Climate Resilience Design Guidelines Are Becoming Mandatory

by Editor

The Federal Emergency Management Agency says that 25% of U.S. cities and towns have adopted the latest building code rules for dealing with hazards. However, modern construction rules may not be enough as climate change worsens.

Experts say municipalities, charity organizations, and industry groups are establishing climate resilience design standards and tools to fill the gap. Some are required or encouraged for publicly financed projects, while others may become anticipated or mandated for commercial real estate transactions. Recent requirements in Boston, New York City, and Washington, D.C. for resilient design address climate risk in coastal cities.

Lindsay Brugger, Urban Land Institute vice president of urban resilience, says, “It’s great to see more locations begin to support the evaluation of climate risk, and we’re also seeing a trajectory from optional to mandated for some project types.” Last year, Local Law 41 in New York City required city capital projects to use the Climate Resiliency Design Guidelines.

She says that Massachusetts created a public-private resilience design tool. “The state’s Climate Resilience Design Standards Tool provides a preliminary estimate of climate risk and proposed design principles that can assist in addressing those physical risks,” Brugger explains. The platform helps cities and towns apply for the state’s Municipal Vulnerability Preparedness grant program and is free for privately supported initiatives.

Flexibility Matters

Building Climate Resilience in Cities Worldwide: 10 Principles to Forge a Cooperative Ecosystem, a paper by the Centre for Livable Cities, Singapore, and ULI, says that flexibility is important for effective implementation, even if resilience criteria become more widely required. “One of the strengths of these resilience design guidelines is that they have a degree of flexibility built in, which allows the design team and the development team to innovate and encourages them to understand their risk so they can address it in a way that works best for the situation,” says Brugger. “Risks vary greatly by location, and the environment is continually changing.”

Natalie Ambrosio Preudhomme, associate director at Moody’s Analytics CRE, observes that nonprofit organizations and industry groups have developed several resilience standards and guidelines, some of which offer incentives. She says developers may advertise new properties in neighborhoods that satisfy the National Fire Protection Association’s Firewise USA guidelines, which may qualify for insurance rate rebates.

Ambrosio Preudhomme says other norms may become mandatory. The National Council of Real Estate Investment Fiduciaries (NCREIF) and Pension Real Estate Association’s NCREIF PREA Reporting Standards address environmental, social, and governance reporting best practices, including key performance indicators for physical and transitional climate hazards.

ASTM International’s property resilience assessment guide for commercial real estate loan or acquisition choices is being drafted by Moody’s and RMS, a global supplier of climate and natural catastrophe risk modeling and analytics. “These will certainly become necessary for commercial real estate transactions, which would have a major influence in helping standardize resilience measures,” says Ambrosio Preudhomme. Some commercial real estate trade associations have even suggested to the SEC that these recommendations become the default for property vulnerability and resilience disclosures in financial filings.

“These standards will likely become required for members of these key industry organizations, or generally expected behavior for transactions, which would have a huge impact in standardizing climate resilience strategies in commercial real estate lending or acquisition decisions,” says Ambrosio Preudhomme.

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