By Keat Foong, Executive Editor
As hurricane season approaches, apartment companies are armed and ready. Over the years, past hurricanes have provided valuable lessons that are being added to the industry’s stock of forward-looking disaster planning best practices. MHN speaks to companies in hurricane zones about what is foremost on their minds.
One of the most recent big storms, Hurricane Sandy hit in October 2012 and was estimated to have caused over $68 billion in damages and at least 286 fatalities. Only Hurricane Katrina was estimated to have incurred greater damages. New York City was notably affected by the Category Two Storm Sandy, which was estimated to have caused economic losses of $18 billion in New York state alone.
The Albanese Organization was one of the management companies whose properties were in the eye of the storm. In Manhattan, the company manages four apartment high rises totaling about 1,200 units located in Battery Park City and Chelsea. Some of these properties fell within flood zones and needed to be evacuated.
Building owners need to make sure that water, electrical and mechanical systems are located above ground in areas that are not subject to flooding, says Michael Gubbins, senior vice president, Residential Management, at Albanese Organization. Maintain power generators for emergency use, and keep emergency equipment onsite—such as pumps, sand bags, batteries, lanterns, and even stretchers for the benefit of residents with mobility issues.
Albanese Organization had full, pre-existing, disaster plans in place before the two big hurricanes occurred. One of the additional actions it has taken since Hurricanes Irene and Sandy is to purchase Tiger Dams which are now ready to be deployed at its properties. The rated flood barrier systems are supposedly more effective than sandbags and easier to employ.
Gubbins advises that a building can be flooded from anywhere during emergencies, and not just the obvious flood sources such as rivers. For example, floods can sweep in from the highway. “Never focus on just the river.”
Communications often go down after natural disasters and, as such, protecting telecommunications systems is a prime item in any disaster planning best practices rule book. Albanese Organization uses BuildingLink to manage its communications with residents, whether by phone, email or text. During emergencies, the same system is “taken to the next level,” says Gubbins. It is important that communication is not site-specific, so that communications with residents can be conducted remotely from other properties if necessary.
Generally, make sure computer systems for the property are backed up remotely, and maintain multiple means of communications, so that if, for example, the phone is down, communication can be made through email or Skype. Employ multiple telecommunications providers—Verizon Fios, Time Warner, wireless internet, says Gubbins.
Albanese Organization conducts quarterly disaster preparedness drills with residents. Train staff consistently, says Gubbins, and share building plans with residents.
Lessons for hurricane preparedness are valuable for apartment properties located along the Eastern coast, not to mention those off the U.S. mainland such as Hawaii. Since records were kept, 289 hurricanes have affected every state along the Atlantic Ocean and the Gulf of Mexico, as well as Pennsylvania. Florida is the state that has been slammed by the most hurricanes, 116, followed by Texas.
CFLane has a major presence in the Southeast, in addition to states in the South, West Coast, Midwest and Mid-Atlantic. The company manages 33 properties in hurricane-prone Florida. Other properties in CFLane’s portfolio that are located in hurricane zones include those located in Houston and Louisiana.
One of the most important, and commonly overlooked, actions to take when preparing for hurricanes is to have signed a contract with an emergency response company that is “agreed to and already in place,” advises Bruce Erikson, vice president of construction management at CFLane. “If damages are incurred, and there is not already an agreement with an emergency response provider, customers with agreements get the response first. It can be days before they get to you,” Erikson warns.
The contract should be written in much detail incorporating scope of work and response time, so that “if you do not get the service you contracted for, there will be repercussions.” Staff training is also important to incorporate into company processes, in order to ensure that everyone understands the policies.
People in the modern world are fortunate that hurricane warnings come days in advance. Prior to an event, it is vital to ask residents to close windows and remove objects from balconies, says Erikson. But in conducting property inspections prior to hurricanes, apartment managers also need to remember to remove all items from the exterior common spaces.
“Any loose items become missiles in a high-wind event,” reminds Erikson. All pool furniture needs to be cleared from the outdoors. It is also “important to look for light items that could be picked up by the wind. These preparations are all very important. Every action can save lives,” says Erikson.
Post hurricane, water is one of the major sources of damage in hurricanes, and it is crucial to get the water out as quickly as possible to avoid the growth of mold, which will be much more expensive to remediate, adds Gubbins. “It only takes three or four days and you can have serious mold issues,” advises Erikson.
Bigger jobs are beyond the scope of property maintenance personnel, and specialists are required. Water pumps and dehumidifiers are not the only tools used to eliminate water from interiors. The emergency first responders can also take out the baseboards and place holes at the bottom parts of the wallboards to dry out the wall cavities, explains Erikson.
If the walls are already moldy, the bottom few feet of the wallboard, or the entire wallboard, can be removed. Erikson notes, though, that the manager needs to know ahead of time if the walls contain asbestos—if that is the case, the walls cannot be cut, and an asbestos abatement company will be needed to remediate both the asbestos and the water damage at the same time.
If the apartment company already has a contract with an emergency response vendor, it is advisable to contact the vendor as quickly as possible after the event in view of the need to obtain insurance compensation. The insurance company may “wonder why you did not advise them earlier, and they may be reluctant to compensate for mold because you were slow to respond to the water damage,” says Erikson.
Of course, a prime component of hurricane preparedness is insurance. Obtaining adequate hurricane insurance can be a tricky endeavor. Flood insurance is almost universally excluded from hurricane insurance policies today, says David Killalea, partner in the Litigation Division of Manatt, Phelps & Phillips L.L.P.
Flood insurance will need to be procured separately from the basic first property coverage, through a government flood
insurance program, which provides limited coverage, or on the private market if available. Depending on the property location, flood insurance may be difficult to obtain, and Killalea advises working through an
Property owners should not assume that “every policy is the same,” and should avoid obtaining “off the rack” policies, says Killalea. “The policy may cover the basic building structure, but not the pool or signage. You don’t want to be surprised. Make sure everything you want covered is covered.”
Killalea cautioned that it may be desirable for property owners to subscribe to insurance policies that allow for increases in property values every year. Under automatic annual adjustments, such policies should take into account the full replacement cost of the property rather than the value of the asset after deduction of capital depreciation. For example, it would be desirable for the full replacement cost of the roof to be covered, rather than the value of the roof as depreciated in value.
Killalea emphasizes that property owners should obtain business interruption insurance, as well as insurance covering expenses incurred while responding to the disaster. Such business interruption insurance should ideally be obtained for as long a period as possible—usually up to 18 months, he says.
Property income can be lost as a result of a host of reasons, says Killalea: not only as a result of direct damage to the property, but also, for example, government actions. If the government closes an area, residents may not be able to get to the property. “They may say they need to stay at a hotel because the roads are closed, and want a refund on the rent. You want that covered by the insurer,” says Killalea.
Property owners may want lost income and expenses to be insured “for as broad a range of bad events as possible.” In general, “ask the broker, ‘are there any exclusions I need to worry about?’” says Killalea.
Such practices do not constitute the full range of best practices, but they count among them items that are often overlooked and need to be kept in mind when implementing hurricane preparedness.