinations, we are recommending that the Secretary of the 
Interior direct FWS to place a high priority on completing its efforts 
to develop digital maps that more accurately depict unit boundaries. 

Agency Comments and Our Evaluation: 

We provided a draft of this report to the Department of Defense, DHS, 
DOI, HUD, SBA, and VA. We received comments via e-mail from the 
Department of Defense, DHS, and SBA, and we received written comments 
from the DOI, HUD, and VA. 

The Department of Defense and the SBA stated that they had no comments 
on the draft report, and DHS provided only technical comments and 
stated that it concurred with the report's recommendations. In its 
written comments, DOI stated that it supports efforts to improve CBRS 
property determinations and ensure compliance with CBRA. DOI also 
indicated that it will consider our recommendation concerning 
prioritization of the completion of digital maps as it develops future 
budget requests. In its written comments, HUD stated that the loan 
guarantees in question have already been terminated. HUD also noted 
that it is now developing policy guidance and associated training to 
ensure that no future violations of CBRA occur. In its written 
comments, VA stated that it agreed with our findings and one of our 
recommendations but did not agree with our recommendation to cancel the 
inappropriate loan guarantees that it had made in violation of CBRA. VA 
stated that it did not believe that the small number of loan guarantees 
that we found indicated a pattern of abuse of CBRA and that canceling 
these guarantees would inflict a disproportionate harm on lenders and 
veterans who were not responsible for the erroneous property 
determinations that the loan guarantees were based on. While we 
understand VA's concerns for the adverse impacts that could affect the 
parties involved, we believe that because these loan guarantees violate 
CBRA they should be rescinded. 

We have also incorporated the technical comments provided by DHS and 
DOI, as appropriate, throughout this report. HUD's written comments are 
presented in appendix V, DOI's written comments are presented in 
appendix VI, and VA's written comments are presented in appendix VII. 

We are sending copies of this report to interested congressional 
committees as well as the Administrator, Small Business Administration; 
the Commander, U.S. Army Corps of Engineers; and the Secretaries of the 
Army, Defense, Homeland Security; Housing and Urban Development, 
Interior, and Veterans Affairs. We also will make copies available to 
others upon request. In addition, the report will be available at no 
charge on the GAO Web site at http://www.gao.gov. 

If you have any questions about this report, please contact me at (202) 
512-3841 or mittala@gao.gov. Contact points for our Offices of 
Congressional Relations and Public Affairs may be found on the last 
page of this report. GAO staff who made major contributions to this 
report are listed in appendix V. 

Sincerely yours, 

Signed by: 

Sincerely yours, 

Anu K. Mittal: 
Director, Natural Resources and Environment: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

We were asked to address issues related to the Coastal Barrier 
Resources Act, as amended, (CBRA) by reviewing development that has 
occurred and federal funding that has been provided within the John H. 
Chafee Coastal Barrier Resources System (CBRS). Specifically, we were 
asked to determine (1) the extent of development within the CBRS and 
(2) the extent of federal assistance provided to CBRS units. 

Determining the Extent of Development in CBRS Units: 

To determine the extent of development in the system, we determined the 
number of structures within each unit. We accomplished the task by 
electronically mapping addresses with MapInfo and layering electronic 
boundaries of CBRS units from the Federal Emergency Management Agency's 
(FEMA) Q3 Digital Flood Insurance Rate Map data product with the mapped 
addresses. FEMA's Q3 data provides the external boundaries for CBRS 
units, though it is not an exact replica of the boundaries. Our results 
are representative of the extent of development within the CBRS. 

We focused our review on a stratified random sample of 91 units drawn 
from the 584 total units in the system, excluding otherwise protected 
areas.[Footnote 25] The sample was drawn so that the results from the 
sample would have a precision margin of about plus or minus 10 
percentage points at the 95 percent confidence interval. We were able 
to collect and analyze data for 84 of the 91 CBRS units, representing a 
weighted response rate of 92 percent.[Footnote 26] Of the 84 units, 42 
units are located in the north and 42 units are located in the south. 
Northern units include those located in Connecticut, Maine, 
Massachusetts, Michigan, New Jersey, New York, and Rhode Island. 
Southern units are those located in Alabama, Florida, Louisiana, 
Maryland, Mississippi, North Carolina, South Carolina, Virginia, Texas, 
Puerto Rico, and the Virgin Islands. As a result of the high response 
rate, we reweighted the sample to represent the entire population of 
units. 

Because we followed a probability procedure based on random selections, 
our sample is only one of a large number of samples that we might have 
drawn. Since each sample could have provided different estimates, we 
express our confidence in the precision of our particular sample's 
results as a 95 percent confidence interval. This is the interval that 
would contain the actual population value for 95 percent of the samples 
we could have drawn. As a result, we are 95 percent confident that each 
of the confidence intervals in this report will include the true values 
in the study population. All percentage estimates from the sample have 
margins of error of plus or minus 10 percentages points or less. 

To identify the number of structures within the CBRS units in our 
sample, we obtained address or parcel data from local government 
offices--including tax assessor's offices and on-line databases, 
geographic information system departments, and information technology 
departments. The exact dates for the parcel and address datasets vary 
by location--however, we requested the most recent available data. We 
also collected year-built data, value, and type of structure when 
available. After determining whether the structure was within the CBRS 
unit, we reviewed the year-built data to determine how many structures 
were built since the unit's inclusion in the CBRS. We did not 
independently assess the reliability of each address dataset provided 
by the local governments. However, for a number of address datasets we 
assessed the reliability of the data through interviews with 
knowledgeable local officials and verification of the addresses in the 
dataset by visual inspection during site visits. 

The electronic mapping was performed using roads and highways data 
provided by MapInfo's 2002 StreetSmart program. As a result, our 
analysis would not be able to map structures located on a street not 
included in the 2003 roads and highways dataset. Once the addresses 
were mapped, they were layered in MapInfo with FEMA's Q3 data. On the 
basis of conversations with FEMA and FWS officials, we believe these 
data are sufficiently reliable for the purposes of this study. Since 
the FEMA Q3 data CBRS boundaries may not be precise, the results of our 
analysis could incorrectly reflect whether a structure is within a CBRS 
unit. As with any electronic mapping technology, accuracy issues are 
inherent and may impact reliability of the results. 

We conducted site visits to 18 CBRS units in Florida, Massachusetts, 
North Carolina, Rhode Island, and South Carolina. During the site 
visits, we observed the CBRS units and interviewed local, state, and 
federal officials, home owners, realtors, insurance agents, and 
environmental officials to discuss the extent of development and 
factors encouraging or discouraging development in the units. 

