Disaster Planning

Main Street Isn't Investing Much in Post-Sandy Upgrades


Men carry sheetrock out of a store near the beach in Rockaway, New York on Dec. 13, 2012

Photograph by Spencer Platt/Getty Images

Men carry sheetrock out of a store near the beach in Rockaway, New York on Dec. 13, 2012

When the owners of Brooklyn Crab hired structural engineer Andrew Goodrich to work on their restaurant, they asked him to build the structure on wooden stilts that extended 10 feet above the ground. The idea was to evoke the feel of Southern crab shacks, and to protect the business, which lies about a block from the waterfront in the borough’s Red Hook neighborhood. It turned out to be good timing. Just months after the restaurant opened last spring, Hurricane Sandy devastated much of the neighborhood. Brooklyn Crab was mostly unharmed.

Following Hurricane Sandy’s more than $50 billion in damages (pdf) to U.S. businesses, homes, and public infrastructure, more business might be expected to follow suit. But the scale of the problems are often too big for business owners and require government planning. “We’ve been telling clients who are thinking about putting up a new building that they should think about raising it above the flood level,” says Goodrich, noting that his four-man firm works primarily in Brooklyn neighborhoods that are close to the water. The improvements Goodrich offers, such as raising structures on stilts or sealing structures with concrete slabs, can be unpalatable because of cost and the space that must be sacrificed.

Walz & Krenzer, a 12-employee company in Oxford, Conn., that designs and builds flood barriers and watertight doors, has gained, since Sandy, dozens of new jobs from New York area businesses and institutions, including the Whitney Museum. “People always wake up when they see or hear a big storm,” says Vice President Tom Themel. But a piecemeal approach is “daunting,” Themel says: “It’s hard to grasp the enormity of it all when you see how many buildings there are and who is being more proactive with flood protection and people who don’t bother.”

One reason: Many small business owners running on tight margins can’t afford improvements or contingency plans. Another: Federal and state governments have yet to deliver billions of dollars in promised grants and low-cost loans. Wide adoption of structural improvements are generally driven by changes to the building code, says Christine Lucas, vice president of Erie Insurance, which insures businesses in New York and other states. For the most part, she says, those haven’t happened.

Even among respondents who suffered Sandy-related damage, only 19 percent invested in improving their physical infrastructure, according to a study by New York City accounting firm Anchin, Block & Anchin, which surveyed 266 business owners in New York, New Jersey, and Connecticut. Even fewer have put away cash or arranged contingency financing to prepare for a future storm, says Greg Wank, the Anchin partner who headed the study. “People are more aware of the risk because it happened two years in a row,” Wank says. That doesn’t mean, however, that they have the resources to tackle potential problems.

Protecting coastal communities from future storms as an issue for local governments, says Frank Knapp, chief executive officer of the South Carolina Small Business Chamber of Commerce, who has sought to raise awareness of the impact that climate change could have on seaside businesses. “Are you going to put a whole downtown area up on pilings?” Knapp asks. “Leaving it to the ingenuity of the business owners themselves to adapt for some future occurrence—it’s not going to be a reality. This is truly a governmental issue.”

Lewis Knight, regional director of planning and urban design at the massive architecture and consulting firm Gensler, says the U.S. hasn’t yet had its “lunar landing moment” about preventing future damage from “climate change [and] the impacts of major storm events.” It’s “not a political vote-winner, nor is it one which gains the available political or financial capital right now.”

With Nick Leiber
Clark is a reporter for Bloomberg Businessweek covering small business and entrepreneurship.

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