- The FEMA Flood Zone Conundrum—What's It All About?
- October 6, 2016 | Authors: Alex P. Prochaska; Robert W. Scheffy
- Law Firm: Jones Walker LLP - Baton Rouge Office
In response to the August 2016 flooding event, there have been several articles about the Federal Emergency Management Agency ("FEMA") regulations, the National Flood Insurance Program ("NFIP"), the base flood elevation requirements relating to a building damaged by flooding, and local government rebuilding requirements. This e-lert will explain these programs and compliance requirements and the recent developments on the national and local levels, as FEMA and local governments in Louisiana respond to the August 2016 flood event.
A building (home) that has experienced flooding is in very GENERAL TERMS in one of three major categories:1 It is:
- either outside the FEMA Flood Zone ("Situation 1") and subject only to local governmental rebuilding requirements as well as insurance provision should the owner have flood insurance; or
- inside the FEMA Flood Zone but with the cost or repairs being LESS than 50 percent of the market value of the building (the "Substantial Damage Rule"), in which case local government regulations come into play for purposes of permitting and/or inspection, and in which case flood insurance issues come into play (see our previous e-lert dated for local government permitting regulation issues) ("Situation 2"); or
- inside the FEMA Flood Zone but with the cost or repairs being 50 percent or more of the market value of the building, in which case the building now must meet the existing floodplain regulations, including the requirement to obtain an elevation certificate certifying the slab elevation as being at or above (depending on the city involved) the base flood elevation before the owner can seek permits from the city ("Situation 3").
National Flood Insurance Program
In the 1950s and 1960s Congress recognized the economic hardships federal flood disaster assistance had on the "nation's resources," and because the only people who were buying flood insurance were the ones who lived in flood-prone areas and were likely to be flooded, it was uneconomic for the private insurance industry alone to make flood insurance available at a reasonable rate.2 Therefore, Congress passed the National Flood Insurance Act of 1968 establishing the National Flood Insurance Program ("NFIP") to address these problems.3 FEMA is the federal agency that administers the NFIP, which has three important functions—mapping and hazard identification, insurance, and regulations, as summarized below.
Mapping & Hazard Identification
As a result of the August flooding there has been constant discussion of the flood maps or FEMA maps. The creation of these maps is a part of the NFIP and set the stage for the regulations and insurance requirement by delineating areas prone to flooding and assigning letters to these zones based on flood risk from data gathered through risk assessments and Flood Elevation Studies.4 The most recent map developed by FEMA is the Flood Insurance Rate Map or ("FIRM").5 The FIRM is based on a Flood Insurance Study ("FIS")6 and shows areas of high to moderate to low flood risk.
High flood risk areas are commonly referred to as Special Flood Hazard Areas ("SFHAs"), and are designated with letters "A" or "V." The moderate-to-low-risk zones, commonly referred to as Non-Special Flood Hazard Areas ("NSFAs"), begin with letters "X," "B," or "C." To emphasize how important these classifications are, if the property is in an A or V zone, the owner is typically required to have flood insurance and is subject to stricter regulations than if the property is in an X, B, or C zone.
The maps are geographic by particular areas, and one particular parish may have several individual FIRMS within its borders. The most recent FIRM for sections of East Baton Rouge Parish was last revised in June 2012, and most of the FIRMs for other sections of the parish were last revised in 2008. The FIRM for the Lake Charles Area was last updated in 2001 and in Lafayette Parish, 1999 with a majority of the parish FIRMS were last updated in 1996.7
FEMA administers the insurance program of the NFIP through private insurance companies in making reasonably priced flood insurance available to communities that adopt and implement floodplain management requirements that meet or exceed certain minimum federal requirements. One key aspect of the NFIP is that it transfers the costs of private property flood losses to the property owners through premiums and away from the tax payers. Initially, participation in the program was voluntary among the communities, and few took advantage of the policies until the Flood Disaster Protection Act of 1973 ("FPDA"). The FDPA provided sanctions to nonparticipating communities by restricting federal assistance for acquisition or construction of buildings in floodplains and required buildings located in flood hazard areas to have flood insurance in order to receive federally backed mortgages or federal disaster assistance.
