By Justin Archer
Areas prone to hurricane damage must keep a vigilant mindset. When the first update of a tropical storm developing is issued, most don’t want to think that it’s going to impact them directly, or better yet it won’t even make landfall and just fizzle out. But as the storm approaches and the hurricane’s projected path becomes more defined, decisions must be made. Windows get boarded, emergency shelters are identified, and risk evaluations of remaining home or evacuating, while leaving belongings unattended and taking on unplanned travel expenses, are done.
Then the hurricane makes landfall, reports and images of the damage done start popping up on the news and social media. For many, the hard part has just begun as the recovery phase begins. What can be salvaged? What needs to be discarded? When will power be restored? How long are the roads going to be impassible? Did work get hit too? One of the more harrowing dilemmas to deal with is how does the damage to my home get repaired and who is paying for it? This is where many turn to the Federal Emergency Management Agency (FEMA) for assistance, but the FEMA policies on how assistance is given are not as apparent as some would assume as FEMA’s assistance is guided by their 50% Rule.
Here's what RGA has found and our thoughts on FEMA's 50% Rule. Plainly, the 50% rule says that if structural damage is estimated to be 50% or greater compared to the appraised value of the building (not including the land it's built on) then the structure must be rebuilt to meet all current codes. If the estimated costs are below 50%, structural repairs are allowed to conform with most of the codes at the time of original construction. This evaluation includes the estimated cost of labor and materials. These two ideas take some interpretation and understanding of the process to be completely aware of what this would mean to a property owner.
First, we need to cover how 50% is determined. There has been some recent debate between governing officials about how this should be determined. The most recent determination comes from a letter from FEMA issued on February 17, 2023 to the mayor of Fort Myers Beach. Using this, there have been two methods used to establish property value. One method is using the County property appraiser's website to see the listed "building value". We have found that, in some cases, this value is not listed on the website depending on the property being viewed. This would force the second method of determining the actual cash value (ACV) of the structure by having an evaluation by a private certified general appraiser to find the pre-damage building value.
One scenario is finding the structure to be over 50% evaluation. In the case of areas affected by hurricanes, this typically means the issue is centered on if the structure was built above the Base Flood Elevation (BFE) or not. If not, the requirement is to either raise the foundation of the structure or demolish and rebuild the lowest occupiable level above the BFE. In this, there is a separation between occupiable areas and common areas. The Florida Building Code (FBC) defines occupiable space as "[a] room or enclosed space designed for human occupancy in which individuals congregate for amusement, educational or similar purposes or in which occupants are engaged at labor, and which is equipped with means of egress and light and ventilation facilities meeting the requirements of [the FBC]." The Fort Myers Beach website simplifies this to say, "only parking, building access and storage is allowed below the flood level."
The alternative scenario is the structure did not hit the 50% threshold of estimated repair cost. This would allow the structure to be repaired without having to elevate the structure above the BFE. The Fort Myers Beach website says, "the existing structure can be repaired as is, provided all construction was permitted and code-compliant in your flood zone originally, without elevating the structure." Yet, with this, property owners need to be aware that repair and restoration will still have to be approved through the local building department's permitting process, which is guided by the FBC. This may sound to be conflicting with the direction of being able to repair as is, but it does not if the intent is understood. When evaluating a structure affected by a natural disaster, an owner will be dealing with two separate organizations, FEMA and local government. The 50% rule is derived from FEMA, and their objective in restoration is to rebuild structures that can withstand the next natural disaster. When dealing with flood and hurricane prone areas, this is where establishing the BFE comes into play. Ensuring the structure can avoid flood damage is FEMA's primary focus. Structural issues outside of disaster prevention are left to local government, and that is guided by the building department. The building department is still going to hold their permitting process, disaster or not. Even if the structure is not required by FEMA to be elevated above BFE, the FBC had direction on what is required for restoration, existing buildings, and compliance to the current code. Following these guidelines is required for permit approval.
This is a reality that property owners do not always want to acknowledge, but there is no way around it, and for many it will create financial hardships on top of an already devastating loss. In an article by USF's Gabriella Paul, she interviewed a homeowner that faced this concern of not being able to rebuild. The issue involved not having enough insurance coverage to demolish the existing structure and rebuild to be BFE compliant. The homeowner expressed concerns of properties being sold to opportunist investors in lieu of facing the financial burden to rebuild. This seems that it could be a real estate strategy used in areas previously hit by natural disasters.
In similar history, Hurricane Michael was a Category 5 storm that hit Mexico Beach, FL along the panhandle in October of 2018. On April 26, 2019, FEMA released a fact sheet showing that 13,616 survivors did not provide necessary information for FEMA assistance. 53,000 survivors were connected to disaster resources for needs "beyond what FEMA can provide." This may translate that people chose reselling and relocation instead of rebuilding. Referencing this area through Google maps one can see new structures replacing those damaged by the hurricane.
Nobody wants to be faced with the decision making and added burdens that come with recovering from a natural disaster. But having the right information can make some of that easier. By looking at past events we can anticipate what to expect, and by knowing how governing bodies move and function we can have a better understanding of the logic used in handling our situation. Hopefully this information can relieve some of those burdens and make some decisions easier to make. At RGA, we want to assist those who are in need the best way we can.
FEMA - Answers to Questions About Substantially Improved/Substantially Damaged Buildings
Substantial Improvement/Substantial Damage Desk Reference
FEMA - Recovery at a Glance - Bay County
2020 Florida Building Code, 7th Edition
USF Article - FEMA's 50% rule could make it more expensive for homeowners to rebuild after Hurricane Ian