• Identify the purpose of the FEMA Substantial Damage Estimator (SDE) Tool
• Recognize the guidelines for performing substantial damage assessments
• Identify best practices for a substantial damage program

You may wish to reference Module 1 - Purpose of the SDE Tool of the FEMA SDE Video Training Series, available at https://youtu.be/5W0CDF1Wods.

Communities that participate in the NFIP are required to determine whether damage to structures within a mapped Special Flood Hazard Area (SFHA), regardless of its origin, meets the criteria for substantial damage, according to 44 CFR Section 59.1 available at https://www.law.cornell.edu/cfr/text/44/59.1.

Substantial damage is defined in the NFIP regulations as:

“Damage of any origin sustained by a structure whereby the cost of restoring the structure to its before-damaged condition would equal or exceed 50 percent of the market value of the structure before the damage occurred.”

If a structure in a floodplain is determined to be substantially damaged by the community, it must be brought into compliance with local flood damage prevention ordinances.

Owners who decide to rebuild may need to elevate their structures or change them in some other way to comply with those local flood damage prevention ordinances and avoid future losses.

Owners of non-residential structures may need to floodproof their buildings.

Structures that have been classified as uninhabitable may be identified as such for several reasons, including health issues, a temporary lack of utilities, or building code violations.

None of these cases would definitively mean that a structure was substantially damaged, but could very well occur simultaneously with a substantial damage determination.

Substantially damaged refers to a case where the dollar value of damage that has affected a structure is equal to or greater than 50% of the value of that structure. An uninhabitable designation generally refers to a legal or health-related issue that creates an unlivable condition in the structure.

A structure may be considered either substantially damaged, uninhabitable, or both. However, a structure that is considered uninhabitable may be in violation of a local code but may not be substantially damaged.

FEMA does not deem a structure uninhabitable or substantially damaged. It is the local community’s responsibility as a minimum requirement of NFIP participation.

There are multiple ways to collect the information needed to make substantial damage determinations.

Options for estimating structure values:

• Actual Cash Value (ACV) using base costs, square footage, and depreciation. The ACV information can be found on the flood insurance declarations page
• Current tax assessed values
• Appraisals prepared by a state-licensed appraiser
• Contractor cost estimate for a new structure of similar type, size, and construction

Sources for repair cost estimates:

• Contractor estimate of repair costs
• Community estimate of repair costs (The community should determine its potential liability for preparing cost estimates before using this option.)
• Flood insurance claims (if current and reasonable)

FEMA has developed the Substantial Damage Estimator (SDE) tool to help communities collect and organize substantial damage information.

The FEMA SDE Tool, available at https://www.fema.gov/media-library/assets/documents/18692, was developed to assist state and local officials in providing property owners with timely substantial damage determinations so that they can begin reconstruction quickly following a disaster.

The SDE Tool can be used when assessing substantial damage from flood, wind, fire, seismic, and other damaging events. The SDE Tool is based on the concept of using substantial damage estimates for individual structure elements to determine whether the structure as a whole is substantially damaged. The SDE Tool may be used in conjunction with an industry-accepted, residential construction cost-estimating guide.

The SDE Tool can be used to assess substantial damage to residential and non-residential structures in accordance with NFIP requirements, as adopted by the communities. The SDE Tool should not be used for structures designated by state or federal entities as historic structures because of their complex valuation unless indicated by local flood damage prevention ordinance.

The SDE Tool was developed in response to the challenges that many local and State officials face after major disasters when they try to conduct substantial damage assessments.

The SDE Tool can assist State and local officials as they perform on-site visual substantial damage assessments to estimate repair costs and building values for residential and non-residential structures. It also can support the enforcement of local flood damage prevention ordinances, as required for communities that participate in the NFIP.

The primary goal in developing the SDE Tool is to give those officials, with limited appraisal or construction backgrounds, a way to make reasonable estimates of the value of buildings and the damage to those buildings after any event.

The SDE Tool is also a resource for seasoned substantial damage assessors, as it provides an organized platform to prepare data and calculate damages in a consistent format. SDE Tool data can help demonstrate that the community is complying with NFIP regulations.

