|
FEMA's Flood Mitigation Assistance program is launching a disaster initiative called Swift Current that will distribute funding in alignment with the survivor experience. New Jersey will receive $10M Flood Mitigation Assistance grant funding administered through the New Jersey Office of Emergency Management.
The intent for the Swift Current Initiative is to explore how to make flood mitigation assistance available within the disaster recovery timeframe, for repetitively flooded and substantially damaged buildings insured under the National Flood Insurance Program in advance of the annual grant process.
Back to top.
FEMA is transitioning to a new National Flood Insurance Program insurance policy pricing methodology called Risk Rating 2.0.
Since August 1, 2021 current NFIP policyholders were able to contact their insurance company or insurance agent to learn more about what Risk Rating 2.0-Equity in Action means to them.
On October 1, 2021, new policies were transitioned to Risk Rating 2.0 ratings. Also on this date, existing policyholders eligible for renewal were able to take advantage of immediate decreases in their premiums.
On April 1, 2022, all remaining policies renewing on or after April 1, 2022, will be subject to the new rating methodology.
The following is a link to a 5-minute video provides an overview of FEMA’s new rating methodology.
FEMA is upholding current statutory requirements by:
- Limiting Annual Premium Increases - Existing statutory limits on rate increases require that most rates not increase more than 18% per year.
- Using Flood Insurance Rate Maps for Mandatory Purchase and Floodplain Management - FEMA’s flood map data informs the catastrophe models used in the development of rates under Risk Rating 2.0. That is why critical flood mapping data is necessary and essential for communities. It informs floodplain management building requirements and the mandatory purchase requirement.
- Maintaining Features - FEMA is maintaining features to simplify the transition to Risk Rating 2.0 by offering premium discounts to eligible policyholders. This means:
- FEMA will continue to offer premium discounts for pre-FIRM subsidized and newly mapped properties.
- Policyholders will still be able to transfer their discount to a new owner by assigning their flood insurance policy when their property changes ownership.
- And, discounts to policyholders in communities who participate in the Community Rating System will continue. Communities will continue to earn National Flood Insurance Program rate discounts of 5% - 45% based on the Community Rating System classification. However, since Risk Rating 2.0 does not use flood zones to determine flood risk, the discount will be uniformly applied to all policies throughout the participating community, regardless of whether the structure is inside or outside of the Special Flood Hazard Area. In the past, the majority of the Community Rating System discounts were for properties located within the special flood hazard area. However, the discount will not be extended to non-compliant structures.
The Association of State Flood Plain Managers has also developed interactive maps of estimated first year premium changes for all existing NFIP and single-family home NFIP policies by State and zip code.
Additional Risk Rating 2.0 information is available at the following websites:
Back to top.
Recently, FEMA updated interested stakeholders with progress on the Coastal Restudy that is occurring because of New York City’s appeal of the 2014 preliminary mapping. While this appeal affected the adoption of new coastal mapping along New Jersey’s coastal zone, these 2014 maps are still considered the “Best Available Data” and should be considered along with the effective Flood Insurance Rate Maps in floodplain management and regulation until the restudied coastal draft work maps and new preliminary mapping are released. Interim milestones are as follows: a 2023 release of draft work maps and a 2024 release of preliminary Flood Insurance Rate Maps. Throughout this process, FEMA expects to hold presentations for community officials and the general public before the 2026 release of effective Flood Insurance Rate Maps. This release will require ordinance adoptions to reference the updated maps.
The Coastal Restudy website and latest newsletter are available at the links below.
Back to top.
Enforcing substantial improvement and substantial damage, while difficult, may not be perceived as the equity problem that it is. When performed impartially and consistently, a community’s permit program fairly and responsibly requires that when property owners invest in their structures or have damages over the 50% market value threshold, they are required to elevate those structures in accordance with the community’s flood damage prevention ordinance. This means that any investment and equity-building over the substantial improvement thresholds also reduces the potential for flood damage as these large-scale improvements are made and insurance claim payouts are received by affected property owners.
