2017 May 25th

City of Hoboken – Chapter 104: Flood Damage Prevention

This is a very interesting part of the City of Hoboken’s Municipal Code, about which many buyers, sellers, realtors, and home owners are very unaware.  It’s a plan to reduce the amount of damage done by potential future floods, a worthwhile aim for sure.  What people don’t realize is how it affects ones ability to utilize space “below grade”.  It is worth a careful read.

In a nutshell, if you are buying a brownstone to renovate, spending more than half the value of the “improvements” value of the property as listed in the tax records, you can use the space below grade (think garden level apartment, basements) ONLY as storage space.  No bathrooms, no furnace, no washer/dryer, no electric panel, no kitchen, no wet bar, no sauna, nothing.  Storage space.  Of course, your kids can play in your storage space and the City of Hoboken can’t tell you how to furnish it, but it’s not going to become an apartment for the in-laws or the nanny, no bathroom, no sink, limited electrical.

If you lose a floor below, you get to add that amount of lost space to the top of your building by way of an additional floor.  That’s what you see popping up atop brownstones all over town.  You get 40 feet above the “DFE” as of right.  If you read through the code, you’ll see what all the definitions mean.  PS – it’s most of Hoboken, even blocks that are not in the flood zone, and if even a portion of your lot – that little back corner of your garden – dips below, the entire property is subject to the rules.

If you renovate in phases, the City of Hoboken is keeping track.  The trigger point is cumulative over the course of 5 or 6 years and they tell me they are being diligent about this.  If you redo the downstairs under the financial threshold and then go back to do more renovations, they will make you rip out the downstairs work.

Think about it – now your HVAC, furnace, water heater, laundry equipment and electrical boxes must all be on the parlor floor, somewhere upstairs or on the roof.  That is a huge change in how these buildings have been configured for centuries.  Sometime, even the parlor floor is not high enough!  When that happens, the cost effective fix is to tear down the whole house and start anew.  So much for historic preservation!

Oh, and if you do have living space down below that has been grandfathered in and you don’t make any changes to it, expect the flood insurance rates to be exorbitant.  Those are set by FEMA and they are skyrocketing.

I asked, “what about all the 4 and 5 story row-house style condo buildings that have all the hot water heaters, laundry and furnaces in the basements?”.  I’m told that if one needs to be replaced, it now has to be put upstairs in the condo unit.  They will no longer allow equipment or appliances in basements, even if elevated up on blocks.

This is really a big deal.  People need to know more about it.  It is going to change the face of Hoboken.  If you live on the hill, be very happy.  If not, get educated.

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  1. M. R.

    Thank you very much for the information you provided. I was unaware of the code. I own a brownstone in Hoboken, and planned on doing a big renovation and making the basement into our kitchen/living room going out to our big yard. But, now I will most likely have to tear down the building. It’s a real shame.

  2. Susana

    Lori,

    How does this impact 1) garages in flood zones that have electrical and 2) basements in buildings on Washington Street (not in flood zone) that store water heaters, laundry, etc.?

  3. Lori Turoff

    @M.R. you are welcome.

    @ Susana – I would check with Anne Holtzman in City Hall as she is the Flood Plain Administrator. The map on their site is tiny and does not seem to enlarge. To my understanding, if it is in the affected zones, it depends on how low the garage is relative to the base flood elevation (BFE) level and the design flood elevation level (DFE). The electrical would have to be moved to a higher location. I actually asked her about the basement question – seems the east side of Washington St. is not affected but the West side may be. Heaters/laundry/furnaces have to be put someplace upstairs.

  4. Gilby

    Lori: Do you have any information on existing brownstones where there is a triplex plus garden unit (with tenant). If the owner’s portion is completely renovated and the flood requirements are triggered so that the garden unit needs to be converted to storage, what is the owner responsibility? Do they need to remove the tenant? Is that legal?

  5. mona

    Lori,

    Question… If you spend a dollar under half the value of the ‘Improvement’s’ total, which is also the city’s assessed value of the property, then you can keep an existing basement apt/bathroom/etc and renovate it? Sorry. Just want to clarify.

