The aftermath of Hurricanes Helene and Milton left many Florida residents navigating complex restoration processes. For those who own properties in designated floodplains, one of the most crucial steps in rebuilding is understanding the Substantial Damage (SD) process. Designed to support disaster recovery and maintain compliance with floodplain regulations, SD plays a critical role in ensuring affected properties are restored quickly and resiliently.  

This guide explores the SD process, its role in post-disaster recovery, and the steps property owners can take when dealing with substantial damage determinations. 

What is the Substantial Damage (SD) Process? 

The SD process is a floodplain management tool employed by National Flood Insurance Program (NFIP) participating jurisdictions in their local floodplain regulations. Its primary function is to evaluate the extent of damage to structures within the special flood hazard area (SFHA). Damage can be of any origin – it is not limited to flood damage. These assessments help identify whether a property is “substantially damaged,” meaning the cost to restore the building exceeds 50% of its pre-disaster market value.  

A substantial damage determination triggers mandatory steps for property owners to bring their structures into compliance with the current floodplain building codes and standards when they obtain repair permits. Such steps are necessary to ensure their structures meet updated local floodplain management standards and building codes. This can involve elevating, retrofitting, or other mitigation activities.  

For newer construction, it should be noted that some SD structures may already meet the current floodplain building codes and regulations.

Below is a graphic that depicts a typical, high-level SD process journey or steps a property owner can expect to go through from beginning to completion. Each step is also detailed in this Substantial Damage Estimation Process informational whitepaper.

The Importance of Substantial Damage Estimation 

1. Resilience in the Face of Future Hazards 

SD ensures that reconstruction efforts align with long-term safety and compliance standards written in the community’s building code and floodplain ordinances. This results in communities better prepared to withstand future floods and other hazards.  

2. Access to NFIP Benefits 

Adhering to SD processes maintains a community’s eligibility for NFIP benefits and federally backed flood insurance, shielding residents from devastating financial loss. Additionally, maintaining compliance with NFIP participation allows communities that participate in the Community Rating System (CRS) to continue to have access to flood insurance discounts of up to twenty-five (25%) percent. 

Substantial Damage Determination Process  

A substantial damage determination is a systematic process involving these critical steps: 

1. Planning 

As part of the larger floodplain management program, many communities plan how they will respond to an event impacting structures within the SFHA that may require SD/SI assessments. This can include, but is not limited to:  

  • The development of systems of record to collect damage assessment information.  
  • Proactive identification of ways to enhance the speed of assessments. 
  • Establishment of quality control procedures to ensure assessment accuracy; and  
  • The process for notifying property owners of an SD determination and their ability to obtain a permit for repairs. 

2. Damage Assessment 

After any disaster, all damaged structures located in a designated floodplain must be assessed to determine the extent of damage. Onsite assessments include evaluating exterior and interior damage components and determining the extent or percentage of damage to those components.  

3. Collection of Data 

Field-collected data, along with any previously obtained data (structure information from assessor inventory, floodplain information, etc.), are compiled into a community’s system of record (SOR). There is no standardized or required SOR, although FEMA provides a free tool to support community data collection, SD calculation, and record retention.  

Using the data and the previously determined methodology for calculating SD, local officials calculate the percentage of damage based on a structure’s pre-damage value. Typically, the pre-damage value is determined by the local floodplain ordinance, which states the value must be calculated from assessment or appraisal documentation.  

4. Notification to Property Owners  

The SD process generates data to guide municipalities in issuing a Substantial Damage determination. Once a structure is determined to be substantially damaged, the local jurisdiction will issue letters of Substantial Damage Determination that require affected structure owners to repair or rebuild the structure to meet current floodplain regulations and building codes. 

6. Appeals Opportunities 

The SD process allows consideration of factors that can affect the Substantial Damage determination. For example, if a structure owner cannot allow entry into the structure during the initial onsite assessment, they may wish to request a reassessment to allow the estimators to enter the structure to provide a more accurate estimate of interior damage. Owners can also appeal the SD determination through their local building department. 

6. Permits 

Once a structure has been identified as Substantially Damaged or not, it may progress through the community’s permitting process. Structures that do not meet the definition of SD have no additional requirements from the SD process that prevent them from moving forward with a typical repair permit. 

What Substantial Damage Means for Property Owners  

If your property is determined to be substantially damaged, specific floodplain management regulations will guide its restoration. If the substantially damaged structure does not meet current floodplain regulations, these efforts may include (based on individual structure specifics):  

  • Flood-proofing: Modifying non-residential buildings to minimize flood-related risks.  
  • Other Mitigation Measures: The local floodplain administrator will work with affected property owners and may suggest appropriate mitigation methods. 
  • Compliance with Current Building Codes: All homes determined to be substantially damaged must be repaired and brought into compliance with the latest adopted building codes of the local community. 

Local officials will coordinate with property owners to outline the next steps. 

Determining Market Value  

The market value of a structure is a key factor in substantial damage calculations. This refers exclusively to the pre-damaged value of the structure itself, excluding land value and other site improvements. Local governments may estimate market value using property tax assessments, adjusted actual cash value, or comparable property sales data. A property owner may also provide an appraisal of the structure’s value provided by a licensed appraiser. 

NFIP Guidelines Require:  

  1. Market value is based on the building’s value before the disaster occurred.  
  1. Land improvements or property use value are excluded from calculations.  

Partnering for Recovery  

Tidal Basin is proud to support communities as they work to safeguard their neighborhoods and build lasting resilience. Through collaboration and expert guidance, we empower communities to recover confidently and prepare for future challenges.  

To dive deeper into the SD Process, read our whitepaper, which navigates the key elements and steps of the SD Process, an understanding of how property market values are determined, the roles and responsibilities of the stakeholders involved in the SD process, and ultimately what the SD determination means for property owners.