Failing to impartially and consistently enforce floodplain management regulations for substantial damage and improvement may result in communities seeking costly Federal or State-funded mitigation solutions after severe and repetitive flood events if they do not require elevations when substantial damage and improvement thresholds are reached. Participating National Flood Insurance Program communities should be aware that FEMA does not provide an option to avoid compliance with the substantial damage and improvement regulations even when improvements and repairs (i.e. ordinary maintenance and minor work) do not require Uniform Construction Code construction permits. Back in the 1980’s Congress enacted legislation to require that the NFIP include substantial damage and improvement floodplain management responsibilities for participating communities as a resiliency measure to reduce floodplain risk and decrease Federal subsidies to the NFIP insurance program. Congress envisioned that these subsidies would be reduced over time and that the costs of adaptation would be a shared responsibility with property owners. Unfortunately, floodplain risk and event frequency has increased nationwide even as FEMA has provided more mitigation opportunities. Also, the NFIP – originally conceived to be self-sustaining – owes the US Treasury in excess of $20.5B (as of 2020) not including funding for recent disasters such as Hurricane Ida.
Since the 1980’s, substantial damage and improvement determinations were included in 44 CFR Part 60 and communities are tasked with ensuring that floodplain risk reduction costs and responsibilities are fairly shared with property owners. While not envisioned back in the 1980’s, sea level rise and climate change adaptation are straining local government expenditures. In addition to addressing the needs of impacted property owners, these communities will also have to make large investments to build municipal infrastructure more resiliently to maintain functionality and ensure post-flood continuity of local services. The bonding costs of these large infrastructure investments are usually shared among all property owners regardless of whether they are located in a regulated floodplain. Non-federal costs shares necessary to address private property mitigation also add to this burden.
Fortunately, Congress and FEMA recognize that many structures were built in floodplains prior to the adoption of FEMA Flood Insurance Rate Maps and there has always been individual assistance, public assistance, and mitigation grant funding provided to address flood damage after a presidentially-declared disaster. However, this funding is limited. FEMA Individual Assistance is not intended to make affected underinsured and uninsured property owners and renters “whole” after disasters and only covers the basic needs to make structures safe, sanitary and functional. NFIP and private market insurance carried by property owners is also subject to policy deductibles and coverage limits that require property owners to also fund a portion of their disaster recovery costs. Unfortunately, this means that without permanent solutions to reduce flood risk, affected individuals endure a build-back and flood loss cycle that negatively impacts their financial security.
Congress also envisioned that when a property is declared substantially damaged, property owners could access $30K in Increased Cost of Compliance funds through their NFIP flood insurance policy that they can either use to elevate, retrofit, or relocate their property. Or, alternatively, the property owner could assign the Increased Cost of Compliance payout to the community to fund a non-federal cost share for a federal mitigation grant to cover structure mitigation, relocation or even property buyouts. In communities where multiple flood events do not individually exceed 50% of the structure’s market value, FEMA also allows property owners to access these funds if their community has included repetitive loss language in their ordinance so that repetitively-impacted properties can be declared substantially damaged. This funding, which advocates have petitioned Congress to increase, is a way for residents and communities to break the build-back and flood loss cycle.
Unfortunately, impacted property owners whose properties are severely impacted but are not declared substantially damaged by their community often find that they are ineligible for mitigation programs such as FEMA’s Swift Current. These property owners must then prod their communities perform their substantial damage responsibilities under the NFIP so that they may access Increased Cost of Compliance funding under their NFIP insurance policy and then prod the community to apply for mitigation grant funding. To address limited local resources after presidentially-declared disasters, FEMA now provides public assistance funding for communities to perform these determinations after a disaster with a 75% reimbursement and 25% non-federal cost share if these responsibilities are performed within 6 months of the disaster.
