Substantial Improvement - Illinois Association for Floodplain and
Contents
1. 44 CFR 59 1 Definitions Substantial improvement means any reconstruction rehabilita tion addition or other improvement to a structure the total cost of which equals or exceeds 50 percent of the market value of the structure before the start of construction of the improve ment 16 2 2 Projects affected All building improvement projects worthy of a permit must be considered These include e Remodeling projects e Rehabilitation projects e Building additions e Repair and reconstruction projects these are ad dressed in more detail in Section 16 3 on substantial damage Note that if part of a building is in the SFHA the entire building is subject to these provisions Substantial Improvement amp Damage 16 2 March 2006 If a community does not require permits for say reroofing minor maintenance or projects under a certain dollar amount then such projects are not subject to the substantial improvement requirements However a larger project that includes reroofing etc must include the entire cost of the project 16 2 3 Multiple projects One problem a floodplain administrator may face is a builder trying to avoid the requirements by applying for a permit for only part of the job and then later applying for another permit to finish the work If both applications together are worth more than 50 of the value of the building and the second permit is applied for a relatively short time aft2. The floodplain regulations for new construction apply and the building must meet the post FIRM construction requirements If the project is an addition that meets the criteria in Examples 3 and 4 later in this section only the addition has to be elevated The formula is based on the cost of the project and the value of the building These two numbers must be reviewed in detail Good records must be kept of the applicant s estimates and the administrator s calculations 16 2 6 Project cost The cost of the project means all structural costs including all materials built in appliances overhead profit o gt repairs made to damaged parts of the building worked on at the same time labor Labor is the true cost of hiring someone to do the job e g the prevailing rates contractors charge If the owner does the work or has free help the true cost of that labor must be in cluded A more detailed list is included in Figure 16 1 To determine substantial improvement a detailed cost estimate is required for the project prepared by a licensed general contractor professional construction estimator or the permit office The permit office must review the estimate submitted by the permit applicant Profes sional judgment and knowledge of local and regional construction costs can be used to verify the Substantial Improvement amp Damage 16 4 March 2006 estimate or the building code valuation tables publi
3. so this is not a substantial improvement CI ABOVE BFE Figure 16 2 Minor rehabilitations use flood resistant methods and materials Neither structure would benefit from post FIRM flood insurance rates because they are not elevated Substantial Improvement amp Damage 16 7 March 2006 Example 2 Substantial rehabilitation If the rehab costs more than 50 percent of the value of the building the ordinance requires that an existing structure be elevated and or the basement filled to meet the elevation standard Figure 16 3 shows a building that has been allowed to run down Its market value is 35 000 To rehab it will require gutting the interior and replacing all wallboard built in cabinets bathroom fixtures and furnace The interior doors and flooring will be repaired The house will get new siding and a new roof The cost of this rehab will be 25 000 25 000 71 4 percent Because total cost of the project is greater 35 000 than 50 the rehab is a substantial improvement Exterior Rehabilitated Interlor Gutted amp Renovated BFE Openings 1ft Block Foundation Added To Above Grade Bring Structure Above BFE Figure 16 3 Substantially rehabilitated building elevated above the BFE The new structure would benefit from post FIRM flood insurance rates Substantial Improvement amp Damage 16 8 March 2006 Example 3 Lateral add
4. up the walls and damage a wallboard ceiling that is several feet above the high water line Standing water or the moisture it brings causes warping mold and mildew that adds to the cost of repair 16 3 5 Substantial damage software FEMA has developed a software program to help local officials make substantial damage determinations The software is based on Microsoft Access but is self contained and does not require any software in addition to a Windows operating system The software comes with a manual Guide on Estimating Substantial Damage Using the NFIP Residential Substantial Damage Estimator FEMA 311 This includes a user s manual and worksheets that allow the calculations to be done manually Contact the FEMA Regional Office for a copy of the software package and help in using it Following a major disaster declaration training sessions and technical assistance may be avail able 16 3 6 Increased Cost of Compliance On June 1 1997 the NFIP began offering additional coverage to all holders of structural flood insurance policies This coverage is called Increased Cost of Compliance or ICC The name refers to cases where the local floodplain management ordinance requires elevation or retrofitting of a substantially damaged building Under ICC the flood insurance policy will not only pay for repairs to the flooded building it will pay up to 30 000 to help cover the additional cost of complying with the ordinance This is
