Watches: global recession beaters

International watch production has continued to increase, despite the worldwide recession in the 1990’s. Analog quartz watches account for nearly two-thirds of international watch production, and are mostly sold in the developed world. Although the production of watches that need to be wound has fallen since the 1980’s the Swiss have capitalized on an interest in highly priced mechanical models to capture much of this market. The Japanese produce nearly a half of the world’s watch production.

While the rate of growth in watch production has slowed, output still is expected to hit the 1 billion mark this decade, spurred mainly by the mighty quartz analog

Like the energizer bunny of TV ad fame, the global watch industry just keeps on going and going …

True, a less-than-buoyant world economy has slowed the pace of annual production. Thus, in 1992, between 850 million (a Japanese estimate) and 877 million (a Swiss estimate) watches and watch movements were produced. That was up 4%-6% from 1991, producing the second consecutive year of single-digit growth after years of double digits.

But output has only slowed, not declined, and far surpasses tallies of even a few years ago. Last year’s total is more than double that of a decade ago. Even at a single-digit pace, annual output should reach 1 billion in this decade.

Engine: The engine pulling the industry toward the 1 billion landmark is the remarkable analog quartz watch. In the early 1980s – before Switzerland’s Swatch watch sparked worldwide interest in inexpensive fashion watches – the analog quartz was a 90-pound weakling in the watch world, overshadowed by digital and mechanical movement watches.

Today, it’s the strong man of the trio. More than 500 million analog quartz watches were produced in 1992, accounting for nearly two of every three watches, according to Swiss and Japanese estimates. This success is due partly to the popularity of analog quartz watches in the most prosperous and economically developed nations; more than half are sold in North America, western Europe and Japan.

Meanwhile, global demand for digital watches has reached a plateau. With annual production averaging 200 million to 250 million since the mid-1980s, digitals’ share of total annual output has dropped from half in 1982 to about one-fourth in 1992.

Production of mechanical-movement watches fell to just over 100 million in the 1980s, as digital and analog watches with quartz chip movements became popular. It rebounded to a high of 147 million in 1987, due to interest in luxury watches as collectibles, watch owners’ fascination with mechanical movements and more inexpensive mechanicals from China. Swiss watchmakers estimate mechanical production totaled 129 million in 1992, up 4% from 1991. However, Citizen Watch Co. of Japan – the world’s largest watchmaker – puts the figure at only 100 million, saying the Swiss overestimated Russian production.

A revival of mid- and high-priced mechanical models is a major success story for Swiss watchmakers. The Swiss exported 4.1 million mechanicals in 1992, up 57% from 1991. Mechanicals accounted for less than 15% of all watches made worldwide in 1992 but well over a third of their value, largely due to high-end Swiss models. The increase in Swiss exports of mechanical watches and movements (for use by other watchmakers) “indicates the overwhelming recovery of a watch type once believed obsolete [and] clearly reflects demand from an international clientele for fine mechanical watches,” says a 1993 report by the Federation of the Swiss Watch Industry.

This revived interest in high-end mechanicals has led makers of less expensive brands to add their own versions. “It is clear that arrival in the market of the mechanical Swatch played a decisive factor in the 57% increase [in 1992 exports of Swiss watches],” says Andre Margot, president of the Federation of the Swiss Watch Industry. Even Seiko, a Japanese brand known for state-of-the-art quartz technology, debuted an automatic movement at Basel 93 and has created a production line exclusively for mechanicals.

Recession’s effect: While production keeps growing, the global recession has affected what and how people buy watches.

Much of the gain in nixon kensington watch output last year came in lower-priced analog watches, says Citizen, which produced 178 million watches or 21 % of the world total in 1992. Sadaki Takeuchi, senior managing director of Citizen Trading Co., called 1992 “a challenging year” because of the economy and cited a “general slowdown in sales of higher priced watches … offset by sales of lower priced ones.” (Seiko, in a post-Basel report, also blamed global recession, along with a domestic shift to lower-priced products, for its 62% drop in pretax profits to $11.8 million.)

In line with Citizen’s evaluation, the Federation of the Swiss Watch Industry says Swiss-made plastic fashion watches, led by the SMH Group’s Swatch brand, grew 51% to 24.9 million in 1992.

Even in lower-priced categories, though, consumers want more quality and value. Average export stuhrling watches prices in 1992 rose for all watchmaking countries – except Switzerland – from US$17.43 in 1991 to US$20.92.

Watch buyers: Citizen data show that nearly half of all watches are bought in North America (23%) and western Europe (25%). The U.S. remains the largest single market, agree Japanese, Swiss and Hong Kong experts. According to U.S. Department of Commerce figures compiled by the American Watch Association, U.S. watch imports rose 6% to 234 million units in 1992. Their value increased 1% to $1.75 billion.

Demand is growing elsewhere, too. Watch sales are expected to continue rising in China and India, which contain more than a third of the world’s population and have active watch industries of their own. The outlook is less rosy in eastern Europe and the former Soviet Union, however. There uncertain economic, industrial and political situations have dampened sales.

Watchmakers: The leading watchmaking nations have maintained their rankings unchanged for a decade. Japan is production leader, making roughly 44% of the world total in 1992. Then comes Hong Kong (about 20%) and Switzerland (17%). By value, the Swiss lead (about 55%), then Japan (about 22%) and Hong Kong (8%). Other watch countries (including China, India, Thailand, Germany, France) provide the rest in both cases.

Here’s a brief look at some watchmaking nations.

* China made almost 88 million timepieces and movements last year, 40% of them exported to the U.S. Most were cheap digitals. Analysts of the Federation of the Swiss Watch Industry note, however, that much of what China makes for Hong Kong watch firms is “sometimes counted as Chinese exports and sometimes as Hong Kong exports.” Analysts for Citizen Watch say China’s statistics also include clocks and production subcontracted by Hong Kong firms. Deducting these, Citizen estimates China made 83 million timepieces and movements in 1992.

* France, which has a 600-year watchmaking tradition, produced almost 8 million watches in 1992 and exported half of them at a reported value of about US$310 million. It also produced 14.2 million watch movements and exported 1.3 million of them.

* Germany’s timepiece industry was affected by recession throughout Europe, its major market. Production of watches slowed 20% to about 4 million units and production of clocks slowed 14.6% to 52 million.

Exports to the U.S. fell for the third year, due in part to the weak dollar. Germany sent us 1.9 million clocks (down 7.2%) worth US$29.7 million (down 5.4%) and 84,721 watches (down 13.1%) worth $7.6 million (down 11.6%).

German watch trade officials say they will work with U.S. clients to improve sales, partly by stressing craftsmanship and technology over price. But their main hope is that President Clinton’s economic policy will stimulate the U.S. and world economies.

* Hong Kong produced 175 million to 180 million watches and movements in 1992, according to Swiss and Citizen estimates.

Hong Kong says it is the world’s largest exporter of watches and clocks by volume and the second largest by value. And the industry is Hong Kong’s fourth largest export business. However, akribos skeleton watch exports fell 13% last year, a first-time decline. “That wasn’t due to poor performance, but the transfers of production to China by many Hong Kong firms,” says Wong Kam Shing, chairman of the Federation of the Hong Kong Watch Trade and Industries.

More than a fourth of Hong Kong’s 1992 watch and clocks exports went to the U.S., its single largest market. And almost two-thirds were quartz analog watches. “Digital and mechanical watches play a smaller role than previously,” says Shing.

* India made more than 10 million watches and movements, according to some sources. Citizen’s analysts, though, say this figure includes timepieces and movements using imported parts. They put the tally closer to 8 million.

* Japan’s watch production topped 373 million pieces, says the Japan Watch & Clock Association. That was up 2% from 1991 and accounts for about 44% of total world output. Most of the production was exported.

According to Citizen, total production value fell 17% from 1991 because of a decline in the proportion of finished watches and an increase in movement production.

