1 MEMORANDUM DATE: May 4, 2004 SUBJECT: Percentage Thresholds for Building ( and Other) Code Applicability to Existing Structures FROM: Lisa Sutton, EC/ R Incorporated Graham Fitzsimons, EC/ R Incorporated TO: Dave Svendsgaard, EPA/ OAQPS/ ITPID Pam Long, EPA/ OAQPS/ ITPID 1. INTRODUCTION EC/ R Incorporated conducted an expedited, preliminary investigation of building codes in use by State and local agencies to identify information you requested as you consider potential cost thresholds in New Source Review rules. We conducted an Internet search to identify regulations that include a percentage threshold for improvements to existing buildings that triggers applicability of a jurisdiction's building code ( or, in some instances, its fire or flood code). Typically, the threshold is the value of a building's improvement ( or similar term) as a percent of the value of the existing building. We found, for example, that many cities include in their building code a requirement that an existing building must be made to conform to the most current building code if it undergoes a " substantial improvement" ( that is, if the building improvements cost more than 50 percent of the value of the existing building).

Section 2 provides background information collected in our Internet search on the applicability of building codes, including definitions of relevant terms. Section 3 presents information collected on specific code applications. A summary of the results of our investigation is presented in Section 4.

2. BACKGROUND INFORMATION ON BUILDING CODE APPLICABILITY The International Code Council ( ICC) was established in 1994 with the goal of developing one comprehensive and coordinated set of model construction codes for U. S. and international use. While 44 States use the International Building Code as a model according to the ICC1, at present, there is no true national level code for construction in the United States. Instead, primary responsibility for codes governing building construction appears to reside with local governments. 2 States may adopt broad levels of codes, but they generally delegate the permitting and inspecting authority to counties and cities. Many jurisdictions use a nationally developed model code but then tailor it to local conditions; they may not adopt revisions on as frequent a basis as that on which the model code is updated.

A code may include a percentage threshold for determining what constitutes a building " improvement," and thus applicability of the current code version. Some codes differentiate between types of improvements, with separate requirements for each type. For example, a particular building code may apply an improvement threshold to a building's " rehabilitation," " reconstruction," " addition," " restoration," " repair," " alteration," " remodeling," or " modification." Several commonly used terms and their meanings are:

Rehabilitations  improvements made to an existing structure which do not affect the external dimensions of the structure Memorandum Percentage Thresholds for Building ( and Other) Code Applicability to Existing Structures May 4, 2004 2 Additions  improvements that increase the square footage of a structure Reconstructions  cases where an entire structure is destroyed by damage or is purposefully demolished or razed and a new structure is built on the old foundation or slab.

The New Jersey Rehabilitation Subcode specifies that a project ( which may include a combination of repair, renovation, and alteration work) becomes a " reconstruction" when both ( 1) the area where the project is taking place cannot be occupied while the work is in progress, and ( 2) a new certificate of occupancy is required before the area can be reoccupied.

How percentages are used in code applicability determinations varies. In examples we found, percentages are applied on the basis of market value, repair value, floor area ( e. g., renovated or added), and assessed value, among others. A " nonconforming" structure, as referred to in numerous building codes, means a structure that does not conform to the terms and requirements of a jurisdiction's current regulations.

Until the late 1970' s, three model building codes used a formula called the " 25/ 50 rule" to guide determination of the extent to which a proposed rehabilitation of an existing building would trigger applicability of current code requirements to the building. By this rule, the estimated cost of rehabilitation work was calculated as a percentage of the total value of the building. If the Percentage of Value ( PV) was lower than 25%, the local building official had the flexibility to determine the extent to which rehabilitation work must conform to building codes. If the PV was between 25% and 50%, then the entire scope of the rehabilitation work had to conform to building codes. If the PV was greater than 50%, then the entire building had to be brought up to current building codes. However, this 25/ 50 rule generally discouraged the renovation and re use of existing structures. In many instances, property owners wanted to rehabilitate certain aspects of their buildings but had to abandon their plans because the 25/ 50 rule would have forced them to rehabilitate the entire buildings. As a result, these buildings remained unused and deteriorated over time. 3 To counter the effect of the rules that governed rehabilitation before the 1970' s ( which was to encourage new construction rather than re use of the existing building stock), in 1998 the State of New Jersey developed its own code specific to building rehabilitations. Subsequently, the U. S. Department of Housing and Urban Development ( HUD), requested the National Association of Home Builders' Research Center ( NAHBRC) to develop a national version of a code for rehabilitation based on the one developed by New Jersey. 4 For work in existing buildings ( including additions), the New Jersey Rehabilitation Subcode generally replaces provisions of other subcodes. Its requirements generally are based upon the type of work being done rather than on the extent of the work. However, in the case of reconstruction work ( as defined in the subcode), there are some requirements that must be met when the project is a large one in floor area. 5 The definitions of several key terms relevant to that application of building codes, including " substantial improvement," appear in rules promulgated by the Federal Emergency Management Agency ( FEMA). However, as noted by the City of Palo Alto, California, " although published by Memorandum Percentage Thresholds for Building ( and Other) Code Applicability to Existing Structures May 4, 2004 3 FEMA as guidelines for use after a disaster, the criteria for determining substantiality  and its consequences  are applicable to non disaster situations as well." 6 Two terms that relate to building improvements are defined by FEMA at 44 CFR 59.1:

Substantial damage means 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.

Substantial improvement means any reconstruction, rehabilitation, addition, or other improvement of a structure, the cost of which equals or exceeds 50 percent of the market value of the structure before the " start of construction" of the improvement. This term includes structures which have incurred " substantial damage," regardless of the actual repair work performed. The term does not, however, include either: ( 1) Any project for improvement of a structure to correct existing violations of state or local health, sanitary, or safety code specifications which have been identified by the local code enforcement official and which are the minimum necessary to assure safe living conditions or ( 2) Any alteration of a " historic structure," provided that the alteration will not preclude the structure's continued designation as a " historic structure."

In its publication, " Answers to Questions About Substantially Damaged Buildings," FEMA addresses why its substantial improvement threshold is set at 50 percent: 7 " The 50% threshold was chosen as a compromise between the extremes of ( 1) prohibiting all investment to structures in flood hazard areas which does not meet minimum FEMA floodplain management requirements and ( 2) allowing structures to be improved in any fashion without regard to the hazard present. In the first alternative there is the potential for causing hardship to those who have located in flood hazard areas without knowledge of the risk because the structure was constructed prior to the designation of the area as flood prone. These individuals could not improve their structures as damage or age contributed to their deterioration. The second alternative provides no mechanism to ensure that increased investment in flood hazard areas will receive needed protection from the flood risk, thus contributing to the increased peril to life and property. The threshold is thus a compromise at a half way point and was chosen because it conforms with similar building code and zoning standards that also use a 50% threshold."

3. SUMMARY OF READILY AVAILABLE INFORMATION COLLECTED Table 1, " Example Criteria for ` Substantial Improvements' That Trigger Application of Current Building and Other Codes to Existing Structures," summarizes regulations and guidance found on the Internet that relate to a percentage threshold for improvements to an existing building.

Represented in Table 1 are building codes for four States ( Oregon, New Jersey, Rhode Island, Texas), two counties and 15 cities. The cities are scattered among California, Michigan, New York, North Dakota, Pennsylvania, South Carolina, Texas, Virginia, Washington, Wisconsin, and Memorandum Percentage Thresholds for Building ( and Other) Code Applicability to Existing Structures May 4, 2004 4 Wyoming. The selection of these jurisdictions was purely a result of the Internet search criteria used and is not necessarily representative of code applicability nationwide.

Several California cities include a percentage threshold for building improvements. A similar percentage threshold for building improvements may be part of the California Code of Regulations ( CCR), Title 24, also known as the California Building Standards Code, but we were not able to verify this through the Internet. Title 24 is " available for purchase or available to the public at no cost through depository libraries," 8 and we can pursue this further if necessary.

4. RESULTS OF REVIEW For jurisdictions that specify a " substantial improvement" threshold in their building codes to determine if an activity triggers the applicability of current codes to an entire building, a threshold of 50 percent, based on value ( cost) of the improvement as compared to the pre improvement building value, is by far the most common.

Some jurisdictions have additional conditions on the 50 percent cost threshold. Examples of such additional conditions are:

A requirement that the improvement costs are summed over a specified length of time

Threshold allows substantial improvements only if the improvements are made necessary by a disaster

Threshold allows improvements only to restore an unsafe building or to relocate a building.