In addition to the site visits, we conducted telephone interviews with 
local, state, or federal officials in Louisiana, Massachusetts, 
Maryland, Michigan, Rhode Island, Texas, Virginia, and Puerto Rico. 
Using the data collected during the site visits and the telephone 
interviews, we were able to determine reasons why development has or 
has not occurred in those units. 

Determining the Extent of Federal Assistance Provided to CBRS Units: 

To determine the extent of federal assistance provided to CBRS units, 
we identified eight agencies with programs that may have provided 
assistance to these areas. Appendix IV includes a complete list of 
these programs. We reviewed and analyzed federal legislation and 
regulations that are applicable to federal assistance to CBRS units, 
including the CBRA. For each of the programs that provide assistance 
that is prohibited in a CBRS unit, we interviewed officials regarding 
their agency procedures for preventing assistance to CBRS units. In 
instances where we identified violations, we collected additional 
information about the assistance provided and interviewed agency 
officials regarding the agency's plans to prevent prohibited assistance 
from being provided in the future. 

We compiled a list of 4,472 addresses in 37 CBRS units that had at 
least one address. (See app. II for a list of CBRS units in our 
review.) As the section above details, we obtained address data from 
local county government sources and electronically mapped addresses 
within the boundaries of CBRS units. Next, we obtained data from each 
agency on program assistance provided and determined whether this 
assistance was provided within one of the CBRS units or to an address 
in a CBRS unit. 

We gathered additional data to determine whether civil works projects 
administered by the Corps and permits issued by the Corps or EPA- 
authorized state agencies were for an activity within a CBRS unit. We 
asked agency officials to provide latitude and longitude data for every 
project that occurred or permit that was issued in any of the counties 
that contained at least one of the 37 CBRS units. Then we 
electronically mapped the coordinates to determine if the activity 
occurred within the boundaries of a CBRS unit. Corps officials, 
however, were unable to provide latitude and longitude data for a large 
percentage of the permits issued. 

For each agency program, we assessed the accuracy and reliability of 
the data system by obtaining from the agency written responses 
regarding (1) the agency's methods of data collection and quality 
control reviews, (2) practices and controls over accuracy of data 
entry, and (3) any limitations of the data. We determined that the 
agencies' data were sufficiently reliable for the purposes of our 
review unless noted below. The details of our analysis for each agency 
program are provided below. 

FEMA National Flood Insurance Program: 

To identify flood insurance policies in CBRS units, we obtained data 
from FEMA's National Flood Insurance Program for all policies as of May 
8, 2006. As mentioned above, we compiled a list of 4,472 addresses in 
37 CBRS units. Because structures built prior to a CBRS unit's 
inclusion in the system may still obtain flood insurance, we had to 
determine whether each structure was built prior to the unit's 
inclusion in the CBRS. Of the 4,472 addresses, we were able to 
determine that 648 structures were built prior to the unit's inclusion 
in the CBRS, and we deleted these addresses from our analysis. We 
reviewed the addresses of all the structures built after the unit's 
inclusion in the CBRS and addresses where we could not determine the 
year built in our flood insurance analysis. Thus, we reviewed 3,824 
addresses in 21 units to determine if the structure had federal flood 
insurance. Structures that were built prior to the CBRS unit's 
inclusion in the system cannot obtain federal flood insurance if the 
property has been substantially improved. We did not collect data on 
whether properties had been improved. If we identified a flood 
insurance policy among the addresses where we were unable to determine 
the year built, we reviewed the year-built data in FEMA's database. If 
FEMA's data revealed that the structure was built prior to the unit's 
inclusion in CBRA, we eliminated the match from our review. 

FEMA IHP Program: 

We provided FEMA our list of addresses located in 37 CBRS units. FEMA 
compared our list of addresses with addresses for which Individuals and 
Households Program (IHP) payments had been provided from its National 
Emergency Management Information System. FEMA reviewed payments from 
the system from August 26, 1998, to August 2, 2006. 

SBA: 

The Small Business Administration (SBA) provided loan data for business 
and disaster loans in all states with CBRS units from its Loan 
Accounting System. SBA provided us records for loans approved January 
1, 1990, through May 30, 2006. While we did not find any matches for 
business loans, SBA officials told us that the address in the database 
could be a mailing address and not the physical address of the 
business. For SBA disaster loans, the SBA officials said that the 
address in the database is the location where the assistance was 
provided. 

HUD Housing Programs: 

We obtained data for 13 of the Department of Housing and Urban 
Development's (HUD) single family and multifamily housing programs. 
(See app. IV for a list of the programs reviewed.) HUD provided data 
from its Real Estate Management System and Single Family Housing 
Enterprise Data Warehouse database for loans as of June 2006. 

VA Home Loan Guaranty Program: 

The Department of Veterans Affairs (VA) provided loan guarantee data 
from its Home Loan Guaranty database. VA provided us records for active 
loan guarantees as of October 2006. 

USDA Business and Industry, Community Facilities, and Housing Programs: 

We obtained data for 22 of the U.S. Department of Agriculture's (USDA) 
business and industry, community facilities and single family and 
multifamily housing programs. USDA provided this information from its 
Automated Multi-Family Housing Accounting System, Guaranteed Loan 
System, MortgageServ Loan Servicing System databases, and Multi-Family 
Information System. The information was as of July 2006. 

USDA Utility Programs: 

For USDA's utility programs, we used a different methodology because 
the projects are not associated with one structure as with a flood 
insurance policy or a housing loan. For USDA's electric programs, USDA 
officials reviewed the construction work plans and the environmental 
reports for recent loans to electric service providers who provide 
service to selected counties in Florida, North Carolina, and Virginia 
that include one or more of the CBRS units included in our review. USDA 
officials determined that it does not appear that they have financed 
projects serving a CBRS unit. 

For USDA's water and waste programs, we requested the environmental 
assessment forms statements for the projects in the counties that 
included a CBRS unit we identified as having 100 or more structures. We 
then reviewed these records to determine if they indicated that USDA 
officials had considered whether the projects would impact a CBRS unit 
when reviewing them. 

FEMA Public Assistance Grant Program: 

FEMA provided data from its National Emergency Management Information 
System on disaster assistance provided to counties and territories in 
our review, including data for the U.S. Virgin Islands and Puerto Rico. 
The data were from November 1998 through July 2006. We reviewed 
assistance designated by FEMA as being within a CBRS unit. However, we 
determined that this designation was not sufficiently reliable to 
identify all projects within the CBRS. We could not determine the full 
extent of assistance provided to CBRS units because the CBRS 
designation in the data was not always reliable. In addition, some 
assistance was provided countywide, and we could not determine if this 
assistance was provided to the unit. As a result, we provide examples 
of disaster assistance in our report. Where data were available, we 
electronically mapped the location of the assistance to verify it was 
within a CBRS unit. 

