Answers to Questions 

About Substantially Improved/

Substantially Damaged 

Buildings

FEMA 213 / August 2018
About the Cover

The photograph on the left shows a house after the storm surge from Hurricane Sandy flooded it with 5 feet of 

water. The photograph on the right shows the house being lifted on a taller foundation after the homeowners 

made the decision to elevate above the new flood level. FEMA photo by Kenneth Wilsey.

All other photographs in this document are public domain or taken by FEMA or a FEMA contractor.

Questions on this publication are welcome and should be addressed to 

FEMA Building Science (http://www.fema.gov/building-science) through the 

FEMA Building Science Helpline at FEMA-Buildingsciencehelp@fema.dhs.gov or call (866) 927-2104.
Answers to Questions

About Substantially 

Improved/Substantially

Damaged Buildings

FEMA 213 / August 2018

Answers to Questions About Substantially Improved/Substantially Damaged Buildings i

Table of Contents

Contents

Acronyms and Abbreviations .......................................................................................................................................................iii

Section 1. Introduction ................................................................................................................................................................. 1

Section 2. Definitions, Regulations, and General Questions ................................................................................................... 3

1. What is substantial improvement? .................................................................................................................................. 3

2. Why was 50 percent chosen as the substantial improvement threshold? ..................................................................... 4

3. Who is responsible for making the determination of whether a building or manufactured home

will be substantially improved or has been substantially damaged? ........................................................................... 4

4. If proposed improvements are determined to be substantial improvements, what must happen

to the building or manufactured home to bring it into compliance? ......................................................................... 4

5. What is substantial damage? ........................................................................................................................................... 5

6. What must happen when a building or manufactured home is determined to

be substantially damaged? .............................................................................................................................................. 5

7. Which buildings and manufactured homes are subject to the substantial improvement and

substantial damage requirements? ................................................................................................................................. 6

8. What types of improvements might trigger the substantial improvement requirement? .......................................... 6

9. If a building or manufactured home is substantially improved or substantially damaged and is not

brought into compliance with community floodplain management regulations, how would that

impact NFIP flood insurance rates and premiums? ..................................................................................................... 7

Section 3. How to Determine Substantial Improvement and Substantial Damage ............................................................... 9

10. What is the basis for determining whether a building or manufactured home is substantially damaged?

Is the basis for making a substantial improvement determination different?............................................................. 9

11. What level of accuracy is required when determining whether a building or manufactured home

is being substantially improved or has been substantially damaged? ........................................................................10

12. For purposes of making SI/SD determinations, how should the market value of a building or

manufactured home be determined? ...........................................................................................................................10

13. If property appraisals used for tax assessment purposes are used to determine market value,

what are some of the limitations that should be considered? .....................................................................................11

14. Can actual cash value or replacement cost value be substituted as estimates for market value?..............................11

15. How are the costs of improvements and costs to repair determined?........................................................................ 12

16. What items must be included in the cost of improvements or repairs? ..................................................................... 12

17. What items can be excluded from the cost of improvements or costs of repairs?......................................................14

18. The NFIP definition of substantial improvement states: “the term does not, however, include any project

for improvement of a structure to correct existing violations of State or local health, sanitary, or safety

code specifications which have been identified by the local code enforcement official and which are the

minimum necessary to assure safe living conditions.” What does this mean? ...........................................................14

19. When a building or manufactured home is completely destroyed and a new structure will be built on the

old foundation or slab, is it considered a substantial improvement or new construction?........................................14
ii Answers to Questions About Substantially Improved/Substantially Damaged Buildings

Table of Contents

20. What happens if damage is determined not to be substantial damage and during repairs, 

the owner wants to make other improvements to the building or manufactured home?........................................ 15

21. What if a building or manufactured home is substantially damaged but not fully restored, 

or is repaired using donated or discounted labor and/or materials, such that the amount actually 

spent on repairs is less than 50 percent of the structure’s market value? .................................................................. 15

22. How are estimates for donated or discounted materials and the owner’s labor or 

volunteer labor determined? ......................................................................................................................................... 15

23. What requirements apply when a substantially improved or substantially damaged building or 

manufactured home is located in a coastal high hazard area (Zone V)? ...................................................................16

24. What requirements must be met if a substantially improved or substanially damaged 

building or manufactured home is located in a floodway? ..........................................................................................16

25. How are historic structures treated when they are substantially damaged or when 

improvements are proposed? .........................................................................................................................................17

Section 4. Post-Disaster Permitting ............................................................................................................................................19

26. What are the permit requirements for buildings and manufactured homes that have 

been substantially damaged? .........................................................................................................................................19

27. Given the number of permit applications may be overwhelming in a post-disaster situation, 

what should local officials focus on to assess potential substantially damaged buildings 

and manufactured homes?..............................................................................................................................................19

28. What options are available to help local officials handle a large number of permit applications and 

potentially substantially damaged buildings and manufactured homes after disasters? ........................................ 20

29. What is the FEMA Substantial Damage Estimator (SDE) and how can it help in determining 

substantial damage? ....................................................................................................................................................... 21

30. When buildings and manufactured homes are substantially damaged by flooding, how can local 

officials help property owners obtain the financial benefits of the Increased Cost of Compliance 

(ICC) coverage that is as part of NFIP standard flood insurance policies? ............................................................. 21

31. What steps can local officials take to inform citizens about the permit process and substantial 

damage determinations?................................................................................................................................................ 22

32. Because of the trauma and inconvenience people experience during and after disasters, can 

communities suspend permit requirements for the repair of damaged buildings and 

manufactured homes in post-disaster situations? ........................................................................................................ 22

33. Can variances to the substantial damage requirements be granted? ........................................................................ 23

34. What steps can communities take to prepare to implement the substantial damage 

requirement during the post-disaster period? ............................................................................................................ 23

35. What information should local officials share with property owners during the post-disaster period? ................ 24

36. Are there grant programs available to communities to help property owners whose buildings 

or manufactured homes have been substantially damaged? ...................................................................................... 24

Appendix A. Publications and Resources ................................................................................................................................. 27

Appendix B. Contact Information for NFIP State Coordinating Agencies and FEMA Regional Offices ........................ 29
Answers to Questions About Substantially Improved/Substantially Damaged Buildings iii

Acronyms and Abbreviations

ACV actual cash value 

BFE base flood elevation

CFR Code of Federal Regulations 

FEMA Federal Emergency Management Agency 

FIRM Flood Insurance Rate Map 

FMA Flood Mitigation Assistance (grant program) 

GIS geographic information system 

HMGP Hazard Mitigation Grant Program 

HVAC heating, ventilation, and air conditioning 

ICC Increased Cost of Compliance 

NFIP National Flood Insurance Program 

PDM Pre-Disaster Mitigation (grant program)

RCV replacement cost value 

SDE Substantial Damage Estimator 

SFHA Special Flood Hazard Area 

SI/SD substantial improvement and substantial damage 

Acronyms and Abbreviations

Answers to Questions About Substantially Improved/Substantially Damaged Buildings 1

Section 1

Introduction

The National Flood Insurance Program (NFIP) is administered by the Federal Emergency Management 

Agency (FEMA). FEMA identifies and maps areas that are subject to flooding under certain conditions, 

establishes minimum criteria for development in identified floodprone areas, and underwrites flood insurance 

coverage. The purpose of the NFIP is to reduce future flood damage and to break the cycle of repetitive 

flood damage by encouraging communities to adopt and enforce floodplain management regulations and by 

providing affordable insurance to property owners, renters, and businesses. The NFIP regulations are found 

in Title 44 of the Code of Federal Regulations (CFR) § 59.1, Definitions, and 44 CFR § 60.3, Flood plain 

management criteria for floodprone areas. 

The purpose of this booklet is to answer questions about the minimum NFIP regulations. It also summarizes 

FEMA’s guidance and policies on substantial improvement and substantial damage (SI/SD) and what it means 

to bring structures into compliance with the minimum requirements for new construction. 

NFIP flood insurance and certain types of Federal financial assistance are available only in communities that 

enter into agreements with FEMA to regulate flood hazard areas. More than 22,300 communities throughout 

the United States—counties, parishes, cities, towns, townships, villages, special districts, territories, Indian 

tribes, and authorized tribal organizations—participate in the NFIP by adopting and enforcing codes, 

regulations, and ordinances that meet or exceed the minimum requirements of the program. 