• Identify data needed for substantial damage determinations
• Organize data in a formal manner
• Provide a database of inventoried structures
• Collect attachments of photos and files
• Create reports which summarize data collected
• Document the assessment process for NFIP compliance

The SDE User Manual and Field Workbook provides detailed instructions on how to use the SDE Tool, available at https://www.fema.gov/media-library/assets/documents/18692, and can be used as a reference when a community has begun performing substantial damage assessments.

The SDE Tool software also features a Help menu and links within the SDE Tool to access resources for answers to questions about the SDE Tool and how to perform substantial damage assessments. Also available are answers to frequently asked questions (FAQs) and best practices for substantial damage assessments.

Throughout this course, you will notice Tips that reference specific sections of the SDE User Manual and Field Workbook to provide more information on the topic being covered.

SDE Tool support materials:

• SDE User Manual and Field Workbook available at https://www.fema.gov/media-library-data/1504291725295-a6fa57343ca6740b8cfcb4c609b599f7/SDE_3.0_User_Manual_and_Field_Workbook.pdf
• SDE Tool Help menu and links
• FEMA 213 - Answers to Questions About Substantially Improved/Substantially Damaged Buildings available at https://www.fema.gov/media-library-data/1541603833704-2b9800c9c287c373db595cb2789ea78a/FEMA_P213_FINAL_08232018_508.pdf
• SDE Best Practices, available at https://www.fema.gov/media-library-data/1504291573723-a6fa57343ca6740b8cfcb4c609b599f7/SDE_Best_Practices.pdf, contains suggested solutions to some common challenges that SDE Tool users may encounter. The guidance is organized into three phases of substantial damage assessment management: Planning for Data Collection, Field Work, and SDE Tool Data Quality Assurance Reviews

The SDE Tool can be installed from a zip (or compressed) file available on the FEMA website.

• The SDE Tool Download is available at https://www.fema.gov/media-library/assets/documents/18692.
• The SDE Read Me – SDE Installation Guide is available at https://www.fema.gov/media-library-data/1504291573550-a6fa57343ca6740b8cfcb4c609b599f7/SDE_Read_Me_-_SDE_3.0_Tool_Installation_Guide.pdf

To run the SDE Tool successfully on a computer or tablet, the minimum system requirements include:

• Windows 7, 8, or 10 operating system
• 32-bit, 1 gigahertz (GHz) or faster processor
• .NET Microsoft Framework 4.6.1 (if not already installed, the SDE Tool installation routine will attempt to install it) 1 gigabyte (GB) memory minimum
• Approximately 300 megabytes (MB) of available hard-disk space. (If the SDE Tool is installed on a network drive, set up the SDE Tool in the standalone mode during installation)
• Microsoft Office 2007 or later, or Microsoft Office Access Database Engine 2007 (Microsoft Office Access Database Engine 2007 is included with the documentation folder within the directory where the SDE Tool is installed, if it is not already installed)

The SDE Tool acts as an organizing platform for all the substantial damage data that a community needs to collect on structures after any type of damaging event. Since it is designed specifically for collecting substantial damage information, the data is organized into an easily reviewable format that is conducive to making substantial damage determinations.

There are two parts to the SDE Tool data.

• The first part is information about those structures in the community that require substantial damage assessments. This information is displayed on the Address, Structure/Damage/NFIP, and Cost tabs in the SDE Tool. This information can be imported or manually entered into the SDE Tool.
• The second part of the data is the damage assessment estimates that are used to make substantial damage determinations. This information is displayed on the Structure/NFIP/Damage and Element Percentages tab in the SDE Tool. SDE Tool data can be displayed in reports or exported in different formats.

Lesson 6 will provide more details on the basic features of the SDE Tool.

Lessons 9,10, and 11 will provide specific information on how to use the SDE Tool.

There are two types of SDE databases: Stand-alone and Client/Server.

Stand-alone versions are installed on a single host computer. Only the user of the host computer has access to a stand-alone SDE database.

On a Client/Server or network installation, multiple users can access the same SDE database once they map the network drive from their computer to the network location where the database is stored. The advantage of a network location for the database is that all users have access to the same copy of the database.

