Substantial Damage

Creator: Don Glondys, CFMRAMPPPresenter: Gary Mullinix CFM CBCO

FEMA National Flood Insurance Program (NFIP) Essentials and Best Practices

ContactsGary Mullinix CBCO CFMgmullinix@safebuilt.com

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Agenda1. The intent behind the NFIP Substantial Damage (SD) provision2. The definition of SD3. The community’s role in making SD determinations4. Pre-disaster preparations for post-disaster recovery and proactive

post-disaster outreach 5. Increased Cost of Compliance6. Opportunities to adopt higher standards and incorporate best

practices

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Reduce Risk to Existing Structures

1. Opportunity to break the cycle of disaster damage, reconstruction, and repeated damage.

2. Reduce future costs associated with property damages.3. Opportunity to build stronger, safer, and smarter communities that

are better able to reduce impacts from future flooding and disasters.

4. Communities that participate in the NFIP are required to determine whether damages to structures within the Special Flood Hazard Area (SFHA) meet the NFIP criteria for substantial damage.

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Intent of the Substantial Damage Provision

Substantial Damage DefinedSubstantial Damage (SD) means damage of any origin sustained by a structure whereby the cost of restoring the structure would equal or exceed 50 percent of the market value of the structure before the damage occurred.

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Percent Damage =Cost of Repairs

Pre-Damage Market Value of Structure

Factors that May Result in SD

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Flooding above first floor Extended duration of flooding High velocities Damage of any origin Wave action Tornado Fire High winds that damage

roofs and break windows Earthquake

Source: FEMA Building Science

Community SD Responsibilities1. Communicate permit and the floodplain management

requirements for rebuilding to structure owners.2. Determine the cost of repairs of the structure.3. Determine the market value of structure.4. Make an SI/SD determination.5. Communicate determinations to structure owner.6. Permit development in compliance with local ordinance.6. Conduct inspections.7. Maintain compliance documentation.

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Determine Costs of RepairAcceptable sources of information: Itemized contractor’s estimates Building valuation tables “Qualified estimates” –

prepared by the local permitting official

Itemized costs provided by structure owner

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Determine Costs of RepairCosts that must be included Materials and labor (actual or

estimated costs, not discounted or donated)

Site prep work Demolition and debris removal Exterior (foundation, exterior

finishes, windows, doors, attached deck/porches

Interior finishes (flooring, wall finishes, built-in cabinets)

Utilities (HVAC, plumbing, electrical, lighting, built-in appliances, security systems)

Costs that can be excluded Clean-up/trash removal Land surveying costs Cost to obtain plans/specs Permit and inspection fees Costs to correct previously

identified heath/safety/sanitary violations

Outside improvements (landscaping, sidewalks, detached accessory structures)

Plug-in appliances

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Building Values and Repair CostsOwners may want to inflate building values to reduce the overall percent damage Verify that the building value does not include land value,

landscaping, or accessory structures (sheds, pools, gazebos) Review any appraisal submitted with an appeal

Best Practice for Repair Costs - review repair plans to see if: All basic components are listed in the plans Material quantities are reasonable Plans are compliant with the local building code and floodplain

management ordinance

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Key Costs for Residential Structures 5 key elements make up over 60% of the structure and will

determine SD for many residential structures.

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Element Percent of Overall Structure

Foundation 12%

Superstructure 13%

Interior Finish 13%

Doors & Windows 16%

Plumbing 8%

Determine Market Value of StructureMarket Value – the pre-damage value of the structure

Acceptable sources of market value for structures include:1. Professional appraisals by a state-licensed appraiser.2. Adjusted assessed tax value (with or without multiplier).3. Estimates of Actual Cash Value (ACV)4. "Qualified estimates" based on sound, professional judgment

made by staff of the local building department or local or State tax assessor's office (not recommended).

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Process for Determining SD

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Advance Preparations

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Define post-disaster permit procedures Verify administrative forms and

systems are in place Establish methods of communication

and outreach to property owners Develop a strategy for increasing

staffing capacity, including cross training staff

Identify what requirements from the existing building code and floodplain ordinance apply

Source: FEMA Region III

Advance Preparations

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Determine if permit fees will be waived or reduced for post-disaster permits.

Pre-identify the sources of information you can access to determine market value and cost of repairs quickly and cheaply

Remember the community can waive the permit fee, but they cannot waive permitting requirements.

Post-Disaster Permitting Assume that structure owners: Are unaware of the SD requirements May disregard the need for permits Are anxious to initiate repairs and may start repairs within a day

or two of the disaster Pressure from officials and owners to start repairs Repairs made without the required permits may: Need to be removed and require enforcement actions Make it difficult to determine between new construction and what

was in-place prior to the disaster

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Proactive Post-Disaster Outreach Alert elected officials, staff, and

community agencies that permits will be required for repairs. Explain the requirements for SD

determinations and permits to the local officials.

Inform residents about SD determinations and the need for permits as quickly as possible after the disaster. The objective is to stop repairs

before SD inspections are made or it is determined that permits are required.

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Source: FEMA Region III

Proactive Post-Disaster OutreachBest Practice Determine the method for distributing the requirements for permits as quickly and widely as possible. The community should consider using:

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USPS Door-to-door hand deliveriesCommunity website & social media Handouts at community facilitiesNewspaper notices or articles PSAs on TV or radioHandouts at post-disaster recovery meetings hosted by the community, State or FEMA

Handouts at hardware, building supply and equipment rental stores

Handouts at local insurance agencies

Handouts at churches and community centers

Best Practices for Making Determinations

There are five major activities to aid in making SD determinations:

1. Identify staff2. Define the SD inventory area3. Conduct rapid safety evaluations4. Prepare inspectors for field work5. Perform SD inspections, record

data, and make SD determinationsSource: FEMA Building Science

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Define the SD inventory area Add the SFHA boundaries to the community map that the

inspectors will use in the field.