    So example. Purchase a brownstone for 1.8 mil. City’s assessed value is 1.0 mil. I would be able to spend $499k on renovations without this new rule affecting?

  6. Lori

    @Gilby,
    You need to ask that question to City Hall because I have no idea how they would address a conflict between the Flood regs and the Rent Control regs. Interesting.

    @Mona,
    I am told that is correct but I was also told that if you are “scheming” to avoid the flood regs they are diligently paying attention and will go after you. Remember, you need final inspections from the City to close out your permits. Will be interesting to see if and how they can monitor and enforce.

  7. Robert

    Does Jersey City have similar rules?

  8. JC

    I wonder what affect, if any this will have on buildings in need of a gut, finished brownstones and large condos. When buying a multi unit property that basically needs a gut, it essentially means the building must now add a floor instead of utilize the basement level since I doubt a gut or extensive renovation could stay below the 50% threshold.

    I would presume adding a floor would cost more $ than being able to simply utilize the bottom floor. I can see prices on these run down row houses in need of a gut come down a bit, since may not be as desirable and uncertainty is now introduced. Also builder cost will go up with this other level, so they need to make it up on lower acquisition price.

    Price on a finished brownstone or duplex/triplex in a row house may benefit since alternative of a gut will be more costly/headache and some may not like the look or functionality of this extra floor.

  9. Lori

    Have not heard anything about Jersey City having similar rules.

    Agree with you, completely, JC.

    Even worse is the issue of where do you put the furnace, the hot water heater, the washer/dryer if not in the basement. And – many people lose the direct access to the garden. Now you have to go down from the parlor level deck and/or stairs.

    I’ve been told some brownstones have a parlor level that is still too low so all the floors have to be shifted upwards, which ends up in a demo job of the entire property being cheaper.

    Plus, if the streetscape starts to look hideous with these hideous glass boxes perched atop and among historic row houses, everyone’s property value drops!

    Good intentions but bad results!

  10. Mike J

    Thanks for this. I will read the code you provided. I am going through this exact process now with my home on 3rd and Park. Apparently, not even meters can be in the basement now. I am tearing the whole building down and going up a floor. I also need to raise the height of the building so that it is at grade to avoid exorbitant flood insurance rates. I currently pay about $325 per month, and that is estimated to double over the next five years.

    By way of clarification, the person in city hall is Ann Holtzman, not Hetman.

  11. ray t

    One key thing to note – this is really a FEMA driven exercise. The impact of this has been known since 2011 when new advisory flood maps were published. We are at a point where they may become the effective maps used for insurance rating purposes. Unfortunately only recently have people begun to educate themselves on the impact.

    People with finished improvements in the flood zone (e.g. first floor at a elevation of 10 foot in a 11 foot AE zone) are in an impossible spot. You have two choices – 1). move all finished improvements out of the flood plain at great personal expense or 2). be held hostage with FEMA flood zone premium increases (which is required for mortgages). Being 1-2-3 feet below the flood zone in a zone AE has a devastating impact on flood insurance rates. It could do as high as $5-10-$15,000 per year based on your elevation relative to the flood zone.

    For right now this is skating by under the radar. Reason being is that people are still paying insurance rates based on the old maps. The minute new maps become law, everyone will be paying the full new insurance rate and it will have an immediate impact on the broader market.

    What new buyer is going to sign up to pay those kind of flood insurance premiums? We have already seen this play out on the jersey shore. Those homes not up to spec are going to take a 20-30% discount to those that are.

    Get ready.

  12. JC

    I would personally rather “self insure” for a flood, especially if premiums will now be largely inflated. But banks will require for mortgages. I forecast buyers will seek alternative financing and a marketplace will pop up offering mortgages for a point higher while not requiring flood insurance. Or maybe banks will offer this type of product as well, so your essentially amortizing flood insurance over 30 years and THEY get the money instead of the insurance companies. However, homeowner doesn’t have coverage in this scenario. This may be good for somebody who is on the fringe of the flood zone that didn’t have water during Sandy and is willing to risk it going forward.