When using the SDE Tool, is it first necessary to assemble data on the structures in the mapped SFHA. This information includes the information about the community, structure address, longitude and latitude, property owner contact information, elevation of the lowest floor, NFIP information, square footage, base cost (based upon a community determined value), structure attributes, and other details.

Much of the information can be assembled in a Microsoft Excel spreadsheet and uploaded into the SDE Tool database. This information can also be manually entered into the SDE Tool.

Lesson 7 contains more specific information about the data required to complete residential and non-residential substantial damage assessments.

In cases where the community would like to collect additional information that is not built directly into the SDE Tool, there is an option to add up to three additional data fields so that this information can be collected as well. Some of the options for these custom fields include:

• Community Rating System (CRS) Discount
• NFIP Policy
• Increased Cost of Compliance (ICC) coverage

These customizable fields are located on the Address tab in the SDE Tool.

Another useful feature of the SDE Tool is the Attachment tool, which allows users to upload attachments, such as photos of the structure, Elevation Certificates, or other useful documentation.

It is recommended that a minimum of two photos be attached to each structure’s file with the SDE Tool. The photos will be displayed as part of the Community, Structure and Percent Damage, and Summary reports that can be generated by the SDE Tool.

Lesson 9 contains specific information on how to use the Attachment tool in the Photos tab of the SDE Tool.

Users can easily import previous assembled data from an existing Microsoft Excel spreadsheet or database into the SDE Tool.

Users can also export SDE Tool data in a format that is compatible with local computer programs or database systems.

The Import and Export data features function only if the exporting and receiving computer or tablet has the SDE Tool software installed.

Lesson 11 contains more information on how to use the Import and Export features in the SDE Tool.

With the SDE Tool, substantial damage assessments can be carried out relatively quickly. After performing several substantial damage assessments with the SDE Tool, a typical substantial damage assessor should require roughly 15 minutes to complete an average assessment.

Substantial damage assessors should remember to stay focused on collecting the information that the SDE Tool requests and on providing percent damaged estimates. They should not try to calculate the dollar value of damages. The SDE Tool was developed so that this calculation could be completed within the tool itself.

Assessors need to keep in mind some simple guidelines for performing substantial damage assessments in the field.

1. Look for physical damage both on the surface and subsurface of each element.
2. Evaluate damage to structural elements that are permanent features of the structure, not portable items, like furniture or televisions.
3. Determine if there is a loss of use of elements, such as HVAC units.
4. Identify mechanical damage that may affect the normal functions of a structural element.

All substantial damage assessments are intended to be visual only. There is generally no need for tools such as levels or ladders to perform up-close assessments of building elements.

It is important to make the community aware of the substantial damage assessment process. Providing assessors with official identification and letters of introduction can support the program’s professional image and facilitate property owners’ cooperation.

Substantial damage assessors should also keep safety in mind. If there is any question about the structural integrity of the building, including the floor, superstructure, and roof system, they should not enter and should perform the substantial damage assessment, to the best of their ability, at a safe distance.

Often, Urban Search and Rescue groups mark buildings to indicate their condition so a jurisdiction’s building inspector will likely know which structures are safe to enter before substantial damage assessments begin.

For non-residential substantial damage assessments, many of the same rules of thumb apply. Substantial damage assessors should not enter any building without the owner’s permission and should keep safety in mind in all situations.

When carrying out a non-residential substantial damage assessment, assessors should plan for the extra time it may take to complete the assessment because of the size or layout of the facility.

Substantial damage assessors should also take extra precautions if they are in a structure that contains large equipment or machinery that may be dangerous. They may need access to areas that are normally restricted to the public.

If at any time substantial damage assessors feel they are in an unsafe situation, they should leave and report the situation to their team lead/supervisor.

Certain considerations should be made when performing a substantial damage assessment in coastal or high-velocity flood areas.

For example, saltwater frequently causes more damage to a structure than fresh water, with an equal duration of flooding, so this should be taken into consideration when evaluating coastal structures.

In addition, structures in high-velocity riverine zones or coastal areas may experience a stronger surge from waves that can push structures off their foundations and cause severe damage. Looking for this type of damage should be part of the substantial damage assessment.

An important rule of thumb is that entering a home or other private property should be done with caution and only if the property owner has given explicit permission to do so.