The minimum NFIP requirements apply to new construction of buildings 

and structures, installation of manufactured homes, and all other 

development activities in Special Flood Hazard Areas (SFHAs) shown on 

Flood Insurance Rate Maps (FIRMs). When improvements to existing 

buildings, structures, and manufactured homes meet the definition 

of “substantial improvement,” or when damage meets the definition of 

“substantial damage,” communities must enforce requirements to bring 

those structures into compliance by meeting the requirements for new 

construction. The SI/SD requirements grew out of the recognition that there 

were large numbers of buildings and manufactured homes already located in 

floodprone areas before communities joined the NFIP. 

This booklet refers 

to the NFIP minimum 

requirements. States 

and communities that 

adopt more restrictive 

requirements in 

floodplain management 

regulations or building 

codes must enforce 

those requirements.
2 Answers to Questions About Substantially Improved/Substantially Damaged Buildings

Section 1 Introduction

As with all design and construction matters, property owners, design professionals, and building owners 

should determine whether any State or local floodplain management regulations or building codes have 

additional or more stringent requirements than those of the NFIP.

The enforcement of the SI/SD requirements can be a major concern for communities after they experience 

widespread damage from floods or other disasters. In particular, local officials may have many questions 

concerning permits that must be issued for the repair of damaged structures. 

This booklet answers many of those questions and concerns and 

is organized into four sections. Section 1 outlines the role of the 

NFIP and the purpose of the booklet. Section 2 explains the NFIP 

definitions and regulations, and also answers some general questions 

about SI/SD. Section 3 answers questions about how to determine 

substantial improvement and substantial damage, and Section 4 

answers common questions that arise in the post-disaster period.

The questions and answers in this booklet are intended to guide 

building officials, building inspectors, floodplain administrators, 

zoning administrators, citizen planning boards, and elected and other 

local officials who have roles in enforcing floodplain management 

and building codes. These officials should also obtain a copy of 

the Substantial Improvement/Substantial Damage Desk Reference (FEMA 

P-758). This booklet refers to the appropriate chapters and sections in 

FEMA P-758 for more detail. See Appendix A for links and ordering 

instructions for free FEMA publications and other resources. 

This booklet is also helpful for architects, engineers, 

contractors, building owners, and other interested parties. 

Local officials may want to provide this booklet to property 

owners to help them understand SI/SD, especially after events 

that damage many structures. 

Local officials can also seek assistance from NFIP State 

Coordinating Agencies and FEMA Regional Offices. Appendix 

B lists contact information for these agencies.

See Another Question

These text boxes identify 

other questions in this 

booklet where related 

information is located.

These text boxes identify 

sections in the SI/SD Desk 

Reference where related 

additional information and 

detail is found.
Answers to Questions About Substantially Improved/Substantially Damaged Buildings 3

Section 2

Definitions, Regulations, and 

General Questions

The questions in this section address general definitions and regulations 

pertinent to SI/SD. The questions in Section 3 address more specific issues 

when detemining SI/SD. 

1. What is substantial improvement?

Substantial improvement, as defined in 44 CFR § 59.1, means any 

reconstruction, rehabilitation, addition, or other improvement of a structure, 

the cost of which equals or exceeds 50 percent of the market value of the 

structure before the start of construction of the improvement. The term 

includes structures that have incurred “substantial damage,” regardless 

of the cause of damage and regardless of the cost of repair work actually 

performed. However, the term does not include:

• Any project for improvement of a structure to correct existing

violations of State or local health, sanitary, or safety code specifications

that have been identified by the local code enforcement official, and

that are the minimum necessary to ensure safe living conditions, or

• Any alteration of a “historic structure,” provided that the alteration

will not preclude the structure’s continued designation as a “historic structure.”

Be sure to check the State and community’s floodplain management regulations and building codes to 

determine whether any local requirements are more restrictive than the NFIP minimum requirements. Some 

communities modify the substantial improvement requirements in one of two ways: adopting a lower threshold 

than 50 percent (such as 40 percent or 30 percent) or tracking costs of improvements and costs of repairs 

over a specific period, referred to as “cumulative substantial improvement.” Some communities adopt more 

restrictive requirements that affect the design of buildings, such as requiring elevation higher than the NFIP 

minimum elevation, which is the base flood elevation (BFE).

This booklet uses the 

terms “structure” and 

“building” to refer to 

buildings, structures, 

and manufactured 

homes subject to the SI/

SD requirements.

Historic Structures

See Question 25.

See Section 3.4 of the 

SI/SD Desk Reference.
4 Answers to Questions About Substantially Improved/Substantially Damaged Buildings

Section 2 Definitions, Regulations, and General Questions

2. Why was 50 percent chosen as the substantial improvement threshold?

The 50 percent threshold was chosen as a compromise between two 

extremes. One extreme would be to prohibit all investment in existing, 

non-conforming buildings that do not meet the minimum NFIP 

requirements. The other extreme would be to allow buildings in flood 

hazard areas to be improved in any fashion without regard to the flood 

risk. In the first scenario, there is the potential for causing hardship to those who have built in flood hazard 

areas without knowing the risk because those buildings were constructed before areas were designated as 

floodprone. Those individuals would not be able to improve their buildings as damage or age contributes 

to deterioration. The second scenario provides no mechanism to ensure that increased investment in flood 

hazard areas would receive needed protection from the flood risk, contributing to the increased peril to life 

and property. Thus, the threshold of 50 percent is a compromise at a halfway point and conforms to similar 

building code and zoning standards that also use a 50 percent threshold.

3. Who is responsible for making the determination of whether a building or manufactured home

will be substantially improved or has been substantially damaged?

The NFIP requires participating communities to review all applications 

for development in mapped SFHAs and to enforce their floodplain 

management regulations and building codes. The local official who is 

designated to administer those regulations and codes is responsible for 

making SI/SD determinations. The local official reviews information 

submitted by applicants and may use a combination of information to 

estimate or verify costs and market values. The review determines whether 

cost estimates reasonably reflect the proposed work, including all work to 

repair and restore damaged buildings to pre-damage conditions. 

To administer the SI/SD requirements, local officials take four actions: (1) determine the cost of work, (2) 

determine the market value of buildings, (3) make SI/SD determinations and provide determinations to 

property owners, and (4) require owners to obtain permits to bring substantially improved and substantially 

damaged structures into compliance with the floodplain management requirements. Property owners may 

appeal decisions by providing additional information, especially when estimates of costs and market values are 

used to make determinations.

4. If proposed improvements are determined to be substantial improvements, what must happen

to the building or manufactured home to bring it into compliance?

When a local official makes a determination that a building or 

manufactured home in an SFHA will be substantially improved, the 

structure must be brought into compliance with floodplain management 

(and building code) requirements for new construction based on flood 

zone. Every aspect of the structure must be made compliant. To identify 

how best to achieve this result, each provision of the community’s 

regulations (and applicable building codes) should be reviewed, including:

• Lowest floor elevations

• Types of foundations

See Section 1.1 of the

SI/SD Desk Reference.

See Section 2.2, 

Chapter 4, and 

Sections 5.2 and 5.6 

of the SI/SD Desk 

Reference.

See Sections 6.2 and 

6.3 of the SI/SD Desk 

Reference.
Answers to Questions About Substantially Improved/Substantially Damaged Buildings 5

Definitions, Regulations, and General Questions Section 2

• Enclosures

• Basements

• Utilities and building service equipment

• Flood damage-resistant materials 

• Making structures reasonably safe from flooding

Several solutions can achieve compliance. The solution selected for any given structure will depend on several 

factors, such as flood zone (Zone A or V), the type of foundation, feasibility, and whether the structure is 

residential or non-residential. Compliance solutions include, but are not limited to:

• Elevate in-place, which means detaching a building from its foundation and raising it onto a compliant 

foundation (applicable in Zones A and V)

• Convert the ground level to a compliant enclosure (typically in Zone A)

• Extend foundation walls upward and raise the floor (Zone A only)

• Convert a walkout basement to a compliant enclosure (Zone A only)

• Dry floodproofing (Zone A only, non-residential only) 

5. What is substantial damage? 

Substantial damage, as defined in 44 CFR § 59.1, means “damage of any 

origin sustained by a structure whereby the cost of restoring the structure 

to its before-damaged condition would equal or exceed 50 percent of 

the market value of the structure before the damage occurred.” Most 

damage occurs during a single and sudden event, such as a fire, wind 

storm, lightning strike, falling tree, tornado, earthquake, flood, or natural 

gas explosion. Damage may also be unrelated to a specific event, such as 

soil settlement, exposure to the elements, termite infestation, vandalism, deterioration over time, and other 

causes.

6. What must happen when a building or manufactured home is determined to 

be substantially damaged? 

If a local official determines that a damaged building or manufactured 

home in an SFHA has incurred substantial damage, then the structure 

must be brought into compliance with floodplain management (and 

building code) requirements for new construction based on flood zone. 

