To Rebuild or Not to Rebuild; That is the Question

By Guest Blogger, John Plodinec (Community and Regional Resilience Institute)

 In a rare lapse in judgment, Claire asked me to analyze / synthesize the information in several recent reports (listed at the end of this post) about rebuilding.  I’ll also sprinkle in a few observations from the tornadoes in AL and KS, and from Hurricane Katrina.

 In spite of the Shakespearean title, there are actually four questions wrapped up in one:

  •        Who’s coming back?
  •        Where do they rebuild?
  •        Who pays for rebuilding?  And the real crux of the question…
  •        What are the policies we should put in place?

 WHO. Each disaster is different so the answer is not always exactly the same.  Further, we don’t yet have any definitive data about Sandy.  But here’s what we know from previous natural disasters.

•  Older residents of a community are more likely to return than the young.  This is strongly indicated in the data from both Hurricane Katrina and from Greensburg, KS.  This reflects the strong pull of a “sense of place.”  Initial data from the tornadoes in Alabama paints a somewhat different picture (the elderly tended not to come back, but this was in predominately rural communities).  that I think is consistent with the overall trends.

•  Those who own their own homes are more likely to return and rebuild.

•  Those who suffer the greatest damage are the least likely to rebuild in the same place.

•  Buyouts tend to increase the number of those who don’t rebuild in a risky area, but reduce the overall risk more slowly than one might expect.  One of the nicest case studies of this is Charlotte’s buyout of risky properties so that they could “re-invent” their watersheds – a story 15 years in the making.

•  Within high damage areas, residents with children were less likely to return than the childless.  And in areas where those with children rebuilt, there tended to be more and better amenities (day care centers, schools, community centers, parks and playgrounds) than there were before.

 There is also a racial component.  Since African-Americans in NOLA were concentrated in some of the neighborhoods that experienced the greatest damage, they were among the least likely to return.  If we look at the demographics of the MSA, it looks like the poor ultimately moved out to the first ring of suburbs around the city proper.

 In general, then, older homeowners are the most likely to return and rebuild.

WHERE. The data strongly indicate that residents are least likely to return to the most-damaged areas, at least within the first few years after a disaster.  If we look at the Ninth Ward in NOLA, a good half of the properties have not been rebuilt.  However, there appears to be a memory effect that can’t be ignored.  Over time, the memories of Katrina have not been enough to prevent new development in some risky areas.  This is also seen in a gradual reduction in the number of homes that are insured in the Katrina-affected areas.

 WHO PAYS. This is a tricky question.  If the home in insured, then the insurer will pay for all losses up to the amount of the policy.  EXCEPT:  Since most homeowners
•  Don’t insure up to the total replacement cost of their home, and
•  Seldom insure the full value of their personal possessions,

In the event of a disaster homeowners will most likely bear a major portion of the rebuilding costs.  However, we the taxpayers also bear a significant portion of these costs, both directly and indirectly.

Direct costs to taxpayers:  FEMA and other federal and state agencies generally will pay homeowners something for the loss of a home.  If a community choses to initiate a buyout program for homes in risky areas, they generally will pay the full replacement cost from the community’s funds.

Indirect:  The National Flood Insurance Program is the insurer for any disaster that involves flooding.  Unlike a commercial insurer, the premiums for flood insurance do not reflect the risks associated with a given area (ah, yes, politics rears its ugly head – again).  If you live in Florida, then you also know that the state is essentially the insurer for hurricanes.  If a big one hits one of the major cities (Miami, Tampa, Orlando), then the state faces financial ruin.  Many other states have similar (though not as large) burdens.

Possible policy approaches. Several have been suggested in the references below.  Unfortunately, while some are just common sense (and we all know how uncommon that is) actions, many (most?) reflect philosophical/ideological biases.  In the following, I’ll try to point these out.

Building codes.  It seems trivial to say that a community’s building codes ought to enhance the  survivability of people’s homes. And yet, we’ve seen more rigorous building codes passed in      many Mississippi and Louisiana communities (and discussed in NY and NJ) that would save         homes and lives, only to be weakened or rescinded a few years after Katrina. Developers, in        particular, are prone to argue that the additional costs of meeting more rigorous codes will         somehow make an area less desirable. This is a point I’ll come back to in a moment.

 And while I’m on it, can somebody explain to me why anyone in Moore, OK, wouldn’t have a safe room in their house, or a tornado shelter in their schools?