Most substantial damage assessments should begin by knocking on the door of the house or alerting the owner to your presence in some fashion. Present your official ID badge and letter of introduction to explain who you are and the organization you are representing. Then, ask permission to perform a damage assessment of the property.

In most cases, property owners will be happy to oblige, but if they refuse the substantial damage assessment, it may be necessary to leave the premises. In these cases, do not put yourself in danger and simply report the refusal back to your team lead or supervisor.

Lessons 4 contains more information on protocols for conducting a substantial damage assessment.

Lesson 5 features a video demonstration of the procedure.

If there is no one present, do not enter the structure. Many substantial damage assessments can be completed from the outside of the structure. You should proceed to complete the substantial damage assessment without entering the structure and by gathering as much information as possible from your observations. Assessment teams should have the Right of Entry granted by local authorities and should be able to access the exterior of properties if the owner is not present.

Assessment teams CANNOT access private properties which have a locked gate or similar obstruction to the entire property, are marked with signage limiting access to the property, or where the owner is present and permission to enter is denied.

The SDE Tool organizes data collected by substantial damage assessors on both residential and non-residential structures. Common data fields include address information and cost data.

However, there are some differences in the information required for residential and non-residential substantial damage assessments.

Certain information that needs to be collected to perform a substantial damage determination, such as Structure Attributes, must be entered into the SDE Tool for both residential and non-residential substantial damage assessments.

In the SDE Tool, the determination of substantial damage to residential structures is based on the assessment of 12 different structural elements. Each of these elements is assessed separately and a percent damaged estimation is made for each.

Of the 12 residential structural elements, six are collected during a substantial damage assessment.

Users can select from several options within the SDE Tool to identify the specific attributes of a residential structure:

• Stories—one story, two or more stories
• Foundation type—continuous wall with slab, crawlspace, piers, piers and posts, slab-on-grade, and basement
• Superstructure–-stud-framed, common brick, insulated concrete form (ICF), and masonry
• Roof covering—shingles, clay tile, (metal) standing seam, and slate
• Exterior finish—Siding or stucco, brick veneer, exterior insulation and finish system (EIFS), or none
• HVAC system—heating and/or cooling or none

Lesson 9 contains more information about selecting the correct option when recording a building’s structural attributes.

The SDE Tool can also organize data collected from substantial damage assessments on non-residential structures. The substantial damage data collected on non-residential structures tend to vary widely based on the structure’s use.

Although the SDE Tool does not identify the use of every non-residential structure that may exist, it does include many options from which to choose. These options were vetted through a range of industry experts to try to identify and consolidate the most common structure uses in communities across the country.

The SDE Tool allows substantial damage assessors to identify many of non-residential structural attributes, including 19 structure-use options and whether the structure has a sprinkler and/or escalator or elevator conveyance systems. The structure use options are limited by the number of stories selected in the SDE Tool.

In addition, the substantial damage assessor can choose from five different construction quality options and make cost adjustments by altering standard and customizable options within the SDE Tool.

Like with residential structures, substantial damage assessors need to assess non-residential structures in terms of the damage sustained to each key element in the structure. The substantial damage assessor estimates the percent damaged for each structural element.

For non-residential structures, there are only seven elements to evaluate instead of 12, as in a residential damage assessment.

The seven non-residential structural elements assessed are:

1. Foundation
2. Superstructure
3. Roof covering
4. Plumbing
5. Electrical
6. Interiors
7. HVAC

One of the other key elements for determining substantial damage is the building value.

There are three options available in the SDE Tool for determining that a building’s value is compliant with NFIP requirements.

• The most accurate option is to use a professional market appraisal for the structure only. This is best for structures that are 1-3 years old. However, the burden of proof is on the property owner to provide this information. Market value estimates should be defensible and consistent.
• The next best option is to use the adjusted tax assessed value for the structure only.
• The third option is to use the SDE Tool’s computed actual cash value (ACV) with a depreciation rating entered by the assessor.

No matter which option is selected, this value becomes the denominator in the substantial damage equation.

The numerator in the substantial damage equation is the repair cost. It should include the cost of all the repairs required to bring the structure back to its pre-damage condition, not what the owner will do.

There are three ways to determine the repair cost in the SDE Tool which meet NFIP requirements.

