When it comes to renovating or improving properties in flood-prone areas of Charleston and the surrounding areas, homeowners need to be cognizant – of FEMA’s 50% rule.
This federal regulation can significantly impact how you must approach your renovation project to ensure compliance with the floodplain management requirements. FEMA’s 50% Rule When Renovating in a Flood Zone is something every homeowner should understand.
What is FEMA’s 50% Rule?
The Federal Emergency Management Agency (FEMA) enforces FEMA’s 50% Rule When Renovating in a Flood Zone as part of its floodplain management regulations.
According to this rule, if the cost of improvements or repairs to a structure in a Special Flood Hazard Area (SFHA) exceeds 50% of the market value of the building (only) before the improvement, then the building must be brought into full compliance with the current floodplain management standards. This means that the structure may need to be elevated or otherwise modified to reduce the risk of future flood damage.
What is a Substantial Improvement?
Substantial improvement, as defined in 44 CFR § 59.1, means any reconstruction, rehabilitation, addition, or other improvement of a structure, the cost of which equals or exceeds 50% of the market value of the structure before the start of construction of the improvement.
The term includes structures that have incurred “substantial damage,” regardless of the cause of damage and regardless of the cost of repair work performed.
However, the term does not include:
Any project for improvement of a structure to correct existing violations of State or local health, sanitary, or safety code specifications that have been identified by the local code enforcement official, and that are the minimum necessary to ensure safe living conditions.
Any alteration of a “historic structure,” provided that the alteration will not preclude the structure’s continued designation as a “historic structure.”
What types of improvements might trigger the substantial improvement requirement?
Any work on a building or manufactured home might be determined to be substantial improvement, regardless of the type of work (or what it is called), including FEMA’s 50% Rule When Renovating in a Flood Zone.
Rehabilitation or remodeling of a structure, with or without modifying its external dimensions
Lateral additions that may or may not involve structural modifications of the load-bearing structure of the existing structure
Vertical additions
Repair, reinforcement, or replacement of foundations, including extending existing foundations
Repair of damage of any origin that is necessary to restore a structure to its pre-damage condition
Work on structures that were compliant at the time of construction
Work on existing structures where BFEs, flood zones, or floodways have been revised
What is the basis for determining whether a building or manufactured home is substantially damaged? Is the basis for making a substantial improvement determination different?
When making a substantial improvement or substantial damage determination, the calculation is the same: the cost of the improvement (or the cost to repair to pre-damage condition) is compared to the pre-improvement or pre-damage market value of the structure. FEMA’s 50% Rule When Renovating in a Flood Zone impacts this calculation.
When improvements to a building are proposed, the cost of the work must include all labor and materials necessary to perform the work. The minimum costs necessary to correct previously cited health, sanitary, or safety code violations may be excluded. The market value of the structure is the market value before the improvements are performed.
When repair of substantial damage is necessary, the cost of the work must include all labor and materials necessary to fully restore the structure to its pre-damage condition, even if the owner proposes to perform less work or do the work overtime.
In addition, the value of volunteer labor (including work performed by owners) and donated materials must be estimated. The market value of the structure is the market value before the damage occurred.
How is the 50% Rule Calculated?
Market value refers to the price that a seller of real property can expect to receive from a buyer in a fair and open negotiation. For this determination, only the market value of the building or manufactured home is important (land, land improvements, and accessory structures are excluded).
In addition, the market value must always be based on the condition of the structure before the improvement is undertaken or before damage occurs.
If structures have not been maintained and have deteriorated over time, then the pre-improvement or pre-damage market values are the values as of the date applications for permits are submitted.
How do I Ensure Compliance?
Evaluate Costs: Before beginning any improvement project, assess the cost of your renovations and compare it to the market value of your building. FEMA’s 50% Rule When Renovating in a Flood Zone must be at the forefront of your planning.
Consult Local Officials: Contact your local floodplain manager or building official to understand specific requirements and obtain guidance on how to comply with the 50% rule.
Plan for Compliance: If your improvements exceed 50% of the building’s value, develop a plan to elevate or otherwise modify the structure to meet FEMA’s standards.
Document Everything: Keep detailed records of all costs associated with the improvements, as well as documentation of the building’s market value, to ensure proper compliance and facilitate any necessary insurance or regulatory adjustments.
Conclusion
FEMA’s 50% rule is a critical component of floodplain management designed to protect properties and communities from flood damage. By understanding and adhering to this regulation, homeowners in flood zones of our Charleston area can make informed decisions about renovations and ensure their properties are resilient to future flooding. FEMA’s 50% Rule When Renovating in a Flood Zone must be carefully considered in all such projects.
For more information or assistance with compliance, consult with your local floodplain management office or a professional specializing in floodplain regulations.
