Thousands of homeowners in Southwest Florida whose homes were flooded by Hurricane Ian face a bureaucratic maze that may force them to demolish their homes and rebuild at higher elevations.
As a result, some local governments are looking for workarounds to help homeowners avoid total rebuilding, but because the regulations are designed to prevent future flooding damage, federal officials appear unlikely to relax the rules.
This will most likely prevent some property owners from rebuilding because they cannot afford the higher construction costs.
The total number of properties affected by the Federal Emergency Management Agency requirements in question is unknown, but it is likely to be significant. Many homeowners may not be aware of the difficulties they will face if they are not far enough along in the post-Ian reconstruction process.
North Port Building Official Derek Applegate and his counterparts throughout the region are tasked with informing disaster victims of these requirements.
In the worst-case scenario, the additional costs imposed by federal regulations could mean that homes must be demolished and several feet of fill dirt brought in to raise a site above the area’s base-flood elevation before a homeowner can even begin to rebuild.
“I have yet to meet anyone who was enthusiastic about our conversation,” Applegate said.
The dreaded 50% rule
Those discussions have centered on the “dreaded FEMA 50% rule,” as one Collier County attorney puts it.
For area homeowners to qualify for policies under the National Flood Insurance Program, county and municipal governments must meet federal guidelines.
One of those guidelines requires building departments not to issue building permits to homes in special flood zones when repair costs exceed 50% of the home’s market value until the property owners raise their homes so that future flood waters are less likely to cause damage.
The rule is intended to keep taxpayers from having to subsidize the rebuilding of properties in areas known to be vulnerable to future flooding.
However, the human impact and high cost of repairs caused by the rule have jurisdictions in Southwest Florida reconsidering how they calculate the 50% rule and how much wiggle room the federal government is willing to allow.
Earlier this month, the Lee County Board of County Commissioners discussed potential changes to allow for an additional 15% on top of the county property appraiser’s assessed value, which is used by building departments to determine the maximum repairs allowed before a property triggers the 50% rule.
Building departments multiply the assessed value of a home in a flood plain by two. The total cost of repairs cannot exceed this amount. If it does, the property must comply with updated building codes before a building permit is issued.
According to Lee County officials, federal regulators were not willing to include the 15% in calculating a home’s assessed value.
Indeed, when Lee County officials pointed to nearby jurisdictions with similar multipliers in their regulations, County Attorney Richard Wesch told commissioners that federal regulators would require those jurisdictions to remove any additive values to how they implement the 50% rule.
A problem unique to Florida
Charles Whittington, an attorney with the Collier County law firm Grant Fridkin Pearson, published an article on the “dreaded FEMA 50% rule” on the firm’s website in 2018.
After Ian, he updated it in November, recognizing that many people would be affected and looking for accurate information on the complex regulation.
According to Whittington, Florida properties may be more affected by the FEMA 50% rule because the rule only considers the value of a structure. He claims that in Florida, the land accounts for a large portion of a property’s value.
So, if someone paid $300,000 for a house but it is only worth $100,000, any repairs would have to be less than $50,000.
If the repair estimates exceed that amount, the homeowner will be required to raise their house to meet all new building codes.
“It would be prohibitively expensive to raise the structure to meet current FEMA regulations,” he explained. “Some people will be unable to pay.”
During the Nov. 15 Lee County Commission meeting, Richard Durling, owner of Marvin Homes in Lee County, pleaded with the board to proceed with the 15% multiplier despite what federal regulators had told county staff.
The Lee County homebuilder predicts a rapid increase in construction costs as a result of the COVID-19 pandemic’s impact on the supply chain. He stated that the construction industry had requested a 40% multiplier to reflect the rise in construction costs.
Lee County does not have an estimate of how many properties may be affected by the 50% rule, but Durling said county officials have identified up to 20,000 substantially damaged properties in the county. Many of those properties will be in federally designated flood zones, but not all of them.
According to county staff, 14 building permits have been halted as a result of the 50% rule so far.
“It’s a difficult situation,” Durling admitted, adding that county officials are “doing their best.”
Durling stated that he believes the county has the authority to determine how the 50% rule will be calculated and chastised federal regulators for not allowing the change.
“I’m not sure if they truly understand the impact of displacing thousands of people,” he said.
There’s also the issue of homestead exemptions to consider. A homesteaded property’s assessed value in Florida can only rise by 3% per year.
As a result, properties that have been homesteaded for years may have assessed values that are significantly lower than their current market value.
If a homeowner appeals their assessed value determination, most local building departments will accept an appraisal conducted by an appropriately licensed professional.
Finding an appraiser willing to sign off on a pre-hurricane valuation, on the other hand, can be difficult.
“You’re asking the appraiser to travel back in time to the day before the storm,” Whittington explained. “That’s a difficult job.”
Durling agreed and advocated for a “straightforward method” of some kind of multiplier.
He believes that some property owners may be feeling backed into a corner, forcing them to hire unlicensed contractors to repair their properties.
In the short term, this could result in property owners impacted by the 50% rule avoiding the regulation by hiring contractors who do not pull permits or hiring an unlicensed contractor.
Using an unlicensed contractor is illegal in Florida, and building department officials have warned homeowners not to do so because it increases the risk of being scammed.
Durling also stated that when a property owner goes to sell the property, he or she is required by law to disclose flooding to a buyer, who should then request the building permits for the repair work.
If the buyer does not request the permits, the mortgage company will, according to Durling.
“That’s going to be a huge issue,” he predicted.
Receiving bad news
Cassie Midas purchased her North Port home in May of this year, uprooting her two children from Minnesota and relocating closer to her husband’s family so he can assist with their business.
She claims that even though only one corner of her property is in a special flood hazard area, the FEMA 50% rule applies to her repairs.
As a result, she was one of more than 600 North Port homeowners who received notice that they may need to meet current Florida building codes before she can get a permit to rebuild.
She paid $325,000 for her home in the 5600 block of Bliffert Street. The family is also covered by flood insurance.
The insurance company estimates that the repairs will cost $48,000.
She’s hoping that an April appraisal, which valued her home at $215,000, will be accepted and she’ll fall well outside of the dreaded FEMA 50% rule, because if it isn’t, the family may be forced to leave the house.
To meet current code, they would need to raise the house two feet.
“The insurance adjuster said it wouldn’t even cover the cost of raising the house,” she explained.
Applegate, the North Port building official, said he’s read eight to ten manuals since Hurricane Ian hit in search of accurate information and alternative avenues he can suggest to people with hurricane damage.
“The building department is here to assist, and we’re trying to figure out how to get through this,” he explained. “We’ve never had to do this in North Port’s 60-year history, so we don’t have a base.”
He recently learned of a method to provide “temporary occupancy of a substantially damaged structure following a disaster,” but even that would be a short-term solution.
“This is only a temporary patch, and it will not save the ones who will be lost,” he explained.
Applegate said he doesn’t see how North Port could add value to the property appraiser’s assessed value without running afoul of regulators or harming residents by raising insurance rates due to noncompliance with FEMA rules.
A point system that takes into account many different aspects of a jurisdiction’s building codes and regulations determines an area’s insurance rates. Changing one part of the code could cause insurance rates to skyrocket.
“I’m not sure what that means for their insurance,” he said of some municipalities that did make changes, “but it will have an effect, and it won’t be free.”
Regarding the hundreds of letters sent out by the city in November, he is hopeful that some of the properties will not fall under the rule when other factors are considered.
“I’m going to work to get that number down