The failure to perform substantial damage reviews and submit them to the Bureau of Flood Engineering within this 6-month period has a cascading effect on the State of New Jersey’s ability to properly estimate the amount of federal funding necessary for impacted property owners to recover after a flood event. After an event, the Bureau shares substantial damage data with other State entities to quantify the “unmet need” funds that the State can seek after a presidentially-declared disaster. After Ida, the Bureau and FEMA provided a significant amount of outreach and substantial damage training to communities, yet some towns were hesitant or unfamiliar with the process even as affected property owners in these communities were calling State agencies for access to mitigation funding. These communities can miss out on programs like FEMA’s new Swift Current pilot because it prioritizes funding for substantially damaged properties. With limited mitigation resources and the reluctance of municipalities to perform substantial damage reviews after each flood, the build-back/ flood loss cycle only worsens for repetitively impacted property owners.
Having a fair, consistent, and equitable substantial damage and improvement decisions process is also important for another reason. Currently, New Jersey does not have a real estate disclosure regulation for flood damaged or substantially damaged/substantially improved structures in need of mitigation. This results in unsuspecting property owners buying properties at market values that do not reflect the cost of any structure elevation or retrofitting that may be required pursuant to a community’s floodplain management decision-making. All too often, these non-compliant structures are bought out of foreclosure, bought with cash, or are flipped by speculators after performing cosmetic renovations which may be considered ordinary maintenance in accordance with the Uniform Construction Code. When this occurs, any required elevation or retrofitting then becomes the new buyer’s responsibility. Improving the transparency of a community’s substantial damage and substantial improvement decision-making at property transfer will improve the resiliency of a community’s building stock as flooding becomes more frequent. Ready access to a property’s non-compliance history will also allow the property’s market value to include the cost of making non-compliant structures more resilient just as Congress envisioned back in the 1980’s.
Back to top.
This image was taken during a Substantial Damage determination training for Disaster Assistance Response Team volunteers that was put on by the DEP and FEMA following Hurricane Ida.
FEMA regulations are the minimum standards nationwide for over 23,000 communities. To better communicate National Flood Insurance Program regulations, FEMA developed a list of costs that must be included in substantial damage and improvement determinations which is found in the FEMA Substantial Improvement/Substantial Damage Desk Reference P-758. This list starts on page 4-5 and ends on 4-7. These include the following items:
- Materials and labor, including the estimated value of donated or discounted materials and owner or volunteer labor
- Site preparation related to the improvement or repair (e.g. foundation excavation or filling in basements)
- Demolition and construction debris disposal
- Labor and other costs associated with demolishing, moving, or altering building components to accommodate improvements, additions, and making repairs
- Costs associated with complying with any other regulations or code requirement that is triggered by the work, including costs to comply with the requirements of the Americans with Disabilities Act
- Costs associated with elevating a structure when the proposed elevation is lower than the Base Flood Elevation
- Construction management and supervision
- Contractor’s overhead and profit
- Sales taxes on materials
- Structural elements and exterior finishes including:
- Foundations (e.g. spread or continuous foundation, footings, perimeter walls, chain walls, pilings, columns, posts, etc.)
- Monolithic or other types of concrete slabs
- Bearing walls, tie beams, trusses
- Joists, beams, subflooring, framing, ceilings
- Interior non-bearing walls
- Exterior finishes (e.g. brick, stucco, siding, painting, and trim)
- Windows and exterior doors
- Roofing, gutters, and downspouts
- Hardware
- Attached decks and porches
- Interior finish elements, including:
- Floor finishes (e.g. hardwood, ceramic, vinyl, linoleum, stone, and wall-to-wall carpet over subflooring)
- Bathroom tiling and fixtures
- Wall finishes (e.g. drywall, paint, stucco, plaster, paneling, and marble)
- Built-in cabinets (e.g. kitchen, utility, entertainment, storage, and bathroom)
- Interior doors
- Interior finish carpentry
- Built-in bookcases and furniture
- Hardware
- Insulation
- Utility and service equipment, including:
- Heating, ventilation, and air conditioning (HVAC) equipment
- Plumbing fixtures and piping
- Electrical wiring, outlets, and switches
- Light fixtures and ceiling fans
- Security systems
- Built-in appliances
- Central Vacuum systems
- Water Filtration, conditioning, and recirculation systems
It should be noted that this guidance document also contains a list of costs that may be excluded from Substantial Improvements and Substantial Damage Determinations on page 4-7 which includes but is not limited to:
- Landscaping
- Irrigation
- Sidewalks
- Driveways
- Fences
- Yard lights
- Swimming pools
- Pool enclosures
- Detached accessory structures (e.g. garages, sheds, and gazebos)
- Costs required for the minimum necessary work to correct existing violations of health, safety, and sanitary codes.
