JOINT STUDY ON FLOOD ELEVATIONS AND BUILDING HEIGHT REQUIREMENTS PURSUANT TO 2015 N.C. SESS. LAW 286. Presented by:

JOINT STUDY ON FLOOD ELEVATIONS AND BUILDING HEIGHT REQUIREMENTS PURSUANT TO 2015 N.C. SESS. LAW 286 Presented by: Dan H. Tingen Chairman of the North Carolina Building Code Council Rick McIntyre North Carolina Senior Deputy Commissioner of Insurance and North Carolina Assistant State Fire Marshal John Dorman Assistant State Emergency Management Director for Risk Management North Carolina Emergency Management Risk Management North Carolina Department of Public Safety The North Carolina Building Code Council, the North Carolina Department of Insurance and North Carolina Emergency Management Risk Management, North Carolina Department of Public Safety ( BCC, NCDOI and NCDPS, respectively, and, together, the Parties ) submit these initial results of the joint study ( Study ) they are conducting pursuant to 2015 N.C. Sess. Law 286 regarding how flood elevations and coastal building height requirements affect flood insurance rates and how coastal building-height calculation methods might be made more consistent and uniform in order to provide flood insurance rate relief. The BCC and the NCDOI, with the input of the NCDPS, have already solicited input for the Study from a range of the stakeholders specified in 2015 N.C. Sess. Law 286. But because of the complexity of the Study s subject matters and the limited four-month time period set by the session law for the Study, the Parties have been unable to obtain the input of as many stakeholders and to address the Study s subject matters in as detailed a manner as they believe appropriate. Consequently, the Parties will supplement this Study with their additional analysis and recommendations from specific stakeholders on or before April 22, 2016. 1

A. Scope of Study 2015 N.C. Sess. Law 286, which is entitled Study Flood Elevations and Building Height Requirements, became effective on October 22, 2015 and reads: SECTION 4.38. The Department of Insurance, the Department of Public Safety, and the Building Code Council shall jointly study how flood elevations and building heights for structures are established and measured in the coastal region of the State. The Departments and the Council shall specifically consider how flood elevations and coastal building height requirements affect flood insurance rates and how height calculation methods might be made more consistent and uniform in order to provide flood insurance rate relief. In conducting this study, the Departments and the Council shall engage a broad group of stakeholders, including property owners, local governments, representatives of the surveying industry, and representatives of the development industry. No later than March 1, 2016, the Departments and the Council shall jointly submit the results of their study, including any legislative recommendations, to the 2015 General Assembly. As explained in Section B below, the NCDPS works with the Federal Emergency Management Agency ( FEMA ) to establish floodplain maps that affect coastal base flood elevations ( BFEs ). FEMA alone, however, establishes general flood insurance premium rates under the National Flood Insurance Program ( NFIP ). FEMA s rates are based only in part on the floodplain maps that the NCDPS creates. Other than through its creation of the floodplain maps, NCDPS does not contribute to FEMA s calculation of flood insurance premium rates. Neither the NCDOI nor the BCC has any role in establishing floodplain maps, including calculating BFEs, or in otherwise contributing to FEMA s calculation of flood insurance premium rates. It is the understanding of the BCC, the NCDOI and the NCDPS, however, that the genesis for 2015 N.C. Sess. Law 286 was a proposal by a group of citizens to the General Assembly to (a) adopt a uniform statutory freeboard requirement at or above which the first floors of new commercial and residential structures in floodplains and substantial improvements to existing structures in floodplains (together, new floodplain structures ) have to be built and (b) to adopt a uniform statutory method generally requiring North Carolina local governmental 2

units ( LGUs ) to calculate floodplain building heights beginning from the first floor of the building rather than from the ground. As detailed below in Sections C and D, any such proposal would affect both the North Carolina Building Code applicable to commercial buildings and the North Carolina Residential Code (together, Building Code ), which the BCC adopts and the NCDOI administers. Also, as detailed below in Sections C and D, a uniform freeboard requirement for new floodplain structures and the method for how LGUs calculate the height of such structures may have an effect on whether property owners in communities within floodplains qualify for discounts in flood insurance premium rates under FEMA s Community Rating System, as well as have potential effects on structural integrity, property values, property tax burdens, property tax revenue and local preferences for coastal development. Finally, 2015 N.C. Sess. Law 286 requests that the Parties address whether overall coastal floodplain building height requirements affect flood insurance rates. The NCDOI and the BCC will supplement this Study with additional analysis and any recommendations on this issue. B. Coastal BFEs, Floodplain Modeling and Mapping and Their Effects on General Federal Flood Insurance Premium Rates Coastal BFEs and floodplain maps are based on a series of complex computer simulations that consider historic weather conditions (e.g., wind speed, air pressure, storm direction, etc.), as well as natural tides and the physical characteristics of the coastline shore. The models consider and add the effects of different phenomena together to develop the final BFE estimate. Of the many factors affecting the generation of coastal BFEs, the primary factor is referred to as storm surge, which is the rise in sea levels due to storm conditions. The height of the storm surge is driven by the strength, size, speed and direction of the storm. The storm 3

