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DRB grants Brattleboro Housing Authority’s appeal for Melrose building permits

BRATTLEBORO—A homecoming is on the horizon for the remaining Melrose Terrace residents unhoused over three months ago by Tropical Storm Irene.

The Development Review Board (DRB), a seven-member, independent, quasi-judicial board, upheld the Brattleboro Housing Authority’s building permit appeal Dec. 5.

The BHA had contested the town zoning administrator’s determination that four of its Melrose Terrace buildings exceeded the 50-percent damage threshold allowed by the Federal Emergency Management Agency (FEMA).

The determination left 26 Melrose residents without housing.

Melrose Terrace provides housing for seniors and people with disabilities on low incomes.

“We’re very pleased with the decision,” said BHA Finance Director Mary Houghton. “We look forward to getting the work [on the four buildings] done and residents back, and then thoughtfully proceeding with flood mitigation.”

The DRB’s decision remains unofficial until the board enters its decision into the written record, said Chair Tim Cutherbertson.

The board has 45 days to write its decision.

Parties have 30 days from the date the DRB enters its decision to the record to appeal to the environmental court, he said.

Of the three market values for the Melrose buildings before the DRB, the board chose to use an appraisal compiled by Dart Everett, of Everett Real Estate Services, at the BHA’s request.

Using Everett’s appraisal and including the costs of bringing building features up to code, the board determined that the Melrose buildings fell under FEMA’s 50-percent mark.

The revised percentages ranged from 37 percent to 48.15 percent.

A long process

The appeal process has taken several weeks since the BHA first appeared before the DRB on Nov. 7.

Zoning Administrator Brian Bannon determined that five of Melrose Terrace’s buildings had sustained substantial damage from Irene’s floods and denied the housing authority’s building permits on Oct. 14.

Bannon denied the permits in accordance with the town’s Special Flood Hazard (SFH) ordinance and FEMA’s National Flood Insurance Program (NFIP).

Buildings damaged beyond 50 percent of their fair-market value must comply with local zoning and flood prevention upgrades.

Such “substantially damaged” buildings that (like a portion of Melrose) sit within a municipality’s special flood hazard area (SFHA) must meet flood-proofing codes.

According to Brattleboro’s SFH ordinance, residential buildings within a floodway cannot rebuild after receiving a substantially damaged determination.

At a Nov. 7 DRB hearing, the board asked the BHA to return Dec. 5 with better cost estimates for four of the buildings damaged by Irene in August.

Board members felt that the BHA and contractor John Brunelle’s estimates required clarification.

At the same meeting, the board voted to overturn the substantial damage determination on Melrose building 230, and six Melrose residents of that building returned after the vote.

Work on the remaining four buildings, which had halted after Bannon’s determination of substantial damage, will need to be completed before residents can return.

Executive Director Chris Hart said 12 residents still want to return to Melrose once contractors complete work.

The third set of numbers

The BHA teamed with Brunelle and Bob Stevens of Stevens & Associates, PC to compile a third set of cost estimates and building values, at the DRB’s request, for the four remaining buildings.

Stevens & Associates submitted revised cost estimates, a narrower scope of work, and a fair-market value based on the properties’ actual cost value (ACV).

The ACV, said Stevens, totals the cost of constructing a comparable building with “today’s dollars,” minus depreciation for the structure’s age and condition.

Tom Barden, a professional cost estimator from Hinesburg who has also worked on the Brattleboro Food Co-op project, assembled the ACV.

According to Stevens, FEMA suggests three methods when developing a property’s market value: assessed, appraised, and ACV.

The five Melrose Terrace buildings have gone through all three.

“There isn’t a right or wrong,” said Stevens. “All are right values for different reasons.”

But, he said, the ACV better reflects the cost of replacing a building.

An assessment helps towns determine property taxes.

Russell Rice, assistant appraiser for the town, provided the original assessment numbers to the planning services department. Bannon used this assessment to make his initial substantial damage determination.

“Melrose Terrace is exempt from taxation, and its operating income and expense results are not provided to the town,” wrote Rice in a Dec. 2 memo.

Instead, Rice employed in his assessment numbers mandated by the state, and by the federal Department of Housing and Urban Development (HUD) for affordable housing properties like Melrose.

The BHA owns and operates Melrose Terrace and other properties as part of the federal public housing program.

Rice’s fair-market rate for Melrose averaged $39,243 per unit.

When the cost of repairs were deducted from this amount, the buildings’ repair costs bounced over 50 percent of their fair-market value — calculated by that measure — and triggered the substantial damage designation.