* Russia made 70 million units in 1992, based on Swiss estimates. Citizen says this figure is too high because it includes clocks and because transportation and delivery problems since the Soviet Union’s breakup have affected production. Citizen estimates Russia made fewer than 38 million watches and movements last year and says this year’s tally will be “far less.”

* Switzerland produced 145 million watches and movements (up 9.8%) valued at a record US$5.3 billion (up 7.5%) in 1992, But the Swiss slipped in two important markets, with the export value of its production dropping 9.6% in the U.S. (bumping it to third place behind Hong Kong) and falling 8.9% in Japan.

* Taiwan watch exports fell 8.8% to 5 million in 1992, with quartz watches down 14.5% to about 2 million, says the Taiwan Watch & Clock Industrial Association. The value of quartz exports slid 6% to US$25.1 million, but the value of mechanical watch exports rose 9.3% to $35.5 million. Clock exports grew 21% to 57.8 million units and 16% to US$220.5 million.

Meanwhile, Taiwan plans to build a $100 million center for watch movement research, development and manufacture.


Bulova gets green light to prohibit transshipping

Bulova has been given a green light from Federal antitrusters to resume its past practice of prohibiting “transshipments” of its watches from “authorized” dealers to discount stores and other unapproved retailers.

But in granting the manufacturer’s request for “transshipment” relief, the Federal Trade Commission stopped short of approving a broader petition from Bulova which would have eliminated a 12-year-old order preventing the firm from engaging in direct resale price maintenance (RPM) activities.

FTC’s original 1971 antitrust order was sparked by a commission complaint charging that Bulova conspired to fix the resale prices of its tissot mens watch by a variety of means, including prohibiting the transshipment of its products to discounters.

Last August Bulova formally petitioned the FTC to either abolish that order entirely, or suspend the restrictions for 10 years.

The vote to partially grant Bulova’s request passed the commission’s five-member bench by a narrow, 3-to-2 margin, with all three Reagan Administration FTC appointees agreeing that allowing the manufacturer to block transshipments would be “in the public interest.”

Citing the Supreme Court’s controversial 1977 ruling that transshipment restrictions aren’t automatically illegal, the FTC’s majority faction ruled that the watch diversion ban is “no longer necessary to prevent injury to competition in this industry, and that Bulova watches for men will likely suffer significant competitive injury unless those provisions are eliminated.”

In the next breath, however, the commission’s ruling concluded that “Bulova has failed to demonstrate that the remaining provisions of the order” prohibiting outright RPM conspiracies against discounters and consumers “should be modified or set aside.”

Specifically, the FTC noted that the manufacturer’s petition “doesn’t point to changes in law or fact or public interest considerations sufficient to require modifying or deleting those [anti-RPM] provisions.”

The Bulova ruling follows a pattern set by Reagan Administration FTC appointees over a year ago in a string of other RPM actions.

Similar longstanding FTC orders outlawing transshipment restraints by Lenox China and a series of Japanese stereo equipment manufacturers (Pioneer, Sansui, TEAC) were relaxed in recent months despite objections from catalog showroom chains and other discount industry groups.

Significantly, the FTC received no public comments on Bulova’s August petition for “relief”–an indication that discounter and catalog industry lobbyists may have given up hope of influencing the commission’s position on transshipments.

The decision to allow Bulova to cut off distribution channels to off-price retailers did, however, draw fire from within the agency.

Voices Disagreement

Commissioner Patricia Bailey, one of the FTC’s two remaining Carter Administration holdovers, attacked the ruling as a step toward legitimizing Fair Trade-style resale price-fixing conspiracies by manufacturers.

In a sharp dissenting statement, Bailey said the only presale “service” which is fostered in this ban on transshipping is a nondiscountable price, which some would say conveys an image of quality.

“I have never accepted this argument,” she said, “because it leads very logically to the position that resale price maintenance is an even stronger guarantee of that precious ‘prestige image.'”

Both Bailey and FTC Commissioner Michael Pertschuk have joined with discount industry groups in urging Congress to pressure the agency to resume vigorous enforcement of the laws against manufacturer resale pricing restraints.


Levying for levees will cause problems

If developers want to build on flood plains, they will have to pay for defences, but will local authorities then never say ‘no’?, asks John Gummer

I have warned before about the government’s attitude towards the risk of flooding, but last week’s rain and snow reminds us of the significant danger to property this presents. We were within a whisker of a major disaster. Another 24 hours and property owners in counties from Yorkshire to the far South West would have been in serious trouble.

The government has, of course, promised that spending on flood defences will rise from pound sterling 144m in 2002 to pound sterling564m in 2005. But the adequacy of this investment has been seriously called into question by expert commentators. The trouble is that we do not have an up-to-date flood survey that estimates the likely demands for prevention work over the coming decade. Governments of all colours have always fought shy of so challenging an estimate. Instead they rely on a range of different surveys, specific reports and local assessments produced at different times and with different parameters.

This means that the extent of the problem is always shrouded and the Treasury decides on the resources without proper external verification. It is the kind of financial nonsense that the same Treasury would condemn in the private sector. It is as if a public company were so concerned about its indebtedness and liabilities that it refused to add them up but reported instead an estimate of what it hoped they would be. Such action would be judged inadmissible – simply because of how it would affect others. So, too, should we condemn successive governments. No wonder the insurance industry has cried stop and set a minimum investment target based on its own figures.

As I reported earlier, the Association of British Insurers agreed to offer insurance only if government spending on sea defences were massively increased and building on floodplains seriously curtailed. The government rushed to meet its minimum requirements but, even so, the figures it touted were based on no new and complete survey, no properly grounded research. The result is insufficient provision and the likelihood of considerable loss for property owners while insurance becomes increasingly expensive and difficult to find.

Shifting the burden

So, mindful of the dangers, government has sought to shift the burden and find ways to generate more funding for defences from the private sector. It wants developers to assume a proportion of the costs of the next investment in coastal and river flood defences. Since it put out a consultation document last February, DEFRA has pushed the view that housebuilders and other developers who build on flood plains should pay a one-off fee which would go towards the construction of coastal and river defences. They have high hopes that this method of taxing could raise some pound sterling20m.

It sounds sensible in theory – anything to make building on flood plains less attractive. But, in practice, the actual implementation and operation of such a tax would do exactly the opposite. The money would have to be routed locally or it could not be said to be for specific protection of the sites being developed.

However, if local authorities were to receive the tax directly, they would almost certainly begin to rely heavily on the money gained from approving schemes on flood plain land. Flooding is already low on the list of planning priorities. In the past year, 288 applications to build on flood plains out of 758 objected to by the Environment Agency were approved. That’s one in three when there was nothing financial in it for the local authority. What if they had the inducement of a nice fat cheque as well?

Impartiality will be lost with cash incentive After all, most of our coastal authorities have been hit by central government cuts in the proportion paid centrally to provide sea defences. Here is a ready way to make up the difference. In inland areas, planning permissions will be a useful way of diverting the Environment Agency’s priorities towards the direction a local authority finds electorally desirable. The fact that it levied a tax to prevent flooding will, all too easily, skew the mechanisms by which the EA decides the order and urgency of its schemes. And what about the duty of the EA to object to damaging schemes in flood plains? How can that be done impartially if there were the prospect of a large contribution to works that it intended to do in any case.

This whole proposition has been ill thought through and presents the developer with a bill without presenting the public with a solution. Effectively, this proposal would be a license for local authorities to permit building on flood-prone land – exactly the opposite of the intention of insurers and government alike.


Frustrations continue to rise over area’s flooding problem

The new rate hike on water and sewer bills passed by City Council last week may alleviate some of the city’s chronic sewage problems, but it probably will not be the kind of solution to resolve the long-term flooding problems of residents in the Memorial area.

Last September, hundreds of residents from Memorial’s more affluent subdivisions jammed a neighborhood elementary school cafeteria to tell Mayor Bob Lanier what was wrong with the city’s sanitary and storm sewer systems in areas along Buffalo Bayou. Armed with pictures and slide shows, residents of Frostwood, Rummel Creek, Tanglewood and Broad Oaks subdivisions pointed to local flooding problems they say have been steadily on the increase over the last three years, ruining some of the city’s priciest residential real estate.