surge is added to normal tide levels to determine an overall storm height near the shoreline, referred to as storm tide. As the storm tide approaches the shore, it breaks, causing waves to be propelled up onto the shore. In large storms, offshore waves come in faster than the nearshore waves that have already broken, causing water to pile up on the beach. In addition to ocean conditions, heavy rains that are often associated with hurricanes can cause streams and rivers to swell, which can further contribute to increased flooding due to water backing up as it tries to empty into the ocean. Elevations are sampled at representative locations along the coastline (referred to as transects ) and are used to characterize physical conditions of the land. The modeled storm conditions are integrated with the topography (i.e., lay of the land ) and landform features (e.g., dunes) of the coastal area to determine final BFEs. Once BFEs are determined, flood zones are designated and mapped based on model information. Coastal Hazard Zones The graphic above provides the three general zone classes typically used in coastal mapping V zones, A zones, and X zones. Each general class can have subclasses that further distinguish characteristics (e.g., VE, AE, AO, etc.). V zones are areas at or near the coastline that have the highest hazard of the coastal zones as they are subject to more destructive forces of 4

larger waves (i.e., greater than three feet in height). V zones are subject to more stringent building requirements and generally have higher flood insurance rates than other zones shown. Coastal A zones are located beyond (i.e., more inland than) V zones but are still susceptible to wave action and flooding during the 1% event (or, 100-year event), which is the 1% annual chance that wave action and flooding in such A zones will occur. X zones are areas that would have a lower or minimal risk of flooding if the 1% event were to occur. On some FEMA maps, there is a line within the A zones referred to as the Limit of Moderate Wave Action ( LiMWA ). This is an intermediate designation to show areas that are potentially impacted by moderate sized waves (i.e., waves greater than 1.5 feet in height). The graphic below is a snapshot of the North Carolina Flood Insurance Rate Map ( FIRM ) and shows the different coastal flood zones with corresponding elevations for the 1% percent annual chance flood event. NC Coastal FIRM Through the North Carolina Floodplain Mapping Program ( NCFMP ), North Carolina Emergency Management Risk Management, NCDPS, updates floodplain maps periodically based on changes in the watershed, based on updated, more-accurate base data, based on updated engineering methodologies and/or based on input from communities. These changes result in 5

adjustments to the BFE. Such adjustments provide a more accurate depiction, as seen in the above image, of possible flooding and the calculated damage/impact to structures. Such adjustments also affect the general flood insurance premium rates that FEMA sets for structures. Coastal Structure Plan View The particular flood insurance premium rate for which structures may qualify, including any discounts in such rates, is largely influenced by the difference, whether positive or negative, between the elevation of the lowest horizontal structural member and the 100-year BFE. The chart below shows the changes in insurance premium rates for which structures may qualify depending on changes in the BFE from between four feet below the building floor elevation (i.e., the LFE ) to four feet above the LFE. The percentage changes are taken from the zero 6

elevation difference (i.e., BFE = LFE). Federal flood insurance premium rates are also influenced by FEMA-defined exceptions to address pre-firm construction and previous construction that was compliant with the NFIP requirements at the time of the construction but is now below the most recent BFE. Although there are grandfathering and other provisions which are intended to prevent or limit increases for structures built in compliance with floodplain regulations when they were originally constructed, these provisions do not apply in all cases. In order for a community to participate in the NFIP and enable property owners within the community access to NFIP flood insurance, FEMA requires a community to include in its flood prevention ordinance the requirement that the first floor of all new floodplain structures be built at or above the BFE. Although it mandates this BFE requirement, FEMA does not have an additional freeboard requirement. NCDPS receives federal funding to educate and provide technical assistance to LGUs about FEMA requirements under the NFIP and, in doing so, advises LGUs about the potential discounts in flood insurance rates they may realize from 7

adopting freeboard requirements. While NCDPS recommends that LGUs adopt higher standards such as freeboard to advance community flood resiliency, it does not require LGUs to do so. NCDPS responsibilities for floodplain mapping are not affected by the height requirements for new floodplain structures, by the design floor elevation ( DFE ) requirements an LGU may establish for such structures or by the methods for calculating the height of such structures. Consequently, NCDPS expresses no opinion about the remainder of this Study. C. The Building Code, Building Height Requirements and Building-Height Calculation Methods As noted, the BCC is responsible for adopting and amending the Building Code, and the NCDOI is responsible for administering the Building Code. The Building Code does not currently contain a required minimum or maximum building height. Instead, LGUs have addressed such requirements through their zoning laws. The BCC and NCDOI will supplement this Study with analysis on whether the General Assembly should adopt any such floodplain building height requirements and whether to do so would have any effect on flood insurance rates. Although the Building Code does not contain a required minimum or maximum building height, it does contain a general method for calculating building heights throughout the state. This method, however, is premised on the assumption that the first floor of new structures will be built much closer to the ground than the BFE usually permits new floodplain structures to be built. Because of the unique issues created for new floodplain structures by the NFIP and its BFE requirements, some LGUs have adopted other methods of calculating the building height of floodplain structures. 8

