Including Building Codes in the National Flood Insurance Program

In response to Section 100235 of the Biggert-Waters Flood Insurance Reform Act of 2012 (HR 4348), the Federal Emergency www.FEMA.gov Management Agency (FEMA) prepared a report titled Including Building

Codes in the National Flood Insurance Program. The report was prepared for the Committee on Banking, Housing, and Urban Affairs of the U.S. Senate and the Committee on Financial Services of the U.S. House of Representatives.

The report presents findings of the impact, effectiveness, and feasibility of including widely used and nationally recognized building codes (International Code Series [I-Codes]) as part of National Flood Insurance Program (NFIP) floodplain management criteria. It includes the regulatory, financial, and economic impacts that would likely occur to homeowners and government entities if the building codes were included and the feasibility and effectiveness in reducing flood damage in the future. In general, the findings are positive and the financial impacts can be offset by the long-term benefits.

Methodology

FEMA used four research methods to assess the impact of including building codes in the NFIP.

1. Analysis of existing program data, such as the NFIP, building code, and building inventory databases to identify those States and communities that do not mandate the adoption of building codes. This analysis was conducted because these entities would likely be the most impacted by this legislative change.

2. Empirical analysis or reviews of prior studies conducted by researchers, non-profit organizations, research institutes, and government agencies to evaluate their relevance and validity in relationship to current knowledge. A number of prior studies touch on aspects of this impact assessment, but no prior studies were identified that directly address the scope of this impact assessment.

3. Development and evaluation of various scenarios to illustrate costs and approaches of providing building code services and other cost impacts.

4. Convening a working group of subject matter experts to obtain opinions, with follow-up queries to participants to clarify findings supporting preparation of this assessment.

Findings

Based on the research described above, FEMA came up with a total of 31 findings. The full list is available in the body of the report, with some major findings presented here.

• The net impact of including building codes as part of the NFIP would be positive. It would help reduce physical flood losses and other hazard losses, which would in turn positively affect the land use planning and regulatory climate.

• Over half NFIP communities already administer building codes based on the I-Codes, and the impact of including the codes into the NFIP would be negligible. Twenty-two States mandate local enforcement of statewide codes and 28 States have partial or complete code adoption and enforcement between the State and local levels (see Figure 1).

• NFIP communities that currently do not have building codes may incur minor increased initial costs as property owners invest in building code-compliant structures, and as communities establish building departments to perform permitting and inspection. The long-term benefits of these actions and investments are abundant, and include generally increased property values, reduced losses during flood and other hazard events, which reduce insurance rates over a 5- to 10-year period, and a more actuarially sound NFIP and insurance industry.

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• Possibly the most significant benefit would arise from the required added elevation above flood levels (freeboard) for dwellings in flood hazard areas. Enhanced code compliance by builders and improved enforcement of NFIP flood provisions would occur because of the statutory enforcement authority of building officials.

• Insurance losses would be reduced for the properties required to comply with building codes because they would sustain less damage. This would lower actuarially rated insurance premiums for those structures, which in turn would make insurance more affordable and attract a broader participant pool, further enhancing soundness and reducing subsidy needs of the NFIP.

• Enforcing building codes as part of the NFIP would only affect new structures and Substantially Damaged or Substantially Improved structures required to be brought into compliance with the requirements for new structures.

• The financial and regulatory impacts on rural communities and Indian reservations that do not already enforce building codes or have adopted codes that are substantially out of date may result in those communities requiring additional resources for enforcement, especially communities where significant growth occurs. As with large communities, the impact on rural communities and Indian reservations that already administer current building codes would be negligible.

Figure 1: Counties in the United States that have adopted flood-resistant building codes.

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(Including Building Codes in the

National Flood Insurance Program)

online in the FEMA Library at:

http://www.fema.gov/media­

library/assets/documents/85960.

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