As noted more fully in section 2 of this memorandum, a threshold based on cost of improvements has been found to be a potential disincentive to re use of existing buildings. As a result, jurisdictions have developed building code that is specific to rehabilitation of existing structures. The State of New Jersey Rehabilitation Subcode includes percentage thresholds based not on improvement cost but rather on the work area ( area comprising all or part of a reconstruction project) as a percent of the building's floor area. Similarly, the State of Rhode Island Rehabilitation Code includes a threshold of 50 percent based on the area of the building being altered.

One jurisdiction prohibits improvements to a nonconforming building that exceed the 50 percent cost threshold.

Some jurisdictions specify a 60 percent cost threshold. Other jurisdictions use a combination of thresholds based on improvement cost. For example, the City of Beverly Hills, California, an occupancy damaged as a result of disaster may be repaired to pre disaster condition if the estimated value of repair does not exceed 10% of the replacement value of the structure. If the estimated value of repair is above 10% but under 50%, the damaged elements must be brought into conformance with current code. If the estimated value of repair equals or exceeds 50%, the entire structure must be brought into conformance with current code. Memorandum Percentage Thresholds for Building ( and Other) Code Applicability to Existing Structures May 4, 2004 5 We note that this data collection effort focused on those building codes that utilize a percentage threshold, so we cannot report what percentage of building codes nationwide might use such a threshold. We further note that by the nature of our data collection approach, which used Internet search engines, our data did not capture any particular geographical distribution, nor is it necessarily representative of building code applicability determinations nationwide.

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1. International Code Council. http:// www. iccsafe. org/ cs/ adoptions/ adoption. html. Accessed March 4, 2004.

2. About, Inc. http:// homerepair. about. com/ cs/ buildingcodes/ a/ codes_ national1. htm Accessed March 8, 2004.

3. " Implementing a Building Rehabilitation Code in Michigan," Matt Syal and Chris Shay, Construction Management Program, Michigan State University, August 2001. http:// www. msu. edu/~ cua/ pubs% 20hsg% 20report/ syal% 20rehab% 20hsg% 20reportI. htm Accessed March 9, 2004.

4. Ibid.

5. State of New Jersey Rehabilitation Subcode. http:// www. state. nj. us/ dca/ codes/ rehab/ text/ rehab_ 5 03. pdf. Accessed March 10, 2004.

6. Website for City of Palo Alto, California, Public Works Engineering, Floodzones. http:// www. cityofpaloalto. org/ floodzones/ damage. html. Accessed March 4, 2004.

7. " Answers to Questions About Substantially Damaged Buildings  National Flood Insurance Program, Community Assistance Series," Federal Emergency Management Agency, May 1991. FEMA  213. p. 3. http:// www. fema. gov/ hazards/ floods/ lib213. shtm.

8. California Building Standards Code. http:// www. bsc. ca. gov/ title_ 24. html Accessed March 4, 2004. Memorandum Percentage Thresholds for Building ( and Other) Code Applicability to Existing Structures May 4, 2004 6 Table 1. Example Criteria for " Substantial Improvements" That Trigger Application of Current Building and Other Codes to Existing Structures Source Relevant Code Value Triggering Code Detail City of Beverly Hills, CA Building 10% and 50%

of value  An occupancy damaged as a result of disaster may be repaired to pre disaster condition if estimated value of repair does not exceed 10% of replacement value of building or structure. If estimated value of repair is above 10% but under 50%, the damaged elements must be brought into conformance with current code. If estimated value of repair equals or exceeds 50%, entire building or structure must be brought into conformance with current code.

 For repair of unreinforced masonry structures and buildings that are damaged, building may be repaired to pre disaster condition if estimated value of repair does not exceed 10% of replacement value of building or structure. If estimated value of repair equals or exceeds 10% but does not exceed 50%, the entire building must be repaired and strengthened to comply with Ch. 5 requirements. If estimated value of repair exceeds 50%, the entire building or structure must conform with Ch. 1 structural requirements.

City of Brisbane, CA Building Either 50% of value or 50% of floor area When additions or alterations to a building or structure are made within a 5 year period and exceed either ( 1) 50% of market value of pre existing building or structure or ( 2) 50% of floor area of pre existing building or structure, then the pre existing building or structure must be brought into conformity with standards for new construction, as the building official may determine to be necessary.

City of Cedarburg, WI Building 50% of value If alterations or repairs exceed 50% of fair market value of an existing building within any 12 month period, the entire building must conform to new building requirements.

