...be whether or not the damages constitute substantial damage:
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. 3
If a structure meets this definition, then it must be flood-proofed to or above the Base Flood Elevation (BFE) and meet other applicable NFIP requirements. The importance of such a determination goes back to the previous discussions regarding repair versus replacement:
“… the BFE will be used to calculate the replacement cost. However, if replacement is thereby indicated, the Advisory Base Flood Elevation will be used to design the replacement facility and to determine eligible costs. If the calculation indicates repair, and the cost to repair disaster-related damages to the structure plus the cost to elevate or flood-proof the structure equal or exceed the cost of a new structure, we will cap total eligible project cost at the replacement cost.” 4
In short, even if a facility does not meet the 50 Percent Rule, in cases of substantial damage, replacement might still be the most cost- effective option. Also, in those...____________________
3 CFR 44 §59.1. 4 Memorandum prepared by David Garratt, Acting Assistant Administrator, Disaster Assistance Directorate – April 26, 2007.
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