Building Resilience: Understanding and Implementing Cumulative Substantial Improvement and Substantial Damage Standards

Substantial improvement and substantial damage (SI/SD) are key to floodplain management, helping communities reduce repetitive loss and close loopholes in flood resilience. One underutilized strategy is cumulative SI/SD standards, which minimize financial losses and enhance resilience. While these standards set a baseline, some communities raise the bar by adjusting cost thresholds or extending compliance periods. However, regulatory variations create challenges. Forerunner examined cumulative SI/SD practices and interviewed floodplain managers across the country to SI/SD explore best practices, challenges presented by information gaps, and solutions.

The Benefits

The conversations highlighted several key benefits of adopting cumulative SI/SD standards. Without cumulative SI/SD standards, property owners can sidestep regulations by breaking up renovations into smaller projects that individually fall below the substantial improvement threshold. Implementing these standards ensures that all improvements are counted over time, preventing circumvention and strengthening regulatory compliance.

Stricter cumulative SI/SD policies encourage more property owners to upgrade structures to meet modern flood standards, reducing long-term risk. By gradually requiring more buildings to comply, these standards drive widespread community adoption of flood-resilience measures, making entire neighborhoods safer from future flooding.

Properties that repeatedly sustain flood damage place a significant financial strain on municipalities. By enforcing stricter SI/SD thresholds, communities can reduce the number of SRL properties, lowering long-term disaster costs. These mitigation efforts are eligible for credit in the Community Rating System and help communities qualify for flood insurance discounts. and making flood insurance more affordable for residents.

However, implementing and regulating stricter SI/SD ordinances comes with its share of challenges. Floodplain managers reported difficulties in communicating the benefits and requirements of SI/SD to residents, tracking cumulative SI/SD data, conducting Substantial Damage Estimates (SDE), and maintaining these practices post-disaster.

The Challenges

A significant hurdle is gaining community support for adopting cumulative ordinances. This challenge often stems from the tension between short-term financial gains and long-term community resilience. Stricter standards, while beneficial in the long run, can appear unfavorable, making it difficult to present a value proposition. Some communities found that emphasizing long-term savings, paired with historical data, illustrates the small number of property owners affected by stricter standards and can strengthen adoption. Tara Coggins, the floodplain manager for Lamar County, LA, highlights, "Your insurance premium drastically lowers. Instead of paying $4,000 a year, people are paying $1,500 to $2,000 a year. It’s a huge difference. Just the savings from insurance make up for the extra spent to build it [up to flood compliance]." 

Similarly, communicating SI/SD regulations effectively to property owners can be challenging. Providing a clear context about why these regulations exist can alleviate confusion and frustration. Creating multiple touchpoints, such as community meetings, digital outreach, and written materials, ensures smoother compliance. Brad Klamer of the City of New Orleans shared, "I try to make sure people understand that I’m not trying to stop them from achieving their aims. I’m just trying to help them comply." Effective communication is crucial to ensure the success of SI/SD practices, but it can often be hard to maintain.

Another challenge lies in documenting and tracking cumulative SI/SD. Existing strategies for managing this data range from using Excel spreadsheets and other permitting software to FEMA’s Substantial Damage Estimator (SDE) tool. However, communities expressed the need to combine SI/SD tracking with other floodplain management functions, ensuring ease of use and cross-departmental access and simplifying data management procedures for long-term efficiency. These capabilities are crucial for effectively responding to disasters and tracking improvements that inform future ordinance updates. Often antiquated and outdated, the current software options complicate reporting processes.

Substantial Damage Estimates are final determinations of substantial damage based on permit applications and, if necessary, independent appraisals. These determinations streamline inspections and data collection, providing floodplain managers with quick and reliable estimates based on documented conditions at the time of the inspection. However, in post-disaster scenarios, collecting substantial damage determinations is challenging due to the required coordination across teams and unreliable field conditions, like limited connectivity. 

Addressing these SI/SD challenges requires forward planning, such as pre-determining inspection areas and developing robust substantial damage plans, to streamline post-disaster responses and support resilient community rebuilding efforts. 

Forerunner’s Solution

To assist communities in addressing these SI/SD challenges, Forerunner developed a suite of tools designed to streamline the process of estimating and determining substantial damage. 

• SI/SD Tracking: Forerunner enables you to easily add, track, and visualize substantial improvement and damage costs so that you can better enforce compliance with NFIP regulations. Users input improvement and damage costs, and Forerunner will generate an automated assessed value, based on the account’s SI/SD threshold, and apply an Adjustment Ratio to the property's Improvement Value. Users are also able to provide a different market value estimate using another methodology or historical valuation, if applicable.
• Substantial Damage Estimates (SDE): A field-based tool designed for collecting data on damaged structures and generating preliminary estimates of repair costs. Available on Forerunner’s Mobile App with offline mode, the SDE tool combines FEMA's SDE logic with property-level data to help communities complete substantial damage assessments quickly and easily. Users can input information about how the structure is built, the degree to which the structure is damaged, and the cost per square foot to rebuild. Forerunner will create a Substantial Determination Summary to provide to FEMA and property owners, which is kept on file. 
• Substantial Damage Letter Generation: Forerunner’s Document Generation feature enables users to generate templated letters for residents on individual properties. The letters automatically populate with property information and are saved in Forerunner for easy access.

By addressing regulatory and administrative challenges, cumulative SI/SD standards offer a pathway for communities to build resilience, reduce future losses, and secure long-term savings. By leveraging tools like Forerunner and implementing effective strategies, communities can better manage the complexities of SI/SD and build more resilient futures.