Work necessary to restore a substantially damaged structure to its predamage condition constitutes substantial improvement, regardless of the 

actual repair work performed. Therefore, when the NFIP regulations refer 

to substantial improvement, repair of substantial damage is included. 

Even if an owner proposes to perform less than all of the work necessary 

to repair the damage completely, the determination must be made on the 

cost to fully repair and restore the structure to its pre-damage condition. 

See Section 3.4 of the 

SI/SD Desk Reference

for other useful 

definitions and terms.

See Sections 6.2 and 

6.3 of the SI/SD Desk 

Reference.

Requirements for 

Compliance

See Question 4.
6 Answers to Questions About Substantially Improved/Substantially Damaged Buildings

Section 2 Definitions, Regulations, and General Questions

If the total repair costs are equal to or greater than 50 percent of 

the structure’s pre-damage market value, the structure must be 

brought into compliance. The same requirements for structures that 

are substantially improved apply to structures that are substantially 

damaged. 

Reconstruction of a completely destroyed building or manufactured home (or one that is voluntarily 

demolished) is new construction, even if some or all of the original foundation is incorporated into the new 

structure.

7. Which buildings and manufactured homes are subject to the 

substantial improvement and substantial damage requirements? 

Communities are responsible for evaluating permit applications to 

perform work on buildings and manufactured homes in SFHAs, 

including improvements (i.e., rehabilitations, alterations, and additions), 

repairs, and reconstruction. After damaging events, local officials 

should proactively tour affected areas to identify buildings that should 

be inspected or evaluated before repairs are started. Buildings that are 

subject to the SI/SD requirements fall into two categories: 

• Existing structures (sometimes called pre-FIRM structures). Existing 

structures were already present when FEMA issued a community’s 

initial FIRM. Because they pre-date the regulations, many existing 

structures were not built in ways that recognized flood hazards. 

Existing structures are subject to the SI/SD requirements when 

certain improvements are proposed and when they sustain substantial 

damage.

• New construction (sometimes called post-FIRM structures). New 

structures are those built after a community joined the NFIP. 

Improvements and repairs of these structures, regardless of the 

nature or value of the work, must not be allowed to alter any 

aspect that was originally required for compliance with floodplain 

management requirements. These structures are subject to the 

SI/SD requirements if a FIRM has been revised and the BFE 

increases, the flood zone designation changes, or the floodplain 

management regulations have changed.

8. What types of improvements might trigger the substantial 

improvement requirement? 

Any work on a building or manufactured home might be determined to 

be substantial improvement, regardless of the type of work (or what it is 

called), including:

• Rehabilitation or remodeling of a structure, with or without 

modifying its external dimensions

Pre-FIRM and Post-FIRM 

The NFIP uses these 

insurance terms to 

determine flood insurance 

rates; they are tied to the 

date of a community’s initial 

FIRM. Using the terms to 

identify buildings subject to 

the SI/SD requirements is 

common, but misleading. 

Because FEMA periodically 

revises FIRMs, sometimes 

changing flood zones and 

BFEs, reliance on “preFIRM” and “post-FIRM” 

terminology can lead to 

incorrect interpretations.

Types of Work, in the SI/

SD Desk Reference, see:

Rehabilitation and 

remodeling (Section 6.4.1)

Lateral additions (Section 

6.4.2) and vertical 

additions (Section 6.4.3)

Repair, reinforcement, 

or replacement of 

foundations (Section 6.4.4)

Repair of damaged 

buildings (Section 6.4.5) 

Reconstruction of 

demolished or destroyed 

buildings (Section 6.4.6)

Work on compliant 

buildings (Section 6.4.7)

Work on buildings where 

flood maps have been 

revised (Section 6.4.8)

Elective Improvements

See Question 20.
Answers to Questions About Substantially Improved/Substantially Damaged Buildings 7

Definitions, Regulations, and General Questions Section 2

• Lateral additions that may or may not involve structural modifications of the load-bearing structure of the 

existing structure

• Vertical additions

• Repair, reinforcement, or replacement of foundations, including extending existing foundations

• Repair of damage of any origin that is necessary to restore a structure to its pre-damage condition

• Work on structures that were compliant at the time of construction

• Work on existing structures where BFEs, flood zones, or floodways have been revised

9. If a building or manufactured home is substantially improved or substantially damaged and is not

brought into compliance with community floodplain management regulations, how would that 

impact NFIP flood insurance rates and premiums? 

When a building or manufactured home in the SFHA is substantially 

improved or substantially damaged, the NFIP flood insurance policy for 

that structure will be rated using risk-based premium rates that depend 

on the surveyed elevation of the lowest floor relative to the BFE. Riskbased premium rates are actuarial rates that take into account the risk 

of flood damage. When a structure is elevated and brought into compliance with the requirements for new 

construction, the cost of an NFIP flood insurance policy generally will be lower than the premium calculated 

based on discounted rates used for buildings built before communities joined the NFIP, called pre-FIRM 

(see illustration on the next page). Communities require permittees to submit as-built surveyed lowest floor 

elevations as a condition of permits for new construction and SI/SD. 

If a building or manufactured home is substantially improved, or if a substantially damaged building or 

manufactured home is repaired or rebuilt, and it is not brought into compliance, it is in violation of the 

floodplain management requirements and the cost of an NFIP flood insurance policy may be very high. 

The annual premium could be more than 3 times the premium paid before the structure was improved 

or repaired. When questions arise concerning how a proposed improvement might affect an NFIP flood 

insurance policy, property owners should obtain cost estimates from qualified insurance agents. The NFIP 

may deny flood insurance coverage for specific buildings if communities cite violations and owners refuse to 

comply with the floodplain management requirements.

See Section 6.6 of the 

SI/SD Desk Reference.
8 Answers to Questions About Substantially Improved/Substantially Damaged Buildings

Section 2 Definitions, Regulations, and General Questions

Substantially Damaged, repaired 

without permit or without proper 

SI/SD determination, 3 feet below BFE

NFIP Premium: Zone A: $6,751

Zone V: $12,603

Substantially Damaged, repaired 

and elevated to BFE

NFIP Premium: Zone A: $1,525

Zone V: $7,076

Pre-FIRM Building, before 

damage, (independent of BFE) 

NFIP Premium: Zone A: $2,247

Zone V: $4,950

Substantially Damaged, repaired 

and elevated to 3 feet above BFE

NFIP Premium: Zone A: $318

Zone V: $3,538

The cost of 

an NFIP flood 

insurance policy 

varies depending 

on how a 

substantially 

damaged building 

is repaired. The 

example illustrated 

is for a one-story, 

single-family home 

without basement 

or enclosure. 

Premiums shown 

are based on 

$250,000 building 

coverage with 

$2,000 deductible 

(rates as of April 

2018), without fees 

and surcharges. 

This figure is 

for comparison 

purposes only.
Answers to Questions About Substantially Improved/Substantially Damaged Buildings 9

Section 3

How to Determine Substantial Improvement 

and Substantial Damage

This section addresses general questions about making SI/SD determinations. Questions in Section 4 

typically arise after disasters. 

10. What is the basis for determining whether a building or manufactured home is substantially 

damaged? Is the basis for making a substantial improvement determination different?

When making a substantial improvement or substantial damage 

determination, the calculation is the same: the cost of the 

improvement (or the cost to repair to pre-damage condition) is 

compared to the pre-improvement or pre-damage market value of the 

structure: 

Cost of Improvement or Cost to Repair to Pre-Damage Condition

Pre-Improvement or Pre-Damage Market Value of Building

≥ 50%

When improvements to a building are proposed, the cost of the work 

must include all labor and materials necessary to perform the work. 

Minimum costs necessary to correct previously cited health, sanitary, 

or safety code violations may be excluded. The market value of the 

structure is the market value before the improvements are performed.

When repair of substantial damage is necessary, the cost of the work 

must include all labor and materials necessary to fully restore the 

structure to its pre-damage condition, even if the owner proposes to 

perform less work or do the work over time. In addition, the value of 

volunteer labor (including work performed by owners) and donated 

materials must be estimated. The market value of the structure is the 

market value before the damage occurred. 

Who Makes SI/SD 

Determinations?

See Question 3.

Determining Market Value

See Question 12.

Costs to Include & Exclude

See Questions 16 and 17.

Existing Violations

See Question 18.

See Chapter 4 of the 

SI/SD Desk Reference.
10 Answers to Questions About Substantially Improved/Substantially Damaged Buildings

Section 3 How to Determine Substantial Improvement and Substantial Damage

11. What level of accuracy is required when determining whether a building or manufactured home 

is being substantially improved or has been substantially damaged? 

