Updates to FEMA maps often expand Special Flood Hazard Areas, and this can create complications for property owners and investors. Designation as a higher-risk zone reduces a property\u2019s development potential, raises insurance requirements, and increases other costs and risks.<\/p>\n
Following a \u201csubstantial damage\u201d event (i.e., where rebuilding costs exceed 50\u00a0 percent of pre-damage market value), it may not be enough to merely replace existing improvements. In a higher-risk zone, a major event triggers a requirement to rebuild the property in compliance with current codes.<\/p>\n
If an update appears to impact your property negatively, however, all is not lost. Although challenging a property\u2019s designation as high-risk is neither easy nor cheap, the option is available. One way is to question a map update before it takes effect. This requires working with local officials.<\/p>\n
Alternatively, an owner can seek a revised determination of location and\/or elevation (e.g., a finding that FEMA\u2019s map does not correspond to actual topography). Errors corrected through this process can result in a Letter of Map Amendment (LOMA) that effectively revises the flood zone for a specific site.<\/p>\n
A more complex alternative is to make physical changes to the site by raising the building\u2019s elevation through the use of fill. An owner can seek to change a flood-zone designation through the LOMR-F (Letter of Map Revision Based on Fill) process. Any such strategy should be evaluated carefully and take into account all applicable laws, including zoning, building, wetland and tideland regulations.<\/p>\n
The use of fill may limit building heights in some cases, such as where state or local law restricts height that uses a baseline other than the finished grade immediately adjacent to the building. Using fill may be problematic for other reasons, as well.<\/p>\n
Because challenging a flood zone map or designation typically requires engaging lawyers, engineers and other consultants, it can be expensive. But for owners of coastal properties, the investment may make sense.<\/p>\n
All these concerns raise questions that investors and managers will need to answer from now on. Evaluating risks created by changes to FEMA maps and standards, as well as the hazards of floods themselves, will be essential steps in due diligence for any acquisition or investment in a potentially vulnerable location. These issues are likely here to stay.<\/p>\n
![\"BrianHochleutnerSC\"](\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2016\/05\/BrianHochleutnerSC.jpg\")
Brian Hochleutner<\/strong> is a Boston-based partner in DLA Piper\u2019s real estate group and serves as counsel to developers and investors in the acquisition, development, sale and leasing of large-scale projects, with a focus on complex development matters.<\/p>\n