Federal Highway Administration: 

We obtained data for projects receiving federal aid that received 
federal funds between January 1996 and July 2006 in counties with a 
CBRS unit that we identified as having 10 or more structures. Federal 
Highway Administration (FHWA) officials extracted the data for these 
projects from the Financial Management Information System---a database 
that tracks projects that receive federal funding. To determine whether 
assistance was provided that is prohibited by law, we identified new 
construction projects or projects that added capacity to existing 
roadways. To determine whether these projects were within a CBRS unit, 
we relied upon interviews and location analysis provided by FHWA 
officials and Department of Transportation officials from New Jersey, 
North Carolina, Puerto Rico, Rhode Island, South Carolina, and the 
Virgin Islands. For projects in New Jersey, state officials provided 
aerial photographs with the location of federally funded projects. For 
North Carolina, we met with FHWA officials to review maps displaying 
the location of federally funded projects. For Puerto Rico, FHWA and 
Puerto Rico Department of Transportation officials electronically 
mapped the location of projects. For Florida, we relied upon analysis 
conducted by an official at the Florida FHWA division office. For Rhode 
Island, South Carolina, and the U.S. Virgin Islands, Department of 
Transportation officials or public works department officials provided 
a paper map marked with the location of the projects. 

Because of the volume of projects that are allowable, we did not 
determine the number of allowable projects in every CBRS unit. However, 
we did review the allowable projects in Gulf County, Florida, and 
Onslow County, North Carolina. 

[End of section] 

Appendix II: CBRS Units We Reviewed: 

This appendix provides information on the CBRS units that we reviewed. 
Table 2 shows the units included within our random sample and the 
approximate number of new structures in each unit. 

Table 2: CBRS Units Included in Random Sample and Approximate Number of 
New Structures: 

[See PDF for Table- did not compute properly] 

Source: GAO analysis of CBRS units. 

Note: There was no development in any unit between 16 and 100 
structures. 

[A] The number of new structures is unknown for these units. 

[End of table] 

Tables 3 and 4 show the CBRS units we included in our analysis to 
determine the extent of federal expenditures and permits made to 
entities in the CBRS. Table 3 displays the CBRS units included within 
our sample that had structures--regardless of whether the structures 
were built prior to or after the units inclusion in the CBRS. Table 4 
lists the additional CBRS units that were suggested for inclusion in 
our review by FWS because the agency had information suggesting that 
development was occurring in these areas. 

Table 3: CBRS Units Included in GAO's Random Sample That Were Analyzed 
to Determine the Extent of Federal Expenditures and Permits: 

Unit number: CT-13; 
CBRS unit: Kelsey Island; 
State: CT. 

Unit number: CT-01; 
CBRS unit: Mason Island; 
State: CT. 

Unit number: E09; 
CBRS unit: Norwalk Islands; 
State: CT. 

Unit number: FL-46; 
CBRS unit: Boot Key Island; 
State: FL. 

Unit number: P31A; 
CBRS unit: Four Mile Village; 
State: FL. 

Unit number: P05A; 
CBRS unit: Matanzas River; 
State: FL. 

Unit number: P18; 
CBRS unit: Sanibel Island Complex; 
State: FL. 

Unit number: P10; 
CBRS unit: Vero Beach; 
State: FL. 

Unit number: C19; 
CBRS unit: Black Beach; 
State: MA. 

Unit number: C11A; 
CBRS unit: Boat Meadow; 
State: MA. 

Unit number: C00; 
CBRS unit: Clark Pond; 
State: MA. 

Unit number: C16; 
CBRS unit: Dead Neck; 
State: MA. 

Unit number: C31; 
CBRS unit: Elizabeth Islands; 
State: MA. 

Unit number: C14; 
CBRS unit: Squaw Island; 
State: MA. 

Unit number: L01; 
CBRS unit: Currituck Banks; 
State: NC. 

Unit number: L08; 
CBRS unit: Wrightsville Beach; 
State: NC. 

Unit number: NJ-04B; 
CBRS unit: Metedeconk Neck; 
State: NJ. 

Unit number: NY-59; 
CBRS unit: Fire Island; 
State: NY. 

Unit number: NY-30; 
CBRS unit: Hog Neck Bay; 
State: NY. 

Unit number: NY-42; 
CBRS unit: Mill Creek; State: NY. 

Unit number: F10; 
CBRS unit: Napeague; 
State: NY. 

Unit number: NY-16; 
CBRS unit: Stony Brook Harbor; 
State: NY. 

Unit number: RI-12; 
CBRS unit: East Matunick Beach; 
State: RI. 

Unit number: D02B; 
CBRS unit: Prudence Island Complex; 
State: RI. 

Unit number: M07; 
CBRS unit: Bird Key Complex; 
State: SC. 

Unit number: M08; 
CBRS unit: Captain Sams Inlet; 
State: SC. 

Unit number: VA-45; 
CBRS unit: Harveys Creek; 
State: VA. 

Source: GAO analysis of CBRS units. 

[End of table] 

Table 4: Additional CBRS Units Suggested for Review by FWS That Were 
Analyzed to Determine the Extent of Federal Expenditures and Permits: 

Unit Number: P10A; 
CBRS unit: Blue Hole; 
State: FL. 

Unit Number: P30; 
CBRS unit: Cape San Blas; 
State: FL. 

Unit Number: P09A; 
CBRS unit: Coconut Point; 
State: FL. 

Unit Number: FL-94; 
CBRS unit: Deer Lake Complex; 
State: FL. 

Unit Number: P28; 
CBRS unit: Dog Island; 
State: FL. 

Unit Number: FL-92; 
CBRS unit: Indian Peninsula; 
State: FL. 

Unit Number: P07; 
CBRS unit: Ormond-by-the-Sea; 
State: FL. 

Unit Number: P08; 
CBRS unit: Ponce Inlet; 
State: FL. 

Unit Number: FL-98; 
CBRS unit: Santa Rosa Island; 
State: FL. 

Unit Number: L06; 
CBRS unit: Topsail; 
State: NC. 

Source: GAO analysis of CBRS units. 