Four months later, with rising frustrations at an overflow of multifamily development along Dairy Ashford and a lack of drainage solutions, residents of a number of communities along Buffalo Bayou have banded together to ask the city to halt development in the area altogether until the cumulative effect of construction upon the city’s drainage systems can be measured.

The fact that the land in West Houston, much less the rest of the city, is prone to flooding is nothing new. As early as 1935, local newspapers chastised the city for not moving toward a comprehensive plan to alleviate the city’s flooding problems in the western edges of the county.

To understand why flood control has been and still is such a problem in the western edges of Harris County takes a bit of history. As Art Storey, executive director of the Harris County Flood Control District, explains it, flood control measures on Buffalo Bayou could have and should have happened with the creation of the Harris County Flood Control District in 1937. At the time, Houston had already suffered through at least four major floods with widespread damage.

But before the full range of flood control measures could be implemented, environmental concerns stepped into the picture. The Bayou Preservation League, supported by then-Congressman George Bush, rallied and won the right to halt improvements on the city’s bayou system. At the time when the improvements on Buffalo Bayou were halted in 1968, the bayou channel, which drains the largest portion of Harris County through its tributaries, had already been enlarged from Shepherd Drive downstream to downtown and from the Sam Houston Parkway out to Barker and Addicks reservoirs.

That left a 19-mile stretch in the middle that has acted as a type of natural flooding bottleneck. Storey refers to the patchwork improvements on Buffalo Bayou as “a natural channel with unnatural flow under storm conditions.” Undeveloped parts of the channel continue to act as a choke as water moves downstream, discharged from the Addicks and Barker reservoirs west of Highway 6 and flowing toward downtown and into the San Jacinto River.

Even now, as high-priced development in Houston continues along the banks of an unimproved Buffalo Bayou, the flood plain continues to expand, and heavy erosion is eating away at the soil. And that flow of water has no intention of stopping.

Homeowners in areas like Tanglewood, who are spending thousands of dollars to buttress their properties, are likely to be lending more erosion to their neighbors.

As late as November of last year, Mayor Lanier sent a letter to the U.S. Army Corp of Engineers, asking if the Buffalo Bayou Improvement Project could be reinstated. Col. John P. Basilotto’s response was that a re-evaluation of the feasibility report, completed in 1988, “could not be economically justified for federal participation.”

What is also likely to be compounding flooding problems in Memorial and other areas of the city, says Harris County Flood Control District Director of Operations Gary Stobb, is also the city’s own drainage system. Every storm sewer in the city, including the ones created to drain Dairy Ashford in 1972, has been based upon the design designated by the Fugate curve.

The Fugate curve, created by the city’s chief engineer in 1926, designates the type and extent of storm sewer channels that the city will require to drain each city thoroughfare. It allows the city to spend less on storm sewers in areas where the city anticipates less development, thus, saving the city dollars on infrastructure.

That system of storm sewer development means that at some time around 1972, a city engineer sat down and calculated what he assumed to be the full potential development of each section of Dairy Ashford. Using the Fugate curve, the engineer would have predicted what type and how wide a potential sewer system would be, allowing for certain amounts of street flooding that would eventually drain into lateral and outfall sewers and finally into a primary drainage channel. In the case of Dairy Ashford, that would be Buffalo Bayou.

Which would be fine, says Stobb, if one could assume that the engineer had the foresight to calculate correctly the right level of ultimate development for each section of a city road; and if one could assume the Fugate curve was an accurate gauge.

“I’m not so sure it is,” says Stobb.

Even if all storm sewer systems along Buffalo Bayou were ideal, adds Storey, they still might not meet the needs of the Memorial area. Larger storm water outfall channels would only feed an overtaxed Buffalo Bayou channel.


The fact that a widening area of homes in some of Memorial’s neighborhoods are flooding at levels more heavily and more frequently than Fugate’s proposed three-year flood levels is an indisputable fact. What is causing those problems, however, is a matter of opinion.

For some neighborhoods, like Broad Oaks, simple street and ditch repairs have resolved many of the area’s flooding problems. As County Commissioner Steve Radack is apt to point out, former Mayor Kathy Whitmire’s administration severely undercut the funding necessary for the maintenance of the city’s infrastructure.

But Richard Scott, director of the city’s Capital Projects Department, admits it wasn’t excessive grass clippings that caused problems like the citywide flooding of last March 4. An overflow in portions of the city’s bayou system left entire stretches of the Katy Freeway submerged.

Since that day, the city’s entire storm sewer department has been recreated with heavy increases in the maintenance from the city’s general revenue fund. And $44 million approved in the city’s bond election has been set aside for a five-year capital improvement plan of the city’s wastewater and sewer system.

Part of the capital improvement bonds, says Scott, will be used to provide the city with a master drainage plan. “It will identify what the needs and problems are, help us prioritize projects in a better manner and help us coordinate more with the Harris County Flood Control District,” Scott says.

He believes that five years and $44 million will be inadequate to handle the city’s storm sewer needs. And, like Storey, Scott knows that an improved storm sewer system will do little good if it flows into an unimproved bayou.

The eventual cost of buying the right-of-way to improve Buffalo Bayou in an environmentally pleasing way, says Scott, would likely plunge the cost-benefit ratio on the project, disqualifying it for federal funding.

So, in essence, taxpayers are eventually going to feel the tug-of-war between Houston’s pro-development and pro-environmental movements in the pricetag of projects like the improvements to Buffalo Bayou.

“There are no easy answers,” says Scott. “You can’t always have both.”

In the case of the proposed Ashford Lakes luxury apartments, many of the residents in the subdivisions that surround the proposed Ashford Lakes luxury apartment project live in an area that is designated below the flood plain. They admit their houses are going to be prone to flood but also theorize that additional development to the area will only exacerbate their flooding problem.

Developer John Garibaldi of JMG Management insists that the upscale Ashford Lakes, which has still not received final approval from the city, is not the source of the local subdivisions’ problems.

“All I can say is that this apartment complex is going to have no impact on the flood plain,” Garibaldi says of the proposed site located on the west side of Dairy Ashford, south of Buffalo Bayou. “The answer to these people’s flooding problems is not me not building the project.”

Radack is personally opposed to the Ashford Lakes project, although he says he cannot say no to a project that meets all the policies and law requirements by the City of Houston and the federal flood insurance program.

“Just because that’s my personal opinion doesn’t mean that I have the right to control development,” says Radack.

That was the statement made by many of the city and county officials at a meeting earlier this year to protest the Ashford Lakes project. As long as a development meets the city requirements, officials have their hands tied.

And those requirements for development, says Stobb, can be as minimal as a three-year flood plain. “What developer is going to spend the money to develop a project with a 10-year (flood) curve if that city doesn’t ask for it?” says Stobb.

As Gary Rapp, president of the Westchester Homeowners Association, has studied the maze of city and country jurisdictions over flood control, he says the question of who is responsible for what problem in flood control is rarely delineated. The Harris County Flood Control District can monitor it, but they have no jurisdiction over it. The U.S. Army Corp of Engineers can build and monitor it, but they don’t have any enforcement rights. The City of Houston often has jurisdiction over it.

Even the city’s own documents have stated that clear-cut lines of responsibility between the city and county have never been drawn. Joining the federal flood insurance program, says Rapp, should have resolved some of those problems. Meanwhile, the average depth of Buffalo Bayou continues to rise.

“Really, the overall problem is the absence of a truly foresightful organized flood plain management plan,” Rapp says. “When the city joined the FEMA program in 1985, a more defined and rigid flood management system should have been used for development. Frankly, just looking at the way new development gets evaluated by the program, relatively little is being coordinated in view of the cumulative impact. It’s a somewhat fragmented system.”