Local officials are responsible for reviewing the validity of all cost 

estimates provided by applicants, whether prepared by licensed 

contractors, engineers, architects, professional cost estimators, or 

property owners. When applicants submit professional appraisals of 

market value, local officials should examine the documentation to 

determine whether the appraisals reflect the specific characteristics of 

the buildings. Local officials also should inspect damaged buildings and manufactured homes to verify that 

the proposed costs include all work necessary to restore the structures to pre-damage condition. 

Estimates may be used for both costs and market values. To be consistent, local officials should decide and 

document in advance the estimation methods that will be used, especially in post-disaster situations when 

many damaged structures may need to be evaluated to determine whether they have been substantially 

damaged.

When using estimates, the closer the ratio of estimated costs to estimated market value is to 50 percent, the 

greater the accuracy needed to make the SI/SD determination. Especially in the post-disaster period when 

using estimates to focus attention on the structures for which additional data are needed, local officials may 

decide that if the ratio of estimated costs compared to estimated market value is less than 40 percent, no 

further evaluation is necessary because the work obviously does not constitute SI/SD. Using that same logic, 

the community may decide that if the ratio is greater than 60 percent, no further evaluation is necessary 

because the work obviously does constitute substantial improvement. However, when the ratio falls between 

40 percent and 60 percent, the local official may require the applicant to provide a detailed list of costs or to 

obtain a professional appraisal of the structure’s market value. 

12. For purposes of making SI/SD determinations, how should the market value of a building or 

manufactured home be determined? 

Market value refers to the price that a seller of real property can expect 

to receive from a buyer in a fair and open negotiation. For SI/SD 

determinations, only the market value of the building or manufactured 

home is important (land, land improvements, and accessory structures 

are excluded). In addition, the market value must always be based on 

the condition of the structure before the improvement is undertaken 

or before damage occurred. If structures have not been maintained and have deteriorated over time, then 

the pre-improvement or pre-damage market values are the values as of the date applications for permits are 

submitted.

Many communities require permit applicants to obtain appraisals of market value prepared by qualified 

professionals who are licensed to perform appraisals in the State or community where the properties are 

located. In addition, three other methods can be used to estimate market value:

• Values developed for property tax assessment purposes, adjusted to approximate market value

• Estimates of a structure’s actual cash value, including depreciation

• “Qualified estimates” based on the professional judgment of a local official 

See Sections 4.2, 4.4, 4.5 

and 7.4 of the SI/SD Desk 

Reference.

See Sections 4.5 and 

7.4 of the SI/SD Desk 

Reference.
Answers to Questions About Substantially Improved/Substantially Damaged Buildings 11

How to Determine Substantial Improvement and Substantial Damage Section 3

Local officials may need to use other methods to estimate market value 

after disaster events that damage many structures, when it is important 

to quickly and efficiently focus attention on those structures most likely 

to have sustained substantial damage.

13. If property appraisals used for tax assessment purposes 

are used to determine market value, what are some of the 

limitations that should be considered? 

Property assessment values determined by a State or local taxing 

or assessment authority can be used if the values are adjusted to 

reasonably represent market value. The assessor’s office should provide 

an adjustment factor that, when applied to assessed value, yields the 

“adjusted assessed value,” which can be used as an estimate of market 

value. 

Local officials who elect to use adjusted assessed values for making SI/SD determinations should consult with 

the authority that prepared the assessment values to understand the limitations on use of the data. These 

limitations are the length of the appraisal cycle (how old are the data), whether land value is listed separately, 

and the assessment level (an established statutory ratio between the 

assessor’s estimate of value and the true fair market value). If not 

considered and accounted for, those limitations can produce erroneous 

estimates of market value. 

In post-disaster situations when no other market value estimates are 

available or the number of permit applications is overwhelming, 

unadjusted assessed values may suffice as the estimate of market value.

14. Can actual cash value or replacement cost value be substituted as estimates for market value?

If depreciated to account for physical conditions, then actual cash value 

(ACV) or replacement cost value (RCV) can be used to estimate market 

value.

ACV is the cost to replace a structure on the same parcel with a new 

structure of like kind and quality, minus depreciation due to age, 

use, and neglect. ACV does not consider loss in value due simply to outmoded design or location factors. 

Depreciation accounts for the physical condition of a structure. The concept of ACV is used in both the 

insurance industry and the construction industry. In most situations, ACV is a reasonable approximation of 

market value, provided depreciation is accounted for.

RCV is the cost to replace a structure on the same parcel with a new structure that is intended for the same 

purpose and using comparable materials and quality (at the present day cost of materials and labor). The 

concept of RCV is also used by both the insurance industry and the construction industry. Definitions may 

vary from State to State.

RCV can be estimated easily, even when a large number of damaged structures must be assessed. Therefore, 

local officials may find it useful to use RCV to estimate market values during the post-disaster period. However, 

Post-Disaster Permitting

See Questions 26, 27, 

and 28.

See Section 4.5.2 of the 

SI/SD Desk Reference.

Post-Disaster Permitting

See Questions 26, 27, 

and 28.

See Sections 4.5.3 and 

7.4.3 of the SI/SD Desk 

Reference.
12 Answers to Questions About Substantially Improved/Substantially Damaged Buildings

Section 3 How to Determine Substantial Improvement and Substantial Damage

the older and more deteriorated a structure is, the greater the potential for a difference between RCV and 

market value. Thus, local officials who use RCV estimates for screening are advised to set a low threshold for 

the ratio of cost to repair to RCV, such as 30 percent. In that case, any structure that the screening indicates 

has a ratio value of greater than 30 percent would be examined carefully to ensure that valid cost estimates 

and market values are used in the substantial damage determinations. 

15. How are the costs of improvements and costs to repair determined?

“Costs of improvements” include the complete costs associated with all 

of types of work being done. “Costs to repair” include the costs of all 

work necessary to restore a damaged building or manufactured home 

to its pre-damage condition. Both include the costs of all materials, 

labor, and other items necessary to perform the proposed work. Most 

costs must be included, although certain costs may be excluded. 

Applicants for permits must provide estimates of the cost of the 

proposed work. Acceptable sources of cost information include: 

• Itemized costs of materials and labor, or estimates of materials and 

labor that are prepared by licensed contractors or professional 

construction cost estimators.

• Building valuation tables published by building code organizations 

and cost-estimating manuals, and tools available from professional 

building cost-estimating services.

• “Qualified estimates” of cost prepared by the local official using 

professional judgment and knowledge of local and regional 

construction costs.

• Structure owners may submit cost estimates that they prepare 

themselves. Owners should submit as much supporting 

documentation as possible.

Costs can also be estimated by using the FEMA Substantial Damage 

Estimator (SDE) software. The program is most effective in the postdisaster period, when many estimates of repair costs and many 

substantial damage determinations must be made. 

16. What items must be included in the cost of improvements or repairs?

Items that must be included in the costs of improvement are those directly associated with the work being 

done on a building or manufactured home. The costs of repairs must include all work necessary to restore 

a structure to its pre-damage condition. Whether determining costs 

of improvement or costs of repairs, the determination must include 

costs associated with complying with any other regulation or code 

requirement that is triggered by the work. Any list of costs that must be 

included cannot be exhaustive; however, the following list characterizes 

the types of costs that must be included:

Included Costs

See Question 16.

Excluded Costs

See Question 17.

Donated and Owner 

Labor Costs

See Questions 21 and 22.

See Section 4.4 of the 

SI/SD Desk Reference.

Substantial Damage 

Estimator (SDE)

See Question 29.

