FEMA urges people to know codes before rebuilding

NEW ORLEANS – The Federal Emergency Management Agency (FEMA) advises Louisiana residents who must repair flood-damaged homes or businesses to be aware of the special requirements for buildings that have been substantially damaged or will be substantially improved. Individual property owners need to work closely with their local community officials to ensure compliance with floodplain regulations – or else their flood insurance rates could be significantly higher.

Both substantially damaged and substantially improved structures must be brought into compliance with National Flood Insurance Program (NFIP) regulations. Among other things, these regulations can require that homes be elevated to or above the 100-year or base flood level, and that businesses and non-residential structures be flood-proofed.

The NFIP, a Federal program enabling property owners to purchase flood insurance, is based on an agreement between local communities and the Federal government. Under this agreement, new construction and substantially improved structures located in a flood hazard area will be mitigated to reduce future flood risks. In return, the Federal government will make flood insurance available within the community as a financial protection against flood losses. As a result of this agreement, if a home or business is located in the 100-year floodplain (a special flood hazard area where there is a 1 percent chance of flooding in any given year), the community’s flood regulations may affect how people repair, rebuild or relocate their homes or businesses.

Below are some frequently asked questions and answers.

What is a substantially damaged building?

A substantially damaged building is a structure that has been so badly damaged that to repair it will require an expenditure of 50 percent or more of the building’s pre-damaged market value. For example, if the market value of a home is $100,000 but it sustains damage and the damage will cost $50,000 or more to repair, that home is considered substantially damaged.

What is a substantially improved building?

A substantially improved building is one that will be reconstructed, rehabilitated, will receive an addition, or otherwise be improved and the improvement cost equals or exceeds 50 percent of the market value of the structure before the start of construction. This term includes structures which have incurred substantial damage.

Sometimes a building sustains less than 50 percent damage; however the owner decides not only to repair the building, but also to improve it. The result can be a substantially improved building. For example, if repairing the building costs 30 percent of the structure’s market value and adding another room costs 20 percent or more of the structure’s market value, then taken together, the repairs and improvement equal 50 percent of the structure’s market value so that the owner now has a substantially improved building.

Who determines whether a structure has been substantially damaged?

Ultimately, it is the responsibility of the community permit official to ensure that market value estimates are reasonably accurate and that the cost estimate reasonably reflects the actual costs to fully repair the damage and make any other improvements to the structure. However, the local permit official may require the permit applicant or owner of the building to supply the necessary information, such as appraisals, construction cost estimates, etc.

How much accuracy is needed in determining whether a structure is substantially damaged?

The closer the improvement or damage appears to approach 50 percent of the market value of the structure, the greater the precision needed in determining substantial improvement. For example, if the damage suffered appears to be minor (40 percent or less) compared to the market value of the structure, more approximate methods for determining substantial improvement may be acceptable. The same is true if the damage suffered is extensive (60 percent or more). However, if the damage suffered or improvement to be made is suspected to be between 40 percent and 60 percent of the structure’s market value, then detailed, itemized estimates for the cost of repair and definitive estimates of market value must be used.

What happens if a substantially damaged or substantially improved structure is not built in compliance with community floodplain management regulations?

If a structure is substantially damaged or substantially improved and is not in compliance with the community’s floodplain management regulations, insurance rates and premiums will be significantly higher for that structure. For substantially damaged structures that have their lowest floors several feet or more below the base flood elevation, the annual premium could increase to thousands of dollars. Structures that are not built in compliance jeopardize the community by putting them in violation of their flood damage prevention ordinance, which could result in the community being put on probation or suspended from the NFIP.

FEMA coordinates the federal government’s role in preparing for, preventing, mitigating the effects of, responding to, and recovering from all domestic disasters, whether natural or man-made, including acts of terror.

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