Rapp says it may take, as Stobb has suggested, legal remedies to reach an ultimate end to citywide flooding. The homeowners groups, which formed a non-profit corporation called the West Houston Civic Action Committee Inc., has hired an independent hydrologist to study the cumulative effects of development on the city’s drainage system.

If the study proves that cumulative development has enlarged the flood plain, the group plans to sue the city to follow its own flood plain management regulations, those that are required as a member of FEMA.

“Our ultimate end is to stimulate legislation,” says Rapp. “People can get pretty emotional, but I think most people are fairly rational, and while a lot of them may not understand all the technical complexities, they do want to know that things are changing for the better.”


Taking to the streets: homeowners protest proposed apartment project

Angry homeowners in west Houston took to the streets last week and staged a demonstration on the site of a proposed apartment project.

Residents of the Wildwood Cluster Homes and Westchester subdivisions marched with picket signs to protest a proposed 208-unit project on Dairy Ashford Road, just south of Buffalo Bayou.

Homeowners claim the complex, called Ashford Lakes, will aggravate flooding and overtax storm sewers. The site is located within the Buffalo Bayou flood plain.

But Jenard Gross, developer of Ashford Lakes, argues that the concerns are groundless.

He says two engineering companies have worked together on the project to ensure that it won’t have an impact on the nearby bayou. The site’s sandy soil absorbs water quickly, he adds, and its runoff is discharged on the east side of Dairy Ashford, downstream from both the Wildwood and Westchester projects.

Plans for Ashford Lakes have already been given the green light by the Planning and Development Commission, subject to approval from the Harris County Flood Control District and from the city’s Public Utilities Department. Gross assures that the project will comply with the requirements of flood control and public utilities.

Art Storey, executive director of the flood control district, says his staff requires evidence that the project won’t displace storm water in the flood plain. Gross’ plans call for building apartment units on stilts — a strategy that will probably satisfy the letter of the law.

If Ashford Lakes meets regulatory requirements, flood control will approve the project. But Storey says he can’t help but be concerned any time there’s high-value construction in the flood plain. When an individual’s expensive car gets trapped in rising flood waters, Storey says he’s the one the wet motorist blames.

“Local regulations should be more restrictive about building high-value structures in the flood plain,” Storey says.

At the present time, he indicates that he can do little more than register his concern about planned construction in the flood plain. But demonstrations by angry homeowners indicate to Storey that the public is aware there’s a link between development in the flood plain and subsequent flooding.

So far, Gross has failed to convince County Commissioner Steve Radack that Ashford Lakes won’t impact the nearby bayou.

“In no way, shape or form have I seen any information that would remove any fear I have that the project will aggravate flooding,” Radack says.

The commissioner says he’s opposed to the project on that issue alone, and will remain opposed until he’s convinced otherwise.

In addition to citing fears about flooding, area homeowners opposed to Ashford Lakes also contend that the proposed apartment site is the nesting ground for several bird species, and they fear development will drive wildlife from the area.

Gross reports that neither he nor his project team members have spotted any evidence of birds’ nests on the disputed tract. Except for ducks swimming on Wildwood’s nearby pond, the developer says he hasn’t seen anything but the most common birds in the area.

Althea Schultz, vice president of the Wildwood Civic Association, says a Great Blue Heron makes its home in the area year-round, while water turkeys and an egret with a six-foot wingspan are regular seasonal visitors.

Concerned as she is about the area’s bird population, Schultz is more worried that apartment construction will aggravate area flooding. In March of last year, water from Wildwood’s pond rose 15 feet — high enough to lift the subdivision’s waterside gazebo off its base.

And Robin Motley, a Westchester resident, says several houses on her street flood during periods of heavy rain. Motley doesn’t want to see additional construction close to the bayou until area flooding is under control.

Gross is surprised at the outcry sparked by his plans for Ashford Lakes.

“I was taken aback,” he says.

The developer didn’t learn of last week’s planned demonstration until the evening before the scheduled date.

He was surprised because Ashford Lakes won’t directly border any residential development. The project site is bounded by a bayou easement to the north, Old Buffalo Bayou to the west, Dairy Ashford to the east and a neighborhood swimming pool to the south.

“We’re far away from the rest of the people,” Gross claims.

But Jim Westover, president of the Wildwood Civic Association, disagrees. He says that one of the 15 buildings proposed by Gross extends out over the water and comes within about 60 feet of a Wildwood house.

Flooding, storm water runoff and wildlife preservation may be the rallying cries of Wildwood and Westchester residents, but the groups are also concerned that apartments will lower property values and aggravate traffic congestion.


It’s not a very auspicious time to be an apartment developer in Houston.

Last week, Bellaire residents protested plans for an apartment project on a vacant tract near Loop 610. Last fall, residents of west Houston’s Fleetwood and Fleetwood West subdivisions protested a proposed apartment project in their area. And last year, Gross saw his plan to incorporate a vintage building into a new apartment complex squelched when the City of Houston wielded its power to eminent domain to acquire the property in order to keep a roof over the head of a resident theater group.

“Generally, people don’t want apartments,” Gross says. “They have the misconception that apartments downgrade a neighborhood.”

Although Houston has the reputation of welcoming development, Gross says he has found it easier lately to build in communities with development-leery reputations.

“We’ve built in places like Austin and don’t seem to have the problems we’re experiencing here,” he says.

According to Wildwood’s Westover, 818 new apartment units have gone up within a mile of the proposed Ashford Lakes site within the past year.

Schultz is scared that too many new apartments in one area will lead to vacancies and depressed rents.

Whether west Houston-area residents like it or not, their area is ripe for apartments, Gross says. BP Exploration, Landmark Graphics Corp. and other employers are relocating to west Houston, he says, ticking off company names.

“A lot of the jobs in Houston are moving out to that part of town,” Gross says. “That’s what’s driving development.”

Gross believes he owns one of the most attractive land tracts in the city. He thinks Ashford Lakes will easily clear a few remaining hurdles, and he predicts that the finished product will convert the neighbors.

“It’s going to be of such high quality that people will be glad to have it in the neighborhood once it’s up,” he says.

But Schultz isn’t convinced.

“It’s an attractive site,” she agrees. “But with so many buildings, it won’t look at all like the attractive site it is now.”


Flood control effort rises as federal deadlines loom

If all goes smoothly, Sacramento’s basic flood problems should be fixed by 1996, ending requirements for flood insurance and allowing development in Natomas.

Of course, nothing has gone smoothly in Sacramento’s nine-year effort to solve its flood problems.

If the city’s flood control plan is in place by 1996, lenders might no longer have to require flood insurance on structures.

But in the meantime, the Federal Emergency Management Agency is expected by early next year to finally adopt new flood plain maps — stalled by political pressure since 1989 — showing that most of Sacramento County is flood-prone.

Between the time those maps are adopted and the time the city’s flood protection is in place, there could be a hike in flood insurance rates, nearly doubling them. And bills currently before Congress would mandate that all mortgage lenders — not just those with federally insured deposits — require flood insurance on structures.

Progress is now described as rapid on flood-control construction in Natomas and on the city’s flood wall, which runs downstream from Old Sacramento to Broadway. Also important are negotiations between local officials and the U.S. Bureau of Reclamation to arrange more flood storage for Folsom Lake.

These measures should give the area basic protection from a major flood likely to occur once every 100 years, said Tim Washburn, counsel for the Sacramento Area Flood Control Agency.

Further down the line and more nebulous at this point is whether a dam or other flood-control measures will be undertaken on the upper American River to increase local flood protection well beyond the level required for a “100-year” flood — a flood of such magnitude that it can be expected only once a century.

Political questions loom. For instance, a federal panel of experts convened by Congress after last year’s Midwestern floods recommended two weeks ago that the government no longer promote levee and dam construction in flood-prone areas. The panel’s degree of influence, however, is unclear.

