Our experts at Holland and Hart share what they know about planning and prepping for extreme weather events.

Utah Business

Our experts at Holland and Hart share what they know about planning and prepping for extreme weather events.

Developing for extreme weather events

Since 1990, I have stood in front of students and professed that successful real estate developers and development attorneys must effectively anticipate and manage risk. Management of visible and known risks seem simple. What separates the great from the good is the ability to anticipate, plan for, and develop contingencies for unknown risk scenarios.

Most of us think of extreme weather in terms of rising seas, coastal hurricanes, and flooding. In fact, extreme weather occurs everywhere and is regional in nature. Scientific journals are replete with papers and data supporting the notion. For example, “[d]ata collected since 1980 by the insurance industry provide one indicator of trends in extreme events. Although these are not direct measures of extreme weather events per se and may not have recorded all perils in the earlier record, they show weather-related catastrophes recorded worldwide to have increased from an annual average of 335 events from 1980 to 1989, to 545 events in the 1990s and to 716 events for 2002–2011.” These events are affecting the way we live and should be taken into consideration as we plan and develop our communities.

Our experts at Holland and Hart share what they know about planning and prepping for extreme weather events.

Extreme weather conditions, and changes in weather patterns, affect physical, transactional, and legal aspects of real estate. Physical impacts appear as structural, corporeal, or earthly damages or modifications. Physical impacts present very real safety risks to site occupants such as failing structures and exposure to life-threatening elements and hazardous substances. Physical damages due to catastrophic events may result in significant costs to repair or replace damaged assets and may mean short- or long-term collateral impairment that may constitute a loan default and present a risk of loan acceleration. Even if there is no damage to the collateral itself, there is a potential for impact on cash flow due to property downtime or permanent loss of use, which again may influence the financing of a project.  

Mitigation measures taken before a natural disaster pay great dividends in terms of safety, prevention of property loss, preservation of asset value, and litigation defense. As development works it way through conceptual site planning and design, weather-related hazards should be taken into account by region with engineering solutions built into the planning.

While not universal, many mitigation measures take the form of familiar engineering and design elements. Developers are already acquainted with stormwater management through the use of landscaped detention basins and water features, the construction of on-site microclimates to enhance development desirability and user amenities, the use of drought-tolerant plants, engineering of water recapture systems, and the reuse of greywater. All of these measures have been successfully achieved on projects. Often identified as sustainability features, these design elements suggest a basis for mitigation measures.

While direct impacts from rising seas may not directly impact development along the Wasatch front, flood, fire, blizzard, and other regional weather oddities should be accounted for through sound engineering and planning. The traditional legal defense of force majeure may now be expanded to include the reasonable foreseeability of extreme events. Proper engineering and design are necessary to protect the people that live and work in these communities and the companies and contractors that establish them. Resilient real estate development must adapt and engineer buildings and communities sustainable under foreseeable extreme conditions.

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This publication is designed to provide general information on pertinent legal topics. The statements made are provided for educational purposes only. They do not constitute legal or financial advice nor do they necessarily reflect the views of Holland & Hart LLP or any of its attorneys other than the author. This publication is not intended to create an attorney-client relationship between you and Holland & Hart LLP. Substantive changes in the law subsequent to the date of this publication might affect the analysis or commentary. Similarly, the analysis may differ depending on the jurisdiction or circumstances. If you have specific questions as to the application of the law to your activities, you should seek the advice of your legal counsel.

Our experts at Holland and Hart share what they know about planning and prepping for extreme weather events.

Kevin Murray is an environmental partner at Holland and Hart. focusing on property remediation and site repurposing. He is also an adjunct professor of 30 years at the University of Utah and Brigham Young University in real estate development, transactions, and finance.