D. Proposed Statewide Freeboard Requirements and Building-Height Calculation Methods and Their Potential Effects on Flood Insurance Rate Discounts, Structural Integrity, Property Values, Property Tax Revenue, Property Tax Burdens and on Local Community Preferences Initial feedback from Study stakeholders suggests that adopting a uniform freeboard requirement for new floodplain structures and/or adopting a requirement that the building height of new floodplain structures be calculated beginning at the first floor may affect community discounts on flood insurance rates, structural integrity, property values, property tax burdens, property tax revenue and the ability of LGUs to regulate development based on their own community preferences. The BCC and the NCDOI present their initial analyses of these issues below but intend to supplement the Study, on or before April 22, 2016, with more detailed analyses of and specific recommendations about these issues. D1. BFEs, Freeboard Requirements, DFEs and Their Effects on Applicable Flood Insurance Rates As addressed in Section B above, federal law requires that new floodplain structures be constructed at any point above the current BFE. Some North Carolina LGUs require property owners and builders to meet only this federal minimum. Other North Carolina LGUs, however, require an additional freeboard height, usually of between one foot and three feet. Some North Carolina LGUs, as permitted by federal law, have also adopted a DFE, which may be either equal to the BFE or, if there is a local freeboard requirement, equal to the BFE plus the required freeboard. The BCC and NCDOI will supplement an overview of LGU freeboard and DFE requirements. Stakeholders surveyed for this Study agreed that, as a very general rule, the higher above the BFE that a new floodplain structure is required to be built through the adoption of a statewide freeboard requirement, the greater the available discount in federal flood insurance 9

rates. Under FEMA s Community Rating System, such discounts may flow not only to new floodplain structure owners subject to the freeboard requirement but also to owners of existing structures that were built beginning either at a lower BFE or at a lower freeboard level. Therefore, as a general rule, to impose a statewide freeboard requirement could effectively compel greater savings for statewide property owners in those floodplains where there is not already a freeboard requirement or where there exists a lower freeboard requirement than the new statutory minimum. One building-height calculation method originally suggested by a group of stakeholders in this Study would impose a statewide, statutory minimum and maximum freeboard requirement of two feet and create a statewide definition of the DFE as the BFE plus these two feet of required freeboard. As noted, such a minimum freeboard requirement of two feet would generally compel those LGUs that have either no freeboard requirements or else freeboard requirements of less than two feet to achieve better savings for the property owners in those LGUs floodplains. A maximum freeboard requirement of two feet, however, could negatively affect the community flood insurance discounts achieved by those LGUs that have adopted freeboard requirements of greater than two feet. Another building-height calculation method suggested by stakeholders in this Study would not require any statewide freeboard requirement but would define the statewide DFE as the BFE plus any applicable LGU freeboard requirement. Such a method would not force changes in any LGU freeboard requirements and therefore would appear to have a neutral effect on flood insurance savings for property owners within floodplains. The BCC and NCDOI will supplement the Study with any other approaches to a statewide freeboard requirement and any recommendations on this subject that they may have. 10

D2. The Effect of Freeboard Requirements on Structural Integrity Whether a structure in a floodplain that is built higher off of the ground than the minimum BFE is necessarily more structurally sound than one that is built only from the BFE upward depends on a tremendous number of variables, ranging from building materials used to the rate of coastal erosion. Certainly, there are many factors that can cause flooding above the BFE, including storm strength, wave heights, blocked draining systems and density of surrounding development. Where flooding occurs above the BFE, damage may occur to structures built only at the BFE that would not have occurred had the structures been built with additional freeboard height. At the same time, thus far, stakeholders in the Study appear to agree that a minimum freeboard requirement set too high could require a structure in a floodplain to be built so far above the BFE as to lose structural integrity, depending on how the pilings for the structure are reinforced. For example, FEMA itself suggests that local freeboard requirements across the nation generally do not rise above four additional feet. The BCC and NCDOI will supplement the Study with additional information about the effects of freeboard requirements on structural integrity. Another issue regarding structural integrity is that stakeholders have thus far proposed two new methods for building-height calculation methods that not only define the first floor as the beginning point for the calculation but also define the uppermost point to which an LGU can calculate building height. Depending on how this uppermost point is set, developers of new floodplain structures may be encouraged to build either flatter or more graded roofs. As a very general rule, graded roofs contribute to better structural integrity. However, developers may opt for flatter roofs if they perceive it will afford a structure more square footage. The BCC and the 11

