[CEUS-earthquake-hazards] The balance

Fri Jan 11 19:58:36 GMT 2008

To all:

In response to Arts comments:

Local policy makers in Memphis were fully aware of both sides of the
argument. 

We've reviewed a 10 story eccentrically braced system centered in Shelby
County and we came to different conclusions, base shear with 99SBC was less
than 03IBC amended with 10%PE (applied force was greater in 99 SBC compared
to 03 IBC). Can you share your calculations with us?

In my opinion, the code amendments adopted by local policy makers
efficiently address Memphian's seismic safety concerns.  

Joseph Tomasello, PE

5880 Ridge Bend Rd.

Memphis, TN 38120

From: Arthur D Frankel [mailto:afrankel at usgs.gov] 
Sent: Thursday, January 10, 2008 5:53 PM
To: Joe Tomasello
Cc: ceus-earthquake-hazards at geohazards.cr.usgs.gov;
ceus-earthquake-hazards-bounces at geohazards.cr.usgs.gov; 'Seth Stein'
Subject: Re: [CEUS-earthquake-hazards] The balance

Joe, 

   Due to your efforts with Seth Stein, the building code in Memphis now
allows for non-essential 10-story buildings to be built to a force level 45%
lower than that stipulated in the Standard Building Code that was used in
Memphis up through 2005.  This newly allowed design level is substantially
lower than the median ground motions expected for a repeat of the 1811-12
earthquakes and lower than the intensities reported in Memphis for the 1843
Marked Tree, Arkansas earthquake (magnitude 6). 

  So you succeeded in lowering seismic  building codes in Memphis.  Perhaps
you would like to make this fact clear to the people living in Memphis and
see what their views on this are.   

-Art 

Art Frankel
U.S. Geological Survey
MS 966, Box 25046
DFC
Denver, CO 80225
phone: 303-273-8556
fax: 303-273-8600
email: afrankel at usgs.gov 

"Joe Tomasello" <JT at ReavesFirm.com> 
Sent by: ceus-earthquake-hazards-bounces at geohazards.cr.usgs.gov 

01/09/2008 12:51 PM 

To

<ceus-earthquake-hazards at geohazards.cr.usgs.gov> 

cc

'Seth Stein' <seth at earth.northwestern.edu> 

Subject

[CEUS-earthquake-hazards] The balance

Buddy: 

I'd like to offer the following for your e-mail discussion group: 

Natural disasters such as earthquakes create complex situations for policy
makers. The difficulty lies in the balance between the costs of mitigation
and the actual risk. Failing this, policy makers could find themselves
dealing with unintended consequences such as those experienced by the
hospital industry in California.  If it's worth the expense in any one
region it would be California; but looking at the hospital industry in
California we don't see it. 

Earthquake risks in California are, to some degree, statistically
predictable; being a near certainty that a moderate to strong earthquake
will occur somewhere on the west coast during a single generation of the
built environment. California attempted to balance public safety with
mandated seismic mitigation in a knee jerk reaction to the 1994 Northridge
earthquake California's Legislature passed Senate Bill 1953 (SB 1953). The
bill was an unfunded mandate to retrofit, rebuild, or close; a free lunch
for California taxpayer. However, over the past decade the consequences of
the mandate caused a once sound hospital system transform into one of the
nation's foremost financial basket cases. 

As in California, policy makers in the New Madrid Seismic Zone are led to
believe that earthquake mitigation costs are small, having little effect on
the built environment. California's mitigation program entails retrofitting
all acute care hospitals or re-building nearly 70 million square feet. The
pace of construction is limited to approximately 1.5 million to 2 million
square feet per year due in large part to the ability of regulatory agencies
to keep up. Furthermore it takes upward of 10 years to design and build a
new hospital.  "The lengthy process for review and approval of hospital
construction and retrofitting projects is far too long. Economic growth is
being thwarted; jobs are being lost; and patient safety is being
compromised."[i]  The result is that it will take nearly 30 years to
complete all the construction required by SB 1953. [ii] The extended
deadline is 2013. 

