October 6, 2017

Cumulative Flood Repair Costs and the 50% Rule

Fear and uncertainty breed speculation.  Speculation is passed on as hearsay.  Hearsay becomes rumor, and—especially when repeated and amplified in the echo chambers of social media—rumor is commonly accepted as fact.  I simply cannot stress enough the importance of visiting the Permit Office to get information specific to your individual circumstances, and reliable information at that.  The decisions flooded homeowners are having to make are just too important to be based on advice, however well-intentioned, from people who don’t actually know what they’re talking about.

There’s a lot of misinformation floating around out there about the cumulation of past flood repair costs in determining substantial damage (the 50% Rule).  Fact is, the Permit Office staff have been paying careful attention to this issue for weeks now, ever since they first opened their doors to accept post-Harvey flood repair permit applications.  Of the 599 applications processed thus far, 8 have resulted in substantial damage declarations.  In each and every one of those cases, staff ran the numbers several different ways and the outcomes were the same.  In other words, exactly how past permitted work is cumulated has yet to make any difference.  But that doesn’t mean it won’t.

As they’ve continued to assess the implications of different policy choices as to how costs will be cumulated, they now have the benefit of the City Engineer’s report.  It shows that a sizeable percentage of homes that flooded in Harvey were built prior to the current standard (at least one foot above base flood elevation) in effect since 2008, but after 1980.

That information prompts new policy considerations.  Especially when coupled with the uniqueness of Harvey itself, in that for the vast majority of these homes Harvey was their first time ever flooding.

The purpose and intent of the 50% Rule is to reduce repetitive flood losses by gradually bringing non-compliant properties into compliance.  It works no differently than “grandfathering” under the zoning code; pre-existing land uses are no longer grandfathered when structures are substantially damaged.  Bellaire has for years applied the Rule cumulatively, consistent with National Flood Insurance Program guidelines, in order for it to actually work over time.  This approach is reflected in our favorable community floodplain management rating.

However, the Rule is not intended to punish homeowners for maintaining and upgrading their homes, or to prevent them from doing so in the future.  Non-flood-related projects, like roof repairs or new granite countertops, don’t need to be counted for the policy aims to be fulfilled.  This is most readily apparent for homes in Tiers II and III above, which are by no means “teardowns,” and all the more so for those that have never flooded before.

Therefore, the Permit Office has clarified that the substantial damage calculation takes into account past flood repair costs, but not other costs for prior work unrelated to flooding.  (As I’ve noted previously, cumulative application of the 50% Rule was explained to homeowners who flooded in the 2015 and/or 2016 floods, back at the time they made those repairs.)  The Permit Office has produced a new information sheet explaining how substantial damage is determined, and will of course be happy to assist you in person at our Harvey Recovery Resource Center.