5. Demolished pan for Vertical IES Addition Vertical Addition Existing Structure Bottom of Lowest Horizontal Structural Member Elevated To or Above BFE Existing Structure Elevation on Piles Columns Figure 16 6 Vertical addition to a residential building The new structure would benefit from post FIRM flood insurance rates March 2006 Substantial Improvement amp Damage 16 11 Example 6 Vertical addition nonresidential When the proposed substantial improvement is a full or partial second floor on a nonresidential building the entire structure must be elevated or floodproofed Figure 16 7 The owner could obtain post FIRM rates on the building if it is floodproofed to at least one foot above the BFE and a floodproofing certificate signed by a licensed professional engineer is procured An optional approach is to elevate the entire building and obtain an elevation certifi cate PLANNED VERTICAL ADDITION Walls of 1st Floor PPaddition jd Barrier 7d Structure Must be Bs Dry Floodproofed McB s Warehousy Warehous Existing Structure MoB Not Floodproofed Originally NOTE Design May Require Reinforcement of Walls and Floor Slab Figure 16 7 Vertical addition to a nonresidential building The new floodproofed structure would benefit from post FIRM flood insurance rates Substantial Improvement amp Damage 16 12 March 2006 Example 7 Post FIRM building minor
6. The total cost of these code requirements would be 8 000 However since the citation was issued before the fire occurred they would not be counted toward the cost to repair Based on the basic formula 53 000 8 000 45 000 Cost to Repair Cost to Correct Code Violation 45 000 0 45 or 45 The building is not declared 100 000 substantially damaged In this example the building can be repaired without elevating or floodproofing However the permit office should strongly recommend incorporating flood protection measures and flood resistant materials in the repair project as in the example in Figure 16 2 Substantial Improvement amp Damage 16 23 March 2006
7. addition All additions to post FIRM buildings are defined as new construction and must meet the re quirements of the floodplain management ordinance regardless of the size or cost of the addition Figure 16 8 A small addition to a residential structure that is not a substantial improvement must be elevated at least as high as the BFE in effect when the building was built Minor addi tions to nonresidential structures can be floodproofed to the BFE If a map revision has taken place and the BFE has increased only additions that are substantial improvements have to be elevated or floodproofed nonresidential buildings only to the new BFE All Improvements to Post FIRM Structures MUST Meet Current Requirements Regardless of Size or Cost Post FIRM Less Than Structure Substantial Figure 16 8 Small additions to post FIRM buildings must be elevated Substantial Improvement amp Damage 16 13 March 2006 Example 8 Post FIRM building substantial improvement Substantial improvements made to a post FIRM structure must meet the requirements of the current ordinance Figure 16 9 shows a lateral addition made after a map revision took place and the BFE was increased Lateral Addition Substantial Improvement NEW BFE In Effect _ NEW BFE OLD BFE Figure 16 9 Substantial improvements to post FIRM buildings must be elevated above the new BFE Nonresidential buildings may be
8. community needs to keep track of multiple repair projects and have the ordinance language shown in Figure 16 12 16 2 4 Post FIRM buildings The rules do not address only pre FIRM buildings they cover all buildings post FIRM ones included In most cases a post FIRM building will be properly elevated or otherwise compliant with regulations for new construction However sometimes a map change results in a higher BFE or change in FIRM zone A substantial improvement to a post FIRM building may require that the building be elevated to protect it from the new higher regulatory FPE Substantial Improvement amp Damage 16 3 March 2006 It should be remembered that all additions to a post FIRM building must be elevated at least as high as the FPE in effect when the building was built The floodplain administrator cannot allow a compliant building to become noncompliant by allowing additions at grade If a new higher FPE has been adopted since the building was built additions that are substantial improvements must be elevated to the new FPE 16 2 5 The formula A project is a substantial improvement if Cost of improvement project gt 50 percent Market value of the building For example if a proposed improvement project will cost 30 000 and the value of the building is 50 000 30 000 0 6 60 percent 50 000 The cost of the project exceeds 50 percent of the building s value so it is a substantial improve ment