The size and scope of most of these projects are very large and expensive.
Compliance could cost California hospitals as much as $110 billion dollars.
The original estimate assumed that the number of patients and the number of
beds would generally remain the same.  However, modern design standards are
most effective with facilities 35% to 60% larger[iii]. Thus, the scope of
each construction project will increase as will the overall cost; perhaps as
much as 20%.  [iv] In California construction costs are rising at an annual
rate of more than 14 percent above the Consumer Price Index resulting in
construction costs more than 40 percent higher for comparable facilities in
other states.[v] In my view this increase is likely to continue do to
regulatory oversight, the limited number of qualified contractors, as well
as the annual inflation of material costs. In California, a fully furnished
and equipped acute care facility (labor and materials) costs $1,000 per
square foot.  Since the SB 1953 mandates affect for-profit, non-profit and
publicly owned organizations most all projects will be financed.  Depending
on the terms of the loan the cost in current dollars for an acute care
facility the square foot cost can exceed $2,800; comparatively normal office
construction in Tennessee is roughly a third the cost per square foot. 

Looking at FEMA's annualized earthquake losses[vi] we find the relationship
of Cost vs. Benefit even more lopsided. FEMA reports that California will
experience a loss of approximately $3,167.5/$Million of infrastructure each
year as a result of earthquakes. Looking at the same 50 year period,
California can expect to lose approximately 15.8% of the present value of
hospitals. Thus, California's acute care infrastructure, worth approximately
$48 Billion [my estimate - C. Duane Dauner, President and Chief Executive
Officer, California Healthcare Association, Statement "Heath Care Scene in
California," May 10, 2001, suggested 24 Billion.], should expect a loss of
approximately $7.6 Billion due to earthquake. We find that California is
spending $110 Billion to offset a loss of $7.6 Billion; a cost benefit
relationship greater than 14.  Over the past 10 years, we've asked FEMA for
a Cost vs. Benefit analysis for the New Madrid Seismic Zone.  So far we
haven't seen anything that would come close to suggesting that the public
would benefit spending limited resources. 

There are a more subtle negative consequences resulting from forcing acute
care facilities to close because they don't meet mandated requirements.
California is experiencing a critical closure of hospitals with the closure
of over 50 hospitals in the 10 year period between 1995 and 2005. More than
3,000 acute care beds have been removed from service between 2001 and 2005.
In the five year period prior (1995 to 1999) 23 hospitals closed. Unfunded
mandated seismic requirements are creating a stampede for funding, usually
in the form of bonds.  The median credit ratio of California hospitals had
nosed dived to the junk-bond status.  The money needed to retro fit
California hospitals is drying up. [vii] "Nobody can bear the burden [of SB
1953 unfunded mandate]"[viii]  Here in the New Madrid Seismic Zone we're
told that the cost is minimal. 

"Seismic upgrades are important. But mandating them during the worst
economic time in the history of California hospitals is like ordering a
homeowner to fix a dilapidated porch on a house that's on fire. Right idea.
Wrong time."[ix] How many doctors and nurses could have been hired in lieu
of spending the money on hospital infrastructure? Just how many lives will
be saved? How many lives will be lost because of the loss of acute care
facilities? Who pays, the bottomless pocket of the taxpayer? Each of the 35
million people in California will need to pay $3,143 (per capita state and
local taxes were roughly $1,600 in 1996).  Are the people of California
going to be willing to forfeit three times their current tax burden? 

If the benefits (reduction of earthquake related economic loss or lives
lost) don't outweigh the costs in California, how can they be justified in
the New Madrid Seismic Zone? 

Joseph Tomasello, PE 
5880 Ridge Bend Rd. 
Memphis, TN 38120 

Phone: 
(901) 761-2016 office 
(901) 821-4968 direct 
(901) 412-8217 mobile 

  _____  

  _____  

  _____  

[i] California Heathcare Association Statement on the Hospital Construction
Plan Review and Area Compliance Process before the California Performance
Review Commission, U.C. Riverside, August 13, 2004. 
[ii] Ibid., 4 
[iii] Ibid., 41 
[iv] Ibid., 8 
[v] Ibid., 30 
[vi]  FEMA 366  Hazus 99 Estimated Annualized Earthquake Losses for the
United States, February 2001, 16 
[vii] California HealthCare Foundation, The Financial Health of California
Hospitals, June 2007, 2-13 
[viii] Ibid., (interviews with key unnamed health care leaders), B-6 
[ix] The Press Democrat, Another hospital falls, what killed Sutter Medical
Center - and what will it mean to families like mine, January 14,
2007_______________________________________________
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