FEMA’s 50% Rule and You

The 50% Rule is a National Flood Insurance Program (NFIP) regulation which states that structures whose lowest living floor does not meet or exceed the current required Base Flood Elevation (BFE) specified on the Flood Insurance Rate Map (FIRM) may not be substantially improved.

In simpler terms it means any structure that is to be improved or has been damaged by any cause for which the renovations or repairs will cost 50% or more of the assessed building value must be elevated and brought into compliance with the existing FIRM. Further, it means if the lowest habitable level of your home is below the current BFE, you must raise that level above the BFE or you may only complete renovations or repairs to your home for the cost of 50% of the structures assessed value. For example: If your home is worth $200,000 you may perform renovations not to exceed $100,000.

Here are some frequently asked questions about FEMA’s 50% Rule and how they may apply to you, especially if you are currently living in a flood zone neighborhood.

• What constitutes a “Substantial Improvement’? Substantial improvement is any reconstruction, rehabilitation, addition, or other improvement to a structure whose cost exceeds 50% of the market value of the structure before the start of construction of the improvement. Items such as plans, specifications, surveys, building permits, architectural fees, contractor profit & overhead are exempt. Also improvements to the land such as; driveways, pools, seawalls, etc. are not included in the 50% rule value.
• What is the market value of my home? Market value is the assessed value or depreciated appraised value of the structure. The City of St. Petersburg determines the market value by either adding 20% to the Pinellas County assessment for ad valorem taxation for the structure only or the home owner can provide an independent appraisal for the structure only, prepared and certified by a Florida licensed appraiser.
• Are substantial improvements cumulative? Yes. In St. Petersburg you can complete a renovation to your home based on its current market value. Once that renovation is complete you can have an updated appraisal of the newly renovated structure performed and then begin a second renovation based on 50% of the new appraisal value.
• How is the value of an improvement determined? St. Petersburg uses a form for additions and modifications specific to 50% Rule applications that must be completed and signed by the contractor or owner-builder. This form includes copies of the construction contract and subcontractor bids. Based on the answers and information provided, the city evaluates the cost of improvements to determine if they are fair and reasonable.
• How do you find out the elevation of the lowest floor of your house? To determine what elevation a structure was built at you need an elevation certificate. You can visit www.stpete.org to ascertain if there is an elevation certificate on record. If there isn’t one on record you will need to contact a state registered land surveyor to provide an updated elevation certificate.

If you have other questions or need additional information, please call me at 727. 686.2859 or E-mail me at Estelia@kw.com