9. residential building in an A Zone The structure on the left would not benefit from post FIRM flood insurance rates because it was not elevated Substantial Improvement Damage 16 9 March 2006 Example 4 Lateral addition nonresidential A substantial improvement addition to a nonresidential building may be either elevated or floodproofed Figure 16 5 Otherwise all the criteria for residential buildings reviewed in Example 3 must be met If floodproofing is used the builder must ensure that the wall between the addition and the original building is floodproofed COMMON WALL y FLOODPROOFED BFE a y Openings Designed y a f Impermeable Closures E dproofed oy Floo 1ft Above BFE Required to Retain Pre FIRM Rate A FEMA FOUR GRAPHIC Figure 16 5 Lateral addition to a nonresidential building in an A Zone The structure would not benefit from post FIRM flood insurance rates because the original building was not elevated or floodproofed Substantial Improvement amp Damage 16 10 March 2006 Example 5 Vertical addition residential When the proposed substantial improvement is a full or partial second floor the entire structure must be elevated Figure 16 6 In this instance the existing building provides the foundation for the addition Failure of the existing building would result in failure of the addition too Typically A Existing Roof is
10. SECTION 16 SUBSTANTIAL IMPROVEMENT AND SUBSTANTIAL DAMAGE Contents 16 1 Introduction aaa 16 2 16 2 Substantial Improvement ccccccscscsssssscecsseccccccsccsccseccsecsecscecssesssecees 16 2 10 2 1 NFIP requirements a 16 2 16 2 2 Projects altea a a a ee 16 2 1823 Multiple project Oca eed ates ate aes 16 3 16 2 4 Post FIRM buildings sacc ics seccasstoseedh tiacecadd sayanes de daaeava avaedaaivgncsdssoqncnaaees 16 3 16 2 5 The TOA i 16 4 162 6 Project cost a hin Mintel a aes 16 4 G27 pak Ret vall o a ele lo 16 5 16 2 8 Substantial improvement examples o oococonocccnocccconocccnonnnononcnonancnnnnncninnnoss 16 7 16 3 Substantial Damage ss sccasachisconssossssnceidscoponevcoensabassenasosssenacbaseosocscesasvoasensenss 16 15 16 31 NETO TOQUES ac cites A A A A A 16 15 16 3 2 LOS TO A a 16 15 16 3 3 Cost to TP Aiuniiani aiii 16 15 16 3 4 Substantial damage examples coin inde ek 16 17 16 3 5 Substantial damage SOW ares j cciisieccsscassves tidad rd 16 19 16 3 6 Increased Cost of Compliance ii 16 19 EIA ds gues vascoeedeescadssecdesscoccdecnsndab ease seenesseceeasonoens 16 20 AL EXEMPt COSTS iii e a E ee AR AA 16 22 16 42 istoti structures stos 16 22 16 4 3 Correction of code violati0NS oooooocononononcnnocnnooncnoncnonccnnn crac cnn ncno recono 16 22 Substantial Improvement amp Damage 16 1 March 2006 16 1 INTRODUCTION The previous sections focused on the rules and regulations that prevent or re
11. adjustment papers exclude damage to contents e Damage assessment field surveys conducted by building inspection emergency management or tax assessment agencies after a disaster e The floodplain administrator s office e Have the estimate submitted by the permit applicant and reviewed by the he floodplain administrator s office Professional judgment and knowledge of local and regional construction costs or the building code valuation tables published by the major building code groups can be used Use an objective system that does not rely on varying estimates of market value or differ ent opinions of what needs to be repaired The Residential Substantial Damage Estimator Program discussed later in this section is one such system Publicize the need for the regulations and the benefits of protecting buildings from future flooding A well educated public won t argue as much as one that sees no need for the requirement Help the owner find financial assistance to meet the extra cost of complying with the code If there was a disaster declaration there may be sources of financial assistance as discussed in Section 20 If the owner had flood insurance and the building was substan tially damaged by a flood the new Increased Cost of Compliance coverage will help Substantial Improvement amp Damage 16 16 March 2006 16 3 4 Substantial damage examples Example 1 Reconstruction of a destroyed building Reconstructions are ca