Back to top.
Some communities have expressed an interest in removing the “ordinary maintenance and minor work” language from the ordinance. To help clarify why this language is in an ordinance that is intended to coordinate with the Uniform Construction Code, some background information on the National Flood Insurance Program requirements, discussed above, was necessary to include in this newsletter. Additionally, with the move to the Code Coordinated Ordinance model, it became necessary to clarify the roles and responsibilities of Floodplain Administrators under the NFIP regulations and Construction Officials under the Uniform Construction Code regulations. To do this, it is important to understand how substantial damage and substantial improvement is implemented nationwide and within New Jersey.
Unlike many States and NFIP participating communities across the country, New Jersey has adopted the Uniform Construction Code to regulate all structures through the issuance of construction permits and bases this code on the national codes such as the International Construction Codes (the “I-Codes”). Historically, it has been well established that “ordinary maintenance” does not require a Uniform Construction Code permit. Also, in 2018, “prior approval” was deleted from the “minor work” definition in the rule and some items were added or shifted between categories requiring a Uniform Construction Code permit. The following describes these rule definitions and is provided for informational and comparison purposes with the NFIP substantial improvement regulations. Floodplain administrators and permit applicants are encouraged to view these sections of the Uniform Construction Code online.
Back to top.
Another image from the recent Substantial Damage determination training hosted by the DEP and FEMA in Little Falls, New Jersey. Here the group is reviewing how to utilize FEMAs Substantial Damage Estimator Tool.
In addition to providing a list of items that are not included as ordinary maintenance, section 2.7 of the Uniform Construction Code provides an extensive list of activities which do not require construction permits. Many of these items are commonly performed, replaced, or repaired after flood events and include labor costs necessary to perform this “ordinary maintenance” which are regulated under the National Flood Insurance Program. This list is located in Subchapter 2 of the Uniform Construction Code. This list provides for building-related items such as:
- Exterior and interior painting
- Installation, repair, or replacement of interior finishes of less 25% of the wall area in a one- or two-family dwelling including plastering, paneling, and drywall installation
- The replacement of any window or door, including garage doors without altering the dimensions or framing including storm windows and storm doors
- The repair or replacement of any non-structural component such as a non-load bearing partition and a railing, built-in or attached furnishings, bookcases, equipment or accessories such as cabinets, benches, or seats, and bathroom accessories
- The repair, replacement of any:
- Interior or exterior trim, decoration, or moldings
- Flooring material with new flooring
- Roof coverings on detached one- and two-family dwellings
- Existing siding on one- and two-family dwellings (except for polypropylene siding which is not ordinary maintenance)
- Existing siding with a like material not exceeding 25% of the total building exterior wall area in other than one- and two-family dwellings (except for polypropylene siding which is not ordinary maintenance)
- Any part of a porch, deck, or stoop that does not provide structural support for any roof or portion of a building
- Screens
- Insulation, except foam plastic insulation when installed adjacent to or not more than one and a half inches from an interior finish
- Exterior gutters and leaders
The Uniform Construction Code also includes more detailed ordinary maintenance regulations for plumbing, electrical, fire protection, HVAC, and elevators – all of which may have elements subject to NFIP substantial improvement regulatory compliance for labor, materials, and equipment cost review and are likely to be impacted after flooding. Floodplain administrators, in consultation with their community’s Construction Official should work in harmony to compare FEMA’s substantial improvement list with the Uniform Construction Code’s ordinary maintenance list to determine whether work being performed without a construction permit is of a magnitude that triggers substantial improvement permitting thresholds (or cumulative substantial improvement thresholds if the community has elected to implement higher floodplain standards). It is also important that the Floodplain Administrator track and document extensive ordinary maintenance work that may precede or be concurrent with permitted construction work to ensure that vulnerable structures in the floodplain are mitigated when they reach the 50% substantial improvement thresholds. Floodplain administrators should also be cognizant of their responsibility to perform timely substantial damage reviews post-disaster by calculating the cost of any ordinary maintenance improvements including labor, materials, and equipment proactively and by not relying on Uniform Construction Code construction permitting or insurance damage claims, which are inadequate for properly calculating substantial improvements.
