Imagine your house catches fire and sustains substantial damage, but then you cannot repair it because your property is located in a flood hazard area. Or picture wanting to do a kitchen remodel as well as replace the roof, but when trying to pull a permit, you are denied because the cost is considered to be too much of an improvement.
Three Options: There are portions of Sacramento in Natomas and North Sacramento that are dealing with these very issues. Because the levy needs updating, these homes are located in a Special Flood Hazard Zone (Zones A, AE, AR, AH or AO). This leaves property owners with three options:
- Improve a home up to 40% of the county assessed structural value of the house. Or obtain an appraisal and get up to 50% of the market value of the structure.
- Raise the house above the flood area so you can spend however much you’d like. This is impractical though since there are portions of Sacramento where one would have to raise the house more than a dozen feet off the ground.
- Remodel without permits (probably not a great option).
Can this house be remodeled? The total assessed value of the structure is $20,297 (it is located in a flood area).
Value of the Structure: It might seem like quite a bit to get to spend up to 40-50% of the value, but keep in mind this is ONLY the value of the existing structure – not the total resale value of your property that includes the land, house and all improvements. For example, if the total value of your home is $100,000, the structure is only a part of the value and may only be $50,000 or so depending on the situation. It’s also important to remember that the Assessor’s figures are sometimes really low. They might have the value of a home’s structure at only $40,000, for example, while the land is valued at $50,000 (NOTE: Postage stamp vacant lots do NOT go for that much in flood areas). This means based on the Assessor’s figures you can only spend $20,000 to improve your home. If you have repairs that exceed that amount, there is really not much you can do unless you plan to spend big money to raise your house (or do work without a permit). However, if an appraiser provides an appraisal (with a Cost Approach), the value of the structure might be higher, which could help your situation.
City of Sacramento Document: The following document is from the City of Sacramento. It might be helpful to dig in a bit deeper. If you have any questions or needs, let me know.
Question: What ways do you think rules in flood hazard areas can impact a neighborhood?
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