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Second Appeal Brief
PA ID# 029-39390-00; Borough of Lavallette
PW ID# (PW) 440 ; Codes and Standards – 50 Percent Rule
Conclusion: The floodplain administrator incorrectly determined the buildings met the definition of substantially damaged; FEMA correctly excluded elevation costs in its application of the 50 Percent Rule; and the Applicant has not demonstrated that applicable codes or standards require elevation. Accordingly, estimated costs to replace, rather than repair, the buildings are not eligible.
From October 26 to November 8, 2012, Hurricane Sandy caused damage to the Police and Municipal Buildings located in the Borough of Lavallette, New Jersey. To document both the estimated costs to repair these buildings to pre-disaster condition and replace damaged contents, FEMA prepared Project Worksheet (PW) 440. The Applicant subsequently requested approval for an improved project that proposed to demolish both buildings and replace them with a single facility. After FEMA approved the improved project request and capped funding based on the repair estimates, the Applicant requested that FEMA base funding on estimated costs to replace both buildings. FEMA denied this request, finding that the Applicant’s floodplain administrator had incorrectly determined the buildings were substantially damaged. FEMA held that substantial damage is determined only when repair costs exceed 50 percent of the market value, and in this case, the elevation costs were incorrectly included as repair costs. As the estimated repair costs alone did not exceed 50 percent of the buildings’ market values, FEMA determined the buildings did not meet the definition of substantially damaged, and thus elevation was not required. The Applicant appealed, arguing that FEMA incorrectly excluded elevation-related costs in the substantial damage calculation—contending certain codes required elevation if the buildings were repaired. The Applicant separately argued that it should be reimbursed estimated costs to replace the buildings because, pursuant to FEMA’s 50 Percent Rule, repair costs exceed 50 percent of replacement costs. Additionally, the Applicant asserted that elevation costs were eligible because it could not obtain building permits without elevating, and without these permits the buildings could not function as they did predisaster. The Region II Regional Administrator (RA) denied the appeal, holding that the Applicant’s code did not require elevation at the time of the disaster and elevation costs were properly excluded from the 50 Percent Rule calculation. Additionally, the RA noted that FEMA policy prohibited inclusion of costs triggered by floodplain ordinances and local codes. The Applicant appeals, reiterating its first appeal arguments, specifically arguing that the RA incorrectly interpreted the code provisions requiring elevation.
Authorities and Second Appeals
- Stafford Act § 406.
- 44 C.F.R. §§ 9.4, 9.11(d)(3)(ii), 59.1, 60, 206.226, (d)(1)-(5), (f)(1), (f)(2), 206.221(i).
- DAP9524.4, at 2.
- 9524.4 Clarification Memo (2015), at 1.
- DAP9527.4, at 3-4.
- PA Guide, at 36.
- N.J. Admin. Code § 7:13-1.2, 11.5 (b), (h), (k).
- Pursuant to 44 C.F.R. § 59.1, a structure is substantially damaged when it has been damaged in excess of a cost that equals or exceeds 50 percent of the market value of the structure.
- Pursuant to N.J. Admin. Code 7:13-11.5(b), (h), (k), elevation is required when the structure meets the definition of “reconstruct” found at N.J. Admin. Code 7:13-1.2. “Reconstruct” involves replacing greater than 50 percent of the structure. As the estimated repairs for each building were not in excess of 50 percent of their respective market values and elevation was not required by the N.J. Administrative Code—the buildings were not substantially damaged.
- If the cost to repair a facility is greater than 50 percent of its value, replacement costs are eligible pursuant to 44 C.F.R. § 206.226(f). However, as stated in DAP9524.4, repair costs do not include costs for triggered or mandatory upgrading of the facility.
- Elevation costs are upgrades to the buildings. Therefore, they are not included as repair costs for purposes of the 50 Percent Rule.