Back to top.
The issuance of a permit for minor work is not required as a “prior approval” before work begins but a permit must be obtained within 5 business days. By including the requirement for an evaluation of minor work prior to the issuance of a flood damage prevention permit in the ordinance, Floodplain Administrators are able to evaluate the project and determine if structure mitigation is necessary. Even though a Uniform Construction Code construction permit is not required before the work begins, either oral or written notice must be given to the community’s Uniform Construction Code Construction Office that includes a brief summary and the location of work within that 5 day period. This notice also allows the Uniform Construction Code Construction Official to enter and inspect in the same manner as a permit application. In addition to the notice, a permit application must still be filed with the Uniform Construction Code Construction Official. If after inspection, the work is acceptable, the Uniform Construction Code Construction Official issues a certificate of approval that states that whatever work was visible at the time of inspection substantially complies with the Uniform Construction Code.
While the minor work Uniform Construction Code permitting process is concurrent with the start of the project, the notice of the work can be flagged by the Uniform Construction Code Construction Official if performed in the Special Flood Hazard Area and referred for further review by the Floodplain Administrator. Either the Uniform Construction Code Construction Office or the Floodplain Administrator can also provide notice to the owner, architect, or contractor that structure mitigation may be required in addition to the work that is proposed to be performed pending further review and permitting by the Floodplain Administrator.
Minor work is well defined in N.J.A.C. 2.17A(c) and includes many activities that trigger an analysis of both labor costs, materials utilized, and equipment replaced and installed. Ideally, contractors and residents should be aware that a property is in the floodplain and should elevate vulnerable attendant utilities such as air conditioning units and furnaces above the Local Design Flood Elevation required by the community’s flood damage prevention ordinance rather than replace them in kind. Additionally, Floodplain Administrators must ensure that their substantial damage and improvement process encourages replacements and repairs of attendant utilities above the local design flood elevation for voluntary elevation and requires property owners elevate them when substantial improvements over the 50% threshold is reached. The list of minor work includes but is not limited to:
- Construction or renovation of any porch or stoop that does not provide structural support for any roof or portion of a building.
- Renovation or alteration in an existing one or two-family dwelling, provided that no primary structural members are altered in any way, and further provided that the work does not constitute reconstruction.
- Repair or replacement with no reconfiguration of space of any non-structural component such as a partition in structures other than on and two-family dwellings:
- Repair and/or renovation work in any Group B, F, M, or S occupancy (not including one- and two-family dwellings) which are not categorized as “ordinary maintenance”
- Replacement of
- Existing plumbing work with new and approved material of like capacity
- Installation of drinking fountains and condensate drains
- Replacement of existing water heaters of like capacity
- New installation of additional fixtures in the existing space of dwellings with no increase in the size of the water distribution system, water service, or house drain.