  13. ray t

    JC – Good thinking but practically speaking it’s not going to work out that way. Look at that building in Weehawken over the water – absolute disaster. They have been forced to get flood coverage through a third party provider (Lloyd’s). Look at the property values of those homes now. Complete devastation.

    This story has already played out down the Jersey Shore. Hoboken is just behind the ball.

    Reality is if you have finished improvements below the flood zone, it is going to have a very significant impact on you. Sell now before those new maps become law…

  14. Gilby

    Thanks Lori – If I can get an answer from city hall, I’ll let you know.

  15. Lori Turoff

    Much appreciated, Gilby. Thanks everyone, for fantastic info here. Keep it coming! This is a huge deal and few are paying attention.

    What happens if there is a tenant living in that basement apartment? That’s not really been addressed, either.

  16. Lori

    The other thing that truly astonishes me is going into people’s homes on a listing appointment – third and fourth floor condo – and listening to the owners brag about how they redid their bathroom or replaced their kitchen appliances with money they got from FEMA after Sandy. “Did you flood or have damage? Your on the third floor!” “Oh, no” they respond. “We were told by friends that if you applied and were in the flood zone, you’d automatically get a check for a few thousand.”

    They were proud. I was dumbfounded. FEMA money is our money and they saw nothing wrong with taking it without any real need.

  17. JC

    I’m a bit confused…For anybody who knows…after you receive an elevation certificate can you still renovate the space that specifically falls below the flood elevation line as long as it’s less than 50% threshold? Or can that space only be used with out mechanicals etc.

  18. JC

    For example you have a duplex with the bottom floor falling below the elevation/design line. You spend less than 50% threshold on the project as a
    Whole, would the bottom unit be able to renovate with no restrictions? Thnx in advance

  19. JC

    In gilby’s example I believe (not certain) as long as garden unit is not renovated it’s not affected. So to Lori’s question the tenant would not need to leave. I’m curious if gilby would combine the 4 units but stay below the 50% threshold if any mechanicals would be able to remain in garden unit if it was under the elevation/design line.

  20. ray t

    Two things:

    1). Tenant would not have to leave. However, since you have space finished below the flood zone rating, you will receive an adverse rating impact. As such, you are going to get with a massive flood insurance bill when those advisory maps become law which could be this December per conversation with Hoboken Flood Administrator. It’s the catch 22 – pay insane flood insurance OR pay the expense to relocate everything about the flood zone.

    2). Yes you should be able to renovate space below flood zone if less than 50% of value. However, if you are going to renovate an unfinished space, chances are you know have an adverse impact on your flood zone. E.g. let’s say you AE 11 foot zone under new maps. Currently have unfinished parlor space so your elevation has lowest elevation as 11 feet per elevation certificate. Flood insuarnce will be reasonable since you are at or above the flood elevation. However, now you renovate, so your finished space lowest elevation becomes 7 feet. Now for flood insurance purposes you are a BFRE -4, or 4 foot below flood zone – insurance will be so high that it basically prevents you from doing the renovation.

    With new FEMA + Hoboken rules you only have 2 options – have no furnished space below the flood zone or pay massive flood insurance bills. That’s it.

  21. JC

    Thank you. Is there any clue what flood rating one would be under the new flood maps? You gave an example of AE 11…what would this persons rating be now? Thanks in advance for your time.

  22. ray t

    The other key thing is to look at the new rating (top of website) vs. the “effective” rating which is at bototm. The effective is what is currently used for flood insurance rating purposes today and is based on maps from like 1980.

    In short order, the rating at top of page will become the new “effective” and that will be used to determine flood rates on a go forward basis.

  23. JC

    Thnx Ray. Are you referring to the FEMA website? I don’t quite see anything as you described. I am currently in an “X” area, that much I know.