[End of table] 

[End of section] 

Appendix III: Snapshots of Selected CBRS Units: 

Massachusetts: 

Within the state of Massachusetts, there are 62 CBRS units. The units 
consist of 64,076 total acres of land, with 88 percent of the land 
considered wetlands by FWS.[Footnote 27] We visited six CBRS units-- 
Black Beach, Boat Meadow, Centerville, Herring Brook, Sandy Neck, and 
Squaw Island. These units were primarily salt marsh or wetland areas 
with narrow coastal beach areas. Only the Boat Meadow unit had 
experienced any new development since inclusion in the CBRS. Figure 2 
displays the CBRS units we visited during our site visit. 

Figure 2: CBRS Units We Visited in Massachusetts: 

[See PDF for image] 

Source: GAO. 

[End of figure] 

The Herring Brook and Sandy Neck units both include land used as a 
public beach destination. The Sandy Neck unit is a coastal barrier 
beach, with both public and private beach areas, approximately 6 miles 
long varying in width from 200 yards to one-half mile. The unit is 
classified by the local government as a conservation and recreation 
area. Several homes are located on the unit, but one local official 
noted they are all registered by the state as historic places. 

The Centerville unit and the Squaw Island unit each have a barrier 
beach, but the beach is privately owned. The Centerville unit serves as 
a private beach and protective buffer for the homes bordering the unit. 
A local official noted the residents annually pay for a beach 
nourishment project in order to keep the protective buffer for their 
homes. The Squaw Island unit is a barrier beach and wetlands 
surrounding an area of developed land that was excluded from CBRS. The 
excluded area consists of homes valued between $1.7 and $6.9 million. 
Figure 3 displays a portion of Squaw Island. 

Figure 3: House and Beach on the Squaw Island, CBRS Unit in 
Massachusetts: 

[See PDF for image] 

Source: GAO. 

[End of figure] 

Both the Black Beach and Boat Meadow units consist primarily of salt 
marshes and wetlands. The southern portion of the Black Beach unit has 
one street of homes that were built prior to CBRA. One local official 
described the homes as "traditional Cape Cod" style houses. The Boat 
Meadow unit has several neighborhoods bordering the unit with one 
neighborhood partially included in the unit. It is within this area 
that new development--three single-family homes--has occurred since the 
unit's inclusion in the CBRS. 

Rhode Island: 

Within the state of Rhode Island, there are 21 CBRS units. The CBRS 
units consist of 10,320 total acres, with 83 percent considered 
wetlands by the FWS. During our site visit to Rhode Island, we focused 
our review on the Prudence Island Complex unit. The Prudence Island 
Complex unit consists of numerous separate pieces of land all included 
in one CBRS unit. The unit is located in residential neighborhoods in 
several counties around the Narragansett Bay. Although approximately 50 
homes are located within the CBRS unit, only 8 of the homes have been 
built since inclusion within CBRS. Figure 4 shows the CBRS units that 
we visited in Rhode Island. 

Figure 4: CBRS Units We Visited in Rhode Island: 

[See PDF for image] 

Source: GAO. 

[End of figure] 

Several areas included in the Prudence Island Complex are backyards of 
private homes. Home owners voluntarily included the CBRS land in their 
backyards in conservation easements, limiting the right of future 
owners of the property to develop the land. Figure 5 is one of the 
homes with a backyard that falls in the CBRS unit boundaries. 

Figure 5: Home with a Backyard in the Prudence Island, Rhode Island 
CBRS Unit: 

[See PDF for image] 

Source: GAO. 

[End of figure] 

Another area included in the unit is owned by the Rhode Island Country 
Club and serves as a golf practice area. Figure 6 is the country club 
land that is included in the CBRS. 

Figure 6: Portion of the Prudence Island Complex CBRS Unit: 

[See PDF for image] 

Source: GAO. 

[End of figure] 

The unit also includes a small beach and a wetland inlet located in a 
residential neighborhood. The inlet leads to the Rhode Island Country 
Club. A local official stated that the County Club has asked the U.S. 
Army Corps of Engineers to re-dredge the inlet to improve the 
playability of the golf course--which gets heavily saturated during 
rains. Dredging within the CBRS unit would allow water to run off the 
course faster. Figure 7 shows the area within the CBRS unit that would 
be dredged. 

Figure 7: Inlet Where Proposed Dredging Project Would Occur in the 
Prudence Island CBRS Unit: 

[See PDF for image] 

Source: GAO. 

[End of figure] 

South Carolina: 

Within the state of South Carolina, there are 16 CBRS units. FWS 
officials determined that the units consist of 97,856 total acres, with 
90 percent of land considered wetlands. We visited two units in South 
Carolina--Bird Key Complex and Captain Sams Inlet (see fig. 8). Each of 
the units has experienced the addition of 10 or fewer residential homes 
since its inclusion in the CBRS. The developed portions of both of 
these units are located on coastal islands--the Captain Sams Inlet 
homes are located on Seabrook Island, and the Bird Key Complex homes 
are located on Kiawah Island. 

Figure 8: CBRS Units We Visited in South Carolina: 

[See PDF for image] 

Source: GAO. 

[End of figure] 

Development in the Captain Sams Inlet CBRS unit is located in the 
Seabrook Island Resort--a 2,200-acre, privately gated, beachfront 
community on Seabrook Island. According to local officials, the title 
to the land where these homes are located was in dispute for years, 
which delayed its development, unlike the rest of the island. Local 
officials also stated that they believe that if the title to the land 
had not been in dispute, the area would have developed at the time of 
the CBRS unit designations and most likely would not have been included 
in the CBRS. Because of the CBRS inclusion, the property owners in the 
unit are no longer eligible for certain types of federal assistance, in 
particular federal flood insurance, which they noted is much less 
expensive than privately available insurance. Officials with whom we 
met on neighboring Kiawah Island stated that a developer has plans to 
build up to 50 units on a 20-acre portion of the Captain Sams Inlet 
CBRS unit that is located on Kiawah Island. 

Development in the Bird Key Complex CBRS unit is located on the 
northeast portion of Kiawah Island, which is also a privately gated, 
beachfront community with approximately 3,000 homes. The southern 
portion of the CBRS unit includes a few homes that we identified as 
being located in the unit, an 18-hole golf course, and an area of land 
called "Cougar Island." Kiawah officials told us that a private 
developer has plans to build 360 homes on 24 acres of Cougar Island at 
a future date. 

Florida: 

Within the state of Florida, there are 67 CBRS units. The units range 
extensively in size and composition and encompass 285,937 total acres 
along both the Atlantic and Gulf Coasts. Overall, 87 percent of the 
land within the units is considered wetlands by FWS. We visited three 
units--Four Mile Village, Cape San Blas, and Deer Lake Complex (see 
fig. 9). All three units we visited had experienced some level of 
development. However, the development ranged from 11 new structures in 
Deer Lake Complex to at least 900 new structures in Cape San Blas since 
the units inclusion in the CBRS. 