In Natomas, developers have been closely watching flood-control construction. Development has been held up since the 1986 floods showed an unexpected weakness of the local levee system. That year’s floods, rated as only about 70 percent as high as a 100-year flood, nearly topped levees.

Last year, the Sacramento Area Flood Control Agency started work on some $45 million worth of improvements needed to Natomas’ inner levee system. The work should be done by 1996, Washburn said.

A possible glitch: the U.S. Army Corps of Engineers recently notified SAFCA that a 100-year flood would raise water levels higher than expected on the Sacramento River in Natomas. That means four miles of river levee might have to be raised six inches, adding another $5 million to $10 million to the project. SAFCA isn’t sure where the money would come from, said Paul Devereux, the agency’s engineer.

SAFCA will try to get FEMA not to require the higher levees, Washburn said.

The higher level also means that SAFCA must buy 1,000 acres in the northern part of the basin near Pleasant Grove Creek canal and reshape the adjacent levee system for better flood control. That could take more time and money.

The Natomas flood-control project can’t be completed unless a wildlife conservation program is developed for the Natomas basin. It’s being worked out among government officials and developers, Washburn said.

Some environmentalists will keep arguing that it is dangerous to allow more construction in an area that suffers deep floods, regardless of levee improvements, said Ron Stork of Friends of the River.

Federal rules allow some development to proceed when the work is half-done, probably late next year. Local officials, however, may not favor residential development until the work is all done, said Bob Thomas, a Sacramento deputy city manager.

The rest of the city, south of the American River, won’t be out of the plain until the reoperation of Folsom Dam is set up, Devereux said. SAFCA is negotiating with the Bureau of Reclamation to increase the amount of reservoir space kept empty in the rainy season. Currently, 40 percent of the lake is kept empty. The reoperation would increase flood storage to 67 percent. SAFCA expects to strike a deal with the bureau this summer, Washburn said.

Also south of the American River, the city’s flood wall on the Sacramento River is in poor shape. But the funding is available for the $2.5 million project and construction should be completed by 1996, Washburn said.

Before the 1986 floods, most of Sacramento was believed to be outside the 100-year-flood plain. The ’86 floods prompted FEMA to remap, which was done in 1989. But local officials persuaded FEMA to hold off adopting those maps until now. As it stands, FEMA is expecting to designate the area by early next year as being in neither a flood-clear nor a flood-prone area, but in an interim zone between the two, said Ray Leneburg, a FEMA spokesman.

FEMA’s anticipated new flood-plain maps could affect flood-insurance rates. Once the new flood-plain maps are adopted and until flood control measures are complete, close to 65,000 homes and building owners would have to absorb insurance rate hikes if they have been slow in buying coverage. The average flood insurance policy for a $100,000 home would then increase 86 percent to $412 a year from $222, reported the National Flood Insurance Program, a division of FEMA. If building owners buy their coverage before the new maps are adopted, they can lock in the lower rate.

As of March 31, 54,002 homes and buildings in both the incorporated and unincorporated areas of Sacramento County were protected by flood insurance, up from 51,693 at the same time last year.

When the local maps were redrawn in 1989, 90 percent of the property in Sacramento County was put in flood-prone areas, up from 10 percent under the old maps. The old maps put 115,000 Sacramento County buildings in the 100-year flood plain; the new maps will include 125,000 more structures.

Federally insured lenders must require homeowners to have flood insurance. But an estimated 30 percent to 40 percent of mortgage lenders don’t comply, said Mike Shore, a mitigation specialist with FEMA.

Congressional legislation is being melded this year, however, that extends the flood insurance mandate to mortgage lenders that are not federally regulated, while also providing fines for those lenders not complying.

Not everyone believes flood insurance rates will come down even if Sacramento solves its flood problems by 1996.

“I do not believe that this will be just a two-year solution,” said Kirby Wells, owner of R.K. Wells Insurance Agency, which sells flood insurance. “For homes in (flood-prone areas) it will be an ongoing program.”


Nuggets wade through flood-plain issue

New arena might require millions in flood controls

The Denver Nuggets‘ grandiose plans for a $110 million arena and $20 million television studio in the Central Platte Valley have city leaders dreaming of a new regional entertainment center that would draw thousands of visitors daily into downtown.

Mother Nature, however, has created one big problem for Denver’s new development hot spot: Much of the Central Platte Valley, including the arena site, lies in a flood plain.

Even if officials determine the arena by itself wouldn’t be a serious flood hazard, construction of the new sports palace could preclude development in the adjacent area.

“The more things you put in the flood plain, the more impediments you create for the flood flow,” said Ben Urbonas, chief of South Platte River planning programs for the Urban Drainage and Flood Control District. “Any new construction can’t back flood water up onto adjacent sites.”

The Central Platte Valley is Denver’s new development mecca, with Elitch Gardens under construction and the Nuggets planning their project next door. Throw in the proposed Ocean Journey aquarium on the other side of the river, nearby Coors Field, and rumored plans for hotels and other entertainment venues, and you have all the makings of Disneyland East.

The Nuggets have insisted their new arena would be privately financed and city taxpayers would not have to pick up any part of the tab. However, the team has made it clear they won’t assume the responsibility for flood control in the entire valley.

“We are prepared to work with the city to eliminate the flood plain problem on our site,” said Tim Leiweke, president of the Nuggets. “That includes making sure we won’t add to anybody else’s problems. We’ll hopefully be able to negotiate that and reach an agreement with the city.”

City voters funded $14 million in flood-plain improvements that allowed Elitch Gardens to move into the valley. Work is now under way to elevate Elitch’s 60-acre site and deepen the segment of the river that runs alongside the amusement park.

In 1965, devastating floods on the South Platte River caused millions of dollars in damage, so the threat of floods is real, even if it’s not a everyday threat.

An engineering study is now under way to evaluate the effect of the Nuggets’ arena on potential flooding.

Even if the study finds that the arena itself won’t have a dramatic impact, Denver could find that future development in the area will be impossible without as much as $12 million in new flood-control work on the Platte. Every new project in the area reduces the size of the flood plain and increases the danger of flood waters being diverted into other parts of the city.

“It’s going to have to be a policy decision whether or not that part of the flood plain should be improved,” said Bar Chadwick, the city’s lead planner for the Central Platte Valley. “Do you do a piecemeal approach or plan out the whole area?”

Elitch Gardens conducted an extensive campaign in 1989 to win voter approval for $14 million in bonds that are funding flood-plain improvements for its new site. But most of that work is being performed only along adjacent portions of the Platte River that borders Elitch Gardens.

Chadwick said opening up the rest of the Central Platte Valley to development would probably require improvements on the Platte River between Colfax Avenue and Eighth Avenue.

Liz Orr, Denver finance director, is coordinating the city’s negotiations with the Nuggets. She acknowledged that the problems with the flood plain will have to be addressed, especially the long-term impact of a project like the Nuggets’ proposed arena.

“The flood-plain issue is one of dozens of issues we have to look at,” she said. “We have to examine that. It’s all one big flood plain. Each project may not have major flood issues in the short term, but they might in the long term.”

Not all the Central Platte Valley lies in the flood plain. The affected area is between the Auraria Parkway and the South Platte River, on the south side of Cherry Creek. Ocean Journey’s proposed site is outside the flood plain, as is Union Station and the land on that side of Cherry Creek.


Flood victims are left uncovered

Like most business owners in El Dorado County, Bill Carey, owner of the St. Pauli Inn, doesn’t have flood insurance.

His Whitehall business suffered only minor flooding, and New Year’s damage from the swollen American River was slight and the cleanup quick.

“We don’t carry flood insurance because it’s so expensive,” Carey said. “I doubt any of the people that live around here have it either.”

Throughout El Dorado County only 190 policies are in force through the National Flood Insurance Program, a division of the Federal Emergency Management Agency, which underwrites almost all flood coverage in the nation.

Nobody with FEMA or the insurance organizations could estimate how much of the four-county region’s roughly $45 million in damage to real and personal property was covered.

