Substantial Damage Estimation

November 20, 2013

Todd C. Tucker AICP Natural Hazards Program Specialist DHS FEMA Region VII | Mitigation Division - FM&I Branch

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Topics Substantial Damage Estimator V.2.0

• Program Installation / overview

Data Collection Excel spreadsheet template Construction costs Market value Calculation percent damage

Implementing SI / SD • Substantial Improvement / Damage overview • Conducting SDE assessments / data input and output

BW-12 Insurance Implications

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SDE 2.0: http://www.fema.gov/library/viewRecord.do?id=4166

Substantial Damage Estimator Best Practices:

http://www.fema.gov/library/viewRecord.do?id=5929

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SDE 2.0 – Installation / Resources

FEMA – P-784 SDE User Manual and Work Book

http://www.fema.gov/media-library/assets/documents/18692?id=4166

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SI/D Information Resources

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Substantial Damage Estimator (SDE) Developed by FEMA to assist State & local officials in determining substantial damage in accordance with the local floodplain management ordinance .

Can be used to assess flood, wind, wildfire, seismic, & other forms of damage. Provides timely substantial damage determinations so that reconstruction can begin following a disaster.

The Substantial Damage Estimator Best Practices

Developed to provide suggested approaches for dealing with challenging situations faced by many users .

To download this publication, visit http://www.fema.gov/media-library/assets/documents/26753

SDE 2.0

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SDE 2.0

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SDE 2.0 – Installation Installation Steps Installing using the FEMA SDE 2.0 CD

1. Insert the CD into the computer. Go to My Computer and select the CD drive. 2. Double-click on setup.exe.

Installing using a zip file downloaded from the FEMA Web site

1. After opening the FEMA Web site (www.fema.gov), search on “SDE” or use the SDE Web page (http://www.fema.gov/library/viewRecord.do?id=4166) to locate the SDE tool download function. 2. Download and unzip the SDE folder. Installation steps vary depending on the host computer setup and the unzip utility installed on the computer. 3. In many cases, users can unzip the folder by right-clicking and selecting the option Extract All... from the list of options or by double-clicking the zip folder and selecting the option Extract all files from the list of choices displayed. Some users may have an unzip utility installed that activates automatically when they click on the folder.

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SDE 2.0 – Installation

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SDE 2.0 – Installation

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Select Server if you are a supervisor and will be assigning properties to inspectors.

Select Client if you are an inspector and will be receiving property assignments.

Select Stand Alone if you will not be making or receiving assignments.

After selecting the database type, the user may enter a database name.

SDE 2.0 – Installation

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Create/Add a record

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Enterprise Import

Enterprise import of existing data

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SDE Fields for Enterprise Import

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Depreciation Two options in SDE 2.0

• Depreciation Rating - based on current condition only Depreciation Ratings (1-6)

1 - Very Poor Condition – 88.90% 2 - Requires Extensive Repairs – 66.50% 3 - Requires Some Repairs – 38.80% 4 - Average Condition – 24.20% 5 - Above Average Condition – 13.40% 6 - Excellent Condition – 2.90%

(excellent = brand new condition, 2 years or less) Pull down menu at the bottom of Tab 3

Based on USACE methodology No longer require year of construction to estimate depreciation

• Other – numerical value based on the judgment of the inspector

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Square Footage Calculator SF Calculator Function - Top of Cost Tab (Tab 3)

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SDE 2.0 – New Features 1. Bulk Property Editor – direct editing of data within SDE

2. Default Data for 22 data fields (facilitates data entry and reduces errors)

3. Revised depreciation methodology (now based on structure condition and not on the year of construction)

4. New checkbox for No Physical Damage (requires less data for a valid assessment)

5. Direct entry of total square footage

6. New filters for exporting data or developing reports (based on specific assessment data such as community name, zip code, or inspection date)

7. Assessment counts are shown after filters are used 8. “Delete All Data” function 9. Add a database name 10. Program revisions for faster search, filter, and report functions

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SDE Tool Use 1. Data management tool 2. Helps manage and formalize substantial damage determinations 3. Facilitates QA reviews of data collected

Not a “silver bullet” or a black box – only as good as the data that is entered into the tool

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Topics Substantial Damage Estimator V.2.0

• Program Installation Data Collection Excel spreadsheet template Construction costs Market value Calculating percent damage

Substantial Improvement / Damage overview Implementing SI / SD Conducting SDE assessments / data input and output

BW-12 Insurance Implications

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Tips and tricks What data is required?

