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FEMA Floodplain Regulations Part 2 – Substantial Improvement (50 Percent Rule)

This post is part 2 of our series of FEMA floodplain regulations. In this post I will discuss the rules regarding substantial improvement of a structure that was built prior to the adoption of the Flood Insurance Rate Map (FIRM) and thereby does not meet the current code requirements for flood elevation.

What Rules Apply?

The code requirements for changes to an existing structure located within a floodplain depend on when the structure was originally built (or substantially improved) and the  extent of the proposed changes.


Post-FIRM Structures

A floodplain structure is called post-FIRM if it was built (or substantially improved) after the effective date of the community’s first Flood Insurance Rate Map (FIRM).  This is the date on which the community began regulating floodplain development.  Post-FIRM structures should already be in compliance with floodplain development standards.  Any subsequent improvements must maintain compliance with the standards that were in effect when the building was built.  Renovations, repairs, or additions to post-FIRM structures are thus regulated as new construction.


Pre-FIRM Structures

Structures that were built prior to enactment of floodplain development standards are called pre-FIRM.  Many of these buildings were constructed without taking the flood hazard into account.  The requirements for modifications to these structures depend on the magnitude of the proposed changes.  It is necessary to determine if the proposed project constitutes a substantial improvement.


Substantial Improvement Rule

If the cost of improvements exceeds 50 percent of the market value of the building, then the entire structure must be brought up to current floodplain management standards.  For many existing buildings, this can require a major investment to elevate the structure, or make other changes to conform to current rules.  The “cost of improvements” must include the market value for all materials and labor, even if the out-of-pocket expenditures are less (for example, the owner does some of the labor).  The “cost of improvements” does not include the cost of repairs required to remedy existing health, safety, and sanitary code violations.


Substantial Damage

If a floodplain structure is damaged by flood, fire, or any other cause and the cost to repair the damage exceeds 50 percent of the market value of the building before the damage occurred, then any repairs are considered a substantial improvement, regardless of the actual repair work performed.  The determination of substantial damage is based on the true cost of bringing the building back to its pre-damage condition using qualified labor and materials obtained at market prices.  If the owner had flood insurance and the building was substantially damaged by a flood, the Increased Cost of Compliance coverage will help with the extra cost of complying with this requirement.


In Part 3 of this series on floodplain regulation we will cover enclosed areas below base flood elevations and what is required to comply with the code regulations.


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