Figure 9: CBRS Units We Visited in Florida: 

[See PDF for image] 

Source: GAO. 

[End of figure] 

The Four Mile Village unit in Florida has experienced an increase of at 
least 100 new residential structures since its inclusion in CBRS. This 
unit is expected to continue to experience development, as a 167-home 
private development project called Cypress Dunes is completed. The 
Cypress Dunes project consists of a 44-acre gated community and will 
include a clubhouse, pool, exercise center, dining facility, and tennis 
courts, all entirely within the CBRS unit. 

The 1,637-acre Topsail Hill Preserve State Park makes up more than one- 
half of the Four Mile Village CBRS unit. The preserve was purchased in 
1992 with funds from the Conservation Acquisition of Recreation Lands 
program, also known as Forever Florida. Topsail was purchased for its 
unique natural ecosystems, including freshwater coastal dune lakes, wet 
prairies, scrub, pine flatwoods, marshes, cypress domes, seepage slopes 
and 3.2 miles of sparkling white sand beaches. The park also includes 
areas to bike, walk, swim, fish, and access to the beach, plus a full- 
facility campground features a swimming pool, tennis courts, and 
shuffleboard courts. 

The Cape San Blas CBRS unit is located on a peninsula in the Florida 
panhandle. It has experienced significant development since its 
inclusion within the CBRS with the addition of at least 900 new homes. 
Primarily, the homes are single-family residences used as vacation 
homes and rentals. 

In November 2002, FEMA designated parts of Cape San Blas as a special 
flood hazard area. Mortgage lenders require home owners in these zones 
to obtain flood insurance. Because federal flood insurance is not 
available in CBRS, home owners with mortgages must obtain private flood 
insurance. At the same time, officials told us that the cost of private 
insurance has skyrocketed and is no longer comparable to national flood 
insurance program rates. According to local officials, tourism in the 
Cape San Blas area is important to the economy of the county. They told 
us that property values in the unit have decreased since FEMA adopted a 
special flood hazard area for the CBRS unit. Residents and local 
officials have unsuccessfully attempted to remove Cape San Blas from 
the CBRS so that residents would be eligible to obtain flood insurance 
through the National Flood Insurance Program. In the 109th Congress, 
legislation was introduced in the House of Representatives that would 
exempt Cape San Blas, along with another unit, from CBRA's prohibitions 
and the limitations on flood insurance.[Footnote 28] However, the bill 
never came to a vote. 

We identified some development in the Deer Lake Complex unit since its 
inclusion within the CBRS. A total of 11 new single-family homes have 
been constructed within the unit. 

North Carolina: 

Within the state of North Carolina, there are 10 CBRS units consisting 
of 52, 215 total acres--approximately 6,809 of those are considered 
developable acres by FWS. We visited four CBRS units--Topsail, Lea 
Island, Currituck Banks, and Wrightsville Beach (see fig. 10). Both 
Topsail and Currituck have experienced significant levels of 
development since inclusion within the CBRS. In contrast, Lea Island 
and Wrightsville Beach are impractical locations for development as 
they are significantly affected by erosion and shifting sands. 

Figure 10: CBRS Units We Visited in North Carolina: 

[See PDF for image] 

Source: GAO. 

[End of figure] 

The Topsail unit in North Topsail is a barrier island with low 
elevation without the protection of substantial dunes. It has a total 
of approximately 1,600 structures and local officials stated that most 
of the structures were built after CBRA was enacted. The unit consists 
of single and multifamily homes, a few hotels/motels, a convenience 
store, and the North Topsail Beach Town Hall. 

In recent years, the unit has been hit several times by hurricanes. For 
example, in 1996, Hurricanes Bertha and Fran caused significant damage. 
The storms leveled dunes, cut new channels across the island, dumped 
tons of sand, and destroyed more than 300 buildings. The federal 
government provided funds that assisted in repairing the streets, 
repairing water and sewer lines, replacing signs, and removing 
substantial debris. Since that time, the area has been rebuilt, but 
other storms have continued to cause damage. We identified at least 
$5.6 million in disaster assistance that was provided to entities in 
the unit since November 1998. 

Portions of the Topsail CBRS unit have experienced substantial levels 
of erosion. As the soil erodes, the ocean becomes dangerously close to 
the homes. Figure 11 pictures one of several homes in the Topsail area 
where the ocean waves make contact with the home's foundation. 

Figure 11: House in North Topsail CBRS Unit on the Edge of the Ocean: 

[See PDF for image] 

Source: GAO. 

[End of figure] 

Several areas outside of the CBRS unit have approved plans for a 
federally funded Corps beach renourishment project. However, because 
areas within the CBRS unit are ineligible for federal funding for a 
beach renourishment project, local officials are pursuing other 
opportunities to fund the portion of the project that falls within the 
CBRS boundaries. For example, the Town of North Topsail Beach recently 
proposed a $34 million bond package to pay for the beach renourishment 
project, but the voters rejected the proposal in November 2006. 

According to local officials, during the time when much of the 
development occurred in the Topsail unit, affordable private flood 
insurance was generally available. However, in recent years the cost of 
private flood insurance has increased tremendously. Currently, these 
officials said that many residents are frustrated with CBRA's 
prohibitions on the availability of federal flood insurance and federal 
funding for beach renourishment projects. According to these officials, 
residents in the Topsail CBRS unit are upset that they must pay 
significantly higher insurance premiums than their neighbors who own 
properties just outside of the unit who can obtain federal flood 
insurance. 

The Currituck Banks CBRS unit is located on the outer banks of North 
Carolina, with the northern boundary at the Virginia state line. The 
unit has also experienced significant new development, with at least 
400 new residential homes built since inclusion in CBRS. Local 
officials stated that rapid development has occurred in the area since 
the late 1980s and that as of June 2006, there were 550 single-family 
dwellings within the unit. However, officials noted this only 
represents 18 percent of the total capacity of homes that can be built 
in the unit. County planning staff noted that the area currently has 
3,088 actual or planned building lots available. Although the Currituck 
Banks unit does not have any paved roads and is only accessible by four-
wheel drive vehicle or boat, it still continues to be developed, partly 
because people on the Outer Banks are seeking the solitude that living 
in the CBRS unit can provide. Moreover, the unit has an extensive canal 
system that allows residents direct boat access to their homes and the 
mainland. 

The Lea Island CBRS unit is a tiny barrier island, accessible only by 
boat, and located south of the Figure Eight Island. The island is 
privately owned, but local officials stated that conservation groups 
are slowly trying to buy more of the island. The island is 
approximately 60 acres long with most of the land less than 10 feet 
above sea level. The island is in a constant state of flux due to 
erosion and shifting sand. According to a local coastal official, 15 
homes previously existed on Lea Island, but all of them--except for one 
small cabin--had been destroyed by natural disasters. 

