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Preliminary BCA Screening for Grant-Eligible Acquisition and Elevation Projects

Preliminary BCA Screening for Grant-Eligible Acquisition and Elevation Projects. NJ Association of Floodplain Managers Presented at the 8 th Annual Conference October 2, 2012 Alison Miskiman, CFM, Tetra Tech. Overview. What is a Benefit-Cost Analysis (BCA)? Why conduct BCAs?

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Preliminary BCA Screening for Grant-Eligible Acquisition and Elevation Projects

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  1. Preliminary BCA Screening for Grant-Eligible Acquisition and Elevation Projects NJ Association of Floodplain Managers Presented at the 8th Annual Conference October 2, 2012 Alison Miskiman, CFM, Tetra Tech

  2. Overview • What is a Benefit-Cost Analysis (BCA)? • Why conduct BCAs? • Where do I begin with my BCA for an elevation or acquisition project? • Success stories

  3. Benefit Cost Analysis Basics • In order to be grant eligible via the Hazard Mitigation Assistance grant program, you must have a cost effective project and to prove this, you need to do a full benefit cost analysis. • Comparison of before-mitigation and after-mitigation conditions.

  4. B E N E F I T S =RATIO C O S T S Project IS cost-effective If Ratio > 1 Project is NOT cost-effective If Ratio < 1

  5. What are costs? • Total project costs include: • Labor • Materials • Equipment • Permitting • Maintenance • Appraisal, closing, demo, site restoration, relocation, site assessment (for acquisitions) • Survey, utility connection, elevation costs (for elevations) • Costs are well documented and from a credible source ** Don’t forget BCA and Grant Application Costs are reimbursed if the project is awarded.

  6. What are benefits? • Benefits are costs/losses avoided as a result of the project. • Benefits can be found in the following areas: • Health Safety – Evacuation and emergency protective services, injuries, casualties • Loss of Service – Road closures, utility outages, business interruptions • Infrastructure Damage – Road, bridge, rail, communications, utilities • Structural Damage – Public and Private, including contents • Environmental – Natural resource damage, human health • Economic – Agricultural, Commercial, Tourism • Debris Management • Income Loss (for businesses)

  7. BCA Basics • Benefits happen in the future and must be calculated based on statistics. • Project costs occur at the present and are determined by cost estimates.

  8. Why conduct benefit-cost analysis? • Meet statutory requirements. • Meet program eligibility requirement. • Determine whether or not a project is cost-effective to build.

  9. Why conduct benefit-cost analysis? • Have a common basis on which to compare projects. • Show that mitigation works.

  10. To obtain FEMA funding for your hazard mitigation project! • ALL* FEMA mitigation projects must be cost-effective to receive HMA funding. *substantial damage waiver; 5% Initiative Projects

  11. Substantially Damaged • Substantial damage means damage of any origin for which 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 (FEMA, 2010). • Municipality provides a letter verifying damages Falls, PA (TS Lee)

  12. Acquisitions and structural elevations are high priority mitigation actions in the 2011 New Jersey State Hazard Mitigation Plan.

  13. Acquisitions and Elevations Acquisition – eliminates exposure Elevation - reduces vulnerability

  14. HMGP Assistance from Hurricane Irene Acquisition and elevation projects:

  15. When do I begin my BCA? • BCA should start early in the overall process – LOI stage • It is very important to understand the existing risk and effectiveness of a potential mitigation project BEFORE fully developing it as a grant proposal.

  16. Where do I begin? • Does your community maintain a list of interested property owners? • Start with your RL and SRLs Wayne, NJ (McCool, 2011)

  17. Preliminary Screening • Estimate Project Cost • Acquisition: • Talk to you Assessor (Assessed Value  Fair Market Value) • Estimate additional costs (survey, appraisal, demo etc.) • Elevation: • Call local contractor for general estimate based on square footage, foundation type, etc. • Elevation Certificate

  18. Preliminary Screening • Start Gathering Project Benefits Structure by Structure* • Obtain NFIP paid claims • Determine the recurrence intervals • Elevation certificates • Estimate potential future losses *Keep documentation!

  19. Plug Numbers into the BCA Module Source: FEMA Training Presentation BCA v4.8

  20. When hazard events are frequent and severe… • Damages and losses are high • Benefits are high • BCRs are often (but not always) > 1.0

  21. What if my ratio is < 1? • Don’t throw in the towel just yet… • Try a different approach • Full-flood module versus Damage Frequency Assessment module • Historic versus Anticipated Losses • Can you change the analysis of duration?

  22. Hazard Frequency and Severity Example: 100-year flood = 510’ 10-year flood = 502’ FFE = 500’

  23. Why is one property cost effective while a similar property in the same neighborhood is not? • Two key components that drive the benefit/cost model: • How much damage will/did the event cause? • How often does the event occur? • What do you do now?

  24. Aggregation • Include multiple structures within a project to obtain an aggregate Benefit-Cost Ratio (BCR). • Aggregationis the process of combining two or more buildings and functions (i.e., roads and utilities) in a single BCA. • Aggregation is allowed if the structures are proximate, such as located within a neighborhood or subdivision.

  25. Document!

  26. Borough of ManvilleSomerset County, New Jersey 15 acquisitions (HMGP) Funding = 100% • 75% federal share (~$2.8 Million) • 25% from NJDEP Green Acres Program (~$950,000) Andrew Mills/ The Star-Ledger

  27. Town of Riverhead,Suffolk County, New York 10 acquisitions $1.8 Million (federal share) in acquisitions (HMGP)

  28. King County, Washington • $26 Million in acquisitions (HMGP/PDM/FMA) • > 500 BCA Screenings (not all cost-effective) Snoqualamie, WA (SnoValley Star.com)

  29. Resources • New version of software just released (v 4.8) http://www.fema.gov/benefit-cost-analysis • Online Resources: www.bcahelpline.com • NJOEM hosts training • FEMA Region 2

  30. Take Aways • Don’t be intimidated by the process • Keep your records • The cost to conduct a BCA and prepare a grant application is minimal compared to the project cost • If your project is not selected, submit again and again…the BCA is already done! • When the grant funding is out there for the taking…. Go get it!

  31. Contact Information: Alison Miskiman, CFM 973-630-8045 alison.miskiman@tetratech.com

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