See Section 4.4.1 and a 

sample Notice to Property 

Owners, Contractors, and 

Design Professionals in 

Appendix D of the SI/SD 

Desk Reference.
Answers to Questions About Substantially Improved/Substantially Damaged Buildings 13

How to Determine Substantial Improvement and Substantial Damage Section 3

• 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, such as foundation excavation or filling in 

basements

• Demolition and construction debris removal

• Labor and other costs associated with demolishing, moving, or altering structure components to 

accommodate improvements, additions, and making repairs

• Costs associated with complying with other requirements and codes that may be triggered by the work

• Construction management and supervision

• Contractor’s overhead and profit

• Sales taxes on materials

• Structural elements and exterior finishes, including:

"Foundations

"Monolithic and other types of concrete slabs

"Bearing walls, tie beams, trusses

"Joists, beams, subflooring, framing, ceilings

"Interior non-bearing walls

"Exterior finishes

"Windows and exterior doors

"Roofing, gutters, and downspouts

"Hardware

"Attached decks and porches

• Interior finish elements, including:

"Floor finishes 

"Bathroom tiling and fixtures

"Wall finishes

"Built-in cabinets

"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

"Solar panels and equipment

"Light fixtures and ceiling fans

"Security and fire, smoke, and CO2 warning 

systems

"Built-in appliances

"Central vacuum systems

"Water filtration, conditioning, and 

recirculation systems
14 Answers to Questions About Substantially Improved/Substantially Damaged Buildings

Section 3 How to Determine Substantial Improvement and Substantial Damage

17. What items can be excluded from the cost of improvements or costs of repairs?

Items that can be excluded are those that are not directly associated with 

the structure. The following list characterizes the types of costs that may 

be excluded:

• Clean-up and trash removal 

• Costs to temporarily stabilize a structure so that it is safe to enter to 

evaluate and identify required repairs

• Costs to obtain or prepare plans and specifications

• Land survey costs

• Permit fees and inspection fees

• Carpeting and recarpeting installed over finished flooring, such as wood or tile

• Outside improvements, including landscaping, irrigation, sidewalks, driveways, fences, yard lights, 

swimming pools, pool enclosures, and detached accessory structures 

(e.g., garages, sheds, gazebos)

• Costs required for the minimum necessary work to correct existing 

violations of health, sanitary, or safety codes

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

18. The NFIP definition of substantial improvement states: “the term does not, however, include any 

project for improvement of a structure to correct existing violations of State or local health, sanitary, 

or safety code specifications which have been identified by the local code enforcement official and 

which are the minimum necessary to assure safe living conditions.” What does this mean?

To be excluded, the costs must be the minimum necessary to correct a 

violation or condition that pre-dates the application and was previously 

cited by an official who has the authority to enforce the community’s 

health, sanitary, and safety codes. If substandard conditions are 

identified by the owner or are discovered in the course of deciding what 

work to perform, the costs to bring those substandard conditions up to code must be included. In addition, 

the mere presence of a condition that does not conform to current codes does not qualify as a violation.

19. When a building or manufactured home is completely destroyed and a new structure will be built on 

the old foundation or slab, is it considered a substantial improvement or new construction?

A building or manufactured home that is totally destroyed, or so 

significantly damaged that it cannot be repaired, is a substantially 

damaged structure. However, any project that involves complete 

reconstruction, even if rebuilt on the same foundation, is new 

construction and must comply with all applicable floodplain 

management and building code requirements. Sometimes owners elect to demolish structures located in 

flood hazard areas. In these circumstances, if the decision is to reconstruct using an existing foundation, the 

reconstructed structure (including the existing foundation) must meet the requirements for new construction.

Existing Violations

See Question 18.

See Sections 4.4.2 and 

4.4.7, and a sample 

Notice to Property 

Owners, Contractors, 

and Design Professionals 

in Appendix D of the SI/

SD Desk Reference.

See Section 4.4.8 of the 

SI/SD Desk Reference.

See Section 6.4.6 of the 

SI/SD Desk Reference.
Answers to Questions About Substantially Improved/Substantially Damaged Buildings 15

How to Determine Substantial Improvement and Substantial Damage Section 3

20. What happens if damage is determined not to be substantial damage and during repairs, 

the owner wants to make other improvements to the building or manufactured home?

Local officials often see applications for combinations of improvements 

and repairs. In these cases, the combined costs of all work must be 

used to make the SI/SD determination. For example, property owners 

who make necessary repairs to damaged structures may elect to add 

improvements at the same time. Applicants must provide the combined 

estimated costs for all costs to repair buildings and all costs of proposed 

improvements. The combined total cost is compared to the pre-damage or pre-improvement market value of 

the structure to make the SI/SD determination. 

If damage is initially determined not to be substantial damage or proposed improvements are initially 

determined not to be substantial improvements, and the owner subsequently wants to add more work, the 

permit must be modified. The cost of the additional work must be added to the costs used in the initial 

determination and the local official must reevaluate the SI/SD determination. If the combined repairs and 

improvements constitute substantial improvement, then the structure must be brought into compliance. Local 

officials should ensure proposed work is a complete project that does not depend on subsequent work, and 

should discourage deliberate phasing to circumvent the substantial improvement requirements.

21. What if a building or manufactured home is substantially damaged but not fully restored, or is 

repaired using donated or discounted labor and/or materials, such that the amount actually 

spent on repairs is less than 50 percent of the structure’s market value?

By definition, a building or manufactured home is substantially damaged 

if the cost to restore all damaged aspects to pre-damage condition 

equals or exceeds 50 percent of the structure’s market value, regardless 

of how much work the owner plans to do right away. Sometimes owners 

decide to undertake restoration and repairs over time. Sometimes the 

initial work is only the minimum necessary to make the structure safe 

enough to reoccupy (provided such occupancy is allowed by the community). Sometimes the owner’s financial 

situation does not allow all of the repairs to be done at the same time. Even if an owner elects to perform less 

work or delay repairs, the substantial damage determination must be made using the estimate of all costs to 

fully restore the structure. 

When repair work is done by owners or volunteers, or when labor costs are discounted by contractors, and 

when materials are donated or discounted, the full costs must be estimated and included in substantial 

damage determinations. 

22. How are estimates for donated or discounted materials and the owner’s labor or 

volunteer labor determined? 

The value placed on all donated or discounted materials should be 

equal to the full actual or estimated cost of such materials and must be 

included in the total cost. Where materials or service equipment are 

donated or discounted below market values, the costs should be adjusted 

to amounts equivalent to normal market costs.

See Sections 5.6.1 and 

5.6.2 of the SI/SD Desk 

Reference.

See Sections 4.4, 5.6.2, 

and 5.6.3 of the SI/SD 

Desk Reference.

See Sections 4.4.4 

(materials) and 4.4.5 

(labor) of the SI/SD Desk 

Reference.
16 Answers to Questions About Substantially Improved/Substantially Damaged Buildings

Section 3 How to Determine Substantial Improvement and Substantial Damage

When property owners do their own work, or if volunteer labor is used, then the normal market value or 

“going rate” for labor must be included in cost estimates. The value of labor should be estimated based on 

applicable minimum hourly wage rates for the skill and type of construction work that will be done. Wage 

rates can vary geographically.

In both cases, local officials should verify the estimates based on professional judgment and knowledge of 

local or regional material costs and construction industry labor wage scales.

23. What requirements apply when a substantially improved or substantially damaged building or 

manufactured home is located in a coastal high hazard area (Zone V)?

Coastal high hazard areas are areas of special flood hazard extending 

from offshore to the inland limit of a primary frontal dune along an 

open coast and any other area subject to high-velocity wave action from 

storms or seismic sources. SFHAs where the waves are predicted to be 3 

feet or higher are labeled Zone V on FIRMs. 

In Zone V, substantially improved and substantially damaged buildings and manufactured homes must be 

brought into compliance with the following requirements:

• Be elevated on open foundations (pilings or columns) that allow floodwater and waves to pass beneath 

the elevated structures (floodproofing is not allowed)

• Be elevated so that the bottom of the lowest horizontal structural member of the lowest floor is at or above 

the BFE

• Have foundations anchored to resist flotation, collapse, and lateral movement due to the effects of wind 

and water loads acting simultaneously on all structure components

• Have areas beneath elevated structures free of obstructions that would prevent the free flow of floodwater 

and waves during a base flood event

• Have utilities and structure service equipment elevated above the BFE

• Have the walls of enclosures below elevated structures designed to break away under base flood conditions 

without transferring loads to foundations

24. What requirements must be met if a substantially improved or substanially damaged 

building or manufactured home is located in a floodway?

A floodway is the channel of a river or other watercourse and the 

adjacent land areas that must be reserved (kept free of encroachments) 

to discharge the base flood without cumulatively increasing the 

water surface elevation more than a designated height. Floodways 

are delineated along most waterways that are studied using detailed 

engineering methods.

If a building or manufactured home is located in a floodway, bringing it into compliance may involve having 

a floodway encroachment analysis prepared if there is any increase in the footprint, such as a lateral addition 

or increase in earthen fill. The NFIP regulations require this analysis to be performed for any work that 

See Section 5.6.9 of the 

SI/SD Desk Reference.

See Section 5.6.8 of the 

SI/SD Desk Reference.
Answers to Questions About Substantially Improved/Substantially Damaged Buildings 17

How to Determine Substantial Improvement and Substantial Damage Section 3

encroaches into a floodway. If the analysis indicates any increase in BFE, the local official must not allow the 

proposed work. Using open foundations such as piers or columns may minimize the floodway impacts.