Assess the inventory area Drive the damage areas within the SFHA to estimate the number

of damaged structures. Estimate the split between residential and non-residential

structures. Conduct a building condition survey to identify buildings that may

be unsafe to enter. Determine which structures require emergency repairs to

prevent additional damage, such as roof repairs.

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Best Practices for Making Determinations

Prepare inspectors for field workReview methods for estimating % damage for each element Errors early on can multiply and

become a significant problem –(such as noncompliance and unsafe buildings)

Review access protocol

Review safety procedures

Notify police of proposed inspection schedule and daily work areas in advance

Source: Iowa DNR

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Field Terminology & Data Requirements Stress the need for complete data collection Items to review include:

SD terms and definitions Non-residential structure uses

“Property” vs. “Assessment” Field vs. office data requirements

Structure attributes Foundation types (define crawl space)

Initial construction quality Depreciation rating

Use of the “No Physical Damage” checkbox

Use of default data (to save time and reduce data entry errors)

Minimum data required to save a record

Collection of additional, community-specific data not required by SDE

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Use of the SDE Tool

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Allows community officials with limited appraisal or construction backgrounds to develop reasonable estimates of structure value and damage in accordance with the NFIP requirements.

Uses the concept of damage estimates for individual structure elements to determine whether the entire structure is substantially damaged.

Includes assessment options for residential structures and common non-residential structures.

Source: FEMA Region III

Structure AccessProcedures for structure access:1. Use a letter of introduction on community letterhead Provide community POC name and phone number

2. Review procedures for dealing with reluctant home owners3. Provide guidance to inspectors for access to: Locked or barricaded structures Unoccupied structures that are open or unlocked

Community can decide if inspectors will enter unoccupied structures.

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Consistent SD DeterminationsLocal officials must be able to defend their SD determinations to structure owners, elected officials, the State, and FEMA.

This requires: Written procedures that meet the NFIP requirements and SD

guidance Implementing the procedures on a consistent basis to make fair

and defensible determinations Decisions should be documented and retained in the community

files

Best Practice – verify all SD determinations for structures with damage between 40% and 60%

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Post-SD Determination Activities

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Perform post-SD determination activities: Issue either SD or non-SD determination

letter to the owner Issue permits for repairs as needed Determine if enforcement actions are

necessaryBest Practices Mark the permit and any retained

materials to indicate that the permit does or does not involve SD

Attach a copy of the SDE summary report showing the percent damage of the building

Source: FEMA Region III

ComplianceCompliance options for structures with SD Residential structures Elevate to the BFE (or required freeboard elevation) or relocate

outside the SFHA Nonresidential and historical structures Elevate above BFE, relocate outside the SFHA, or floodproof

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Enforcement of ViolationsEnforcement of the community’s floodplain management ordinance is a requirement of their participation in the NFIP. Repairs completed without the required permits are violations of

the floodplain management ordinance. Failure to follow the floodplain management ordinance may

lead to NFIP sanctions (probation or suspension) against the community

Failure to follow the local code may lead to a legal issue of non-enforcement of the code and provide an opening for lawsuits

The community must be prepared to take the required enforcement actions, including ordering the removal of repairs or reconstruction and assessing fines, on an occurrence or daily basis for all non-compliant work.

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Increased Cost of Compliance (ICC)Many flood insurance policy holders are unaware that: They have ICC coverage Claims are filed with the flood insurance company ICC is a flood insurance claim and not a grant Up to $30,000 that can be used for elevation,

demolition, relocation or floodproofing (for non-residential structures) The structure must be located in the SFHA and be

substantially damaged due to floodingInformation from insurance claims may help screen for substantial damage, but cannot be used as the basis for final SD determinations.

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Mitigation Opportunities

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Disasters create a window of opportunity to increase risk awareness. Use this opportunity to encourage residents to build back safer and stronger. Use better designs – elevating

first floor, utilities Use disaster resistant building

materials Reduce future losses and

recovery times

Higher StandardsCumulative SD Requires that either all or specified damages are counted towards

the SD determination over a set period of time. Must be in the community floodplain ordinance to be enforced (see

example on page 5-19 of SI/SD Desk Reference).

Lower SD Threshold Establish substantial damage at a threshold lower than 50%.

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Tracking Cumulative SD

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Communities will need to determine: Method for calculating cumulative

SD Time period covered by the

requirement What constitutes damage Specific dollar amount (any repair

> $X) Actions requiring a permit Repairs beyond normal

maintenance

CRS credit is available for adopting and administering these standards!

Source: FEMA Region III

Historic StructuresFor NFIP purposes, the definition of “historic structure” does not include structures that:

Are merely old Residents or officials refer to as historic Are located in an historic district

Communities may elect to use one of two methods when applying SD for historic structures:

Granting a variance - as discussed under 44 CFR § 60.6(a) Exempting historic structures from the SD requirements

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Variances for Historic Structures

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Proposed repairs cannot impact the continued historic designation of the structure Must involve the minimum action

necessary to preserve the historic character and design of the structure Consider other mitigation

measures like the use of flood-damage resistant materials and design

The variance method allows the community to evaluate SD on a structure-by-structure basis

Source: FEMA Region III

Resources and Assistance Available at the FEMA Library:

Substantial Improvement / Substantial Damage Desk Reference

Substantial Damage Estimator (SDE) Tool FEMA Building Science Homepage:

http://www.fema.gov/building-science Building Science Helpline: 1(866) 927-2104 or FEMA-

Buildingsciencehelp@fema.dhs.gov The FEMA Building Science Toolkit CD (FEMA P-950 CD,

2013)

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