1. Pre-FIRM structures only - located within SFHA

2. Pre-disaster market value of the Structure

3. Repair Costs – local Cost per Square foot

4. Parcel data for the structures impacted by the hazard event.

To determine the Percent Damage of the Structure

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Data 1. Recommend to pre-load data for 22 of the most commonly used data

fields using Enterprise Import (*.xls file available upon request). 2. Reduces data errors and omissions 3. User is prompted to use default data for every new assessment 4. Default data can be overwritten

• Default data remains active until the user deletes it or enters new default data

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Repair estimate

Marshall & Swift R.S. Means Locality based labor & material estimate Contractor estimates

Repair estimate (labor-material) is based on the fair market cost of construction per square foot

$100.00 / SF to $400.00 / SF? Communities construction values vary across the country and within the State. Some communities estimate their construction cost just below $100.00/S.F., while others indicate its over $400.00. Where does your community fall?

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Pre-Flood Market Value for a Building

County Assessor’s office property valuation for the structure. • Deduct land value. • Use a multiplier if necessary to calculate current fair market value for

the structure. Obtain square footage of the structure from Assessor’s Office. Obtain comparable appraisal.

• Comparable used in the appraisal must be located within the SFHA.

Adjusted Assessed Value

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Calculating SI / SD

The 50% Rule is determined by this ratio: • The cost of repairing the structure to its before damaged condition to • The market value (assessment/appraisal) of the structure prior to the

damage • Note: the cost of the repairs must include all costs necessary to fully

repair the structure to its before damage condition • If over 50%, enforcement is required.

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Example A: Calculate Substantial Damage Market value = $40,000. Square footage = 1,000 sq. ft. SDE inspection percent of damage = 30%

Construction cost per square foot = $80.

• 1,000 sq. ft. x 30% = 300 sq. ft. to be repaired. • 300 sq. ft. x $80 = $24,000 cost of flood repair. • $24,000 divided by $40,000 = 60% damage.

The cost of flood repair is over 50%. The structure is substantially damaged.

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Example B: Calculate Substantial Damage Market value = $80,000. Square footage = 1,000 sq. ft. SDE inspection percent of damage = 30%

Construction cost per square foot = $80.

• 1,000 sq. ft. x 30% = 300 sq. ft. to be repaired. • 300 sq. ft. x $80 = $24,000 cost of flood repair. • $24,000 divided by $80,000 = 30% damage.

The cost of flood repair is below 50%. The structure is not substantially damaged.

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Topics Substantial Damage Estimator V.2.0

• Program Installation Data Collection Excel spreadsheet template Construction costs Market value

Substantial Improvement / Damage overview Implementing SI / SD Conducting SDE assessments / data input and output

BW-12 Insurance Implications

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Where are determinations required?

• All Zone A boundaries 100-Year Floodplain 1% Annual Chance

Flood Base Flood

Applies to Pre-FIRM development . . . within the Special Flood Hazard Area (SFHA):

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Substantial Damage Ordinance Compliance Substantially damaged Pre-

FIRM structures must be brought into compliance with NFIP regulations and other requirements in the local FPM ordinance as if it was new construction.

This means substantially damaged Pre-FIRM homes, including the basement, must be elevated at or above the BFE.

Substantially damaged Pre-FIRM non-residential structures may perform FEMA approved engineered dry flood-proofing.

Branson, Mo. Substantially damaged April 2011 w/ 1 foot of flood water. Elevated to 1 foot above BFE (±8 feet).

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Substantial Damage Defined

Damage of any origin sustained by a structure whereby the cost of restoring the structure to its before damage condition would equal or exceed 50 percent of the market value of the structure before the damage occurred.

