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Cost-effectiveness for Insured Repetitive Loss Properties

Alternative Methodology

In 2003, FEMA introduced a pilot program to allow a simplified, alternate, FEMA-approved methodology to conduct the Benefit-Cost Analysis (BCA) for certain repetitively flooded properties currently insured under the National Flood Insurance Program (NFIP). This effort was designed to support the mitigation of certain NFIP-insured structures by providing a framework that allowed States, Tribal governments and local community applicants to use NFIP-provided data to determine the "benefits" portion of the Benefit Cost Analysis (BCA) to demonstrate cost-effectiveness of proposed mitigation projects submitted for the Hazard Mitigation Assistance (HMA) programs:   Hazard Mitigation Grant Program, Flood Mitigation Assistance, Pre-Disaster Mitigation, Repetitive Flood Claims, and Severe Repetitive Loss, and Supplemental Mitigation Grants.

Most recently on November 26, 2008, FEMA released Guidance for the 2009 Alternative Determination of Cost-Effectiveness for Eligible Insured Repetitive Loss Properties.  The supporting data set released with the 2009 guidance was based on NFIP data as of September 30, 2008 and was deemed effective for use with eligible Hazard Mitigation Assistance projects through December 31, 2009, or until superseded.

Effective January 1, 2010, the Alternative Methodology was suspended per the memorandum Suspension of Alternative Determination of Cost-Effectiveness for Eligible Repetitive Loss Properties.  This action will have no impact on HMA applications submitted during the current FY 2010 HMA application period. 

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Greatest Savings to the Fund Approach

The Greatest Savings to the Fund (GSTF) approach was released in June of 2009.  Only flood mitigation project applications submitted for Severe Repetitive Loss (SRL) program funding may use the GSTF data and methodology to determine cost-effectiveness relevant to acquisition, elevation, and mitigation reconstruction projects.  Applicants are not required to use this methodology when submitting projects for funding, and may continue to utilize existing FEMA Benefit Cost Analysis (BCA) tools for the SRL grant program.

The information is based on the National Flood Insurance Program (NFIP) records as of September 2008 and is considered valid until superseded by an updated data set.  FEMA updates the list of validated Severe Repetitive Loss Properties as additional properties are validated to meet certain NFIP claims and insurance coverage criteria.  As additional properties are identified, FEMA will periodically update the GSTF data for use by SRL program applicants. 

Please note that certain data utilized in this methodology, such as insurance premium and coverage amounts for SRL properties, will be verified by FEMA upon review of projects submitted for funding.  Changes in insurance premium or coverage amounts could impact the calculated savings to the fund.

HMA grant applications submitted after December 31, 2009, must have their Benefit-Cost Ratio developed based on either the approved methodology using FEMA BCA or on the GSTF methodology, as amended.

 

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Last Modified: Wednesday, 11-Aug-2010 12:52:53 EDT

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