FEMA 50% Rule

Pursuant to the definition of "substantial improvement" in the Federal Emergency Management Agency regulations, the amount of improvement that can be done to a structure, that does not meet the minimum FEMA floodplain management requirements, is largely dependent upon establishing an estimate of the market value of the structure prior to the improvements being made. This page shows how the applicable values are calculated.

Why the 50% Threshold Was Chosen

The 50% threshold was chosen as a compromise between the extremes of:

  1. Prohibiting all investment to structures in flood hazard areas which do not meet the minimum FEMA floodplain management requirements, and 
  2. Allowing structures to be improved in any fashion without regard to the hazard present.

First Instance

In the first instance, there is the potential for causing hardship to those who have located in flood hazard areas without knowledge of the risk because the structure was constructed prior to the designation of the area as flood prone, and they could not improve their structures as damage or age contributed to the increasing peril to life and property.

Second Instance

In the second, there is no mechanism to ensure that increased investment in flood hazard areas will receive needed protection from the flood risk, thus contributing to the increased peril to life and property. The threshold is a compromise at a half-way point and was chosen because it conforms with similar building code and zoning standards that also use the a 50% threshold.

Market Value Estimation

The first step in the process is to determine the current market value of the structure to be improved. This is done in one of two ways:

  • Use the latest Fair Market Value on the Pinellas County Property Appraiser website.
  • An alternative source of market value is for the property owner to submit a structural appraisal conducted by a state-licensed real estate appraiser.

Under the Federal Regulations, it is the responsibility of the local building official to ensure that a market value established through the appraisal process is reasonably accurate and that estimated construction costs reasonably reflect the actual costs to fully repair or make improvements to an existing structure or to build a new one.

Determining the FEMA Threshold

The market value determined, as described above, and is then divided by 2 to establish the 50% of market value basis for any structure. All open permits and their job costs shall be considered as part of the total job cost and must be less than the 50% threshold.

In order to help owners and contractors determine the construction items that are included in the project cost against the FEMA threshold, the city offers a worksheet that lists items that must be included and those that are excluded.