• The most accurate option is to use a contractor’s estimate. Be sure to check that the owner-supplied unit cost data is from a credible source like a licensed builder, engineer, architect, or contractor or an industry-accepted cost guide, and it is adjusted for local conditions.
• The next best option is to use the computed damages from the SDE Tool.
• The third option is to use a community estimate from the community. No matter which option is selected, this value becomes the numerator in the substantial damage equation.

Lesson 13 contains more information on the use of contractor’s estimates for repair costs

Once the cost of repairs and the building value are determined, the repair cost is divided by the building value to get an overall percent damage calculation.

If the result of that calculation is equal or greater than 50%, the structure is considered substantially damaged, according to the NFIP.

For example, if a building’s value is $100,000 and the cost to repair it to its pre-damage condition is estimated to be $50,000, then:

$50,000 ÷ $100,000 = 0.50

0.50 × 100 = 50%

This building would be considered substantially damaged according to 44 CFR 59.1 available at https://www.law.cornell.edu/cfr/text/44/59.1

One of the primary objectives of the SDE Tool is to help local officials make substantial damage determinations when they may not have enough time to make thorough determinations with existing tools and information.

The SDE Tool provides a streamlined approach so users can assess structures throughout a community quickly and consistently. For example, the photo shows how the SDE Tool uses color to differentiate between the range of damages estimated in the View Search Records screen. Red = likely substantially damaged, yellow = potentially substantially damaged, and green = not likely substantially damaged.

The SDE Tool generates an estimate that either can be accepted as the percentage of damage or, in the cases of the 40%-60% damaged structures, can be used as a start of a discussion. That discussion is generally finalized with a contractor’s estimate of repairs and a professional market appraisal (or another form of structure valuation).

The SDE Tool facilitates the community’s compliance with NFIP regulatory requirements.

The SDE Tool provides reports that help local officials make substantial damage determinations or guide conversations with property owners.

The reports available in the SDE Tool include the:

• Community report, which provides a brief summary of the SDE data on all assessed structures
• Structure and Percent Damage report, which displays the location of the assessed structures and the associated percent damaged estimations
• Summary report, which generates a one-page report with all the SDE Tool data for each property record selected

Lesson 11 contains information on creating reports in the SDE Tool.

One of the keys to the success and credibility of a substantial damage determination program is to ensure consistency in the way that substantial damage determinations are made.

Every community is different, but officials who perform substantial damage assessments should communicate and coordinate frequently.

It is also recommended that a community selects a single, defensible method for determining building value and require all substantial damage assessors to employ this same methodology so that all structures are consistently assessed using the same criteria.

It should also be noted that it is OK for substantial damage determinations to be revised based on additional information gathered later, such as from a certified appraiser. Substantial damage determinations are based on estimates, and the property owner has a right to appeal them if more accurate information can be provided.

Finally, it is recommended that all substantial damage assessments be reviewed and quality controlled before they are finalized. Taking photographs while in the field can help facilitate this review process and avoid cases where substantial damage assessments include inaccurate information.

In this lesson, you learned that:

• The purpose of the FEMA SDE Tool is to:
• Support the enforcement of local flood damage prevention ordinances, as required for communities that participate in the NFIP
• Assist State and local officials in on-site, rapid, visual substantial damage assessments to estimate repair costs and building values for residential and non-residential structures
• Allow local officials with limited appraisal or construction backgrounds to develop reasonable percent damage estimates
• Prepare data and calculate substantial damage percentage estimates in a formal, organized manner
• Help determine substantial damage in accordance with 44 CFR 59.1 available at https://www.law.cornell.edu/cfr/text/44/59.1

In this lesson, you also learned that:

• When performing substantial damage assessments, it is important to:
• Estimate percent damaged for structural elements
• Use specific criteria for residential and non-residential structures
• Use a NFIP-compliant method to determine building value and repair cost
• Best practices for a substantial damage assessment program include:
• Making consistent and defensible substantial damage determinations throughout the community
• Allowing for the revision of determinations if structure owners can provide more accurate data obtained through other NFIP-compliant estimation methods
• Reviewing all substantial damage assessments for quality and consistency
• Taking photos in the field