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Future of slab house construction in question
Sunday, March 26, 2006
By Gordon Russell
Staff writer


While laying waste to more than half the homes in New Orleans, Hurricane Katrina delivered a couple of brutal reminders about the troubles that can arise when the lessons of history are forgotten.

 

Katrina's floodwaters essentially reclaimed the swampland that once came right up to the riverfront city's back door. And while tens of thousands of houses were inundated, perhaps the worst-off were those built on slabs, a construction method that would have been unthinkable in New Orleans' early days, when building raised homes on piers was de rigueur.

Slab-on-grade construction only became fashionable in the city during the post-World War II years, when builders and residents decided the city's defenses -- which by then included levees, screw pumps and drainage canals -- could hold back the forces of nature. Slab homes were cheaper to build and less drafty along the floors, among other advantages.

Yet in post-Katrina New Orleans, amajor question facing the city as it struggles to rebuild is: Whither the slab house?

 

The answer could affect thousands of homeowners from Lakeview to Gentilly to eastern New Orleans, heavily flooded areas where the style predominates, and where many slab homes are built at street level, well below the minimum elevations set by the federal government after those areas were developed. On the one hand, allowing homeowners to rebuild in place could well be the cheapest option; on the other, some experts foresee a possible repeat of Katrina if the mistakes of the past aren't corrected now.

 

Officials with the Louisiana Recovery Authority, which will likely disburse most of the billions in federal aid expected to flow to local homeowners, have said that grant money will only go to homeowners who build in accordance with new federal flood elevation advisories, expected to be released this week.

 

But if state and federal officials have made it clear that they want safety to guide reconstruction, there's still at least one wrench in the works -- one likely to have a disproportionate impact on slab-on-grade homes. It all has to do with mathematics: the costs of renovation versus rebuilding, and the costs of elevating a slab home versus one on piers. Such analyses are not likely to favor renovating and raising badly damaged slab homes that are below the base flood elevation.

Raising slab costs more

 

The Federal Emergency Management Agency makes grants of up to $30,000 for what is called "increased cost of compliance," or ICC, for homeowners whose houses meet two criteria: the home has suffered damage of at least 50 percent of the structure's value and its lowest floor is located below what FEMA calls "base flood elevation." The grant money must be spent to mitigate the risk of flooding; generally, it is used to elevate homes.

 

The amount is sufficient that it's often an attractive option for the owner of a house on piers. Some piered houses can be elevated for that amount or less; typically, the cost is at least in the ballpark of $30,000, although there are other factors, such as the home's size and the condition of the piers.

 

State officials have talked about making money above and beyond the ICC grants available for elevation projects. However, Andy Kopplin, director of the LRA, said all homes targeted for renovation grants -- even ones with less than 50 percent damage and not eligible for FEMA mitigation grants -- will undergo a cost-benefit analysis to see if raising them makes sense.

 

The expectation is that, in the case of many piered homes, the answer will be yes. If it is, the homeowner may be required to elevate.

 

But with slab homes, which tend to cost more than the $30,000 cap on FEMA elevation grants to raise, the answer is more likely to be no.

 

That said, it's worth noting that while raising a slab home is more expensive than elevating one on piers, the differences may not be as dramatic as many assume.

 

Greg Abry of Abry Bros., a local firm that specializes in house elevation, said raising a house on piers in good condition is relatively simple and can cost as little as $20,000. But if foundation repairs are required, the cost of the job could get as high as $45,000 for a typical home.

 

By comparison, the most common method of elevating a slab home is difficult and expensive. It involves tunneling under the old slab, installing new pilings or footings, using those to support jacks, and then building a larger foundation. An unremarkable job done using that method can cost $70,000, Abry said, and the cost often runs quite a bit higher.

 

But Abry and others are starting to use another method for elevating slab houses, in which the wood frame is separated from the slab, then hoisted using beams thrust straight through the house. Then, piers are built on top of the old slab and the house is lowered onto them.

 

In many cases, the cost of such a job is in the neighborhood of $40,000 to $45,000 -- more than the cost of raising a piered house, but substantially less than the cost of tunneling under a slab home and jacking it up.

