Substantial Improvement or Repair of Substantial Damage - SI/SD
The National Flood Insurance Program (NFIP) includes a requirement that new buildings and substantially improved buildings be constructed in ways that minimize or prevent damage during a flood. This requirement grew out of the recognition that there were large numbers of buildings already located in flood-prone areas that would continue to be subject to damage.
The SI/SD requirement is similar to common zoning and code requirements that address non-conforming uses and structures. The non-conformance is allowed to continue until a triggering event occurs, such as a change in use or a proposal to undertake significant physical alterations.
The purpose of the SI/SD requirements is to protect the property owner’s investment and safety, and, over time, to reduce the total number of buildings that are exposed to flood damage, thus reducing the burden on taxpayers through the payment of disaster assistance. The SI/SD requirements are triggered when the local official determines that the cost of repairing or improving a building in an SFHA equals or exceeds 50 percent of the building’s market value (excluding land value).
Types of work that may trigger SI/SD requirements are described in detail in Chapter 6 and generally include:
- Rehabilitation or remodeling of a building with or without modifying its external dimensions
- Lateral additions that may or may not involve structural modifications of a building
- Vertical additions
- Repair of foundations, including replacing or ex-tending foundations
- Restoration or repair of damage of any origin that is necessary to restore a building to its pre-damaged condition
- Reconstruction of demolished or destroyed buildings on the same site or on the same foundation
- Work on post-Flood Insurance Rate Map (FIRM) buildings
- Work on existing buildings where flood zones or floodways are revised
Understandably, owners are concerned about the costs of bringing buildings into compliance. NFIP flood insurance policies on buildings located in SFHAs include coverage that is available for buildings that are substantially damaged by flood. Called Increased Cost of Compliance (ICC), this coverage is described in Sections 5.6.4 and 7.6.
The intent of the SI/SD requirements is not to discourage routine maintenance. If work requires a permit, then the local official must review all of the work proposed and the cost of all work must be included in the project costs, including work that might otherwise be considered routine maintenance.