Orange Beach Building Department part of Wall Street Journal article on 'Fortified' building standards

June 11, 2018
WSJ article about Fortified building standards

After Harvey, Texas Town Looks to Fortify in State With No Mandatory Building Code

Some officials and residents call for stiffer standards to create sturdier homes; others fear excessive rules could financially burden homeowners

By Arian Campo-Flores | Find article at (Login required) | May 25, 2018 

ROCKPORT, Texas—After Hurricane Harvey thrashed their coastal home here last year, tearing off chunks of roof and leaving a sodden shell, Bill and Susan O’Bryant vowed: Never again.

They are now rebuilding a well-armored home, adhering to stringent building standards devised by the insurance industry that exceed local code requirements. The house’s roof, floors and foundation are fastened together with steel straps, the windows are made of impact-resistant glass, and the roof is specially sealed and nailed down.

“We really wouldn’t do this any other way,” said Mr. O’Bryant, a 74-year-old retired restaurateur.

As the start of a new hurricane season looms on June 1, homeowners along this stretch of Texas coast—which Harvey pounded with 130-mile-an-hour winds before steering north to drench Houston—are grappling with how to build back stronger. Some officials and residents are calling for stiffer standards to create sturdier homes, while others fear that excessive requirements could financially burden homeowners.

It is a debate that has surfaced repeatedly in coastal communities from Texas to New York in the wake of ruinous storms. In an era of rising sea levels and intense hurricanes, measures to harden buildings are key to ensure communities remain viable, risk consultants say. They also make properties more attractive to insurance carriers—essential to create a robust insurance market that can provide homeowners with sufficient coverage at affordable rates.

“If you’re not mitigating risk, you’re not going to have a healthy market,” said Jeffrey Czajkowski, managing director of the Wharton Risk Management and Decision Processes Center at the University of Pennsylvania.

A study released last year by the National Institute of Building Sciences found that every $1 of federal grant money spent to mitigate the risks of natural hazards avoids $6 in losses.

Because the U.S. has no mandatory national building code, states and localities adopt their own. After Hurricane Andrew struck Florida in 1992, Miami-Dade County toughened its building requirements, mandating more-robust roof systems and strengthening testing standards for construction products. Florida then passed a statewide building code in 2002 that is among the strictest in the U.S.

A string of destructive hurricanes in 2004 and 2005 led to another round of code upgrades in eastern and Gulf Coast cities and states. Soon after emerged the new set of standards the O’Bryants in Rockport adopted: a program dubbed “Fortified” created by the Insurance Institute for Business and Home Safety, a research organization funded by insurers.

The guidelines—which draw on decades of storm-damage investigations—cover many aspects of a home but emphasize protecting the roof, which can expose a dwelling to significant damage if it fails. Homes can earn ratings of gold, silver or bronze depending on the provisions builders adopt.

In Alabama, Georgia, Mississippi and North Carolina, homeowners in some areas who build to Fortified standards qualify for insurance discounts or other incentives. The program has gained the most traction in Alabama, where about 7,000 properties are designated Fortified, out of some 8,200 in the U.S. as a whole.

After the 2004 and 2005 hurricane seasons, which resulted in more than $80 billion in insured losses, carriers began to retreat from the Southeastern coastline. Carl Schneider, an insurance agent in Mobile, Ala., helped assemble a group to press coastal Alabama officials to incorporate the Fortified standards into local building codes. Many cities and counties did.

Meantime, the Alabama Legislature and insurance department implemented measures between 2009 and 2014 mandating that insurance carriers provide premium discounts of as much as 55% to residents who build homes to Fortified standards. “That sped the process up,” said Lannie Smith, chief building official in Orange Beach, Ala.

A study last year by the Alabama Center for Insurance Information and Research found that homes built to Fortified standards had resale values 7% higher than those built conventionally.

In Texas, which has no statewide building code, municipalities are considering whether to adopt new standards. Rockport implemented the 2012 version of the International Residential Code, a model building code used in jurisdictions around the U.S. that the Fortified standards exceed.

During Harvey, newer homes built to the current code fared better than older ones, but damage was nevertheless widespread, local officials say. In Key Allegro, an area of Rockport on the waterfront where the O’Bryants live, more than 160 of some 860 homes and condos have to be demolished, and hundreds more suffered substantial damage.

Soon after the storm, some Key Allegro residents learned about the Fortified standards. The homeowners association found the program appealing and it voted last year to adopt the standards in its deed restrictions.

“It was simple, it was proven and it was funded by the insurance industry,” said Dave Foster, president of the Key Allegro homeowners association. “I want to do everything possible to ensure that we get private underwriters back in there.”

Private insurers largely pulled back from coastal Texas after 2005—though some have returned in recent years—leaving most residents to rely on the state’s insurer of last resort, the Texas Windstorm Insurance Association, or TWIA.

The new Fortified standards, which are voluntary, haven’t been universally embraced. Builders complained about having to learn and comply with a new set of strictures. Some residents feared the program would boost building costs at a time when residents were reeling financially from the storm—even though insurance analysts say it adds only about 1% to 3% to a home’s price tag.

William Weempe, whose Key Allegro house lost a large section of its roof and became waterlogged, still hasn’t begun rebuilding because of disputes with his insurer, TWIA. He said he fears the eventual payment he receives will cover only a fraction of the actual reconstruction cost—a shortfall exacerbated by having to build to stricter guidelines.

“It’s somewhat like kicking you when you’re down,” said Mr. Weempe, a 59-year-old wealth adviser.

Still, officials in Rockport are considering rolling out the Fortified program more widely—aiming in part to create more insurance options for homeowners. City leaders are treating Key Allegro—where so far about a dozen homeowners are rebuilding to Fortified standards—as a pilot project. “We have to see how the community is going to take it,” said Amanda Torres, the city’s community planner.