12. available for any flood insurance claim and therefore is not dependent on the community receiving a disaster declaration There are some limitations to ICC Itis only available if there was a flood insurance policy on the building before the flood It covers only damage caused by a flood Claims are limited to 30 000 per structure Claims must be accompanied by a substantial damage determination by the floodplain ordinance administrator A portion of the rest of the claim payment may help meet the cost of bringing the building up to code For example if there was foundation damage the regular claim will pay for the cost of repairing or replacing the foundation The ICC funds would only be needed for the extra costs of Substantial Improvement amp Damage 16 19 March 2006 raising the foundation higher than it was before The permit official s help and records are needed for the owner to receive this payment An ICC claim cannot be paid unless the community has determined the building to be substan tially damaged and requires that the building comply with local ordinance requirements For further information on how ICC coverage works and how a floodplain administrator can help policyholders in their community qualify for the coverage refer to National Flood Insurance Program s Increased Cost of Compliance Coverage Guidance for State and Local Officials FEMA 301 In certain cases an ICC claim can be filed if the build
13. duce damage from floods to new buildings This section looks at what happens when the owner wishes to make an improvement such as an addition to an existing building and what happens if a building is damaged by a fire flood or other cause Basic Rule 5 If the cost of improvements or the cost to repair the damage exceeds 50 percent of the market value of the building it must be brought up to current floodplain management standards That means an existing building must meet the requirements for new construction People who own existing buildings that are being substantially improved will be required to make a major investment in them in order to bring them into compliance with the law They will not be happy If the buildings have just been damaged they will be financially strapped and the elected offi cials will want to help them not make life harder for them For these reasons it is easy to see that this basic rule can Nu Mie leer eta be difficult to administer It is also time when a regula building is the same as the term tory program can reduce flood damage to existing structure in the NFIP regulations buildings That s why this desk reference devotes this Local ordinances may use either term The terms are reviewed in more detail in Section 12 section to administering the substantial improvements and substantial damage regulations 16 2 SUBSTANTIAL IMPROVEMENT 16 2 1 NFIP requirements
14. er the first then the combined project should be considered a substantial improvement and subject to the rules FEMA requires that the entire improvement project be counted as one In order to help enforce this a community may want to count all applications submitted over say one year as one project The community s attorney should be consulted on whether the ordinance clearly gives the floodplain administrator the authority to do this and be sure to spell it out in the permit papers given to the applicant Some communities require that improvements be calculated cumulatively over several years All improvement and repair projects undertaken over a period of 5 years 10 years or the life of the structure are added up When they total 50 percent the building must be brought into compliance as if it were new construction The Community Rating System provides credit for keeping track of improvements to enforce a cumulative substantial improvement requirement It also credits using a lower threshold than 50 percent These credits are found under Activity 430 Section 431 c and d in the NFIP CRS CRS Coordinator s Manual and the CRS Application See also CRS Credit for Higher Regulatory Standards for example regulatory language The NFIP s Increased Cost of Compliance benefits are explained in section 16 3 There is a provision to provide additional funds for buildings that are repetitively flooded To make this provision available the
15. floodproofed Substantial Improvement amp Damage 16 14 March 2006 16 3 SUBSTANTIAL DAMAGE 16 3 1 NFIP requirements Rules for regulating substantially damaged buildings are similar to those for substantial im provements The major difference is calculating the cost to repair rather than the cost of the improvements 44 CFR 59 1 Definitions Substantial damage means 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 percent of the market value of the structure before the damage occurred Two key points 1 The damage can be from any cause flood fire earthquake wind rain or other natural or human induced hazard 2 The substantial damage rule applies to all buildings in a flood hazard area regardless of whether the building was covered by flood insurance or whether disaster assistance is available 16 3 2 The formula The formula is essentially the same as for substantial improvements Cost to repair gt 50 percent Market value of the building Market value is calculated in the same way as for substantial improvements Use the pre damage market value 16 3 3 Cost to repair The formula uses cost to repair and not cost of repairs The cost to repair the structure must be calculated for full repair to the building s before damage condition even if the owner elects to do less I