City of Davis,

CA Building 50% of value " Substantial improvement" means repair, reconstruction, or improvement of a structure where cost equals or exceeds 50% of market value of structure. Term excludes ( 1) improvement of structure to comply with existing specifications that are solely necessary to assure safe living conditions or ( 2) alteration of structure listed as an historical place. Table 1. Example Criteria for " Substantial Improvements" That Trigger Application of Current Building and Other Codes to Existing Structures ( cont'd)

Memorandum Percentage Thresholds for Building ( and Other) Code Applicability to Existing Structures May 4, 2004 Source Relevant Code Value Triggering Code Detail 7 City of Erie, PA Building 50% of value In flood prone area, any modification, alteration, reconstruction, or improvement to an existing structure to an extent of 50% or more of its market value must be undertaken in full compliance.

Horry County,

SC Building 50% of value Substantial improvement of a nonconforming building is prohibited. Substantial improvement is any combination of repairs, reconstruction, alteration, or improvements to a building, taking place during a 5 year period, in which the cumulative cost equals or exceeds 50% of market value of the building.

City of Issaquah, WA Building 25% of value for maintenance;

75% of value for change  Maintenance may be performed on a nonconforming " situation" ( including structures and uses) if the value of work and materials in a 12 month period does not exceed 25% of the value of the structure, using International Conference of Building Officials ( ICBO)

construction tables. Exception is if rehabilitation expands the number of dwelling units or physically expands the square footage of the structure. Undergoes a " Level 0" review.

 Reconstruction of a damaged, nonconforming structure undergoes a " Level 0" review if reconstruction costs are less than 75% of structure's value. Otherwise, reconstruction undergoes a " Level 2" review. Reconstruction permit must be submitted within 1 year of damage, or the project will be required to comply with all codes.

 Change of a nonconforming situation ( including reconstruction, repair, remodeling, or alteration of a building or site) undergoes a " Level 0" review if the cost of change is less than 75% of structure value. Otherwise, the change " shall decrease the degree of nonconformity" and undergoes a " Level 2" review. Table 1. Example Criteria for " Substantial Improvements" That Trigger Application of Current Building and Other Codes to Existing Structures ( cont'd)

Memorandum Percentage Thresholds for Building ( and Other) Code Applicability to Existing Structures May 4, 2004 Source Relevant Code Value Triggering Code Detail 8 City of Jackson Hole, WY Building 50% of value  Voluntary restoration: A nonconforming structure which has been willfully modified or dismantled to an extent greater than 50% of fair market value of the structure during any 2 year period must be restored in conformity with standards of the Land Development Regulations.

 Damage triggered repair/ reconstruction: If a structure is damaged by less than 50% of the fair market value during any 2 year period, it may be repaired and reconstructed to its prior nonconforming condition, provided repair or reconstruction is commenced within 12 months after date of damage.

Town of Menasha

Neenah, WI Building 25% and 50%

of value  If a building is altered or repaired at a cost of greater than 50% of the assessed value of the building, it must conform to current building code.

 If a building is damaged to an extent in excess of 50% of the assessed value of the building prior to damage, then the building must be made to conform to current building code.

 If cost of alterations or repairs is between 25% and 50% of physical value of the building, the Building Official determines the degree to which the altered/ repaired portions must conform to requirements for new buildings.

 If cost of alterations or repairs is below 25% of physical value of building, it may be restored to its previous condition.

City of Mill Creek, WA Building 60% and 100% of value  Their building code for fire extinguishing sprinklers treats as new construction ( 1) additions exceeding 60% of value of building or structure or ( 2) alterations and repairs to any portion of a building or structure.

 A different part of their building code for fire extinguishing sprinklers treats as new construction ( 1) additions exceeding 60% of the building or structure or ( 2) alterations and repairs to any portion of a building or structure within a 12 month period that exceed 100% of the value of the building or structure. Table 1. Example Criteria for " Substantial Improvements" That Trigger Application of Current Building and Other Codes to Existing Structures ( cont'd)

Memorandum Percentage Thresholds for Building ( and Other) Code Applicability to Existing Structures May 4, 2004 Source Relevant Code Value Triggering Code Detail 9 City of New York, NY Building 30% and 60%

of value If the cost of making alterations to an existing building in any 12 month period are between 30% and 60% of the value of the building, only those altered portions of the building must comply with code. If the cost exceeds 60%, the entire building must be made to comply with code.