 

Abry cautioned that the method works only when the existing slab is in good shape. If a home isn't plumb, he said, that's a sign that the foundation will need work. But Abry believes many more slab homes may be good candidates for elevation than people realize.

 

"There's not a lot of people talking about this," Abry said. "A lot of people that have slab houses have this perception that it's a huge expense, and they're not even pursuing it."

 

50 percent controversy

 

If elevating a slab house is more cost-effective than many believe, it still tends to cost more than a grant will cover. And as a result, for owners of slab homes, the viable choices may come down to renovating in place and or tearing down and rebuilding from scratch at a higher elevation. If so, many owners of such homes may decide that it's more attractive financially to repair their damaged houses at their present elevations.

 

As a rule, it's far cheaper to do so. As a ballpark, a low-end renovation of a flooded home is likely to cost around $50 a square foot, compared with roughly $100 for new construction, according to Toni Wendel, president of the Home Builders Association of Greater New Orleans.

 

Under the rules governing the federal flood insurance program, owners of any home that sustained 50 percent damage -- or what FEMA terms "substantial" -- must rebuild at least to current base flood elevation levels, which were last adjusted in 1984. City officials estimate that as many as 80,000 New Orleans homes are below that level because they were built before 1984, and they expect the number of homes below the standard will grow when the new elevations are released.

 

And though the new advisory elevations won't have the force of law immediately, the LRA's insistence that they be followed should -- again, theoretically -- require many homeowners to rebuild higher if they want to be eligible for flood insurance.

But the so-called "50 percent rule" has created an incentive for homeowners to appeal at City Hall for lower damage assessments, which city officials in most cases have been happy to hand out.

 

Once the damage assessment is down to 49 percent or lower, homeowners are free to renovate their properties at their current elevations, still purchase federal flood insurance and not have to raise their homes regardless of what the new elevation standards require. Because it's generally cheaper to fix a house than to rebuild from scratch, there's plenty of reason for homeowners to argue the damage assessment.

 

FEMA rules allow the appeal process, and in many cases, the inspection process -- which was conducted mainly by private contractors working for the city -- has been flawed. That said, some former FEMA managers, as well as members of the LRA, have been sharply critical of the city's willingness to haggle.

 

Critics of the city say that it creates several problems: One, it may encourage the rebuilding of homes that are below the recommended elevation and may be prone to future flooding. And two, it jeopardizes the city's participation in the National Flood Insurance Program, and establishes a bad precedent for FEMA nationwide.

 

"It destroys the integrity of the program," said Bob Hunter, former administrator of the program and now director of insurance for the Consumer Federation of America. "When the next flood happens in Minnesota, how do you tell people there that they can't rebuild where they are? They ought to err on the side of safety, especially with all the questions raised about the levees."

 

George Bernstein, the original administrator of the flood program, notes that flood insurance is highly subsidized, with the understanding that homes susceptible to flooding will be taken out of harm's way once a certain threshold of claims has been reached.

 

"It's not really an insurance program; it's a tradeoff for subsidized rates," Bernstein said. "If you get the benefits, you have to pay a price. If they start playing games with the 50 percent rule, they're ensuring that future construction will never catch up with the subsidized side of the program."

 

Sean Reilly of the LRA echoed some of those concerns, warning that people should think long and hard about what's truly in their own interest. With future new homes all built higher off the ground, older repaired slab homes still at street level are unlikely to be hot commodities.

 

"What we hope is that people choose safety over expediency," Reilly said. "At the end of the day, that may be a penny-wise and pound-foolish decision. We don't want you to do something that may cause your home to lose sale value, something that makes it difficult to insure, difficult to mortgage, difficult to sell.

 

"Gaming the damage estimates to get a permit should be avoided by everybody. We're trusting people to exercise good judgment on the less-than-50-percent damage. People need to keep in mind the long-term value of their homes could be damaged to a greater degree by doing the unsafe thing."

