Key Points
1. Repair cost includes only those repairs, including non-emergency mold remediation, associated with the damaged components and the codes and standards that apply to the repair of the damaged components. The cost does not include upgrades of other components triggered by codes and standards, design associated with upgrades, demolition of the entire facility, site work, or applicable project management costs. The cost of contents and hazard mitigation measures is not included in the repair cost.
2. Replacement cost includes the costs for all work necessary to provide a new facility of the same size or design capacity and function as the damaged facility in accordance with all current applicable codes and standards. The cost does not include demolition, site work, applicable project management costs, cost of contents, and hazard mitigation measures.
References: Section 406(a) of the Stafford Act 44 CFR §206.226(f)
Eligibility of Facilities for Replacement (The 50% Rule), FEMA Policy 9524.4, dated September 24, 1998
Public Assistance Guide, FEMA 322, pages 36-38, 83
Detailed Discussion
FEMA will restore an eligible facility to its pre-disaster design. Restoration is divided into two categories: Repair or Replacement. If a facility is damaged to the point where the applicant thinks the facility should be replaced rather than repaired, the following calculation, known as the “50% Rule,” should be used to determine whether replacement is eligible. The repair cost does not include codes and standards upgrades, demolition, site work, or applicable project management costs.
IF Repair Cost1
Replacement Cost2
Repair Cost1
IF Replacement Cost2
< 50% THEN only the repair cost is eligible
≥ 50% THEN the replacement cost is eligible
1. Repair cost includes only those repairs, including non-emergency mold remediation, associated with the damaged components and the codes and standards that apply to the repair of the damaged components.
The cost does not include upgrades of other components triggered by codes and standards, design associated with upgrades, demolition of the entire facility, site work, or applicable project management costs. The cost of contents and hazard mitigation measures is not included in the repair cost.
2. Replacement cost includes the costs for all work necessary to provide a new facility of the same size or design capacity and function as the damaged facility in accordance with all current applicable codes and standards. The cost does not include demolition, site work, applicable project management costs, cost of contents, and hazard mitigation measures.
FEMA does not apply the 50% Rule to a facility’s structural or mechanical components (e.g., windows, roofs, HVAC; electrical, plumbing). For example, FEMA does not apply the 50% Rule to a damaged HVAC system to determine whether the system should be repaired or replaced because it is a component of a building. As long as the HVAC system is repairable, as determined by an inspector or engineer with appropriate technical expertise, FEMA limits its funding to the repair of the system.
For facilities that are systems composed of multiple components that are easily segregated, FEMA applies the 50% Rule to individual components of the system, rather than the system as a whole.
The following are examples of facilities that are systems to which FEMA applies the 50% Rule calculation to individual components:
• Drainage channel or irrigation system: a section from node to node
• Water or sewer line system: a section of piping from manhole to manhole, a lift station, or a manhole structure
• Water or wastewater treatment plant: a control building, clarifier, or sedimentation pond
• Roadway: each damaged roadway section
Electrical distribution systems are evaluated for replacement based on the criteria in Chapter 2:VII.H.4(b).
The following are examples of facilities to which FEMA applies the 50% Rule to the entire facility:
• Bridge
• Culvert
• Building
• Pumping station
• Pier
• Pool, including integral pumping
• Bath house or rest room
• Equipment
• Lighting structure
• Sign