  24. ray t

    FEMA has a quick tool that helps understand your zoning under new maps. If you are on the border (e.g. it partially touches your house), need a professional to do the real analysis. But plus or minus this shows you where you are under the new maps

    WWW – region2coastal – COM /view-flood-maps-data/what-is-my-bfe-address-lookup-tool/

    (not posting links – should be able to figure it out from above)

    This, however, only tells half the story – you also need to know your house elevation relative to the flood zone rating. In order to do that, need to look at either property survey or get a flood zone elevation certificate from a survey expert which costs around $750.

  25. ray t

    JC – my parents went through this.

    They were an X paying ~$750 a month. Then under new maps got put as an AE 9 foot zone. House elevation certificate brought them 8 feet so rating went -1 foot. Flood insurance bill went to $6,000.

    It’s ok if you go from X to AE, as long as your lowest elevation of your house is above the AE zone designation (e.g. 10 foot elevation in a 9 foot AE zone)

  26. ray t

    ** $750 a year

  27. JC

    Thank you Ray. You have been a tremendous help.

  28. Lori Turoff

    I’ll post the link:

    http://www.region2coastal.com/view-flood-maps-data/what-is-my-bfe-address-lookup-tool/

  29. Lori Turoff

    Yes, thank you, Ray. Going to learn more about this!

  30. ray t

    Not fun to have to dig in.

    There used to be some rule that as long as you maintained constant coverage you could be grandfathered in with the old rating and even transfer it to a new homeowner buyer.

    Believe Brigatine WAter Act made that no longer the case…

    It just ends up being very unfortunate if you have finished space below the flood elevation. Only good news is that all new major renovations or buildings will be up to code so over time it will correct itself.

  31. Jc

    Ray…do you see any scenario in 5-10 years all the work Hoboken is doing (among other coastal towns) would alleviate the premiums in way of a discount or even better actually change the flood zone ratings? Sort of like you get a discount if you have smoke alarms in your home….the city will have this resiliency program. It could count for something eventually. Thanks!

  32. ray t

    Yes – there is always a chance that with all of the work Hoboken is doing that it results in a change to the maps. However, that process is extremely slow. Including link below that talks about how levees in certain areas resulted in such changes.

    However, I think for the near future the reality will become exactly what has been outlined. These changes to the maps have been pending for years – they will become law soon and then the education process for homeowners will start…

    WWW (including link in this format as this commenting does not allow links) – insurancejournal.com/blogs/right-street/2013/07/17/298846.htm

  33. Lori

    There is a process a municipality can go through to become certified and obtain lower flood insurance rates for the entire municipality. Hoboken is working on it but I don’t believe the certification has yet to be obtained. Read more about it here:
    https://www.fema.gov/national-flood-insurance-program-community-rating-system

  34. Lori

    Further to above, from the City’s website:

    “COMMUNITY RATING SYSTEM. The city already participates in the National Flood Insurance Program (NFIP). The city has submitted an application to the Federal Emergency Management Administration to participate in the Community Rating System (CRS) program. Communities participating in the CRS program may lower their residents’ flood insurance premiums by as much as 45%.”

    http://hobokennj.gov/departments/environmental-services/storm-flood-zones/

    A 45% reduction is a big deal – Hoboken needs to get certified!

  35. Dee

    Does anyone know if this is actually being enforced? If you look at the MLS there are a number of newly renovated homes for sale in the flood zones with beautiful finished basements below grade. I hope this is not true it would certainly deter me from making any substantial improvements.

  36. Lori Turoff

    It is most certainly being enforced – City inspectors have to issue final permits when you renovate. Which homes do you speak of? When was the work done? Those that I have seen were renovated before this was enacted, are not in the flood zone (Hudson St., Washington St.) or do not have basement level living space.

  37. Jc

    I’d appreciate if anybody can answer…seems like the west part of town is AE10 while further east is AE 11. I presume AE11 is better, is it not? Say lowest finished building unit elevation is 9 feet. Then it would be -2 under AE11 and only -1 under AE 10….which seems counter intuitive if the east part of town is supposed to be a higher elevation .

  38. Lori Turoff

    I think you are correct, JC. The land may slope upward again as it nears the Palisades, accounting for the AE11. There are companies you can pay to do a “certified determination”. See myfloodstatus.com for more info.

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