The first step in making this determination lies with your local codes officials and floodplain administrator, who can help determine if a structure requires substantial improvement.
Substantial improvement 4 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 that have incurred “substantial damage,” regardless of the actual repair work performed. 5
Substantial damage 6 means damage of any origin sustained by a structure whereby the cost of restoring the structure to its pre-damage condition would equal or exceed 50 percent of the market value of the structure before the damage occurred.
Market value 7 – in common parlance, market value is the price a willing buyer and seller agree upon. The market value of a structure reflects its original quality, subsequent improvements, physical age of building components 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 location of the property should be attributed to the value of the land, not the building.
If your floodplain administrator declares a facility substantially damaged, it is important to determine immediately what must be done in order to affect repairs, or if the facility must be replaced. It is noteworthy to stress that this is not a FEMA Public Assistance issue at this point; however, it is very important to advise the state as quickly as possible after a substantial damage designation has been made for a facility.
Once it is known what must be done to bring the damaged facility up to code, it is time to move forward with FEMA. Ideally, local architects and engineers (or contractors) will develop the scope of repairs—including all applicable codes and standards— and this information can be...
In a perfect world, flood damages would fall within available NFIP coverage amounts. But as events over the past few years have proven, they often do not. This is where FEMA’s PA program steps in.