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Residential SDE Inspection 12 Elements

Foundation Superstructure Roof Covering Exterior Finish Interior Finish

Doors & Windows Cabinets &

Countertops Floor Finish Plumbing

Electrical Appliances HVAC

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Commercial SDE Inspection 7 Elements

Foundation Superstructure Roof Covering Plumbing Electrical Interiors HVAC

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Costs included in SI/SD determinations All Material and labor (even when

donated), structural elements and exterior finishes

Site Preparation Demolition of construction debris

(excluding trash removal / clean up cost) Cost of complying with other regulations

and codes (i.e. Health Dept., ADA, etc.) Cost of elevating the structure when the

pre-damage elevation is below BFE. Construction management and

supervision Contractor’s overhead Sales tax on materials Utility and service equipment

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Costs excluded from SI/SD determinations

Damage Clean-up and trash removal Temporary stabilization of the structure. Construction plans and specifications Land survey Permit fees Carpeting or re-carpeting installed over a

finished floor (wood / tiling). Outside improvements (landscaping, pool

enclosures, sidewalks, fences, yards lights, and detached accessory structures).

Cost associated with the minimum work necessary to correct existing violations of health, safety, and sanitary codes.

Plug-in appliances such as washing machines, dryers and stoves.

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Topics Substantial Improvement / Damage overview Data Collection Excel spreadsheet template Construction costs Market value

Substantial Damage Estimator V.2.0 • Program Installation

Implementing SI / SD Conducting SDE assessments / data input and output

BW-12 Insurance Implications

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SDE field application

Up to 40% damage relative to market value: • Use approximate damage determination methods.

Reconstruct as before flood.*

40-60% damage relative to market value: • Use detailed, itemized repair cost estimates and

definitive estimates of market value. Reconstruct in full compliance if over 50%.

60-100% damage relative to market value: • Use approximate damage determination methods.

Reconstruct In full compliance.*

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1. Best Practices Document • Lack of posted addresses • GPS coordinate data • Photos • 1.5-story residences • Best fit for non-residential structures

2. Percent Guidance Damage Documents 3. FEMA P-758 – SI/SD Desk Reference

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Completed example

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Topics Substantial Damage Estimator V.2.0

• Program Installation Data Collection Excel spreadsheet template Construction costs Market value

Substantial Improvement / Damage overview Implementing SI / SD Conducting SDE assessments / data input and output

BW-12 Insurance Implications

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Changes are Coming to the NFIP Congress passed the Flood Insurance Reform Act of 2012 (Biggert

Waters 2012), which will: • Make the NFIP more financially stable by raising rates on certain classes of

property to reflect true flood risk; and • Trigger rate changes for certain properties within a revised or updated map area

to accurately reflect the flood risk.

The changes will mean rate increases for many policyholders over time.

Buying or selling a property, or allowing a policy to lapse may trigger rate changes.

There are investments you and your community can make to reduce the impact of rate changes. (More about this later)

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Who Will Be Affected by Subsidy Changes?

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Policyholder Subsidies

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BW-12 and Rebuilding Decisions Elevation lowers premiums.

ZONE A” EXAMPLE

Elevating 3 feet above the BFE

could lower premiums

significantly!

Homes built below BFE could be hit

hard by an increase to full-risk rates

Current “Subsidized” Rate

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What Can I Do to Lower Costs? Home and business owners:

Talk to your insurance agent about your insurance options You’ll probably need an Elevation Certificate to determine your correct rate Higher deductibles might lower your premium

Consider remodeling or rebuilding Building or rebuilding higher will lower your risk and could reduce your premium Consider adding vents to your foundation or using breakaway walls

Talk with local officials about community-wide mitigation steps

Community leaders: Consider joining the Community Rating System (CRS) or increasing your CRS

activities to lower premiums for residents. Talk to your state about grants. FEMA issues grants to states which can distribute

the funds to communities to help with mitigation and rebuilding.

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VI. Links to FEMA Website FEMA Publication P-758: http://www.fema.gov/media-

library/assets/documents/18562?id=4160 SDE Tool: http://www.fema.gov/media-

library/assets/documents/18692?id=4166 SDE Best Practices:

http://www.fema.gov/library/viewRecord.do?id=5929 SI/SD Desk Reference: https://s3-us-gov-west-

1.amazonaws.com/dam-production/uploads/20130726-1735-25045-1673/508_version___sde_2_0_user_manual_and_field_workbook.pdf

Biggert Waters: http://www.fema.gov/flood-insurance-reform-act-2012

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Todd C. Tucker AICP Natural Hazards Program Specialist

Office: (816) 283-7528 | Cell: (816) 812-7835 | Fax: (816) 283-7018 | Todd.Tucker@FEMA.DHS.GOV

DHS FEMA Region VII | Mitigation Division - FM&I Branch |9221 Ward Parkway, Suite 300 |Kansas City, MO. 64114-3372