At the time CBRA was enacted, FWS determined that the Wrightsville 
Beach unit had 83 developable acres of land. However, sand continuously 
shifts within the unit. At one point, the majority of sand in the unit 
had shifted to such an extent that the entire unit was under water. 
According to local officials, to keep the unit above water, local 
entities must continually dredge an inlet adjacent to the unit to 
replenish the unit with sand. 

[End of section] 

Appendix IV: Programs and Types of Federal Assistance Analyzed: 

U.S. Army Corps of Engineers: 

Permits - Section 404 and Section 10: 

Civil Works programs: 

U.S. Department of Agriculture: 

Business and Industry Programs: 

Business and Industry Direct Loans: 

Business and Industry Guaranteed Loans: 

Intermediary Relending Program: 

Rural Business Enterprise Grants: 

Rural Business Opportunity Grants: 

Rural Economic Development Loans: 

Rural Economic Development Grants: 

Renewable Energy and Energy Efficiency Program: 

Community Facilities Programs: 

Community Facilities Direct Loans: 

Community Facilities Guaranteed Loans: 

Community Facilities Grants: 

Electric Programs: 

Hardship Loans: 

Municipal Loans: 

Treasury Loans: 

FFB Guaranteed Loans: 

Single Family Housing Programs: 

Rural Housing Guaranteed Loan: 

Rural Housing Direct Loan: 

Housing Repair and Rehabilitation Loan: 

Housing Repair and Rehabilitation Grant: 

Rural Housing Site Loans: 

Mutual Self-Help Housing Grants: 

Homes for Sale: 

Multifamily Housing Programs: 

Farm Labor Housing Loans and Grants: 

Rural Rental Housing Loans: 

Guaranteed Rental Housing: 

Rental Assistance Program: 

Water and Waste Programs: 

Water and Waste Disposal Loans: 

Water and Waste Disposal Grants: 

Emergency Community Water Assistance Grants: 

Revolving Fund Program: 

Household Water Well System Program: 

Department of Homeland Security: 

Federal Emergency Management Agency: 

National Flood Insurance Program: 

Individuals and Households Program: 

Public Assistance Program (Disaster): 

U.S. Coast Guard: 

Permits for bridges over navigable waters of the United States: 

Department of Housing and Urban Development: 

Single Family Housing Programs: 

Mortgage Insurance - Section 203(b): 

Rehabilitation Mortgage Insurance - Section 203(k): 

Mortgage Insurance for Condominium Units - Section 234(c): 

Home Equity Conversion Mortgage - Section 255: 

Multifamily Housing Programs: 

Supportive Housing for the Elderly - Section 202: 

Mortgage Insurance for Cooperative Housing - Section 213: 

New Construction/Substantial Rehabilitation of Apartments with 
Nonprofit Sponsors - Section 221(d)(3): 

New Construction/Substantial Rehabilitation of Apartments with For- 
profit Sponsors - Section 221(d)(4): 

Refinancing of Apartment Primary Loans - Section 223(a)(7): 

Healthcare Facilities - Section 232: 

Refinancing of Healthcare Facilities - Section 232: 

Supplemental Loan Insurance - Section 241(a): 

Supportive Housing for Persons with Disabilities - Section 811: 

Environmental Protection Agency: 

National Pollution Discharge Elimination System (NPDES) permits: 

Federal Highway Administration: 

Federal Aid Highway Program: 

Small Business Administration: 

7 (a) and 504 Loan programs: 

Disaster Loan program: 

Department of Veterans Affairs: 

Veterans Benefits Administration Home Loan Guaranty Program: 

[End of section] 

Appendix V: Comments from the Department of Housing and Urban 
Development: 

U.S. Department Of Housing AND Urban Development: 
Washington, DC 20410- 3000: 
Assistant Secretary For Housing-Federal Housing Commissioner: 

Feb 9 2007: 

Anu K. Mittal, Director: 
Natural Resources and Environment: 
United States Government Accountability Office: 
441 G Street, NW: 
Washington, DC 20548: 

Dear Ms. Mittal: 

The Department of Housing and Urban Development (HUD) appreciates the 
opportunity to respond to the Government Accountability Office (GAO) 
draft report. Coastal Barrier Resources System: Status of Development 
That Has Occurred and Financial Assistance Provided by Federal Agencies 
(GAO-07-356). GAO states it has sampled 91 of the 585 Coastal Barrier 
Resource System (CBRS) units that have been designated under the 
Coastal Barrier Resources Act, as amended (CBRA). GAO has determined 
that HUD has provided Single Family Mortgage Insurance (SFMI) for five 
properties located among three of these units: Cape San Blas, Florida; 
Topsail, North Carolina; and Prudence Island, Rhode Island. 

Based on its determinations, GAO has recommended that, as SFMI is 
prohibited within CBRS units, HUD obtain official determinations from 
the Fish and Wildlife Service (FWS) as to whether the five properties 
are truly in CBRS units, and, where so detennined, cancel all 
inappropriate loan guarantees. GAO has recommended further that HUD 
examine its policies and procedures to ensure that they are adequate to 
prevent SFMI within CBRS units. 

In regard to the first set of recommendations relating to the five 
properties in question; HUD has determined that between the years 1986 
and 2003 all of the mortgage loans have been satisfactorily paid-off, 
with the mortgage insurance thus terminated. Therefore, further 
analysis and determinations, as well as cancellations, are not needed. 

In regard to the second set, HUD is now developing policy guidance and 
an associated training module for its SFMI programs to ensure that 
there will be no future violations of CBRA. HUD expects this to be 
completed within the year and with training to occur as soon afterwards 
as possible. 

Thank you for providing this most useful draft report to HUD. 

Sincerely, 

Signed by: 

Brian D. Montgomery: 
Assistant Secretary for Housing-Federal Housing Commissioner: 

[End of section] 

Appendix VI: Comments from the Department of the Interior: 

United States Department of the Interior: 
Office Of The Secretary: 
Washington, DC 20240: 

Mar 6 2007: 

Ms. Anu Mittal: 
Director, Natural Resources and Environment: 
U.S. Government Accountability Office: 
441 G Street, N.W. 
Washington, D.C. 20548: 

Dear Ms. Mittal: 

Thank you for providing the Department of the Interior the opportunity 
to review and comment on the draft U.S. Government Accountability 
Office report entitled, "Coastal Barrier Resources System: Status of 
Development That Has Occurred and Financial Assistance Provided by 
Federal Agencies," GAO-07-356, transmitted on January 30, 2007. In 
general, we agree with the findings that pertain to the U.S. Fish and 
Wildlife Service and the report's recommendations. 