25. How are historic structures treated when they are substantially damaged or when 

improvements are proposed? 

Floodplain management regulations give special consideration to the 

unique value of designated historic structures, which include structures 

listed or preliminarily determined to be eligible for listing in the 

National Register of Historic Places, structures certified or preliminarily 

determined as contributing to the historical significance of a registered 

historic district, or structures individually listed on a State inventory of historic places or on local inventories 

in communities with certified historic preservation programs. Note the NFIP has a specific definition for 

historic structures. It does not include structures that are merely old, those that are referred to as historic, or 

those that happen to be located in historic districts. 

Provided historic structures retain their designations as historic structures, the requirement to bring 

them into compliance does not apply if they will be substantially improved or have been substantially 

damaged. Although compliance is not required for substantial improvement of historic structures, owners 

should carefully consider the benefits of implementing measures to minimize flood damage. Guidance for 

minimizing the impacts of flooding on historic structures is found in Floodplain Management Bulletin: Historic 

Structures (FEMA P-467-2). 

Permit applications for improvements (including additions) or repairs of historic structures should be 

accompanied by two pieces of evidence: (1) documentation that confirms the structure is designated a historic 

structure, and (2) documentation that confirms the proposed work will not preclude the structure’s continued 

designation.

Communities may elect to use one of two approaches to handle historic structures. One approach is to grant 

variances, requiring evaluation of individual requests and consideration of conditions to make the structures 

more resistant to flood damage. The other approach is to exclude historic structures from the definition of 

substantial improvement. Whichever approach is selected, it should be used in all cases when improvements or 

repairs are proposed for historic structures.

See Section 6.5.1. of the 

SI/SD Desk Reference.
18 Answers to Questions About Substantially Improved/Substantially Damaged Buildings

Section 3 How to Determine Substantial Improvement and Substantial Damage
Answers to Questions About Substantially Improved/Substantially Damaged Buildings 19

Section 4

Post-Disaster Permitting

The questions in this section typically arise after a disaster, especially when many buildings or manufactured 

homes are damaged. The questions and answers in Sections 2 and 3 still apply after disasters. 

26. What are the permit requirements for buildings and manufactured homes that have been 

substantially damaged? 

Before starting to repair damaged buildings and manufactured homes, 

property owners should always check with local permit authorities 

to determine whether permits are required. Permits are typically 

required to repair damage, and if a structure has been substantially 

damaged, it must be brought into compliance with the community’s 

floodplain management regulations. Note that it is not always easy to tell whether a damaged structure has 

been substantially damaged because making that determination requires an estimate of the cost to repair the 

damaged structure to its before-damage condition and an estimate of the market value of the structure before 

the damage occurred. 

27. Given the number of permit applications may be overwhelming in a post-disaster situation, 

what should local officials focus on to assess potential substantially damaged buildings and 

manufactured homes?

Immediately after a damaging event occurs, the first step in assessing 

damage typically involves conducting an initial “windshield review” or 

survey of the extent of damage, resulting in a broad characterization 

of the number of buildings and manufactured homes affected and the 

level of anticipated damage. This initial assessment, call a Preliminary 

Damage Assessment, is usually a precursor to a decision regarding 

whether to seek a declaration of the event as a major disaster.

The next step local officials typically take is to conduct a rapid evaluation or structure condition survey of 

affected areas. This is done to identify obviously unsafe structures and to identify those that will require a 

permit before repairs are undertaken. This is the step where many communities use color-coded placards 

to identify the structures that have been inspected and declared safe (green), those that have restricted use 

(yellow), and those deemed unsafe (red).

See Sections 7.3, 7.4, 

and 7.5 of the SI/SD Desk 

Reference.

Existing Violations

See Questions 5 and 6.
20 Answers to Questions About Substantially Improved/Substantially Damaged Buildings

Section 4 Post-Disaster Permitting

Preliminary Damage Assessments and safety evaluations are not equivalent to substantial damage 

determinations. However, local officials charged with performing building inspections and making substantial 

damage determinations may find the results useful to identify areas where significant damage has occurred 

and to coordinate their substantial damage inspections.

Although it is important to issue permits to allow property owners in SFHAs whose buildings have sustained 

less than substantial damage to make repairs as soon as possible after a damaging event, it is equally important 

to make substantial damage determinations and to enforce the substantial damage requirements. Failure to 

do so means structures would remain vulnerable, may be in violation of floodplain management requirements, 

and NFIP flood insurance policies may have very high premiums. 

Some readily available data can be used to estimate repair costs and market values. These estimates can be 

used to screen damaged structures for those most likely to have sustained substantial damage. Comparing 

readily available information on repair costs to readily available information on market value can give 

local officials a basic picture of which structures will require more 

attention and more detailed information to make substantial damage 

determinations. When using estimates, attention should be focused on 

those buildings for which the resulting ratios fall within a range around 

50 percent, such as between 40 and 60 percent. Even if more refined 

data are used, those with higher ratios are still likely to have incurred 

substantial damage, while those with lower ratios are less likely to have 

to meet the substantial damage threshold.

While the sources of information listed below should not be used to 

make final substantial damage determinations, local officials can use 

them to organize and focus efforts following disasters:

• Property owners who have insurance will receive estimates of damage from their insurance companies. 

Because the basis used by insurance adjusters to estimate damage and the costs to repair are governed 

by the terms of the insurance policy, these estimates cannot be used to make substantial damage 

determinations. However, they are useful for screening to help identify the structures most likely to have 

sustained substantial damage.

• Unadjusted assessment values can be used as estimates of market values to quickly screen damaged 

structures to help focus attention on those for which more detailed information has to be provided.

• Replacement cost values can be used as estimates of market values to screen all damaged structures. 

28. What options are available to help local officials handle a large number of permit applications and 

potentially substantially damaged buildings and manufactured homes after disasters? 

Communities that have extensive floodplains and significant numbers 

of floodprone structures are encouraged to plan ahead to handle 

the workload. Even with good planning, support may be necessary to 

handle large numbers of damage inspections and permit applications. 

In addition to support from the State and FEMA, resources may 

be available from other communities, State floodplain management associations, State building code 

associations, and organizations that represent engineers and architects. Some States and communities develop 

mutual aid agreements, interlocal agreements, or some other mechanism to facilitate this post-disaster 

See Section 7.2 of the

SI/SD Desk Reference.

Level of Accuracy

See Question 11.

Adjusted Assessment 

Values

See Questions 12 and 13.

Replacement Cost Values

See Question 14.
Answers to Questions About Substantially Improved/Substantially Damaged Buildings 21

Post-Disaster Permitting Section 4

support. While help may be offered to perform inspections and gather data, perhaps using the FEMA SDE, 

making final SI/SD determinations and permit decisions remain the responsibility of local officials in affected 

communities. 

Depending on the scale and severity of damage, some communities institute a full or partial moratorium on 

issuing permits. Once the community has evaluated the magnitude, scope, and general location of potential 

substantially damaged structures, the community may remove the moratorium. When mitigation projects 

such as floodplain buyouts, elevation-in-place, or other measures are considered, it may be reasonable to delay 

rebuilding until the pros and cons of such projects are evaluated.

29. What is the FEMA Substantial Damage Estimator (SDE) and how can it help in determining 

substantial damage? 

The SDE software offers a formalized approach to develop reasonable 

estimates of structure values and reasonable estimates of the costs 

to repair or reconstruct buildings. The SDE enables local officials to 

calculate a reasonable and defensible estimate of whether structures 

have been substantially damaged and make substantial damage 

determinations. The SDE is described in the Substantial Damage Estimator 

(SDE) User Manual and Field Workbook, Using the SDE Tool to Perform 

Substantial Damage Determinations (FEMA P-784).

The SDE can be used to evaluate damage by any cause (flood, tornado, earthquake, etc.). The software allows 

users to develop damage estimates by examining individual structure elements. Users can estimate damage 

percentages for each described structure element. Using these percentages, the SDE produces an aggregate 

“percent damage” for the structure as a whole. Because the SDE uses localized cost data and estimates of 

market value (typically based on property assessments), communities should establish a procedure to handle 

property owner appeals, especially when owners provide more detailed data for costs to repair and market 

value. 

30. When buildings and manufactured homes are substantially damaged by flooding, how can local 

officials help property owners obtain the financial benefits of the Increased Cost of Compliance 

(ICC) coverage that is as part of NFIP standard flood insurance policies? 