16. ing is repetitively flooded and has had two or more claims averaging 25 or more of building value within a ten year period provided the community has language in the flood damage ordinance that implements the cumulative substan tial damage rule in these cases Figure 16 12 has example ordinance language This language exceeds the minimum NFIP requirements but would be needed if the administrator wanted to trigger the ICC provision for repetitively damaged buildings The Community Rating System credits keeping track of improvements to enforce a cumulative substantial improvement requirement The CRS Coordinator s Manual credits the ordinance language in Figure 16 12 These credits are found under Activity 430 Section 431 c in the CRS NFIP CRS Coordinator s Manual and the CRS Application 16 4 SPECIAL SITUATIONS As explained in previous sections the substantial improvement and substantial damage require ments affect all buildings regardless of the reason for the improvement or the cause of the damage There are three special situations to be aware of exempt costs historic buildings and corrections of code violations 16 4 1 Exempt costs Certain costs related to making improvements or repairing damaged buildings do not have to be counted toward the cost of the improvement or repairs These include Plans and specifications 4 4 Surveying costs Permit fees 4 Demolition or emergency repairs made for health or safet
17. ir tread was defective and had to be replaced do not exempt the cost of rebuilding the entire stairway Similarly count only replacement in like kind and what is mini mally necessary If the owner chooses to upgrade the quality of a code required item the extra cost is not exempt from the formula it s added to the true cost of the improvement or repairs Unfortunately many property owners and builders pressure local building officials to exclude code violation corrections from their voluntary improvement proposals There are code violations in all structures built before the current code was enacted In many cases those elements must be brought up to code as part of an improvement project This is very different from a code violation citation that forces a property owner to correct those violations and make improvements that were otherwise not planned The building official must know about and document the violations before or at the time the permit is issued Example A small business in a 40 year old building was damaged by a fire The building s pre fire market value was 100 000 The insurance adjuster and the permit office concluded that the total cost to repair would be 53 000 The business is in an urban renewal area The City had inspected it and cited the following violations Replace unsafe electrical wiring Install missing fire exit signs smoke detectors and emergency lighting Inadequate bathrooms
18. ition residential Additions are improvements that increase the square footage of a structure Commonly this includes the structural attachment of a bedroom den recreational room garage or other type of addition to an existing structure When an addition is a substantial improvement the addition must be elevated providing that improvements to the existing structure are minimal Figure 16 4 illustrates lateral additions that are compliant According to FEMA the existing building may not have to be elevated depending on the flood zone and details of the project The determining factors are the common wall and what im provements are made to the existing structure If the common wall is demolished as part of the project then the entire structure must be elevated If only a doorway is knocked through the common wall and only minimal finishing is done then only the addition has to be elevated However the State model ordinance does not make this distinction and any lateral addition that increases the value by 50 or increases the floor area by 20 is considered a substantial im provement In A Zones only if significant improvements are made to the existing structure such as a kitchen makeover both it and the addition must be elevated and otherwise brought into compli ance Some states and many communities require that both the existing structure and lateral additions be elevated in all cases Figure 16 4 Lateral additions to a