The Department concurs with the Recommendations for Executive Action in 
the report. Any additional workload associated with these 
recommendations will be addressed as we are able, given existing 
resources and other competing priorities. The Department supports 
efforts to improve the John H. Chafee Coastal Barrier Resources System 
property determination and consistency consultation processes and 
ensure compliance with the Coastal Barrier Resources Act. 

With regard to the recommendation concerning prioritizing the 
completion of digital maps, the Service will consider this 
recommendation as it develops future budget requests. The Department 
supports CBRS map modernization. Modernizing the entire set of CBRS 
maps with digital technology would help improve customer service -and 
government efficiency; correct mapping errors that adversely affect 
private property owners; conserve natural resources; and maintain the 
long-term integrity of the CBRS. The Service has demonstrated its 
commitment to digital CBRS mapping by recently completing the 
Congressionally-directed Digital Mapping Pilot Project which includes 
draft digital maps of 60 CBRS units and a report to Congress that 
describes the results of the pilot project and the costs and 
feasibility associated with creating digital maps for the remainder of 
the CBRS. We anticipate that the pilot project and report, which are 
undergoing review within the Department, will be submitted to Congress 
this year. Congress has directed the Secretary of the Interior to 
complete digital maps for the entire CBRS by 2013. 

Additionally, we note one of GAO's conclusions that "Although CBRA has 
limited the amount of Federal financial assistance provided to some 
CBRS units, it does not appear to have been a major factor in 
discouraging development in those CBRS units that have developable land 
and local government and public support for development." The 
Department believes that CBRA has affected the extent of development 
within the CBRS. CBRA's influence on development is reflected in the 
numerous efforts by property owners to remove land from the CBRS 
through legislation so that the properties can be developed with 
Federal financial assistance. Since the CBRS was designated in 1982, 
Congress has enacted technical correction legislation to revise the 
boundaries of 42 CBRS units. Currently, the Service has a backlog of 
requests from property owners and other interested parties who seek to 
remove private land from 26 units. 

The enclosure provides technical comments from the Service. We hope 
these comments will assist you in preparing the final report. 

Sincerely, 

Signed by: 

Assistant Secretary for and Wildlife and Parks: 

[End of section] 

Appendix VII: Comments from the Department of Veterans Affairs: 

The Deputy Secretary Of Veterans Affairs: 
Washington: 

February 23, 2007: 

Ms. Anu K. Mittal: 
Director, Natural Resources and Environment: 
U. S. Government Accountability Office: 
441 G Street, NW: 
Washington, DC 20548: 

Dear Ms. Mittal: 

The Department of Veterans Affairs (VA) has reviewed your draft report, 
Coastal Barrier Resources System: Status of Development That Has 
Occurred and Financial Assistance Provided by Federal Agencies (GAO-07-
356) and agrees with your findings as they pertain to VA. 

However, VA does not concur with your recommendation to cancel the 11 
possibly inappropriate loan guaranties identified in the draft report. 
This small number of incidents does not indicate a pattern of abuse of 
the Coastal Barriers Resources Act and cancelling the subject 
guarantees would inflict a disproportionate harm on lenders and 
veterans who were not responsible for the potential errors. 

The enclosure details VA's comments to your specific recommendations. 
VA appreciates the opportunity to comment on your draft report. 

Sincerely, 

Signed by: 

Gordon H. Mansfield: 

Enclosure: 

Department of Veterans Affairs (VA) Comments to Government 
Accountability Office (GAO) draft report, Coastal Barrier Resources 
System: Status of Development That Has Occurred and Financial 
Assistance Provided by Federal Agencies (GAO-07-356): 

GAO Recommends that the Secretaries of the Departments of Homeland 
Security, Housing and Urban Development, and VA, and the Administrator 
of Small Business should direct their agencies to: 
1. obtain official determinations from the U. S. Fish and Wildlife 
Service on whether the properties GAO identified as receiving Federal 
Assistance in violation of the Coastal Barriers Resources Act (CBRA) 
are in fact located with a Coastal Barriers Resources System (CBRS) 
unit and if they are, cancel all inappropriate loan guarantees and 
insurance policies that have been made to the owners of these 
properties; and: 

Do Not Concur - GAO has identified merely 11 such loans. VA is not 
inclined to cancel the guaranties on these 11 loans insofar as it was 
the responsibility of the private fee appraiser on each of these loans 
to identify that these properties were not eligible. Neither the 
lenders nor the veterans were responsible for the erroneous property 
determinations. Holding the lender responsible by canceling the 
guaranty on a loan would not be fair and could well adversely impact 
the veteran. Instead, VA is prepared to assume the risk involved in 
keeping the guaranty on these loans. The total value of these loans, at 
origination, was $352,188. We have a portfolio of approximately 2.2 
million active loans, currently valued at over $203 billion, on which 
our contingent liability is $61 billion. We believe that our 
willingness to accept potential losses on the 11 loans identified by 
GAO is an acceptable risk, in light of (1) the size of our overall 
portfolio and (2) the benefit to these veterans of preserving the VA 
guarantee on their loans. 

2. examine their policies and procedures to ensure that they are 
adequate to prevent Federal assistance that is prohibited by CBRA from 
being provided to entities In CBRS units. 

Concur - VA concurs with the second recommendation of this report. In 
fact, the Veterans Benefits Administration's Loan Guaranty Service is 
examining its policies and handbook guidance to ensure that they are 
adequate to prevent VA guaranteed loans from being made within a CBRS 
unit. Towards that end, we are already providing specific instructions 
in our Lenders' Handbook informing program participants that properties 
located in CBRS units are ineligible as security for VA-guaranteed 
loans. In addition, in mandatory training sessions, VA appraisers are 
instructed to reject assignments to appraise such properties. 

[End of section] 

Appendix VIII: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Anu K. Mittal (202) 512-3841 or mittala@gao.gov: 

Staff Acknowledgments: 

In addition to the contact named above, Sherry McDonald, Assistant 
Director; Natalie Herzog; Stuart Ryba; Jay Spaan; Amy Ward-Meier; and 
Leigh M. White made key contributions to this report. Also contributing 
to this report were Kevin Bray, John Delicath, Nancy Hess, Gloria 
Saunders and Jay Smale. 

FOOTNOTES 

[1] For the purposes of CBRA, a coastal barrier was considered 
undeveloped if the density of development was less than one structure 
per 5 acres of land above mean high tide. 

