Is Your Building Ready for an Earthquake?

This week, the US Resiliency Council (USRC) launched the USRC Earthquake Building Rating System, which assigns one- to five-star ratings for three performance measures per building: safety, damage and recovery. The voluntary process is a new way for building owners to show the market they have high-performance buildings as well as prepare the properties to withstand potential disaster.

“We have ratings for movies, restaurants, hotels and cars, but not for the buildings we spend most of our time in,” says acting executive director Ron Mayes. “We don’t know how they’re going to perform in earthquakes or other natural hazards.” Ron, who's also staff consultant for structural engineering firm Simpson Gumpertz & Heger, specializes in earthquake engineering. He’s originally from New Zealand and moved to the US in 1972. “For the past 40 years, professionals have really struggled with informing the public about the performance of buildings designed to the building code,” he says. All came to roost with the devastating February 2011 earthquake in Christchurch, NZ, which has similar design codes and construction methods as the US.

All except two buildings survived that earthquake, “But 70% of the buildings in Christchurch’s CBD have now been demolished, which was a shock to the public,” Ron says. “Building owners expect that when they get a competent architect and engineer, they’re getting an earthquake-proof building, but all they’re getting is a life-safe building that’s maybe badly damaged. Our structural engineering profession has done a lousy job of communicating that to owners.” The idea for a rating system goes back 20 years, and anytime the National Science Foundation or FEMA holds a workshop on research needs, the rating system is at the top of their list, he says—but we haven’t had the technical capability to do anything until now. With the backing of the FEMA-funded P-58 (Seismic Performance Assessment of Buildings)—a 10-year, $12M project—structural engineers are now able to predict the safety, damage costs and time to regain functions of buildings in an earthquake. Los Angeles will be the first municipality to adopt the rating system to assess all city-owned buildings.

To make sure the voluntary rating system would have credibility and longevity, structural engineers formed the USRC in 2014; Ron says that its auditing will prevent the potential manipulation of results. The nonprofit USRC certifies professionals who do the building evaluations, and then it provides a technical review process of the building’s evaluation. There are two types of ratings: the USRC Verified Rating is used by building owners for promotional, marketing and publicity purposes, while the USRC Transaction Rating is used for transactional due diligence that accommodates leasing, sales, finance and insurance. Users then receive actionable information about building safety, repair costs, and time to regain function in case of an earthquake. The rating system is targeted to not only owners, but brokers, buyers, lenders, insurers and tenants.

For building owners, the Transaction Rating will hopefully replace Probable Maximum Loss (PML) reports, which many people in real estate consider to be a fractured system lacking consistency, credibility and professional licensing verification, Ron says—if you want, you’re able buy a PML report for $500 and fall right below 20 (the highest acceptable PML number to avoid having to purchase earthquake insurance; the higher the number, the more risky the building). Owners who pursue a USRC rating will show the market that they have a high-performance building, which translates to higher income, he notes—tenants might shell out 20% to 40% more for such space. “People will pay a higher premium for a LEED-rated building but don’t ask about earthquake performance," he notes. "It will also be an incentive to build better-performing buildings, whether new construction or retrofits.” USRC hopes to launch a wind rating system (for hurricanes and tornadoes) within three to five years, followed by a flood rating system.