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December 10, 2009

Are you prepared for the big flood?

  • Building occupants should have an alternative location in mind so they can continue business operations if the Kent Valley floods.
  • By MICHAEL ROY
    Neil Walter Co.

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    Roy

    Over the past few months, the residents and businesses of the Green River Valley — which includes the communities of Renton, Tukwila, Kent and Auburn — have been made acutely aware of the danger of a major flood.

    The Howard Hanson Dam, which has protected the valley from major seasonal flooding since its construction by the Army Corps of Engineers in 1962, cannot safely contain the usual amount of runoff behind its walls without the threat of a catastrophic collapse. To avert this calamity, the corps must release excess water, resulting in an increased chance of flooding within parts of the valley.

    When this impending danger was first announced, the corps warned of a 33 percent chance of a major flood, sending valley businesses scrambling to buy sandbags, and justifiably so. Emergency repairs being performed by the corps, including injecting grout into the earthen abutment adjacent to the dam, have since prompted the corps to lower the risk of flooding down to one in 25, allowing valley businesses to take a more measured assessment of their risk.

    The once-feverish sandbagging has moderated, and the calls as to how to break one’s lease and move to higher ground have slowed to a trickle.

    But the threat of flood, though lessened, still very much exists, and businesses should not be lulled by our relatively mild fall weather into thinking that the coast is clear. This is a problem that will persist for at least the next three to five years, which is how long the corps has said it will take to permanently repair the dam.

    The ripple effect

    Image courtesy of U.S. Geological Survey
    The U.S. Geological Survey maintains a webcam that updates photos of the Green River every five minutes. The address is: http://wa.water.usgs.gov/data/12113000.htm

    But, it’s not just a problem for those businesses actually located with the Green River floodplain. The ramifications of a major flood would extend far beyond those directly affected occupants of the valley. The greater Kent Valley is one of the 10 largest distribution hubs in the country. The ripple would be felt up and down the supply chain, resulting in the interruption of goods to nearly every home and business in the Northwest. If you have a critical supplier or customer located in the Kent Valley, coordinate with them on how they plan to conduct business in the event of a flood.

    To those businesses actually located within the floodplain, such as my own, the reality and severity of the situation really hits home when one attempts to accomplish the first task recommended by the authorities — purchasing flood insurance.

    Standard policies do not typically cover flood damage. Even with the lessened odds of flooding, there are currently only two insurers in the world issuing flood damage policies for the Kent Valley. You know it’s bad when Lloyd’s of London won’t offer a policy!

    Still, insurance is attainable; one just has to be prepared to pay. For example, a recent valley client was able to insure a $4 million immovable piece of equipment, but the cost was nearly $8,000 per month through the current flood season. The typical business will pay much, much less for replacement and business interruption insurance, but don’t be surprised if the additional flood coverage winds up costing the same as your total policy did prior to the flood rider. Also, don’t forget that coverage typically takes 30 days to go into effect. Contact your insurance provider to assess your particular situation and coverage needs.

    Have a plan in place

    If a flood occurs, can you continue to conduct business outside of your present location, or do you need an alternative location to survive? A national freight company in the valley was so concerned about its ability to operate during a flood that it recently leased a 100,000-square-foot facility in SeaTac — outside of the floodplain — despite the fact that the ink was barely dry on a 125,000-square-foot lease it had just signed for a location in the valley.

    While most of us do not have the resources to contractually commit to another location “just in case,” we can take steps to expedite a quick move if disaster strikes. Determine what critical tasks need to continue through a flood, and how much space you would need for that particular task or group to function. Coordinate with your real estate broker to have a ready list of available locations that could house that particular function. You don’t need to sign a lease, just know what’s currently available.

    There’s a finite amount of ready-to-occupy space available in the market, and there will be a very high stakes game of “musical chairs” on that space in the event of flooding. Streamline the decision-making process so that if and when the disaster occurs, you can move quickly.

    If you’re like us and the most important piece of equipment you own is your server, talk to your IT folks about how to keep the information side of your business safe. Again, like us, maybe you haven’t been particularly diligent about backing up your electronic data frequently, or keeping important business information in a safe, off-site place.

    Virtual server and data centers offer the ability to remain online through catastrophe, and keep you and your employees connected while your office resembles a swimming pool. At the least, have your server and information equipment physically raised above your building’s projected flood elevation.

    These are some of the bigger issues in the event of a flood. There are a lot of smaller things a business can do to prepare as well. Keep a supply of containers or boxes at the ready to quickly pack and move stuff. Although the authorities cannot guarantee any advance notice of an impending flood, simply watching the forecasts for heavy rain periods (especially with sudden snowpack melts) may give one ample notice to clear out important items.

    Have emergency contact information for all employees, and a plan in place to communicate with them following a disaster. Keep a disaster supply kit, with enough basic materials to get you and your employees through a day or two of confinement (visit http://www.redcross.org for a list of what to include in the survival kit).

    Fortunately, the day will come when the dam will be repaired, and we can go back to worrying about surviving the possible eruption of Mount Rainier and the shifting of tectonic plates. But until then, a little adherence to the Boy Scout motto “Be prepared” will go a long way toward insuring the survival of your business.

    For more information on the potential flooding of the Green River, and how to prepare for such an event, visit http://www.kingcounty.gov/floodplans.


    Michael Roy, a principal with the Kent office of Neil Walter Co., has been a commercial real estate broker in the Kent Valley for 19 years.



     


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