NCDOI will supplement the Study with additional analysis and recommendations on whether, as part of adopting any general statewide building-height calculation method in floodplains, the General Assembly should address the uppermost point to which LGUs can calculate building height and whether, in doing so, there is a manner to achieve both graded roofs and maximal square footage. D3. The Potential Effects of Freeboard Requirements and Building- Height Calculation Methods on Property Values To impose a freeboard requirement in a floodplain where structures had previously been built only to the BFE could result, for example, in a pre-existing structure built to a BFE of eight feet located next to or nearby a new floodplain structure built to a BFE of eight feet plus (again, only for example) a mandatory two feet of freeboard, with the latter structure obviously being taller. Likewise, absent any change in the local maximum height requirements, to change a method of calculating floodplain building heights from a beginning point of at or near the ground level to a method with a beginning point of the first floor could result in new floodplain structures being taller than preexisting floodplain structures next to or nearby the new structures. Owners of older, shorter floodplain structures situated in close proximity to new, taller floodplain structures may perceive that the new structures affect their property values negatively, including by obstructing their coastal views, creating shadow or creating lack of symmetry. At the same time, the development of new, taller floodplain structures with greater square footage can have overall positive effects for preexisting structures in the floodplain, including for their property values. Greater development may affect overall local commerce, make isolated coastal areas more accessible and make smaller, preexisting structures more valuable. Because it is difficult for the BCC and the NCDOI to forecast the overall effect of new, taller floodplain structures on the property values of preexisting floodplain structures, the BCC and the NCDOI 12

will encourage Study participants to supplement the Study with their own opinions on this subject. D4. The Potential Effects of Uniform Statewide Freeboard Requirements, Floodplain Building-Height Calculation Methods and Floodplain Building Height Requirements on Property Tax Burdens and Property Tax Revenues In and of itself, a uniform statewide freeboard requirement would not necessarily affect the square footage of new floodplain structures. But to impose a statewide floodplain buildingheight calculation method that begins at the first floor instead of at the ground could permit new floodplain structures to gain more square footage than if their height were still measured from the ground up. Property owners could only gain additional square footage on such structures, however, if the relevant LGU did not subsequently lower its maximum building height requirement so as to offset the effects of such a change in the height calculation method. As noted above in Section C, currently LGUs set required minimum and maximum building heights through their zoning laws. If the General Assembly were to adopt statewide floodplain building height requirements, it would largely eliminate the ability of LGUs to adapt their local building height requirements to offset any change in the height calculation method. If the effect of new, taller and larger floodplain structures on the property values of preexisting, smaller structures is positive, then it is foreseeable that local property tax levels would rise for all floodplain property owners, adding to their tax burdens. These additional tax burdens, however, could foreseeably be offset or, at least, equal to the accordant rise in property values. Additionally, any rise in property values from new, taller and larger floodplain structures would result in greater tax revenue for LGUs, which, depending on how LGUs direct such new revenue, could benefit all floodplain property owners and other community members. The BCC 13

and the NCDOI will encourage Study participants to supplement the Study with their own opinions on this subject. D5. The Potential Effects of a Statewide Freeboard Requirement, Statewide Building Height Requirements and Statewide Building-Height Calculation Methods on Local Preferences in Floodplain Communities As discussed in Sections D2 through D4, for the General Assembly to establish a statewide freeboard requirement alongside a statewide floodplain building-height calculation method and uniform statewide floodplain building height requirements could potentially result in: (1) discounts in flood insurance rates; (2) greater square footage in new floodplain structures than exists in nearby, preexisting structures; (3) new floodplain structures that are taller than nearby, preexisting structures; (4) new floodplain structures that begin higher off of the ground than nearby, preexisting structures; (5) greater local property tax burdens; and/or (6) greater local property tax revenues. Some LGUs and their citizens (particularly, those citizens who own preexisting floodplain structures) may perceive statewide requirements resulting in larger, taller, more expensive new floodplain structures as undesirable, especially where the LGUs are already achieving discounts in their floodplain insurance rates through locally adopted freeboard requirements. LGUs and their citizens have traditionally been able to heavily influence the esthetics, appearance, size and height of new floodplain structures through local zoning ordinances. The limitation or loss of such local control may be viewed by such LGUs and their citizens as an intrusion on their local discretion. The BCC and the NCDOI will encourage Study participants to supplement the Study with their own opinions on this subject. 14