Mitigating Risk and Managing Redevelopment

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America’s aggregate national exposure to disaster risk is rising – not necessarily due to climate change, but rather because of urbanization, coastal-ization, and land-use economics. Over the last decades, more and more Americans have moved closer and closer to the coasts, and have built more vertical, more dense, more expensive, and more technologically complex structures in low-lying areas vulnerable to natural disasters.

At the same time, inescapable principles of land-use economics dictate that affordable housing is often built last, on land that is the lowest value, least desirable, and most susceptible to flooding or earthquake. Thus hurricane Katrina’s impact on New Orleans was disproportionately concentrated in poor neighborhood and public housing, and in New York City, the power outage rate and duration among NYCHA apartments was roughly three times that of the city as a whole.

Though we do not root for disasters, we should be clear-eyed about mitigating their risk beforehand and managing the redevelopment afterwards.

When a disaster hits, the human impulse is to provide immediate free relief and to promise complete restoration of the status quo ante – but that is highly unwise. What disasters wipe out should not be rebuilt as it was; instead the storm or earthquake creates a palimpsest on which to write a better city. The London Sir Christopher Wren designed and built after the Great Fire of 1666 remade that city for the better; so did the 1906 earthquake give rise to a more functional downtown San Francisco, as did the Rotterdam which arose after its 1940 obliteration by the Luftwaffe.

The facts are:

• Relief is not redevelopment. Immediate replacement is seldom as good as a thoughtful replatting and redevelopment.
• Some neighborhoods should not be rebuilt. They were over-settled, under-resourced, overly risky places to live. They should either be redesigned or abandoned and their residents resettled.
• When older residences (including public housing) go under water, by the time it drains out they may not be physically unoccupied but they are legally unoccupiable – the risk of contaminants disturbed, rust created, and moisture absorbed means that the deadly trio of lawyers, molds, and torts renders them financially toxic. They should be condemned.
• Though people always say they want to rebuild just as it was, that is bravado talking. Offer them cash to quit and relocate, and they will.
• Disasters create a once-in-a-generation opportunity to lay out civic infrastructure, such as dedicated public transit lines, through eminent-domain rationalization of a former higgledy-piggledy city maze.
• Redevelopment always entails an increase in scale – wider streets, large average plot sizes, taller buildings. It is urbanization on fast-forward … if it benefits from rational contingency planning.
• Though natural disaster is unpredictable in micro, it is virtually certain in macro – meaning that vulnerable areas are in effect living on borrowed time. The time to have a big-vision master plan for the reinvented city is before the disaster strikes, so that the political open space created by a disaster, and the tsunami of aid that accompanies it, can be put to rational use. Money so invested pays back a hundredfold.

Don’t recreate an obsolescent city; build a future city where the old one stood.

David A. Smith is the founder and chairman of Recap Real Estate Advisors.

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