Substantial Improvements/ Damage

Question 1

What is the basic rule for substantial improvements?

Answer 1

If costs of improvements, or costs to repair damage exceeds 50% of the fair market value of the building, it must be brought up to current floodplain management standards.

Question 2

Substantially improved dwellings that meet the basic rule must be treated the same as new construction , True of False.

Answer 2

True

Question 3

Define substantial improvement.

Answer 3

Reconstruction, rehabilitation, addition or other improvement to a structure, the total cost of which exceeds 50% of fair market value before the start of construction.

Question 4

Can a developer segment a project to avoid having to upgrade to current flood management standards.

Answer 4

No, in fact some communities require a 5-10 year look back and improvements are calculated cumulatively. When they total 50% the building must be brought into compliance as if it were new construction.

Question 5

The substantial improvments rule covers both pre-FIRM and post-FIRM buildings. True or False.

Answer 5

True, post-FIRMS should already be compliant with regulations for new construction, but the BFE may have been elevated, or zone boundary changeed if FIRMS are updated.

Question 6

what is the formula to determine if a project is a substantial improvement.

Answer 6

cost of improvement /market value of the building >=50%

Question 7

What costs must be included in the formula?

Answer 7

all structural costs, materials, labor, overhead, profit, built in appliances and repairs made to damaged parts of the building being worked on at the same time.

Question 8

what are the 2 exemptions from the substantial improvement requirement?

Answer 8

projects that are historical buildings and improvements to code violations

Question 9

How is market value determined?

Answer 9

Based only on the structure, not the land, location or detached accessory structures. Price is what seller and buyer agree to. Based on condition before repairs and similar units of similar size.

Question 10

what costs must not be included in the formula

Answer 10

plans and specs, survey, permits, post storm clean up, and all outside improvements.

Question 11

When should you get more exact estimate of fair market value of structure.

Answer 11

Use available data to screen, if the ratio is close (40-60%) it is worth getting a more precise market value.

Question 12

What is a minor rehabilitation?

Answer 12

improvements made to existing structure that does not increase the external dimensions and is less than 50% of fair market value does not need to be elevated, however if it is, or if flood proofed, insurance rates are lower.

Question 13

What is the benefit from incorporating methods to reduce flood damage even if not required as a substantial improvement project.

Answer 13

Flood insurance rates will go down and property will be better protected. (i.e. use flood resistant materials, elevated electrical, heating and AC above BFE).

Question 14

What is substantial rehabilitation

Answer 14

If the rehabilitation cost more than 50% of the value of the building, the project must be brought up to floodplain standards (elevated or basement filled)

Question 15

If a residential addition is added laterally do the same substantial improvements requirements apply

Answer 15

Only the addition needs to be elevated if the original structure improvements are minimal (existing common wall is also maintained). If the common wall is demolished, both the original and addition must be elevated. However, if building is in the V zone, both must be elevated for any time of addition, due to “free of obstruction “ standard.

Question 16

If commercial addition is added laterally, do the same substantial improvements requirements apply?

Answer 16

the addition may be either elevated or floodproofed, wall between the addition and original building must also be floodproofed.

Question 17

What is the free of obstruction standard.

Answer 17

In a V zone, if an addition is placed on a building, both must be elevated no matter what. Otherwise, the lower existing structure would create a storm surge, causing damage to the addition.

Question 18

What is the substantial improvement rule for a vertical residential addition?

Answer 18

If a full or partial second floor is added, the entire structure must be elevated. Otherwise, failure of the existing building would result in failure of the addtion as well.

Question 19

What is the substantial improvement rule for a vertical nonresidential addition?

Answer 19

If a full or partial second floor is added the entire structure must be floodproofed or elevated.

Question 20

What is the substantial improvement rule for a minor addition to a Post-FIRM building.

Answer 20

all additions to post-FIRM buildings are treated as new construction and must meet all requirements. If minor addition is not substantial improvement, must be elevated at least as high as when BFE went into effect. Minor additions to nonresidential can be floodproofed.

Question 21

What is the substantial improvement rule for a minor addition if a map revision has taken place and the BFE has increased?

Answer 21

only additions that are substantial improvements have to be elevated to the NEW BFE, or floodproofed (non residential)

Question 22

What is the definition of substantial damage?

