Substantial Damages and Proposed HMGP Buy-Outs

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Posted on 01/31/2012 by VLCT Communications

Homes located outside of the 100-year flood zone are eligible for buyout under HMGP;  however, they must meet FEMA’s benefit cost analysis (BCA) requirements. A substantially damage determination can only be substituted for a BCA for a home located in the designated  flood zone or Special Flood Hazard Area (SFHA). VEM has instructed the SAIC (Science Applications International Corporation) outreach team to bring those homes to our attention as quickly as possible to determine if they can meet BCA requirements. As a general rule of thumb, if this is the only event that has caused them to flood, it is highly doubtful they will make a BCA or >1.0. The precise guidance is below.

 

D.3 Cost Effectiveness.
Mitigation projects must be cost-effective to be eligible for Hazard Mitigation Assistance (HMA) funding as demonstrated by a FEMA-validated BCA. A BCA evaluates the future benefits (projected losses avoided) of the project in relation to the project costs. This evaluation results in a Benefit-Cost Ratio (BCR). If the future benefits are equal to or greater than the cost, then the BCR is equal to or greater than 1.0 and a proposed activity is considered cost effective. If the benefits are less than the cost, then the BCR is less than 1.0 and the proposed activity is not considered cost effective. Only project sub-applications with a BCR of 1.0 or greater will be considered for HMA funding. For purposes of performing the BCA, the total cost must include annual maintenance costs for the proposed mitigation activity even though maintenance costs are not eligible project costs.

 

For HMGP only, an expedited cost-effectiveness determination is available for property acquisition and structure demolition or relocation projects when certain conditions are met. For structures identified in a riverine SFHA [Flood Zone] on the current effective Flood Insurance Rate Map (FIRM) and declared substantially damaged due to the impacts of flooding by a local authority having such jurisdiction, property acquisition and structure demolition or relocation is considered cost effective and a BCA is not required to be submitted for the structure.