Appropriately price risk.  If taxpayers are to bear a major part of the rebuilding burden, then insurance premiums should reflect the risks of building in a given location.  Biggert-Waters is a good attempt to fix this.  But there is another component to this same policy approach that has not yet been considered:  the cost of capital.  Developers use the banks’ money to build their projects.  While banks lend on the basis of “business plan risk,” they are neither required nor do take into consideration the risks of a natural disaster.  If they did, it would begin to cut the legs from under developers who want to build in hazardous locations.

Make intelligent infrastructure decisions.  Developers seldom will develop (and few homeowners will rebuild) in places that don’t have adequate infrastructure (e.g., roads, water, electricity, solid waste). That means that when communities put in new infrastructure, or have to decide whether and where to rebuild existing infrastructure, they need to consider whether or not they want to encourage development/redevelopment in risky places.  Too often, community leaders build on the basis of tax revenues under normal conditions, and ignore the abnormalities of disaster.  Conversely, in times of constrained revenues, too often community leaders won’t pay the costs of making their infrastructure more resistant to disaster.

Get accurate risk information to communities.  Community planners and leaders can’t make good judgments about where to allow development if they don’t know which areas are prone to hazards.  Accurate pricing of insurance also requires this kind of information.  And it should also be available to homeowners when they make their own home buying/building decisions.

Don’t allow people to rebuild in risky places.  While I have problems with this one, I can’t fault the underlying logic.  The best way to avoid the loss of life and the costs of disasters is to move away from them.  So don’t let people rebuild in locations that we know are frequently flooded, or earthquake prone, or subject to wildfires.  Draconian, but effective.

Buy back properties in risky areas.  A sort of corollary to the previous item, though kinder and gentler.  Same logic, but incentivizes the desired behavior rather than penalizing the undesired.  It is an approach that works, but it is not cheap and not an overnight solution.

 A personal note:  I’m a radical pragmatist who has spent an entire career taking a systems approach to nearly every problem I’ve encountered.  I find these dry statistics and black-and-white policy prescriptions sadly lacking.  One of my favorite sayings is that “Statistics are people with the tears washed off.” Many of the proposed policies bear no imprint of tears.

Up until a few years ago, I was gung ho against allowing anyone to build back in risky areas.  However, when you hear the voices of those who left the Ninth Ward of New Orleans and didn’t return, you can still viscerally feel the emotional pull that they feel to go back, even to all of its vulnerability and poverty. It is the place where they remember the comfort of their mother’s arms. It is the place where they played their first game of stickball or hopscotch. It is the place where they met their first steady. It is the place that memory tells them is home.

 It is easy for those of us who live in safer places to simply say “That area is too dangerous. We shouldn’t allow rebuilding there.” And in the past, I’ve said the same thing. But I think the wiser course is for all of us to say to those who want to rebuild in dangerous places, “If you feel you must, do so. But you must do so better.” And then we must work with them to help them build back better.

Because there are very real costs if we don’t.  Those who have these emotional ties will become more isolated, more fragile and more vulnerable. The cost of that vulnerability may be greater than the cost of building back better.

 Again, New Orleans provides evidence of this, and offers a signpost to the future. Immediately after Katrina, the lower Broadmoor neighborhood was one that city government didn’t want to rebuild. But the more affluent northern part of the neighborhood and the less affluent (and more prone to flood) southern portion banded together to stop the city’s plans in their tracks. They used money from wherever they could get it to build back better. Today, there is a wealth of new buildings in the neighborhood that will survive future storms better, but that will also strengthen the community’s sense of itself on a daily basis. Kids there will have memories even better than those their parents have that will bind them even more strongly to their community.  And in the end, shouldn’t that be our main goal?  Not just stronger buildings, but stronger communities.

 Some related articles:

 After Tragic Loss, a Woman Chooses a Buyout

Disaster Leadership and Rebuilding

Living in Harm’s Way. (posting on 7/13)

ULI report: Strategies Against Inevitable Superstorms: Extreme Storms Require Extreme Preparation

Extreme Weather, Extreme Costs: The True Financial Impact of Superstorm Sandy on New Jersey Homeowners, Businesses and Municipalities

Resilience in the Wake of Superstorm Sandy

Thoughts on Sandy:  I – Coming Back, to What?

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