Oregon Legislative Assembly Building 50% of value Applies to relocated buildings. When relocating a building, its heating, plumbing, and electrical systems must meet standards for new construction if the cost of rehabilitation exceeds 50% of the value of the structure before rehabilitation.

City of Rockford, MI Building 60% of value If a nonconforming building or structure is destroyed to an extent of more than 60% of its replacement value, exclusive of the foundation, it must be reconstructed in conformity with ordinance.

Shenandoah County, VA Building 50% of value Applies to restoration of unsafe buildings. If the damage or cost of reconstruction or restoration exceeds 50% of replacement value of a condemned building or structure,

exclusive of foundations, building must comply with State building code.

City of Wichita Falls, TX Building 50% of value Allows reconstruction of a nonconforming structure if structure has been damaged to the extent of not more than 50% of replacement cost of structure on the date of damage.

Village of Woodville, WI Building 50% of value  An existing, nonconforming building can be altered only if it has not deteriorated by more than 50% of the equalized value of the building or structure. Otherwise it must be demolished.

 An existing structure must comply with code if the cost of altering or repairing it exceeds 50% of the equalized value of the structure, said value to be determined by the Village Assessor. Table 1. Example Criteria for " Substantial Improvements" That Trigger Application of Current Building and Other Codes to Existing Structures ( cont'd)

Memorandum Percentage Thresholds for Building ( and Other) Code Applicability to Existing Structures May 4, 2004 Source Relevant Code Value Triggering Code Detail 10 City of Beverly Hills, CA Fire 50% of value An existing building has to install fire extinguishing system if additions, alterations, or repairs are made within a 12 month period that exceed 50% of the value of the existing building.

City of Mill Creek, WA Flood 50% of value  They define " substantial damage" and " substantial improvement" like FEMA.

 For floodways, reconstruction of residential structures is only allowed if the cost of repairs, reconstruction, or improvements does not exceed 50% of the market value of the structure. Work done on structures to comply with existing health, sanitary, or safety codes or to structures identified as historic places shall not be included in the 50%.

City of Fargo,

ND Flood 50% of value " Substantial improvement" means any repair, reconstruction, or improvement of a structure, the cost of which equals or exceeds 50% of the market value of the structure,

either ( 1) before the improvement or repair is started, or ( 2) before the damage occurred,

if the structure has been damaged and is being restored. Substantial improvements to a structure must conform to floodproofing code.

Town of Occoquan, VA Flood 50% of value They define " substantial damage" and " substantial improvement" same as FEMA. A modification, alteration, repair, reconstruction, or improvement of any kind to a structure to an extent of 50% or more of its market value must comply with building code.

Texas Department of Licensing and Regulation Industrialized Housing and Buildings 50% of value If the cost of altering an " industrialized building" ( modular commercial building) exceeds 50% of the value of the modules or modular components used in construction of the building, the entire building must comply with code; otherwise, only the modified or altered portion of the building must comply with code. Table 1. Example Criteria for " Substantial Improvements" That Trigger Application of Current Building and Other Codes to Existing Structures ( cont'd)

Memorandum Percentage Thresholds for Building ( and Other) Code Applicability to Existing Structures May 4, 2004 Source Relevant Code Value Triggering Code Detail 11 State of New Jersey Rehabilitation Subcode Rehabilitation of Buildings Typically 20%, 25%,

and 50% of floor area  If the " work area" ( reconstruction project comprising repair, renovation, alteration, or any combination thereof) exceeds a threshold percent of the floor area of the building ( in some cases the gross enclosed floor area, in other cases the occupied floor area), then code requirements ( building, fire, elevator) are triggered. Typical thresholds are: 25% for fire alarm systems; 50% for vertical opening protection; 20% for smoke and heat detection devices; 20% for elevator emergency control devices; 20% for standpipes; and 50% for elevator devices.

 We found one application of a cost threshold: If a building is required by the barrier free code to be accessible and its entrance steps are being replaced, an accessible entrance must be provided if it does not add more than 20% to the cost of replacing the steps.

[ 5: 23 6.6 Alterations]

State of Rhode Island Rehabilitation Code Rehabilitation of Buildings 50% of [ floor]

area When the total area of all rehabilitation work areas included in an alteration exceeds 50%

of the area of the building, the work is considered reconstruction and must comply with code.