NFIP standard flood insurance policies on buildings and manufactured 

homes in SFHAs include ICC coverage. This coverage was authorized 

by Congress to help pay the added costs of bringing structures 

that are substantially damaged by flooding into compliance with 

the community’s floodplain management requirements for new 

construction. ICC claims are paid any time flood damage qualifies and when local officials make substantial 

damage determinations, not just when major disasters are declared. Processing ICC claims, which involves 

insurance adjusters, property owners, and local officials, must be accomplished within specific timeframes. 

As of 2018, the ICC coverage provides up to $30,000 toward the cost of bringing insured structures into 

compliance. Additional guidance, brochures, frequently asked questions, and a policyholder processing 

checklist are available online at https://www.fema.gov/increased-cost-compliance-coverage.

Compliance measures that can be paid with the ICC claim payment include elevation, relocation, demolition, 

and dry floodproofing (non-residential structures only).

See Section 7.5.1. of the 

SI/SD Desk Reference.

Making Determinations

See Question 10.

See Section 7.6. of the

SI/SD Desk Reference.
22 Answers to Questions About Substantially Improved/Substantially Damaged Buildings

Section 4 Post-Disaster Permitting

The community’s role helping property owners with ICC claims includes:

• Requiring compliance with all NFIP and local requirements.

• Collecting information and making substantial damage determinations.

• Informing property owners/policyholders about the requirement to bring structures into compliance and 

working with them to determine the appropriate options to achieve compliance.

• Providing property owners/policyholders with letters documenting the substantial damage by flooding 

determination; the owner provides a copy to the claims adjuster to process the ICC claim.

• Issuing permits and inspecting construction.

• Performing final inspections and issuing certificates of occupancy or letters stating the work to bring 

the structure into compliance has been completed satisfactorily and that no variance was granted. This 

evidence is required before policyholders receive the final installment of their ICC claim payments.

31. What steps can local officials take to inform citizens about the permit process and substantial 

damage determinations?

Local officials should recognize that citizens will have questions 

about recovery and the process of obtaining inspections and permits. 

Distributing substantial damage determinations may generate a number 

of questions. Local officials should be prepared to answer questions 

throughout the post-disaster recovery phase. 

Communities should consider developing and distributing guidance to citizens, property owners, contractors, 

and design professionals on:

• The importance of having damaged structures inspected before repair work is started

• Activities that require a permit

• Activities that do not require a permit

• The floodplain management requirements that apply when structures in the SFHA are substantially 

damaged and what it means to bring those structures into compliance

• The availability and benefits of the ICC coverage that is part of NFIP standard flood insurance policies on 

structures in mapped SFHAs

• The importance of hiring licensed contractors and cautions about fraudulent and unlicensed entities that 

may take advantage of victims in areas affected by significant events

• The importance of including damage-reduction measures to minimize future flood damage, even if such 

measures are not required by the community’s floodplain management regulations

32. Because of the trauma and inconvenience people experience during and after disasters, can 

communities suspend permit requirements for the repair of damaged buildings and manufactured 

homes in post-disaster situations?

No, requirements for buildings and structures in SFHAs must not be 

suspended or waived. Sometimes there is pressure on local officials to 

suspend issuing permits or to waive requirements that are perceived 

See Sections 5.5 and 

7.9 of the SI/SD Desk 

Reference.

See Section 7.1. of the SI/

SD Desk Reference.
Answers to Questions About Substantially Improved/Substantially Damaged Buildings 23

Post-Disaster Permitting Section 4

to delay recovery, but returning structures to their pre-flood condition 

leads to repetitive flood damage. Yielding to such pressure would 

expose people and their properties to future damage. In addition, 

allowing repairs and reconstruction of substantially damaged structures 

means the owners would have very costly NFIP flood insurance 

premiums. Moreover, if a community fails to properly administer its floodplain management requirements for 

substantially damaged structures, its standing in the NFIP could be jeopardized. 

Communities may decide to waive permit fees after significant damage events to be responsive to the needs of 

property owners. However, waiving fees does not waive the requirement for property owners to obtain permits 

and comply with the requirements.

33. Can variances to the substantial damage requirements be granted?

Generally, no. Local floodplain management regulations have criteria 

for variances that must be satisfied even in the post-disaster recovery 

period. A variance is a grant of relief from the terms of a code or 

regulation. If granted, a variance allows construction in a manner that 

is otherwise prohibited. Granting variances to the requirements would 

allow property owners to repair and rebuild in ways that will continue to 

expose their buildings to flooding. Especially when damage was caused by flooding, it is difficult to conceive of 

situations where waiving the requirement to elevate substantially damaged buildings could be justified. 

NFIP flood insurance policies written on new construction and 

substantially improved buildings are rated based on risk (primarily 

elevation relative to BFE). Even if variances are issued to allow the 

substantially damaged buildings to be repaired without elevating and 

bringing them into compliance, the cost of flood insurance policies will 

be high. 

34. What steps can communities take to prepare to implement the substantial damage 

requirement during the post-disaster period? 

There are several ways communities can effectively administer 

floodplain management responsibilities after disasters occur. Some 

successful actions include:

• Brief elected officials as soon as possible after an event to inform 

them of the community’s responsibilities to:

"Issue permits for repair and reconstruction

"Make substantial damage determinations for buildings located in mapped SFHAs

"Explain what it means to bring substantially damaged structures into compliance with current 

floodplain management standards

"Explain the NFIP ICC coverage that is part of NFIP flood insurance policies on buildings in SFHAs

"Share the materials developed to communicate with citizens

NFIP Insurance Rates

See Question 9.

NFIP Insurance Rates

See Question 9.

See Sections 5.6.7 and 

7.8 of the SI/SD Desk 

Reference.

See Section 7.2 of the SI/

SD Desk Reference.
24 Answers to Questions About Substantially Improved/Substantially Damaged Buildings

Section 4 Post-Disaster Permitting

• Ask electric utility companies and community utility departments to turn on service only when property 

owners provide copies of building permits or evidence that permits are not required

• Establish a routine to drive through affected areas to check for unpermitted construction work

• Depending on the scale and severity of damage, institute a full 

or partial moratorium on issuing permits to allow evaluation of 

potential substantially damaged structures and possible mitigation 

projects

• Keep records in a format that allows plotting by a geographic 

information system (GIS) to easily document the status of damaged 

structures

• Plan ahead to handle the workload, perhaps by developing mutual 

aid agreements, interlocal agreements, or other support, and by 

learning to use the SDE before disasters to facilitate use after 

disasters

35. What information should local officials share with property owners during the post-disaster period? 

Communications with property owners will take place throughout the 

post-disaster recovery period. Immediately after an event, communities 

should be prepared to provide information about cleanup and repairs 

and to caution property owners not to perform any work that requires a 

permit until a permit is obtained, except work necessary to temporarily 

stabilize structures so they are safe to enter. 

Local officials should recognize that there may be questions from 

property owners about permit requirements and what it means if 

they receive a substantial damage determination. Many communities 

distribute notices to property owners, contractors, and design professionals summarizing the SI/SD 

requirements and listing costs to be included in estimates. This booklet can be made available to property 

owners, contractors, engineers, architects, and other interested parties. 

36. Are there grant programs available to communities to help property owners whose buildings or 

manufactured homes have been substantially damaged?

Yes. FEMA, working through the States, administers a number of 

mitigation grant programs that allow communities to apply for 

funds to implement a variety of flood mitigation projects. Projects 

that may help owners of substantially damaged structures include 

acquisition of property (and demolition or relocation of structures), 

elevating structures in-place on higher foundations, relocating structures to sites outside of SFHAs, and dry 

floodproofing (applicable only to non-residential structures and historic structures). 

Each of FEMA’s hazard mitigation grant programs has specific requirements, notably that projects must 

be cost effective, which may be determined by a benefit-cost analysis. Visit https://www.fema.gov/hazardmitigation-assistance for more information about the following grant programs:

Federal Assistance

See Question 36.

See Chapter 8 of the SI/

SD Desk Reference.

See Section 7.9 and 

a sample Notice for 

Property Owners, 

Contractors, and Design 

Professionals in Appendix 

D of the SI/SD Desk 

Reference.

Substantial Damage 

Estimator (SDE)

See Question 29.
Answers to Questions About Substantially Improved/Substantially Damaged Buildings 25

Post-Disaster Permitting Section 4

• Pre-Disaster Mitigation (PDM) Program. This nationally competitive program provides funds to States, 

territories, federally-recognized tribes, and local governments to implement cost-effective hazard 

mitigation activities that complement a comprehensive mitigation program.

• Hazard Mitigation Grant Program (HMGP). These funds are available following Presidential disaster 

declarations. Eligible applicants include States, territories, federally-recognized tribes, local governments, 

and some private non-profit organizations. Communities may apply for HMGP assistance on behalf of 

affected individuals and businesses, and all funds must be used to reduce or eliminate losses from future 

disasters.