- Existing low-pressure boilers, warm air furnaces, air conditioning units of like capacity
- New electrical work incidental to the installation of air conditioning, equipment, clothes dryers, ranges or ovens in one or two family dwellings
- Installation of five or fewer outlets where existing circuits and/or available space for circuits and service are adequate to support the load in one- or two-family dwellings
- Minor work shall include the installation of:
- Fire detection or suppression device in any one- or two-family dwelling
- Radon mitigation system with certain conditions
- Installation of a burglar alarm, security system, or doorbell in structures other than a one- or two-family dwelling with an exception for controlled, delayed, or sensor released egress doors
- Installation of communications wiring in any Class 1, 2, or 3 structure involving the penetration of a fire-resistance rated assembly
- Any change of an existing transmission means from a digital alarm communicator transmitter to a fire alarm supervising station.
Top of page
Image of the inside of a home following Hurricane Ida in Little Falls, New Jersey. This home was used as an example to teach Disaster Assistance Response Team volunteers how to do Substnatial Damage determinations.
After Superstorm Sandy, FEMA’s Mitigation Assessment Team developed a report entitled “FEMA P-942: Hurricane Sandy in New York and New Jersey Mitigation Assessment Team Report” which evaluated post-disaster structural damage and floodplain management effectiveness in both states. On Page 7-4 of this report, FEMA made the following observation:
“Local officials in New Jersey and the regulated public are expected to resolve the differences between three sets of rules: the Flood Hazard Area Control Act rules, the flood provisions of the UCC, and locally adopted flood damage prevention ordinances.”
The report also provides additional background information in Section G.1.1 of Appendix G. Noted in this section was the observation that the Bureau of Flood Engineering’s model ordinances were compliant, however, FEMA subsequently performed a more comprehensive review of the ordinances and provided additional suggestions. These were accommodated in the development of the Riverine and Coastal Model Code Coordinated Ordinances. Also noted in this section FEMA’s concerns about local floodplain enforcement and the Uniform Construction Code which were as follows:
“Because communities are also responsible for enforcing the UCC, and because, in general, the more restrictive of local ordinances and the UCC prevails, there is a potential for conflict that must be resolved by local officials—the local floodplain administrator and the local construction official who is responsible for enforcing the UCC (see Section G.1.2 for more information on enforcing the UCC).”
In Section G.1.2, Building Codes, FEMA notes that all communities in the State are required to enforce the Uniform Construction Code using construction permits and specifically notes: “There are some exceptions to the permit requirements, such as for ordinary maintenance, which includes routine repair.”
FEMA also mentions in the G.1.2 UCC Administration and Enforcement of Codes (N.J.A.C. 5:23, Subchapter 2) that “The rule is clear that [construction] permits are required except for ordinary maintenance, and that “no provision of any municipal zoning or other municipal code shall conflict, govern, or have effect. Where the provisions herein specify requirements with respect to location, use, permissible height, and the municipal zoning code establishes requirements as well, then the more restrictive requirements of this code or the zoning code shall govern.” Because floodplain management including substantial damage and substantial improvement determinations are regulated under local Flood Damage Prevention Ordinances and affect property use, location, and height, these determinations by the floodplain administrator would be considered “prior approvals” under the Uniform Construction Code. The inclusion of “ordinary maintenance and minor work” in the ordinance was placed there in accordance with Recommendation 3 of the MAT report which stated:
“Recommendation 3. NJDEP should evaluate FEMA model floodplain management ordinance: The NJDEP should evaluate the model floodplain management ordinance that is being developed by FEMA that is specifically written to coordinate with building codes and consider its merits related to reducing duplicative and potentially conflicting requirements. Adopting a coordinated ordinance will enhance local enforcement.”
