-Appeared on Apartment Association California, Southern Cities (AACSC).
Southern California recently observed the 25th anniversary of the Northridge Earthquake — a 6.7- magnitude blind-reverse thrust that in 1994 caused $67 billion in widespread damage.
It was deemed, and still remains, one of the nation’s most expensive natural disasters.
We’ve learned a lot since then and thousands of structures have since been retrofitted to protect them and the people inside them against the next major earthquake.
But there is still a lot left to do.
Unfortunately, many apartment owners still feel they are better off doing nothing to protect their buildings. The following information will show that seismic retrofits make good business sense.
Save Up to $7 for Every Dollar Spent
Researchers at Caltech have determined that for every dollar spent in retrofitting soft-story structures, property owners could expect to save up to seven dollars, and that study didn’t factor in loss to contents, alternate living expenses or deaths and injuries – all of which would have significantly increased the cost-to-benefit ratios.
In a separate study, the university determined that seismic retrofits are cost-effective when projected annualized loss would be reduced by 50 percent or more at a cost that would equal no more than 10 percent of the replacement cost of a building.
The Federal Emergency Management Agency found similar cost benefits in a two-year analysis of seismic retrofit scenarios applied to a variety of building types, including a scenario of a tilt-up warehouse building in California.
“In this example,” the study found, “the benefit/cost ratio is about 10 without the value of life and about 12 with the value of life. The benefit/cost analysis suggests that a retrofit is strongly justified economically, even without including the value of life.”
Avoid Liability, Loss of Income
There are other strong economic factors to consider when weighing the cost benefits of a seismic retrofit. These include potential loss of income and liability associated with damage, death and injury associated with an earthquake.
Loss of income can occur when commercial property is damaged to the point where it is no longer habitable. This can create severe financial hardship for property owners who not only lose their monthly rental income, but are simultaneously facing the costs of recovery coupled with ongoing monthly payments associated with their original mortgage.
Risks of Doing Nothing
What risks to building owners face if they do not have their buildings retrofitted?
Apart from the possible destruction of the building, there are liability issues to consider.
When it comes to the law, a two-year study funded by the National Science Foundation’s Earthquake Hazard Reduction Program determined that liability is in the hands of a jury to decide.
In a precedent-setting case in Paso Robles, two employees of a clothing store were crushed to death by falling bricks during an earthquake in 2003. The building had been ordered by the city to be seismically retrofitted, but the deadline to do it had not yet passed.
A jury in the case found the building owner negligent based on the fact that he had received a retrofit order, knew the building was potentially dangerous but had not taken action to correct the problem. The judgment was for $2 million.
Taking action now could prevent future problems. If you are uncertain about the potential risks of your building, I suggest you do your due diligence and reach out to two or three licensed professionals for their advice. Do it today. You have nothing to lose.