FEMA, however, estimates that only 25 percent of structures in the nation’s flood plains are covered by flood insurance. Because much of the region’s flooding occurred in Carey’s neck of the woods – outside the designated flood plains – the numbers are likely to be lower.

“With flood insurance, it’s out of sight, out of mind,” said Candysse Miller, spokeswoman for the Western Insurance Information Service, a consumer education organization based in Los Angeles. “A lot of people are surprised to find out that their homeowners’ insurance doesn’t cover flood.”

* What’s covered and what’s not: Lenders whose loans are backed by the Federal Deposit Insurance Corp. must require that their clients living in designated flood plains carry flood insurance. This is sold through insurance agents and is underwritten by the National Flood Insurance Program.

For single-family dwellings, the maximum coverage is $250,000. Additional insurance can be purchased to insure contents up to $100,000. For the most part, the policies are enough to cover the debt outstanding on a home loan, but can be increased if the buyer wants.

The maximum on business policies is $500,000 for structures and another $500,000 for contents. Both commercial and personal policies can carry various deductibles that increase or decrease the price. The average National Flood Insurance Program policy costs $300 a year for about $98,000 worth of coverage.

Depending on the flood threat of a given area, prices can be lower or higher. The New Year’s Flood will not raise prices, a FEMA spokesman said.

* Tougher requirements loom: For years there were no teeth to the law that requires flood insurance on FDIC-backed loans. In the past, many people bought flood insurance when they took their loans out, and then let it lapse, said Mark Stevens, spokesman for the FEMA’s headquarters in Washington, D.C.

Two years ago, though, new laws were implemented that allow for fines to be imposed on lenders that don’t keep track of their flood-plain home loan clients and their flood insurance. Fines for lenders not complying are $350 per violation, rising up to $100,000 per lender per year.

The Mortgage Bankers Association of America says 60 percent of the nation’s homes carry mortgages. Those that are owned free and clear and are in flood plains have no insurance requirements.

The stiffer laws and population of growth – combined with the memory of the January and March 1995 floods – have caused an uptick in the number of National Flood Insurance Program policies in place in the four-county area, especially in Sacramento County.

Including all its cities, Sacramento County has 62,735 policies in place, according to the National Flood Insurance Program, up from 54,241 two years ago.

Placer County residents hold 876 policies, down from 1,027 two years ago.

In Yolo County there are 2,950, compared to 3,541 in January 1995.

1995 numbers are not available to compare to El Dorado’s current tally of 199 policies.

One of those El Dorado businessmen not carrying flood insurance, St. Pauli’s Carey, did not leave everything to chance. “We have multi-peril, which is anything but flood insurance,” he said.

Bill Sirola, spokesman for the Sacramento office of State Farm Insurance Cos., said that the company has had many calls from people wondering if their homeowners policies cover flooding. The answer.

Still, the insurer has fielded some 15,000 claims in Northern California from storm damage, including falling trees and leaking roofs, among other calamities. So far, he said, those claims should add up to about $15 million.

* Rules may change: Requirements for flood insurance in Sacramento County will likely change during the next few years as the levees continue to be upgraded to withstand 100-year-flood levels – meaning that there’s one chance in 100 of a flood of such magnitude hitting in a given year. In the flatlands of Sacramento, the New Year’s deluge was a 60- or 70-year flood.

Before 1986, most of Sacramento was believed to be outside the 100-year flood plain. The ’86 floods prompted FEMA to redraw the maps, which were completed in 1989. The remap put 90 percent of the county in flood-prone areas, compared to 10 percent on the old maps.

But local officials persuaded FEMA to hold off on adopting those maps. Time and again, FEMA has been coaxed to delay the maps’ implementation.

“FEMA released the maps in 1994, but they have yet to be formally published,” said Butch Hodgkins, executive director of the Sacramento Area Flood Control Agency. “They have never been finalized. I’m not aware of any plans to reschedule their release.”

Because of the levee work that is done, under way and planned, Hodgkins added, “most of Sacramento should be out of the 100-year flood plain” by 2000. The flood agency has submitted an application to FEMA to recognize the work in progress. This may result in less flood insurance in place in the area.

Meanwhile, Carey at the St. Pauli Inn, said that he expects that his business won’t see any customers during the next eight to 12 weeks, as state Department of Transportation crews work to rebuild Highway 50. The freeway was shut only a half-mile west of the inn, choking off the traffic needed to sustain the business.

County-by-county tallies

Preliminary flood assessments, as of the middle of last week, showed varying levels of damage to real and personal property throughout the four-county region.

In Sacramento County, 277 homes were reported flooded and damages were estimated at $27 million.

Some 80-plus houses were flooded in El Dorado County, but damage to isolated vacation homes may not be discovered or tallied for months. Current losses are very roughly $3.2 million.

Placer County estimated that residential and commercial losses hit $15 million.

Yolo County reported only three or four homes flooded.

The impact to the north was worse. Some 500 homes were damaged in Yuba and Sutter counties.


Flood Plain Drain

Population size has nothing to do with need, and the not-yet-600 residents of rural Stewart, Minn., have long needed a way to prevent floods that come with heavy rain and snowmelt. Located 70 miles west of Minneapolis on flat McLeod County land, the town contended with storm runoff that had nowhere to go. Until bidding opened in February 2002, a storm water improvement project languished on the drawing board for years.

When GM Contracting of Lake Crystal, Minn., was awarded the project’s contract, work began immediately with its pipe supplier, County Concrete, to meet engineering specifications for an outlet control structure, manholes, and 14,050 feet of reinforced concrete pipe. Accordingly, the contractor anticipated that by summer’s end, Stewart would be ready to handle decades of growth and wet weather.

A civil engineering background and years of experience with municipal pipe projects helped Pipe Division Sales Engineer Jim Rogers sell GM on County Concrete’s product line and its ability to meet the project’s challenges. “On the pipe side, County Concrete is fairly new in Minnesota, so there may be some reluctance to use us,” says Rogers. “GM’s willingness to take the risk and let us demonstrate what we can do gave them an edge in bidding.”

County Concrete’s products were reportedly an easy sell, particularly Superseal elliptical concrete pipe with its preformed gasket. “Arch and elliptical pipe are used when there are profile concerns,” notes Rogers, “that is, when volume and flow of water can’t be restricted, but space for the pipe is restricted. The pipe might need to run above, below, or between something, or, where there’s limited elevation. Our elliptical pipe, used horizontally or vertically, installs faster and is easier than arch pipe to seal.”

Storm water diversion in Stewart called for various-sized pipes and manholes. Weighing ease of installation, GM preferred tee manholes to the standard designs of Stewart’s city engineers. Tee manholes, however, can be tricky to fabricate, particularly with specified 36-in. pipe. County Concrete’s Charlie Anderson, based at the company’s integrated Roberts, Wis., operation east of the Twin Cities, worked with the engineers to quickly modify their manhole specifications. His technical expertise kept the $2 million dollar project on schedule.

County Concrete is also providing an 8-ft. x 8-ft. outlet control in an area north of Stewart near Buffalo Creek, along with nearly 13,625 feet of round concrete pipe and 375 feet of elliptical concrete pipe. GM and city engineers are pleased with the project’s progress to date. For their money, Stewart residents stand to know true flood control – at last.

Report adapted from the Summer 2002 InForm newsletter, published by Marathon, Wis.-based County Concrete Corp.


Weathering a crisis

Various states are finding themselves reassessing how some of the costs of damages to homes and buildings are increased because building codes for these structures were not enforced. State and local governments feel that disaster relief should emphasize prevention to help limit damages.

Since 1989, when Hurricane Hugo blasted the East Coast, leveling parts of South Carolina, the United States has been battered steadily by natural disasters, enduring the Loma Prieta earthquake (1989), Hurricanes Andrew and Iniki (1992), the Midwest flood (1993) and California fires (1993).