The rates for these policies are set nationally and do not depend on the private company from which the policy is purchased. If a community has set requirements that exceed the minimum federal requirements, then the policyholders in that area receive a discount in the premiums paid because of NFIP's Community Rating System ("CRS"). CRS identifies which communities have exceeded the minimum standards and assigns points to each of the 19 floodplain management activities that a community can engage in to participate in CRS. Some of the activities a community can implement in order to earn points are (i) maintaining elevation certificates for new constructions in floodplains, (ii) providing FIRM mapping information to members of the public, (iii) performing outreach projects, (iv) higher regulatory standards, storm waterman agent, (v) ensuring drainage system maintenance, (vi) developing flood warning and response, and (vii) levee and dam safety and others in order to earn points. Each activity has a maximum number of points that can be earned. Depending on the number of points the community earns, the CRS will assign the community to one of 10 rate classes. Each class has a percentage discount assigned to it, and the classes/discounts range from 5 percent to 45 percent. So the more stringent requirements a community enacts for its community and the more robust its floodplain management activities are, the less expensive the premiums a property owner, who is required to have flood insurance through the NFIP, has to pay.
The NFIP requirements are found in 44 CFR Parts 59 & 60 and are the minimum federal standards or FEMA or NFIP standards which each community must enact and implement in order to participate in the NFIP standard. Communities implement these requirements by passing ordinances that mirror or exceed the federal NFIP program requirements.
It is important to understand the meaning of the terminology used in the regulations. Base Flood and Base Flood Elevation ("BFE") are used interchangeably and are defined in ordinances and in the federal regulations as the elevation of surface water resulting from a flood that has a one 1 percent chance of equaling or exceeding that level in any given year.8 Base Flood and BFE are also used interchangeably with the 100-year flood or the 1 percent flood. The FIRM will delineate what properties are within the 100-year flood zone and begin with letters A or V on the flood hazard boundary map. After detailed ratemaking has been completed in preparation for publication of the FIRM, Zone A usually is refined into Zones A, AE, AH, AO, A1-30, A99, AR, AR/A1-30, AR/AE, AR/AO, AR/AH, AR/A, VO, VI-30, VE, or V.9 If you are in these zones that start with A or V, insurance is mandatory, and sometimes heightened elevation requirements are implemented, as will be discussed below.
From parish to parish and city to city, the floodplain ordinances are largely identical.10 However, where communities exceed the minimum federal standards,14 it is usually by providing the minimum elevation for the lowest floor of new construction in areas of "special flood hazard"11 and/or the particular elevation that must be built to or exceed.12 The minimum NFIP standard is the lowest flood elevation new construction and/or substantial improvements must meet, at a minimum, which is elevated to or above the Base Flood Elevation ("BFE"). Some communities exceed these requirements by requiring the lowest floor be elevated one foot above the BFE, as is the case in East Baton Rouge Parish and Lafayette Parish. This area of elevation above the BFE is sometimes referred to as freeboard.
Another requirement implemented by communities to receive the premium discount is the "substantial damage rule" that governs the regulations and reconstruction and repairs to a building that has been damaged by flooding. When these federal regulations were enacted and ordinances adopted, the current structures in the floodplain were not required to be brought up to the new standards right away. However, if the structures become damaged to a certain degree, then in order to rebuild, they must comply with the current standards, that is, the 50 percent rule. The basic rule is that the cost to repair the damage caused by a flood equals or exceeds 50 percent of the market value of the building, it must be brought up to current floodplain management standards - i.e. in some cases elevated to 1 foot above BFE.
By way of example, a building currently valued at $300,000 was built before Lafayette adopted its floodplain regulations, and the lowest floor of the building sits six inches below BFE; the building is in Zone A and was damaged by the August 2016 flooding event. In Lafayette, the standard for all buildings is that the lowest floor in Zone A must be one foot above BFE. If the cost to repair or rebuild the residence is $150,000 (50 percent of $300,000, or equals 50 percent of the market value of the building), then Lafayette Parish will not issue a flood damage repair permit to rebuild unless the building meets all Lafayette Parish floodplain regulations, including elevation requirements.
Current Developments in Response to the August 2016 Flooding Event
Since the August 2016 rain events, FEMA has indicated it will not update the FIRM based on the recent event, nor will the resulting damage force an increase in flood insurance premiums. This alleviates an immediate fear for building owners of being subject to stricter requirements and higher insurance premiums if updated maps place them in an A or V zone. Whether this is sound policy for the long term, however, is something that will be scrutinized.