19. nce procedure In either case the historic structure exemption is usually granted subject to conditions If the improvements to a historic structure meet the following three criteria and are approved by the community the building will not have to be elevated or floodproofed It can also retain its pre FIRM flood insurance rating status 1 The building must be a bona fide historic structure Historic structures are those listed on the National Register of Historic Places or the State Inventory of Historic Places or that contribute to a historic district 2 The project must maintain the historic status of the structure If the proposed improve ments to the structure will result in it being removed from or ineligible for the National Register or federally certified state or local inventory then the proposal cannot be granted an exemption from the substantial improvement rule The best way to make such determinations is to seek written review and approval of proposed plans by the Illinois Historic Preservation Agency If the plans are approved the exemption can be granted If not no exemption can be permitted 3 Take all possible flood damage reduction measures Even though the exemption to the substantial improvement rule means the building does not have to be elevated to or above FPE or be renovated with flood resistant materials that are not historically sensitive many things can and should be done to reduce the flood damage pote
20. ntial Examples include Locating mechanical and electrical equipment above the FPE or floodproofing it Elevating the lowest floor of an addition to or above the FPE with the change in floor elevation disguised externally 16 4 3 Correction of code violations The definition of substantial improvement includes another exemption p include Any project for improvement of a structure to correct existing violations of state or local health sanitary or safety code specifications which have been identified by the local code enforcement official and which are the minimum necessary to assure safe living condi tions Note the key words in this exemption correct existing violations identified by the local official and minimum necessary to assure safe conditions This language was included in order to avoid Substantial Improvement amp Damage 16 22 March 2006 penalizing property owners who had no choice but to make improvements to their buildings or face condemnation or revocation of a business license This exemption was intended for involuntary improvements or violations that existed before the improvement permit was applied for or before the damage occurred for example a restaurant owner who must upgrade the wiring in his kitchen in order to meet current local and state health and safety codes A floodplain administrator can only exempt the items specifically required by code For exam ple if a single sta
21. on of the property should be attributed to the value of the land not the building Acceptable estimates of market value can be obtained from these sources An independent appraisal by a professional appraiser The appraisal must exclude the value of the land and not use the income capitalization approach which bases value on the use of the property not the structure Detailed estimates of the structure s actual cash value the replacement cost for a build ing minus a depreciation percentage based on age and condition For most situations the building s actual cash value should approximate its market value A community may pre fer to use actual cash value as a substitute for market value especially where there is not sufficient data or enough comparable sales Property values used for tax assessment purposes with an adjustment recommended by the tax appraiser to reflect current market conditions adjusted assessed value The value of buildings taken from NFIP claims data usually actual cash value Qualified estimates based on sound professional judgment made by the staff of the local building department or tax assessor s office Some market value estimates are often used only as screening tools 1 e NFIP claims data and property appraisals for tax assessment purposes to identify those structures where the substantial improvement ratios are obviously less than or greater than 50 percent i e less than 40 pe
22. ons during a 10 year period for which the cost of repairs at the time of each such flood event on the average equals or exceeds 25 percent of the market value of the structure before the damage occurred NOTE 1 Communities need to make sure that these definitions are tied to the floodplain management requirements for new construction and substantial improvements and to any other requirements of the ordinance such as the permit requirements in order to enforce this provision NOTE 2 An ICC Claim Payment is ONLY made for flood related damage The substantial damage part of the definition must still include damage of any origin to be compliant with the minimum NFIP Floodplain Management Regulations Figure 16 12 Sample ordinance language for ICC repetitive loss definitions Source Increased Cost of Compliance Coverage Guidance for State and Local Officials FEMA 301 September 2003 This language is only needed to trigger an ICC payment for a repetitive loss No ordinance changes are needed for the ICC coverage for substantial damage Substantial Improvement amp Damage 16 21 March 2006 16 4 2 Historic structures Historic structures are exempt from the substantial improvement requirements subject to the criteria listed below The exemption can be granted administratively if the current NFIP defini tions of substantial improvement and historic structure are included in the local ordinance or it can be granted through a varia
