Public debate about risk and the cost to the community
Discussion on the topic "Public debate about risk and the cost to the community" first discussed at the 3 July 2013 Forum Meeting
From: Fred Turner <Turner@StateSeismic.com>
Date: 27 July 2013 09:34
Good afternoon Bruce;
Thank you for continuing to share information through the Canterbury Technical Forum.
Your notes on the Technical Forum Meeting of July 3rd mentions: "In California (CA), unstrengthened buildings are valueless so there is an economic driver." Do you know the source of this statement? I think it may not have substantiation.
Due to mandatory CA state government laws that require disclosure of typical seismic vulnerabilities for single-family dwellings and similar voluntary disclosure laws for commercial buildings, it has been our experience that market values of buildings with disclosed seismic vulnerabilities are often adjusted downward based upon the advice of Realtors and appraisers compared to similar buildings in the same neighborhoods that don't have seismic vulnerabilities by amounts that are comparable to the costs of seismic retrofits.
However, the disclosures of seismic vulnerabilities don't necessarily prompt sellers or buyers to retrofit unless the market is soft and sellers are highly motivated to remove impediments and retrofit costs are relatively incidental compared to market values. So this market-driven system generally only works well and is self-regulating without much government intervention when the market is a "Buyers' Market", that is, where there is a relative glut of buildings for sale and there are fewer potential buyers than buildings for sale.
Sellers of such buildings are also at liberty to simply state that they don't know if seismic vulnerabilities exist. So if they can find buyers (like in a "Sellers' Market" described below) to purchase the buildings as is, the market value won't necessarily reflect adjustments downward for assumed, but non-disclosed, vulnerabilities. In generally, this market-driven system does not work at all when the market is a "Sellers' Market", that is, where there is a perceived shortage of buildings for sale and competition among buyers is stiff, often resulting in buyers bidding up sale prices well beyond actual property values without much consideration of seismic vulnerabilities.
Also the values of many buildings are largely driven by land values and neighborhood viability and not the values of buildings themselves. Some buildings can also be demolished at little or no cost, if the salvage value of the materials, such as used brick, is high at the time of the demolition. Other buildings have little or no salvage value. So market valuations can also take into consideration demolition costs and feasibility (often precluded for historical buildings) as well as the land's zoning, neighborhood viability and development potential.
California also has laws requiring water heater bracing at the time of sale of dwellings. This law is considered to be a relatively effective method of triggering market-driven retrofits on older water heaters (generally pre-1990's or prior installations that were not completed in compliance with building standards in effect). So, if Realtors, property appraisers or home inspectors encounter unbraced water heaters, sellers are advised to install pre-approved water heater straps and bolts that are widely available in hardware stores. Costs are incidental ranging from $30 U.S. for materials and perhaps up to $300 for labor if owners can't self-install.
While it is relatively common for real estate transactions to trigger voluntary seismic retrofits for single-family wood frame dwelling cripple wall retrofits since costs can often be a relatively small percentage of the property's market value, (say $5000 to $15000 or roughly 1 to 5 percent of a property's overall market value including land value), real estate sales are less frequent triggers of voluntary, market-driven retrofits for other types of buildings since retrofit costs can be typically much higher percentages of building valuations (say in the range of 10 to 50%) compared to dwellings.
Mandatory and voluntary seismic vulnerability disclosure laws have been in effect since the early 1990's in CA. I hope this helps clarify the situation on this side of the pond.
Fred
Fred Turner, Staff Structural Engineer,
Alfred E. Alquist Seismic Safety Commission, a public policy advisory agency of State Government,
1755 Creekside Oaks Drive #100 Sacramento, CA 95833,
Turner@StateSeismic.com Land Line 916-263-5506 Ext 227 Fax 916-263-0594
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