The adjusted tax assessment method can’t be used to obtain the building value because buildings owned as condominiums are assessed as units, and the value of a condominium unit always includes component values for land and other improvements. An independent appraisal estimating actual cash value is the only way to establish the building value. Best practice is that the condominium association order an actual cash value appraisal of the affected building or buildings.
Floodplain administrators should avoid the practice of dealing exclusively with individual condominium unit owners. When work is a proposed improvement inside a single apartment it is tempting to deal direct. Such a practice undermines understanding that the NFIP “market value” is about buildings, not units. It undermines the essential role of condominium associations to act on behalf of unit owners, and it sets up bad habits that cause confusion, doubt, and distrust post- disaster when associations must act.
Whether the work proposed is an improvement, or the repair of damage, it is in the interest of the condominium association to review and approve permit applications to avoid a situation where work in a single apartment uses all the available building value, thus foreclosing work in other apartments, or work on other portions of the building. Local officials should avoid issuing building permits for work inside an apartment without the knowledge and consent of the condominium association.
When work is an improvement there are opportunities to adjust the scope of work to keep the project within building value/cumulative rule tolerances.
When the work is the repair of damage, all the costs required to return the building to its condition prior to damage are included in the budget, without phasing, so there is no flexibility. It is essential that the condominium association lead by:
- Arranging cleanup and remediation efforts to safeguard the affected structure or structures.
- Ordering an actual cash value appraisal of all damaged buildings subject to the 50 Percent Rule.
- Coordinating the development of repair cost budgets, building by building.
- Comparing building total repair costs with the building actual cash value to identify whether a given building is likely to pass the 50 Percent Rule determination.
- Coordinating the flow of permit applications (prioritizing critical building component repairs) to avoid a situation where work in a single apartment consumes excessive building value, thus foreclosing work in other apartments, or work on other portions of the building.
Similar procedures should be employed for buildings owned as cooperatives.