[2] Financial assistance as defined by the act does not include general 
revenue sharing grants; deposit or account insurance for customers of 
financial institutions; the purchase of mortgages or loans by federal 
associations or corporations such as the Federal National Mortgage 
Association; assistance for environmental studies, planning, and other 
assessments that are required incident to the issuance of permits or 
other authorizations under federal law; and assistance for programs 
entirely unrelated to development, such as the federal old-age 
survivors or disability insurance program. 

[3] Such reports and certifications shall be submitted annually to the 
Secretary of the Interior. 16 U.S.C. § 3506(b). 

[4] Coastal Barrier Resources Reauthorization Act of 2005, Pub. L. No. 
109-226, § 4(a), 120 Stat 381. 

[5] GAO, Coastal Barriers: Development Occurring Despite Prohibitions 
Against Federal Assistance, GAO/RCED-92-115 (Washington, D.C.: July 17, 
1992). Our 1992 report only covered units designated by the original 
1982 act. 

[6] We electronically mapped the location of the addresses using 
MapInfo Software. 

[7] Aside from minor exceptions, only Congress, through new 
legislation, can modify the boundaries of the CBRS. To determine 
whether the revisions constitute appropriate technical corrections, FWS 
conducts objective reviews to examine whether or not the area was 
undeveloped when it was included in the CBRS and whether or not the 
boundaries on the map correctly follow the natural or man-made features 
they were intended to follow on the ground. When technical mapping 
errors are found, FWS has supported legislation to modify boundaries 
accordingly. Since the CBRS was designated in 1982, Congress has 
enacted technical correction legislation to revise the boundaries of 42 
CBRS units. 

[8] FWS anticipates the draft maps and report will be submitted to the 
Congress in 2007. 

[9] The random probability sample included 91 geographically dispersed 
CBRS units. All percentage estimates from the sample have margins of 
error of plus or minus 10 percentage points, unless otherwise noted. 

[10] Developable land is the number of fastland acres in each unit. 
Fastland is situated above the mean high-tide line and is generally not 
wetlands. FWS determined the fastland acres for each unit within the 
CBRS. 

[11] According to Massachusetts state officials, the Wetlands 
Protection Act regulations established a "no net loss of wetlands" 
policy for all coastal areas and barrier beaches. Under the 
Massachusetts Coastal Wetlands Restriction Act, the Massachusetts 
Commissioner of Environmental Protection can regulate and prohibit 
dredging, filling, or otherwise altering coastal wetlands. 

[12] In 1980, Massachusetts Governor Edward J. King issued Executive 
Order No. 181 preventing the use of state funds and grants for 
construction projects to encourage growth and development in hazard 
prone barrier beaches. See also Me. Rev. Stat. Ann. tit. 38, §§ 1901- 
1905. 

[13] To determine the reasons development occurred, we interviewed 
local officials in a number of developed units in our sample as well as 
officials for the Cape San Blas unit in Florida and the Topsail unit in 
North Carolina. 

[14] The date structures were built in the Topsail unit was not readily 
available when we conducted this analysis, so we could not determine 
the exact number of structures built since the unit's inclusion in the 
CBRS. 

[15] According to FEMA officials, FEMA does this plotting for all 
properties in a community where a CBRS unit is located. Every month 
FEMA plots addresses of new policies or policies that have changed. All 
addresses in a community with a CBRS unit are reviewed at least once a 
year. 

[16] FEMA uses MapInfo software with MapMarker to plot locations. This 
software is updated more frequently than the software that we use. In 
these 20 instances, our software located properties within the CBRS 
boundary, but FEMA's software did not. However, we physically verified 
that 14 of these 20 properties appeared to be within CBRS boundaries 
during a site visit to the unit. We did not visit the locations where 
the remaining 6 properties were located. 

[17] The Coastal Barrier Resources Reauthorization Act of 2000, Pub. L. 
No. 106-514, §6, 114 Stat. 2394, 2396, required FWS to prepare draft 
digital maps for a portion of the CBRS. 

[18] The Coastal Barrier Resources Act of 2005 directs the Secretary of 
the Interior to finalize the pilot project maps by conducting a public 
review of the draft maps, making adjustments as necessary, and 
presenting final recommended maps to the Congress its consideration. At 
that point, the Congress could adopt the pilot project maps as the 
official CBRS maps through legislation. 

[19] The Coastal Barrier Resources Reauthorization Act of 2005, Pub. L. 
No. 109-226 § 4, 120 Stat. 381, 382 (2006). 

[20] Our study also includes data from disasters that predate IHP, from 
its predecessor program called "Disaster Housing/Individual and Family 
Grant Program." 

[21] CBRA exempts from its general prohibition assistance for emergency 
actions essential to saving lives and the protection of property and 
the public health, as performed under particular sections of the Robert 
T. Stafford Disaster Relief and Emergency Assistance Act, as amended. 
16 U.S.C. § 3505(a)(6)(E). In its regulations, FEMA describes these 
actions to include, among other things, removing debris and repairing 
primary residences to make them habitable. However, for the 
expenditures described above as "Other Eligible Property Items," such 
as chainsaws and generators, FEMA officials said those payments were 
prohibited. 

[22] We issued a report on the challenges that the IHP program 
experienced during Hurricanes Katrina and Rita and recommended that 
FEMA address the potential for fraud and abuse identified in the 
program. GAO, Hurricanes Katrina and Rita: Unprecedented Challenges 
Exposed the Individuals and Households Program to Fraud and Abuse; 
Actions Needed to Reduce Such Problems in Future, GAO-06-1013 
(Washington, D.C.: Sept. 27, 2006). 

[23] SBA approved seven loans in CBRS units, however, individuals did 
not initiate four of these loans and they were cancelled. 

[24] In most cases, permits to regulate point sources that discharge 
pollutants into waters of the United States are issued by EPA- 
authorized states rather than by EPA itself. 

[25] According to the Fish and Wildlife Service (FWS), there are 585 
units in the system. However, FWS considers the Waites Island Complex 
to be two units because portions of the units are in North Carolina and 
South Carolina. We counted this as one unit for our analysis. We 
excluded OPAs from our review based on discussions with FWS officials. 
According to the officials, they did not believe that OPAs were subject 
to the same level of development as full system units since they were 
often protected from development by other mechanisms. 

[26] We were unable to obtain data for seven units within the sample 
because the local governments were unable to provide address data or 
year built for the structures in these areas. 

[27] For purposes of this appendix, wetlands include associated aquatic 
habitat such as nearshore waters and inlets. 

[28] H.R. 3280, 109th Cong. (2005) 

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