It is solely the responsibility of the Floodplain Administrator and not the community’s Construction Official to have a process that determines whether any ordinary maintenance and minor work performed in a regulated floodplain needs an evaluation under a flood damage prevention permit. This is confirmed by language in the Uniform Construction Code which specifically discusses this requirement. N.J.A.C. 5:23-6.3A states that "any work that constitutes a substantial improvement or repair of substantial damage of an existing building as determined by a floodplain administrator, shall comply with the applicable flood resistant construction requirements..." The sections that require flood resistant construction are given within this section. Generally, each of these sections have been modified to require that the American Society of Civil Engineers Standard for Flood Resistant Design and Construction, ASCE 24-14 be followed. Compliance with this section requires that structures and attendant utilities be elevated above the Design Flood Elevation (or Local Design Flood Elevation if a community’s Flood Damage Prevention Ordinance is more stringent than the Flood Hazard Design Flood Elevation plus applicable factors of safety and freeboard).
While necessary, many Floodplain Administrators commented during the rollout of the model ordinance that the inclusion of “ordinary maintenance and minor work” has become increasingly difficult to enforce now that these items are except from Construction Permits. However, in the Uniform Construction Code section on minor work (N.J.A.C. 5:23-2.17A(a)), it states that “The issuance of a permit shall not be required before minor work may proceed. The owner or an architect or contractor acting on behalf of the owner, shall, however, provide notice of the work to the enforcing agency (the Community’s Construction Office) before work begins.” The reality is that sometimes there is work performed without the required Uniform Construction Code or flood damage prevention permits and that most work performed by property owners on a yearly basis will not trigger the 50% substantial improvement threshold for mitigating a structure. The difficulty in enforcing substantial improvements without construction permits or items that do not require Uniform Construction Code permits is noted and Floodplain Administrators may have to regularly drive around the community’s floodplain looking for evidence of substantial improvements to enforce floodplain ordinance permitting requirements. This challenge is not unlike those experienced by Construction Officials when work is performed without the required construction permits. Fortunately, Floodplain Administrators can enforce the need for substantial improvement reviews through the model ordinance’s violations section using N.J.S.A. 40:49-5 and do not have to rely on stop work orders from the Construction Official. The inclusion of Uniform Construction Code references and the words “including ordinary maintenance and minor work” in the model ordinance ensures that the ordinance is NFIP-compliant and coordinates with the Uniform Construction Code as intended by the code-coordinated ordinance and recommended in FEMA’s Post-Sandy Mitigation Assessment Team report. It provides the municipality with the ability to address the importance of adapting structures gradually over time, breaking the build-back and flood loss cycle, and reducing the need to fund non-Federal cost-shares for mitigation projects.
FEMA has indicated in ordinance rollout sessions that there is flexibility for a Floodplain Administrator to only require permits under certain conditions so that homeowners aren’t applying for permits that are well under the 50% threshold (e.g. doorknobs, light switches, changing out the front door, etc.) provided that the community documents its policies and keeps accurate records.
For example, while a roofing, siding, windows, kitchen, bathroom cosmetic replacement project costing $90K would not exceed the threshold in communities where the market values of houses are in excess of $400K, that project would require a substantial improvement and mitigation (e.g. elevation, relocation, buyout) in communities where small houses are valued starting at $170K. Because not every New Jersey community will have the same housing stock values, a market-value-driven policy approach that sets thresholds amounts for substantial improvement reviews is a recommended strategy for communities to consider when developing their substantial improvement review process. In the towns with the higher market values, maybe the threshold for determining substantial improvements begins when the total project costs within the period of accumulation (1 year, 5 years, 10 years, or even life of the structure) reach 25% of market value or $100K, whichever is more stringent. If community develops a permitting policy based upon market values or another mechanism, this policy should be in writing and communicated to residents as part of the Flood Damage Prevention permitting process. Also, communities considering regulating repetitive loss by including specific language in ordinances (see below), should consider even more stringent substantial improvement review permitting thresholds or market value percentages.