23. rcent or greater than 60 percent For structures that fall in the 40 percent to 60 percent range more precise market value estimates are sometimes necessary Substantial Improvement amp Damage 16 5 March 2006 Items to be included All structural elements including Spread or continuous foundation footings and pilings Monolithic or other types of concrete slabs Bearing walls tie beams and trusses Floors and ceilings Attached decks and porches Interior partition walls Exterior wall finishes brick stucco siding incl painting and moldings Windows and doors Reshingling or retiling a roof Hardware All interior finishing elements including Tiling linoleum stone or carpet over subflooring Bathroom tiling and fixtures Wall finishes drywall painting stucco plaster paneling marble etc Kitchen utility and bathroom cabinets Built in bookcases cabinets and furniture Hardware All utility and service equipment including HVAC equipment Plumbing and electrical services Light fixtures and ceiling fans Security systems Built in kitchen appliances Central vacuum systems Water filtration conditioning or recirculation systems Cost to demolish storm damaged building components Labor and other costs associated with moving or altering undamaged building components to accommodate improvements or additions Ove
24. rhead and profits Items to be excluded Plans and specifications Carpeting over a finished floor Survey costs Permit fees Post storm debris removal and clean up Outside improvements including Landscaping Sidewalks Fences Yard lights Swimming pools Screened pool enclosures Detached structures including garages sheds and gazebos Landscape irrigation systems Figure 16 1 Items included in calculating cost of the project Substantial Improvement amp Damage 16 6 March 2006 16 2 8 Substantial improvement examples Example 1 Minor rehabilitation A rehabilitation is defined as an improvement made to an existing structure which does not affect the external dimensions of the structure If the cost of the rehabilitation is less than 50 percent of the structure s market value the building does not have to be elevated or otherwise protected However it is advisable to incorporate methods to reduce flood damage such as use of flood resistant materials and installation of electrical heating and air conditioning units above the FPE Figure 16 2 shows a building that had a small rehabilitation project Central air conditioning was installed and the electrical system was upgraded The value of the building before the project was 60 000 The value of the project was 12 000 12 000 0 2 20 percent The project costs less than 50 percent of the 60 000 building
25. ses where an entire structure is destroyed damaged purposefully demol ished or razed and a new structure is built on the old foundation or slab The term also applies when an existing structure is moved to a new site Reconstructions are quite simply new construction They must be treated as new buildings Razed or totaled building Reconstruction on with remaining foundation existing foundation Figure 16 10 A reconstructed house is new construction FLOODPLAIN MANAGEMENT SUCCESS STORY The Plainfield Tornado In 1990 Plainfield Illinois was hit by a tornado Twenty buildings in the Village s floodway were destroyed The village used the substantial damage requirements and funding assistance from FEMA disaster assistance and State programs to encourage residents to not rebuild Eventually all 20 properties were acquired and the floodway development was converted to public open space Substantial Improvement amp Damage 16 17 March 2006 Example 2 Substantially damaged structure To determine if a damaged structure meets the threshold for substantial damage the cost of repairing the structure to its before damaged condition is compared to the market value of the structure prior to the damage The estimated cost of the repairs must include all costs necessary to fully repair the structure to its before damaged condition If the cost of repairs is equal to or greater than 50 percent of the str