In the wake of each disaster came new questions. Was the large-scale damage of Andrew preventable? Were construction faults rather than earthquake faults to blame for crumbled buildings in San Francisco? Why did more than 80 percent of last year’s flood victims forego federal flood insurance?

When Hurricane Andrew ripped through Florida and the Gulf Coast in August 1992, it was the most expensive natural disaster in American history, costing insurance companies $15.5 billion and the federal government another $10 billion. According to the Florida insurance department, as much as 40 percent of Andrew’s damage could have been prevented if building code standards had been enforced. Instead, widespread deficiencies were found in thousands of construction sites in Florida, where wind resistance standards are 10 mph tougher than those in any other state.

Code enforcement had been lax because state officials fell behind during the 1980s construction boom and have never caught up. Dade County, for example, approved 20,000 building permits in 1991, but it has only 60 building inspectors.

Other states face the same dilemma. Texas’ insurance department estimates that if the state’s building codes had been enforced properly prior to Andrew, 70 percent of insured losses would have been prevented. Similarly, Louisiana’s insurance commissioner says that losses could have been reduced 60 percent in his state.

Building codes work, says Jack Weber, executive director of the Natural Disaster Coalition, a Washington-based group backed by insurance companies. But they work only with a watchful eye and strong arm to back them up. He cites a 1985 study comparing Hurricanes Alicia and Diana. Alicia hit West Beach, Texas, in 1983 and damaged 70 percent of the town’s 3,000 homes because building codes were not enforced. Conversely, Diana slammed into North Carolina with comparable winds a year later, but, because codes were rigorously maintained, only 3 percent of those homes sustained major damage.

The federal government does not write or enforce building codes, leaving that task to cities and counties, where local officials understand their particular geography. Guidelines are drawn up by the American Society of Civil Engineers (ASCE), but officials are often faced with the choice of writing standards based solely on ASCE guidelines and appeasing builders who are concerned about reliability and profit. Frequently, the result is a compromise between safety and cost.

“If the technical community could write the standards, there would be a better level of protection,” says John Kuhlman, past president of the St. Louis chapter of ASCE.

Accessing Insurance

In addition to closer scrutiny of building codes enforcement, U.S. disasters of late have forced insurers to safeguard their reserves and tighten the lid on the property market. In 1988, property insurers lost less than $1.5 billion as a result of natural disasters; in 1992, they paid out nearly $23 billion. Insurers with heavy exposure in risk-prone areas either went belly up or bailed out, drastically reducing the availability of coverage. Those who stayed lowered their limits and raised premiums.

Jim Brown, Louisiana’s insurance commissioner, reports that his state suffered more than $1 billion in losses from Andrew. Many insurers stopped writing policies, and premiums for remaining coverage were raised 10 percent. Louisiana’s property owners were left in the extremely uncomfortable position of not being able to adequately protect their homes and businesses, he says.

Unfortunately, the storm may not have passed. The National Hurricane Center says that states along the Atlantic and Gulf coasts should prepare for more frequent and intense hurricanes, while the U.S. Geological Survey says that there is a 65 percent chance of a catastrophic earthquake in the next 25 years. And the costs will be astronomical, according to Applied Insurance Research, based in Boston. The firm predicts that, by the year 2020, the total bill from earthquake damage in California, Washington state and the Midwest will be $245 billion, and total hurricane expenses along the Atlantic and Gulf coasts, as well as in Hawaii, will reach $281 billion.

That is why state and local officials, as well as insurance companies, are prodding Congress to change the current federal disaster program from one that emphasizes relief under almost any circumstance to one that encourages prevention through techniques such as better building code enforcement and incentives to build away from coastlines, fault lines and flood plains.

Washington’s Response

Lawmakers have heard those pleas. Last August, Sen. Daniel Inouye (D-Hawaii) introduced the Natural Disaster Protection Act, which would, among other things, reward states for implementing hazard mitigation and emergency response systems.

Under the bill, states would be given the incentive to adopt and enforce building code standards with the cooperation of other state agencies and working professionals, and they would be required to set up comprehensive emergency response plans. The bill also seeks to withhold federal aid from communities or individuals who do not take precautions to protect themselves from potential losses. That means mandating earthquake or flood insurance for those to whom it would apply, saving the federal government billions in disaster relief.

Such relief has cost the federal government about $20 billion since 1989, and most of the funds have gone to individuals for low interest loans to pay for precisely the kinds of losses that private insurance covers, says Weber of NDC. He adds that 41 percent of the Federal Emergency Management Agency’s (FEMA) disaster relief obligations from 1977 through 1990 went to pay for things that could have been financed through the private sector.

The cost of insurance would decrease as more people purchase coverage and spread the risk. “Actuaries conclude that such a primary insurance program would reduce earthquake insurance premiums by an average of 70 percent across the country,” says Weber. He adds that premiums would be actuarially-based, meaning that those in the most risk-prone areas still would pay the most.

In addition to requiring primary coverage, the Inouye bill calls on the federal government to be the insurer of last resort. Any insurer could buy reinsurance from Uncle Sam but would only be able to tap into the coverage after it has lost either 15 percent of its surplus or $25 billion due to disaster losses. If the reinsurance could not pay claims, the government would borrow from the treasury.

“The establishment of a federal program for natural disasters of all types would allow the creation of reserves ahead of time to prepare for these catastrophes and avoid the multi-billion dollar handouts that would otherwise be sought and that we as a compassionate society would be hard-pressed to ignore,” says Linda Chu Takayama, Hawaii’s insurance commissioner.

“One of the by-products of the federal reinsurance program is that it would discourage insurers from withdrawing from disaster-prone regions, as is occurring in Florida and other high risk states,” says Joseph LaFleur, director of Pennsylvania’s Emergency Management Agency and a representative of the National Emergency Management Association, made up of state emergency directors.

While Sen. Inouye’s bill is endorsed by a broad array of interests, some consumer groups are wary. “We are concerned … it focuses on protection of the insurance industry, rather than preventing and protecting against losses from catastrophic natural disasters,” says Mary Griffin, insurance counsel for Consumers Union, Washington, D.C. “The reinsurance program provides insurers with complete protection, with no incentives to accurately price their products or to institute loss reduction measures.”

Griffin argues that natural disasters were not the sole cause of surplus reductions but were only contributors, along with inaccurate pricing, concentration of risks in certain geographical areas and mismanagement. She says that even the insurance industry admits that its availability crisis is withering, calling into question the need for federal involvement in the reinsurance business.

The Odds

Perception that the bill is a bailout for insurers could be a major hurdle for legislators to overcome. Critics note that, if the reinsurance fund runs dry, the federal government — not the insurance industry — picks up the tab. Supporters of the measure acknowledge that danger, but they believe the reinsurance program would be actuarially-based and more cost-effective than old-fashioned handouts.

Criticism surrounding the bill will likely prevent it from becoming law soon, but insurers and state insurance commissioners plan to launch a full-fledged public relations campaign to win the endorsement of the administration, particularly that of officials from FEMA and the Department of Housing and Urban Development.

“Any sort of legislation should have two goals: reduce disaster assistance and reduce the loss of life and property from natural disasters,” says Jane Bullock, earthquake project analyst for FEMA. “This bill is a step in that direction because it ties mitigation to insurance availability, but it doesn’t go far enough.”

Sen. Inouye is optimistic that, once the facts are on the table and everyone’s views can be aired, the misconceptions will fade and some type of disaster policy will be enacted. He hopes the bill will clear the Senate and House by this Autumn and be ready for the president to sign before the 103rd Congress adjourns.

“Whether this bill becomes law or the status quo remains, the federal government will remain involved,” says Inouye. “Either the involvement is through this reinsurance program or through disaster relief. The insurance industry simply can’t afford to go it alone.”

Grinders Hasten Tree Cleanup

One of the enduring images of 1993 is that of the midwestern United States submerged beneath gallons of river and rain water as weather and outdated levees combined to bring record floods to the region.

Damage from rainfall was only part of the problem, however. Last July, for example, hurricane-force winds wailed through much of eastern Nebraska, ushering in baseball-size hail stones in addition to the heavy rain.

