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50 % rule (repair / rebuild criteria for damaged timeshare properties)

theo

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In the aftermath of Hurricane Ian, I have seen (usually somewhat vague) Internet references to a "rule" which apparently requires that if the damage repair cost to a property exceeds 50% of the property value, then that property must be rebuilt to meet current code standards (such as minimum elevation above ground level, etc.). I admit to having been ignorant regarding details of this "rule", but was interested and finally stumbled upon (via a Lee County FL site) some answers to my own questions:

Q1. Does this rule in FL originate with the State? County? FEMA? Other? :shrug:
A: FEMA. 50% rule.

Q2. Does "property value" refer to buidings & structures only (i.e., exclusive of land value), or does it refer to the total value of the property as a whole? :shrug:
A: The basic rule is that "if the cost of improvements or the cost to repair the damage exceeds 50% of the market value of the building (red highlighting mine), it must be brought up to current floodplain management standards". (Note: I found no mention or any further clarification regarding exactly who determines "market value", or how, or when. Maybe using the most recent assessed value of the building? I have no idea).

Just sharing a bit of what I learned, alleviating (...a little bit of) my previous clueless state on this subject. Others may very well already know all about this.
Source reference: www.fema.gov/sites/default/files/2020-07/fema_p213_08232018.pdf
 
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CO skier

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Interesting topic.

No knowledge, just a good guess is that the "FEMA 50% Rule" applies only to properties applying for FEMA grants or covered by FEMA flood insurance and does not supercede local building codes or affect a homeowner rebuilding with their own funds. Local building codes would supercede FEMA 50% rule if those codes had a lower threshold.
 

theo

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I’d be inclined to think that the flood zone designation / location of the property would be the determining factor, but I could very well be mistaken. :shrug:
 
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tschwa2

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One of the buildings at my outer banks resort had a fire a few years back and was subject to the 50% rule. Buildings can no longer be built that close to the ocean. I think on their 6th estimate they were able to find a contractor that could make the repairs within the 50% rule so they didn't have to knock it down and build on another site further from the ocean.
 

jacknsara

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Its not only Florida.

Intense rain led to flooding of the first floor units in five of the buildings of Kauai Beach Villas. Repairs (substantially covered by insurance) led to the discovery of original construction defects that impact all 8 buidings with two currently closed due to being unsafe for occupancy. The long story is available in this forum https://tugbbs.com/forums/forums/kauai-beach-villas-ioa-public-square.61/ The estimated cost of repairs to common elements is $56M which does not include interior restoration.

FEMA is not involved but I mention it due to a recently enacted law on Kauai. I’ve extracted a bit from my post at https://tugbbs.com/forums/threads/kbv-news-letter-the-resort-is-in-bad-shape.338006/post-2854880

(3) the impact of a newly passed regulations in Kauai that “requires the lowest floor of any new dwellings in the Sea Level Rise Constraint District be raised 2 feet above the highest sea level rise flood elevation as projected by a scientific model. New, non-livable buildings need to be raised 1 foot above the flood elevation projection. This differs from other sea level rise regulations, which tend to rely on historical data rather than future models . . . . . also apply to significant rebuilds of existing structures, where the total cost equals or exceeds 50 percent of the market value of the building” per article in The Garden Isle 10/6/22

The BOD has not communicated to owners what percentage of market value the $56M represents.
 

CO skier

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I’d be inclined to think that the flood zone designation / location of the property would be the determining factor, but I could very well be mistaken. :shrug:
Would the "50% FEMA Rule" apply to an owner within the flood zone designation who is willing to self-insure for flood damage?
 

theo

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Would the "50% FEMA Rule" apply to an owner within the flood zone designation who is willing to self-insure for flood damage?
I certainly don’t claim to know. Reading again through the Lee County, FL material I found, it seems (...to me) that Lee County defers to the FEMA “floodplain” designation as the (maybe sole?) determining factor for application of the 50% rule, but that could be a misinterpretation on my part. Alternatively, my interpretation could be correct, but perhaps Lee County has voluntarily chosen to adopt and apply FEMA's 50% rule for any and all property within designated floodplain zone(s). I simply don't know.

I also don't grasp where the “market value of the building” figure originates. Seemingly, it would be a figure existing and known before incurred damage. Maybe it is simply the most current assessed value of the building as appears on the tax rolls? I don't find any "benchmark" reference to that issue at all. Perhaps tschwa2 can offer some insight into where that figure actually comes from, having had direct and first hand experience with appilcation of FEMA's 50% rule (as described in post #4 above).

Another (verbatim quote) from the Lee County site material caught my attention during subsequent reading:
"These laws are required by the NFIP to protect lives and investment from future flood damages. The County must enforce these laws in order for federally-backed flood insurance to be made available to Unincorporated Lee County residents and property owners" (red highlighting is mine).

Does this intend to indicate that (individual willingness to self-insure notwithstanding) if a property is simply located within an applicable "floodplain" area, then the 50% rule applies (like it or not) to ensure and preserve eligibility for anyone to be able to access FEMA flood insurance in that geographic area (Lee County) at all? I don't know. :shrug:
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This topic is of more than just academic interest to me. I have a close relative who lives in Lee County (east of FMB), sustaining significant home damage from Ian, but repairs are already underway, minus one destroyed vehicle). Also, we own a few timeshare weeks at a independent "Legacy" (i.e., old) resort on Fort Myers Beach, at which I expect (although it's still too soon to know for sure) that the 50% rule scenario described by tschwa2 in post #4 above may soon unfold. The damage there is extensive and repair costs will surely be huge, likely approaching (and perhaps exceeding) 50% of the "market value of the stucture before any improvements are performed" (words again quoted verbatim from the Lee County site). So far, the ominous silence from that resort's management company and / or Board has been quite deafening, but the utter devastation in Fort Myers Beach certainly warrants and deseves some patience and understanding, since so many people who LIVE in that area have lost homes, vehicles, employment and, in some instances, even loved ones. We have had a lot of use and enjoyment there over the years, but at this point in our lives (and with the advanced age of that resort), if the place cannot be affordably rebuilt and owners collectively decide by majority vote not to rebuild at all, the land alone is certainly worth a whole lot of money. I would be very disappointed but not heartbroken if what we are ultimately left with is just a hefty property sale proceeds check and a lot of wonderful memories. Time will tell, I guess…
 
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Carolinian

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There are a number of issues related to this. One, as mentioned above with the fire at Dunes South, is local or state codes on setback from the high tide line.

Also, in some areas, if electricity is turned during repairs over a certain period, then at least the electrical and plumbing have to be brought up to code.

Then there are the provisions of the Uniform Unit Ownership Act and the Uniform Condominium Act dealing with required owner votes on whether to rebuild if damage exceeds a set percentage. That can also be impacted by provisions of a timeshare resort's Declaration of Covenants.
 

Roger830

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We live in a 100 year flood plain in Old Saybrook, CT without flood insurance.
The town is bordered on the east side by the Connecticut River and forms a peninsular into Long Island Sound.

To lower flood insurance rates for all residences, the town has imposed suggested fema guidelines into the building code, which are stricter than mentioned here.
In a 10 year period, no more than 50% of the appraised value of the structure can be spent improving it except for wear such as shingles.

If more needs to be spent, then it must be constructed at 15 feet above sea level. Currently flood insurance is required for mortgaged property only up to 13 feet above sea level.

The ramifications are that if someone spends serious money upgrading an existing structure, then modest damage by any reason could require rebuilding.
 
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