26. shed by the major building code groups can be used These tables can be used for determining estimates for particular replacement items if the type of structure in question is listed in the tables There are two possible exemptions to be aware of 1 improvements to correct pre identified code violations do not have to be included in the cost of an improvement or repair project and 2 historic buildings can be exempted from substantial improvement requirements These are explained in more detail in section 16 4 16 2 7 Market value Market value is the price a willing buyer and willing seller agree upon The market value of a structure reflects its original quality subsequent improvements physical age of building compo nents and current condition However market value for property can be different than that of the building itself Market value of developed property varies widely due to the desirability of its location For example two houses of similar size quality and condition will have far different prices if one is on the coast or in the best school district or closer to town than the other but the value of the building materials and labor that went into both houses will be nearly the same For the purposes of determining substantial improvement market value pertains only to the structure in question It does not pertain to the land landscaping or detached accessory structures on the property Any value resulting from the locati
27. t must also include the cost of any improvements that the owner has opted to include during the repair project Substantial Improvement amp Damage 16 15 March 2006 The total cost to repair includes the same items listed in Figure 16 1 As shown in Example 2 in Section 16 3 4 properly repairing a flooded building can be more expensive than people realize The owner may opt not to pay for all of the items needed The owner may 4 4 4 4 Do some of the work such as removing and discarding wallboard Obtain some of the materials free Have a volunteer organization do some of the work or Decide not to do some repairs such as choosing to nail down warped flooring rather than replace it Substantial damage is determined regardless of the actual cost to the owner The true cost of bringing the building back to 1ts pre damage condition must be figured out using qualified labor and materials obtained at market prices The permit office and the owner may have serious disagreements over the total list of needed repairs and their cost as the owner has a great incentive to show less damage than actually occurred in order to avoid the cost of bringing the building into compliance The following are four steps that can help reduce or avoid disagreements 1 2 Get the cost to repair from an objective third party or non debatable source such as e A licensed general contractor e A professional construction estimator e Insurance
28. ucture s market value before damage then the structure must be elevated or floodproofed if it is nonresidential to or above the flood protection elevation and meet other applicable local ordinance requirements This is the basic requirement for substantial damage Figure 16 11 graphically illustrates the amount of damage that can occur to a building flooded only 2 to 3 feet deep Even though the structure appears sound and there are no cracks or breaks in the foundation the total cost of repair can be significant Figure 16 11 Even standing floodwater can cause substantial damage The cost of repair after a flood that simply soaked the building will typically include the follow ing structural items Remove all wallboard and insulation Install new wallboard and insulation Tape and paint Remove carpeting and vinyl flooring Dry floor replace warped flooring Replace cabinets in the kitchen and bathroom Replace built in appliances Replace hollow core interior doors Replace furnace and water heater Clean and disinfect duct work Repair porch flooring and front steps Clean and test plumbing licensed plumber may be required Replace outlets and switches clean and test wiring licensed electrician may be required Substantial Improvement amp Damage 16 18 March 2006 The longer the water is in the building the more damage it will cause It can wick
29. y reasons or to prevent further damage to the building Improvements or repairs to items outside the building such as the driveway fencing landscaping and detached structures Substantial Improvement amp Damage 16 20 March 2006 Option 1 A Adopt the Following Definition Repetitive Loss means flood related damage sustained by a structure on two separate occasions during a 10 year period for which the cost of repairs at the time of each such flood event on the average equals or exceeds 25 percent of the market value of the structure before the damage oc curred B And modify the substantial improvement definition as follows Substantial Improvement means any reconstruction rehabilitation addition or other improvement of a structure the cost of which equals or exceeds 50 percent of the market value of the structure before the start of construction of the improvement This term includes structures which have incurred repetitive loss or substantial damage regardless of the actual repair work performed Option 2 Modify the substantial damage definition as follows Substantial Damage means 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 percent of the market value of the structure before the damage occurred Substantial damage also means flood related damage sustained by a structure on two separate occasi
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