Flood Leaves Its Mark on Real Estate Values
Adam Goodman Of the Post-Dispatch, St Louis Post-Dispatch (MO)
The Flood of 1993 left a much larger impact on Midwestern real estate than the land it devastated.
It also obliterated the historical standards used for estimating the value, use and risks of land in flood plains.
So says Richard C. Shepard, a St. Louis real estate consultant.
"We must concern ourselves in terms of the market risks as well as the physical risks," Shepard told more than 100 people Thursday morning at a seminar on flood-plain development in urban areas.
The seminar, at the Hyatt Regency St. Louis at Union Station, was sponsored by the St. Louis District Council of the Urban Land Institute.
Shepard, principal at Real Estate Strategies and Advisory Services, said the real estate industry must rethink the way it prices land in flood plains."Significant economic incentives exist not to recognize or publicize land susceptibility to flooding, and that is a huge mistake," he said.
Industry and government officials also need to better recognize the risks and perceptions of risks in flood-plain development, he said. If they build on land vulnerable to flooding, they should be prepared to commit to installing a proper flood-protection system, he said.
He cautioned that developers, brokers and municipal planners alike have traditionally relied too heavily on the 100-year flood-plain standard used by federal agencies.
"It's wrong," Shepard said. "It's led to an oversimplified sense of security."
Generally, any property considered to be out of the 100-year flood plain or any land protected by a levee offering 100-year flood protection has gained an almost-automatic increase in value and attractiveness in the marketplace over real estate below that standard.
But the failure of Chesterfield's Monarch Levee on the Missouri River points out just how arbitrary and susceptible the 100-year flood standard can be, Shepard said.
A portion of the Monarch Levee, a former agricultural levee that had been strengthened to the Army Corps of Engineer's 100-year-flood specifications, collapsed on July 30 and flooded Spirit of St. Louis Airport and hundreds of businesses and homes in the valley.
Not surprisingly, the Chesterfield flooding appears to have lowered real-estate values in the valley. …