 

Money pot limits

 

Despite the tough talk, though, the LRA seems unlikely to play the heavy by changing the rules of the game. For instance, the LRA could lower the damage assessment for homeowners seeking renovation grants to a level, such as 25 percent, that would be difficult to appeal for any homeowner whose house took on water.

 

Kopplin said changing that rule hasn't really been contemplated. And Reilly said the LRA will depend on local governments to enforce the rules.

 

"We have been told by FEMA that they are bird-dogging the permitting process," he said. "If they see abuse, they are going to start documenting it," he added, noting that widespread problems could jeopardize the future availability of flood insurance in the parish. "They aren't seeing that level of abuse now. We have to assume a permitting process of integrity."

 

Drew Sachs of James Lee Witt and Associates, the firm founded by the former FEMA director that was hired by the LRA, said officials have been considering ways to try to discourage rebuilding homes that may not be safe or wise to rebuild.

One possibility, Sachs said, would be to deny renovation grants to owners of homes that were worth less -- based on pre-Katrina values -- than the repairs are slated to cost.

 

For instance, if a home was worth $70,000 before the storm, and it will cost $90,000 to fix, then the LRA would not approve a renovation grant. Instead, the owner could have his home demolished by the Army Corps of Engineers, and then use up to $150,000 in grant money to construct a new house at an elevation that complies with the new maps.

 

No such provision now exists in the state's plan. And in the end, Kopplin said it's unlikely that the agency will impose new and tougher rules. While higher elevations may be the best long-term solution, he said, there are other factors at play, including the limited pot of money the state has at its disposal and the need to get people in homes quickly.

 

As an example, Kopplin cited relatively inexpensive slab homes in Kenner that he saw on a recent visit. Renovating the homes might cost, say, $35,000 apiece, he said, compared with $100,000 or more for building new houses. Even if the houses are below flood elevations, renovation might be the most sensible option, he said, given the limited pool of cash available to the state.

 

Individual choices

 

Edward Miller, a professor of economics at the University of New Orleans who received his doctorate at the Massachusetts Institute of Technology for studies on cost-benefit analyses of water resource projects, said he believes that's the right course.

 

For starters, he believes that FEMA's 50 percent rule is a "one-size-fits-all" law that doesn't fit every situation. Raising homes often isn't worth the cost, he said, because the average flood claim is only $15,000. With risk spread over decades, that doesn't justify spending tens of thousands to elevate a house.

 

While Katrina-related claims tend to be much higher than $15,000, that owes mainly to the failure of the levee system and thus shouldn't be "held against" the homeowner, Miller argues.

 

Miller, whose own slab-on-grade home in the Lake Vista area was flooded, believes that demolition should be limited to truly flood-prone homes and those that were candidates for razing before the storm because of blight or poor quality.

But the tens of thousands of slab homes that don't fit those categories should be rebuilt if the owner chooses, he said. That makes the most financial sense, he said.

 

"You take a house that's badly damaged, but still probably salvageable, with a roof, foundation and framing," he said. "If you do the math, and it's 52 percent damaged, that means there's 48 percent left. If it's a $100,000 house, if you require bulldozing, that person has lost $48,000 of structure. Why take this guy and deprive him of that?"

 

Miller further argues that encouraging or allowing renovation provides the best hope for neighborhoods to recover.

 

"If the house is demolished, the owner has no particular incentive to rebuild at that site," he said. "He may very well take any insurance proceeds or other funds he has and rebuild elsewhere. This leaves the stores, churches, schools and universities without their usual customers and can lead neighbors not to return, knowing their own neighbors will not be returning. The social compact in which I rebuild . . . is destroyed."

 

The long-term future of slab homes may well depend mostly on the individual choices made by homeowners trying to weigh a myriad of factors, a list topped by cost and safety.

 

Mike Centineo, the city's director of safety and permits, said he's seeing evidence that -- regardless of what the law requires -- many people hope to be living off the ground the next time a storm forms in the Gulf.

 

"Slab-on-grade homes for the near future I don't think will be the desired building style," Centineo said. "The majority of people we're talking to want their houses elevated up."


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