Substantial Improvement/Damage Requirements

City Ordinance § 160.03 defines Substantial Improvement as any reconstruction, rehabilitation, addition, or other improvement of a structure, the cost of which equals 49% or less of the market value of the structure before the “start of construction” of the improvement. This term includes structures which have incurred “substantial damage” regardless of the actual repair work performed. (The term does not include improvements of structures to correct existing violations of state or local health, sanitary, or safety code requirements or any alterations of a “historic structure”, provided that the alteration will not preclude the structures continued designation as a “historic structure”).

A substantially improved structure must be brought into compliance with NFIP regulations and other requirements in the local ordinance for new construction; that is, the structure must be elevated (or floodproofed if it is a non-residential structure) to or above the 100-year or base flood, and meet other applicable requirements.

If a structure is substantially damaged or otherwise substantially improved, it becomes a Post-FIRM building and is actuarially rated based on its risk of flooding. The rate is established based on the elevation of the structures lowest floor in relation to the base flood elevation (BFE). If the lowest floor is elevated to or above the base flood elevation (or floodproofed in non-residential) in accordance with the community’s floodplain management regulations, the resulting premium in an A-zone will generally be lower than a premium calculated based on Pre-FIRM rates.

If the structure is rebuilt in violation of the community’s floodplain management regulations and not elevated to or above the base flood elevation (or floodproofed in non-residential), the Post-FIRM rates and premiums will be significantly higher than Pre-FIRM rates and premiums. For substantially damaged structures which have their lowest floors several feet or more below the base flood elevation, the annual premium could increase to thousands of dollars.

Substantial improvement requirements apply to two different types of structures: all existing (Pre-FIRM) structures; these structures were already present at the time a community adopted a floodplain management ordinance and a Flood Insurance Rate Map (FIRM) allowing it to enter the Regular Phase of the NFIP. Many existing structures do not meet Program building requirements but are “grandfathered” into the program. Secondly, new construction (Post-FIRM) structures in communities that have undergone map revisions resulting in areas with more restrictive zone designations (e.g. A-Zone to V-Zone) or increased base flood elevations. Substantially improved Post-FIRM structures located in areas affected by map revisions must be brought into compliance with regulations applicable for the zone designations and base flood elevations which became effective after the structure was built.

Structures are substantially improved in one of four ways: 1) Rehabilitations – improvements made to an existing structure which does not affect the external dimensions of the structure; 2) Additions – improvements that increase the square footage of a structure; 3) Reconstruction – cases where an entire structure is destroyed by damage or is purposefully demolished or razed and a new structure is built on the old foundation or slab; 4) Substantial Damage – structures that are considered substantially damaged due to a disaster, and the damages are repaired (recognized as improvements).

The criteria for determining substantial damage is the ratio of the cost of repairing the structure to it’s before damaged condition to the market value of the structure prior to the damage. This is ultimately the responsibility of the Planning Department to assure that market value estimates are reasonably accurate and that the cost estimate reasonably reflects the actual costs to fully repair the damage and make any other improvements to the structure.

Reference

FEMA – 213 (May 1991) Answers to Questions About Substantially Damaged Buildings
(A copy of this publication is located in the Anderson Public Library Reference Section along with other flood information)