East Baton Rouge Parish
In 1991 East Baton Rouge Parish joined FEMA's Community Rating System. For the purpose of this discussion, East Baton Rouge Parish adopted ordinances that exceeded the minimum federal standards in four ways. First, it only required that the cost to repair a structure equal or exceed 40 percent of the market value of the structure in order to qualify as substantially damaged, as opposed to the federal 50 percent standard. Second, if you met or exceeded this 40 percent standard, you had to elevate to one foot above BFE, as opposed to the federal standard that only required you meet the BFE. Third, it required these heightened standards in Zones B, X, and C, (zones of low-to-moderate-risk areas) where the federal requirements do not require anyone participating in the NFIP to take extra measures. For example, under FEMA, if you have a structure that was substantially damaged in this area, FEMA would not require you to elevate in these zones, but East Baton Rouge Parish would. And fourth, the minimum slab elevation (the lowest floor) for buildings located in Zones A, B, C, and X not only must be one foot above BFE, also must be one foot above the "Record Inundation."13 Record Inundation was defined as "the highest flood level recorded by the city-parish in an applicable area. The minimum federal requirements only required the lowest floor be elevated to or above the BFE—no other level was required.
Therefore, if you were in Zones A, B, C, or X in East Baton Rouge Parish and you sustained damage that would result in spending 40 percent or more of the market value of the structure before the damage, then the parish would not issue a building permit to rebuild unless the structure meets or exceeds the minimum lowest floor elevation levels: one foot above the FIRM base flood elevation, one foot above the record inundation, one foot above the center line of the street, and one foot above the top of the lower upstream or downstream sanitary sewer manholes between the house connection. One way to prove the structure is compliant is through an elevation certificate that states the structure meets or exceeds these elevation requirements.
Because East Baton Rouge implemented these heighted standards, it was awarded 1,629 credit points and was placed in the class 7 range (1,500-1,999 credit point range), and policyholders received a 15 percent discount in Zone A and a 5 percent discount in Zones B, C, and X. East Baton Rouge received 20 points for the 40 percent substantially damaged standard, 108 points for requiring buildings be elevated one foot above BFE, and 25 points for pulling in Zones B, X, and C.
As a result of the damaging effects the August 2016 flooding event had on East Baton Rouge Parish, the Parish Metro Council relaxed some of these heightened requirements and was able to retain credit points above 1,500 and thus maintain its class 7 range.
On Wednesday, September 7, 2016, the Metro Council relaxed the 40 percent substantial damage threshold to 50 percent, consistent with the minimum federal standards. On this day, the Metro Council also excluded the August 2016 rain event from the definition of Record Inundation, so it now reads "the highest flood level, excluding the flood in August 2016, recorded by the city-parish in an applicable area."15 The motion carried without objection. On Wednesday, September 14, 2016, the Metro Council approved measure 16-000349 to loosen the one foot elevation requirement for Zones B, C, and X. As stated above, East Baton Rouge Parish had in place heightened requirements for these moderate-to-low-flood-risk Zones B, C, and X above that of the minimum federal requirements. This approved measure eliminated the one foot requirement for structures in these zones.
On September 2, 2016, Ascension Parish President Kenny Matassa suspended portions of Ordinance 17-505 of the parish’s Uniform Land Development Code. 17-505.A.5. provides all structures shall be constructed a minimum of one foot above each of the following criteria:
(a) FEMA Base Flood Elevation, or nearest adjacent FEMA Base Flood Elevation (latest edition);
(b) Record Inundation;16
(c) Top elevation of nearest adjacent sanitary sewer manhole on the sewer collection system servicing the proposed structure; and
(d) Accessory buildings are not subject to items a-c in Section 17- 505A.5. However, accessory buildings are subject to FEMA regulations per Section 17-505A.6. Deviations to this policy must be based on sound engineering judgment submitted by the applicant and approved in writing by the Floodplain Administrator.
The Executive Order suspended the requirement in the ordinance above that structures must be constructed one foot above "Record Inundation." The Executive Order is only in effect for thirty days, and any further action will require the Parish Council to amend the ordinance.
In summary, although local regulations may dictate a particular elevation requirement for a structure, local governments in some situations have the authority to amend these requirements and still protect the NFIP insurance premium payers. In addition, many local governments that issue building permits to repair or rebuild residences and commercial structures must consider whether issuing such permits is in compliance with its established floodplain management program, and if such a program allows for variances, how to issue variances consistently across the community to the satisfaction of FEMA. In addition, communities wishing to amend their regulations should keep in mind the consequences such amendments may have on the NFIP insurance policyholder's premium payments.