In the Lincoln area alone, damages ranged from downed power lines and shattered signs to battered homes and trees. More than 5,000 trees were destroyed or damaged in the storm, and officials were eager to begin removal and cleanup.

“Besides the appearance of dead limbs and trees lying around, there was increased danger of weakened limbs falling later,” says Lincoln Parks Director Jim Morgan. “We decided we had to get rid of them as quickly as possible.”

The Parks Department calculated it would take the city’s 19-member forestry crew two years to finish the cleanup. And at $440 per tree ($300 for removal, $50 to remove the stump and $90 to purchase and plant a new tree), costs would approach $2.5 million.

To save time and money, city officials contracted with Fox Bros. Hay Co., O’Neill, Neb., to grind the fallen trees into mulch and wood chips.

The tub grinders used in the project were hay grinders modified to handle trees and logs. Three grinders were placed in key parks around the city, and trees and limbs were hauled to the closest site.

The mulch was offered free to Lincoln residents, who carried it away as fast as it was ground, Morgan says. Trees larger than 20 inches in diameter were sawed up and given away as firewood.

Cleanup was completed in five weeks for considerably less than $2.5 million. “If we had to haul away the trees, limbs and brush without grinding, it would probably have cost 20 times as much,” says Morgan.

And this way, he adds, “the material is being put to good use for yards and gardens.”

Des Moines |Rents’ Power to Restore Water

With damages exceeding $12 billion dollars, last sum-summer’s flood in the Midwest ranks as one of the nation’s costliest natural disasters, second only to Hurricane Andrew, which ripped across south Florida in 1992.

Among the cities hit hardest by the flood was Des Moines, Iowa, where, in July, rivers swelled to overtake utility substations and the Des Moines Water Works, rendering hospitals, communications systems, utilities, government agencies and private businesses powerless and without water.

A long-term crisis was averted when power was restored to the Water Works plant through rented generators, allowing the plant to recharge the city water system. Water Works staff set up an operations base the day of the flood, and power was fully restored to the plant in just over a week.

One of the first steps in the reclamation process was to rent generator sets to power water pumps and rid the Water Works plant of standing water. The only other choice was to wait for the flood waters to recede so that utility power could be restored.

While the National Guard fortified a 12-foot levee built by Water Works staff, six generator sets supplied by Ziegler Power Systems, Des Moines, and Caterpillar Rental Power, Mossville, Ill., were airlifted to the plant by helicopter.

The generators were placed on top of the levee surrounding the plant, and flood water was then pumped outside the levee. Within two days, the water level had dropped enough for engineers to examine equipment inside the plant and determine the extent of damage.

By the third day, 13 additional generator sets had arrived and were up and running, providing 800 kW to power water pumps and air driers. The plant’s portable emergency backup generator, damaged by water, was repaired and put into use.

Utility power was available to the plant by this time, but it was fed by a makeshift transmission line, and there was no backup system. Water Works engineers were ready to restore the motors that drive the city’s water pumps, but they were concerned about losing utility power in the process.

From Caterpillar, they ordered two utility-grade power modules, which were transported to the plant on a makeshift road. Within hours of their arrival, the modules were paralleled and tested. Together, they provided 3,200 kW of power, which was not only sufficient to back up the utility but was also enough to feed the water system indefinitely.

With a backup power system in place, engineers began testing the water pumps that supply water to the city. None of the pumps was operational, despite efforts to repair them, but work continued on the largest one — a 1,750-hp pump that engineers feared would be too powerful for the water system, causing pressure surges during the recharging process.

By the eighth day, workers had taken steps to alleviate startup pressure, and, using electricity from the power modules, they activated the large pump and restored water to the city system. Four days later, running water was available to residents, and potable water was restored within two weeks.

GIS Guides Efforts to Contain Oil Spill

Last August, an outbound freighter loaded with phosphate material collided with two inbound barges — one carrying #6 fuel oil and the other loaded with aviation fuel — near the mouth of Tampa Bay, Fla. One barge burst into flames, and both leaked contaminants into the bay. Within hours, 300,000 gallons of fuel oil were riding the tide toward some of Florida’s most sensitive ecosystems.

To anticipate the fuel’s path, the U.S. Coast Guard and other responding agencies relied on mapping technology provided by St. Petersburg, Florida’s Marine Research Institute (MRI). Within six hours of the collision, MRI had produced the first maps showing locations of the vessels and the perimeter of the leaking contaminants.

The maps provided a “big picture,” identifying wildlife habitats and showing where booms needed to be placed, says Ensign Steven Lang of the Seventh Coast Guard District’s Marine Safety Division in Miami. Using this data, the Coast Guard directed oil skimming vessels and placed booms to steer contaminants away from the most sensitive areas. As the oil slick progressed, responding agencies predicted that weather conditions would drive the fuel toward John’s Pass, with its expensive boats, popular beaches and fragile ecosystems. As the slick neared the beaches, more precise maps — including information on road networks, navigational aids and the locations of temporary wildlife rescue headquarters — were used to coordinate the 600 volunteers ready to assist in the cleanup.

As final damages are assessed in Tampa Bay, MRI’s system, developed with Arc/Info software from Environmental Systems Research Institute Inc., Redlands, Calif., is being used to create detailed maps of the ecosystems that were affected by the oil spill and to assist in examining damages to surrounding natural resources.

Technology |Maps’ Path for Flood Recovery

As the Mississippi River swelled and washed over much of the Midwest last summer, it beat a path of destruction from as far north as St. Paul, Minn., to the southernmost extremes of Illinois. The constant rain kept the river raging at levels 25 to 35 feet above normal for several weeks. Homes, businesses, roads and airports were submerged and, in some cases, cut off from supplies.

Valmeyer, Ill., a small railroad and farming community about an hour south of St. Louis, was hit twice by the flood, once when the levees broke upstream on August 2 and again on September 10.

As the initial floodwaters began to recede in late August, Valmeyer’s 900 residents began weighing their options: rebuild, raise their structures or abandon them altogether. Some residents had already packed up and moved elsewhere, realizing they could neither afford to rebuild or repair their homes nor endure the wait to do either.

Working with the U.S. Army Corps of Engineers and Geo Research Inc., Billings, Mon., the Federal Emergency Management Agency (FEMA) was able to use mapping technology to determine damages and assist local officials in planning reconstruction.

In late July, FEMA commissioned a pilot study to assess and inventory the flood damage using Global Positioning System (GPS) and Geographic Information System (GIS) technology. A team consisting of a handful of observers from FEMA, the Corps of Engineers in Rock Island, Ill., and Geo Research began recording structure damage throughout Illinois. In less than two months, the team drove the length of the state and assessed thousands of structures, registering about 1,600 of them, including more than 250 in Valmeyer alone.

Data were recorded using Motorola’s LGT 1000 GPS/GIS mapping system and Geo Research’s GeoLink software and sent via disk to Rock Island, where the Corps of Engineers plotted community and structure maps. Within days of the data transmission, FEMA and local officials began meeting with flood victims to start the rebuilding process.

In addition to time, the GPS technology saved money, says Eric Berman, FEMA GIS coordinator for the Illinois disaster. “Thanks to GPS, people who needed help or information about rebuilding got it with little or no delay,” he says, adding that manual assessment would have required a workforce of 50 and cost hundreds of thousands of dollars more than mapping.

“Previously, it would take many people and significant amounts of time to collect the data and build a single-scale map of a given area,” explains Harry Bottorff, computer systems coordinator for the Rock Island Corps of Engineers and project manager for the Mississippi mapping program. “By using GPS and GIS, we created hundreds of maps on a variety of scales within a few days. Until now, this amount of work would take years to complete.”

“GPS can be used to not only produce maps, but to show locations of hazards, roads, waterways and where to set up disaster centers,” says Berman. “And, once an area has been mapped, we can reuse that database to help in planning for future disasters.”