Managing substantial improvements is an important floodplain management responsibility. Enforcing substantial damage and improvement regulations is a cost-effective and equitable strategy for ensuring that a community’s building and housing stock becomes more resilient to flood events over time and is worth protecting and servicing with public infrastructure funded with taxpayer funds. As predicted by numerous climate impact studies, future public infrastructure costs will include road elevations, stormwater improvements and pump stations, higher bulkheads, beach replenishment and other infrastructure improvements. Substantial damage and substantial improvement regulation ensures that the costs of adaptation are shared among both taxpayers and private property owners from within the Special Flood Hazard Area. Ideally, performing substantial damage and improvement reviews would be a rare occurrence but they are either driven by flooding or other substantial damage to the structure or by the property owner’s willingness to increase the value of their structure in a regulated floodplain. Including ordinary maintenance and minor work in these ordinances not only ensures NFIP compliance but also ensures that those properties in the Special Flood Hazard Area that benefit from Federal and State public infrastructure funding will be fairly and compliantly evaluated for substantial improvement thresholds as agreed to by the participating NFIP community.
Back to top.
Recently, the Coastal and Riverine New Jersey Model Code Coordinated Ordinances were updated to include optional language that gives municipalities the option to regulate repetitive loss damage costs as substantial improvements. This higher standard will allow residents who have received National Flood Insurance Program claim payouts from two flood events totaling 25% or more of the market value of the structure within a 10-year period to receive Increased Cost of Compliance coverage from their insurance policy for a combined total of 50% of the structure value. The funds can only be used by the property owner for four types of mitigation activities: mitigation (elevation or retrofitting if appropriate), relocation, acquisition, or demolition.
These funds may also be assigned by the property owner to the community so that the community can utilize these funds to support a community mitigation grant implementing a mitigation, relocation, acquisition, or demolition project. FEMA will count the Increased Cost of Compliance claim monies as non-Federal matching funds when applying for mitigation grants, because Increased Cost of Compliance coverage is a direct contract between the policyholder and the insurer. The community can then use FEMA mitigation grant funds to help pay for any additional portion of the grant’s mitigation costs on a structure that is more than the individual’s Increased Cost of Compliance claim payment. It should be noted that individual participation in a FEMA-funded community mitigation project is voluntary and when a property owner assigns their Increased Cost of Compliance funds to a mitigation project, the community is required to provide grant mitigation funds to support mitigation of the participating property owner’s structure.
While the combined repetitive loss damage total must be 50 percent of the value of the building before the damage occurred, it does not need to be evenly distributed across two events. So, if the repetitive loss damage was 35 percent of the value of the building in the first event and 15 percent of the value of the building in the second event, the policyholder would qualify for Increased Cost of Compliance coverage.
To encourage communities to consider maximizing the use of Increased Cost of Compliance coverage to fund resiliency efforts, these updated ordinance models now include the following optional higher standard language:
- Inclusion of a definition for Repetitive Loss which is defined “as any flood-related damage sustained by a structure on two separate occasions during a 10-year period for which the cost of repairs at the time of each such flood event, on the average, equals or exceeds 25 percent of the market value of the structure before the damage occurred.”
- A modification of the definition of Substantial Improvement to include “This term also includes structures which have incurred “repetitive loss” or “substantial damage”, regardless of the actual repair work performed.”
- Additional language in Section 103.14.4 Substantial improvement and substantial damage determination that states: “This determination shall also include the evaluation of flood related damages over a 10-year period to determine if the costs of repairs at the times of each flood constitutes a repetitive loss as defined by this ordinance.”
All language is highlighted in a darker teal blue rather than the light blue highlighting, signifying that this higher standard is achieved only by ensuring that the language in all three sections is adopted.
Additional information is available on the Increase Cost of Compliance Coverage is available in FEMAs Increased Cost of Compliance Fact Sheet.
For towns that experience repetitive flooding in towns with high structure market values, including repetitive loss language that will trigger substantial improvement of repairs totaling 50% of market value after two or more flood events within a 10-year period. Post-Ida, some homes that also lost foundations in a 2018 flash flooding event were not declared substantially damaged due to high
Back to top.
|