Answer 22

Damage of any origin sustained by a structure whereby the cost of restoring the structure to its before damaged condition would equal or exceed 50% of the market value of the structure before the damage occurred.

Question 23

What are 2 key points that apply to substantial damage projects.?

Answer 23

Damage can be from any cause, natural or human induced hazard. Substantial damage rule applies to all buildings in a flood hazard areas regardless of whether it is covered by flood insurance.

Question 24

What is the formula to determine if a project is substantially damaged?

Answer 24

cost to repair/market value of building => 50%

Question 25

what is difference of cost to repair, versus cost of repairs?

Answer 25

formula uses all costs for full repair, even if owner decides to do less, cannot “discount” for home repairs or volunteer help. must calculate cost using qualified labor and materials obtained at market price.

Question 26

How do you obtain the cost to repair?

Answer 26

Licenced general contractor, insurance adjustment papers (exclude damages to contents) or use a damage estimator program from FEMA.

Question 27

How is reconstruction different from new construction if entire structure is destroyed.

Answer 27

There is no difference, must be treated as new building. Also applies if the damaged building is being moved to a new site.

Question 28

What is the basic requirement for substantial damage?

Answer 28

If damage is => 50% of the structures market value before damage, then structure must be elevated or floodproofed (nonresidential) to or above the BFE and meet other ordinance requirements.

Question 29

what is Increased Cost of Compliance coverage?

Answer 29

Additional coverage to all holders of structural flood insurance policies that not only pays for repairs to flooded buildings, but also pays up to $30,00 for addittional costs of complying with ordinance. helps for the extra cost of elevation, floodproofing, etc, above and beyond the original structure condition.

Question 30

Can ICC be used for RLS?

Answer 30

Yes ICC claim can be filed if building is repetitively flooded, and has had 2 or more claims averaging 25% of the buildings value in a 10-year period, provided the community include language in the flood damage ordinance that implements the substantial damage rule in these cases.

Question 31

How can a community find language for the oridance to cover the ICC for RLS.

Answer 31

The floodplain guidebook has ordinance language, or contact FEMA regional office.

Question 32

What costs are exempt from including in the cost to make improvements or repair damages.

Answer 32

plans, specs, permits, survey, emergency repairs, or any outside improvements.

Question 33

Are historic structures exempt from the substantial improvements requirement?

Answer 33

Yes, provided that the building is a listed historic structure or within historic district, repairs maintain the historic status of the structure and all possible flood damage reduction measures are taken.

Question 34

What are some flood damage reduction measures that could be employed for improvements to a historic structure?

Answer 34

Elevate mechanical and electrical equipment.

Elevate lowest floor of addition at or above the BFE with change in floor elevation disguised internally.

Question 35

How is an owner who needs to correct a code violation exempt from the substantial improvement requirement.

Answer 35

If a dwelling has a violation , identified by the local official, the cost to correct the violation will not be counted towards the cost of improvements or repairing damages. The violation needs to have existed before the permit for improvements or damages occurred, or the improvements are for involuntary improvements (change in code required building to upgrade wiring, ADA issues, fire code requirements). These code violation repairs are not counted in the cost of repairs.

Question 36

What are three sources for obtaining market value of house ?

Answer 36

Tax records, professional appraiser, detail assessment of structure - actual cash value- cost to replace minus depreciation.

Question 37

What is basic rule on improvements and repairs to existing buildings in floodplain

Answer 37

If cost of improvements is >= 50% of structure fair market value must be elevated or floodproofed.

Question 38

What is formula for determining substantial damage?

Answer 38

Cost of repairs/fair market value of structure. Must be <=50% or must elevate or floodproof

Question 39

What is best way to determine if building is historic and eligible for exemption from substantial damage improvement requirement

Answer 39

Listen on national historic register as structure or structure contributing to the designation of historic district

Question 40

What kind of projects need a permit so you can check to see if they would be substantial improvements?

Answer 40

Remodeling, rehabilitations, new additions

Question 41

The substantial damage emulation only applies if building was damaged by a flood, true or False?

Answer 41

No, substantial damage applies for any natural or man-made Hazard.

Question 42

A relative of owner of A flooded property is a contractor and states that damages is 48% of fair market value. You think it is higher. How do you prevent argument on who is right?

Answer 42

Get professional independent estimate or use FEMA damage calculator