• Flood Mitigation Assistance (FMA) Program. This program provides funding to States, territories, 

federally-recognized tribes, and local governments to implement measures that reduce or eliminate the 

long-term risk of flood damage to buildings and manufactured homes that are insured by the NFIP.
26 Answers to Questions About Substantially Improved/Substantially Damaged Buildings

Section 4 Post-Disaster Permitting
Answers to Questions About Substantially Improved/Substantially Damaged Buildings 27

Publications and Resources Appendix A

Appendix A

Publications and Resources

Free hard copies of FEMA Building Science’s current publications may be ordered by calling the FEMA 

Publication Warehouse at 1-800-480-2520, Monday through Friday between 8:00 AM and 5:00 PM (EST), 

by faxing a request to 1-240-699-0525, or by emailing FEMA-Publications-Warehouse@fema.dhs.gov. Please 

include the publication title and number, quantity of each publication, and the requestor’s name, address, zip 

code, and daytime telephone number. 

FEMA F-084, Answers to Questions about the National Flood Insurance Program. Washington, DC: Federal 

Emergency Management Agency, 2011. 

https://www.fema.gov/media-library/assets/documents/272

FEMA P-85, Protecting Manufactured Homes from Floods and Other Hazards: A Multi-Hazard Founda¬tion and 

Installation Guide, Second Edition. Washington, DC: Federal Emergency Management Agency, 2009. 

https://www.fema.gov/media-library/assets/documents/2574?id=1577

FEMA P-259, Engineering Principles and Practices of Retrofitting Flood-Prone Residential Structures, Third 

Edition. Washington, DC: Federal Emergency Management Agency, 2012. 

https://www.fema.gov/media-library/assets/documents/3001?id=1645

FEMA 301, Increased Cost of Compliance Coverage: Guidance for State and Local Officials. Washing¬ton, DC: 

Federal Emergency Management Agency, 2003. 

https://www.fema.gov/increased-cost-compliance-coverage

FEMA P-312, Homeowner’s Guide to Retrofitting: Six Ways to Protect Your Home from Flooding, Third Edition. 

Washington, DC: Federal Emergency Management Agency, 2014. 

https://www.fema.gov/media-library/assets/documents/480

FEMA P-347, Above the Flood: Elevating Your Floodprone House. Washington, DC: Federal Emergency 

Management Agency, 2000. 

https://www.fema.gov/media-library/assets/documents/725

FEMA P-467-2, Floodplain Management Bulletin: Historic Structures. Washington, DC: Federal Emergency 

Management Agency, 2008. 

https://www.fema.gov/media-library/assets/documents/13411?id=3282

FEMA P-499, Home Builder’s Guide to Coastal Construction: Technical Fact Sheets. Washington, DC: Federal 

Emergency Management Agency, 2010. 

https://www.fema.gov/media-library/assets/documents/6131?id=2138

FEMA 511, Reducing Damage from Localized Flooding: A Guide for Communities. Washington, DC: Federal 

Emergency Management Agency, 2005. 

https://www.fema.gov/media-library/assets/documents/1012
28 Answers to Questions About Substantially Improved/Substantially Damaged Buildings

Appendix A Publications and Resources

FEMA 551, Selecting Appropriate Mitigation Measures for Floodprone Structures. Washington, DC: Federal 

Emergency Management Agency, 2007. 

https://www.fema.gov/media-library/assets/documents/10618?id=2737

FEMA F-663, Increased Cost of Compliance Brochure. Washington, DC: Federal Emergency Man¬agement 

Agency, 2017. 

https://www.fema.gov/media-library/assets/documents/12164

FEMA P-758, Substantial Improvement/Substantial Damage Desk Reference. Washington, DC: Federal 

Emergency Management Agency, 2010. 

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

FEMA P-784, Substantial Damage Estimator (SDE) User Manual and Field Workbook, Using the 

SDE Tool to Perform Substantial Damage Determinations. Washington, DC: Federal Emergency 

Management Agency, 2017.

https://www.fema.gov/media-library/assets/documents/18692

FEMA P-936, Floodproofing Non-Residential Buildings. Washington, DC: Federal Emergency 

Management Agency, 2013.

https://www.fema.gov/media-library/assets/documents/34270

FEMA P-1080, Answers to Frequently Asked Questions About Increased Cost of Compliance. Washington, DC: 

Federal Emergency Management Agency, 2017. 

https://www.fema.gov/media-library/assets/documents/142200

FEMA, NFIP Technical Bulletin Series. Washington, DC: National Flood Insurance Program. 

https://www.fema.gov/nfip-technical-bulletins

U.S. Government Printing Office. Title 44, Code of Federal Regulations, Emergency Management and 

Assistance, (Parts 59 and 60). 

https://www.gpo.gov/fdsys/pkg/CFR-2017-title44-vol1/content-detail.html
Answers to Questions About Substantially Improved/Substantially Damaged Buildings 29

Contact Information for NFIP State Coordinating Agencies and FEMA Regional Offices Appendix B

Appendix B

Contact Information for NFIP State Coordinating 

Agencies and FEMA Regional Offices

NFIP State Coordinating Agencies

Every State and territory has an office or agency designated as the NFIP State Coordinating Agency, usually 

called the NFIP State Coordinator. Contact information is available at http://www.floods.org. 

FEMA Regional Offices 

Regional office addresses and contact information are shown below and are available at 

https://www.fema.gov/fema-regional-office-contact-information. 

FEMA Regions and Location of Regional Offices

Alaska

American

Samoa

Guam Hawaii

CNMI

Virgin

Islands

Puerto

Rico

Washington, DC

Philadelphia

Kansas City

Bothell

Denton Atlanta

Boston

New York

Oakland

Chicago

Denver
30 Answers to Questions About Substantially Improved/Substantially Damaged Buildings

Appendix B Contact Information for NFIP State Coordinating Agencies and FEMA Regional Offices

FEMA Region Contact Information

FEMA 

Region States and Territories Address Telephone

Region 

I

Connecticut, Maine, 

Massachusetts, New Hampshire, 

Rhode Island, Vermont

Federal Emergency Management Agency

99 High Street

Boston, MA 02110

877.336.2734

Region 

II

New Jersey, New York, Puerto 

Rico, U.S. Virgin Islands

Federal Emergency Management Agency

26 Federal Plaza

New York, NY 10278-0002

Region II Caribbean Address

Federal Emergency Management Agency

Caribbean Division

New San Juan Office Building

159 Calle Chardon, 6th Floor

Hato Rey, PR 00918

212.680.3600

Region 

III

Delaware, District of Columbia, 

Maryland, Pennsylvania, Virginia, 

West Virginia

Federal Emergency Management Agency

615 Chestnut Street

One Independence Mall, Sixth Floor

Philadelphia, PA 19106-4404

215.931.5500

Region 

IV

Alabama, Florida, Georgia, 

Kentucky, Mississippi, North 

Carolina, South Carolina, 

Tennessee

Federal Emergency Management Agency

3003 Chamblee Tucker Road

Atlanta, GA 30341

770.220.5200

Region 

V

Illinois, Indiana, Michigan, 

Minnesota, Ohio, Wisconsin

Federal Emergency Management Agency

536 South Clark Street, 6th Floor

Chicago, IL 60605

312.408.5500

Region 

VI

Arkansas, Louisiana,

New Mexico, Oklahoma, Texas

Federal Emergency Management Agency

FRC 800 North Loop 288

Denton, TX 76209-3698

940.898.5399

Region 

VII

Iowa, Kansas, Missouri,

Nebraska

Federal Emergency Management Agency

9221 Ward Parkway, Suite 300

Kansas City, MO 64114-3372

816.283.7061

Region 

VIII

Colorado, Montana,

North Dakota, South Dakota, 

Utah, Wyoming

Federal Emergency Management Agency

Denver Federal Center

Building 710, Box 25267, Denver, CO 80225-0267

303.235.4800

Region 

IX

Arizona, California, Guam, 

Hawaii, Nevada, Commonwealth 

of Northern Mariana Islands, 

Republic of the Marshall Islands, 

Federated States of Micronesia, 

American Samoa

Federal Emergency Management Agency

1111 Broadway, Suite 1200

Oakland, CA 94607-4052

510.627.7100

Pacific Area 

Office:

808.851.7900

Region 

X

Alaska, Idaho, Oregon, 

Washington

Federal Emergency Management Agency

Federal Regional Center

130 228th Street, Southwest

Bothell, WA 98201-8627

425.487.4600