Later, Everett provided at the BHA’s request a professional appraisal. Brunelle also submitted revised estimates.

These new numbers brought the Melrose buildings damage percentages slightly under the 50-percent mark.

The town questioned what had changed between the appraisal and the contractor’s estimates.

Stevens said in a recent interview that comparing assessed to appraised values to determine a building’s fair-market value is “like comparing apples and oranges.”

The ACV method also generated a higher value for the buildings and brought all under FEMA’s 50 percent mark. The buildings’ respective ACVs ranged from $72,186 to 110,217, reducing the damage percentages to between 24.5 percent and 27.6 percent.

Stevens said he and Brunelle also worked together to “clean up” the contractor estimates to make the numbers, like cost of labor, consistent.

Disputed findings

Representatives from the town Planning Services Department and town attorney Robert Fisher of Fisher & Fisher vehemently contested the BHA’s third set of numbers.

The planning staff and Fisher also disputed the BHA’s claim that the FEMA guidance allowed the BHA to choose which of the three methods contained in the guidelines for its fair market value.

“We request that you reject that,” said Francis of using the ACV.

“I pity those who tried to reconcile the inconsistent guidance from FEMA,” said Vice-Chair Craig Miskovich of FEMA’s guidance documents intended to help communities determine fair market value.

Francis also said the planning department took issue with the BHA and Stevens’ interpretation of adding “code violations” to the cost estimate.

Stevens told the board that the BHA’s third round of cost estimates did not include all the expenses for bringing the buildings up to code.

If a previously grandfathered fixture or building design required removal, like a lead-containing faucet, to repair flood damage, said Stevens, than the BHA included the expense of bringing the faucet up to present building codes.

Francis said that the planning department’s review of the same FEMA guidelines did not support Stevens’ reasoning.

Planner Sue Fillion echoed Francis when she spoke to the department’s position on the codes.

She said that the department viewed the act of bringing building elements up to code as representing an improvement, thus requiring it to be included in the cost estimate.

Francis added that his department didn’t have adequate details to assess or validate the BHA’s new numbers or Barden’s methodology for determining the ACV.

“We don’t find broad encouragement [in the FEMA guidance] to applicant to seek out” a fair-market method that benefits them, said Francis, who also asserted that a town assessment or appraisal provides reliable values.

“‘If at first you don’t succeed, try, try again’ seems to be the approach here,” said Fisher of the BHA’s numerous estimates and property values.

Francis said that the department could see a list of “shortcomings” in the BHA’s new estimates and the ACV.

The DRB “is obligated” to decide what items to select for reviewing an appeal because “FEMA leaves the discretion to you,” said Francis.

He later added that the board had an obligation to arrive at a decision that it could defend and to do so using a consistent process.

Fisher said that whatever decision the board arrived at would need to be “equitable” and “defensible” — not just for this case, he said, but also for all the ones to follow.

Francis also said that FEMA’s guidance contained multiple items to consider when determining damage and improvement costs to buildings even “for appliances.”

The BHA’s shifting estimates and cost values made it hard for the planning office to provide the DRB with guidance to ensure everything “conforms to FEMA.”

“But you haven’t provided that guidance yet, and this is the second hearing,” said Miskovich.

“What I’m offering to you is that we see some continued problems here and that makes it difficult to offer guidance,” Francis said.

FEMA employees were also in the audience.

New documents

The Planning Services Department submitted new documents, most dated Dec. 2, into evidence at the Monday hearing.

Contained in the new documents: memos from Fillion and Rice to the DRB about determining market value; a copy of an email from Stevens to the department; a letter from Rob Evans, river coordinator and floodplain manager of the state Vermont River Management Program; and a letter to the state from Ivy Frances, chief of floodplain management and insurance for FEMA Region 1.

FEMA’s Nov. 21 letter to the Vermont River Management Program cautioned the state that, if the DRB overturned the town zoning administrator’s substantial damage determination, “Brattleboro jeopardises its good standing in the NFIP.”

Ivy Frances told Evans in her letter that “an owner may appeal the local official’s findings or determination that the proposed work constitutes substantial damage.”

“This appeal must be on the basis of insufficient information, errors, repair/improvement costs that should be included/excluded, inappropriate valuations of costs for the proposed work, or an inappropriate method to determine the market value of the building,” she said.

If Brattleboro granted permits or variances for other reasons, Frances wrote, the town risked losing the discount obtained through their participation in the Community Ration System (CRS), being “placed on probation,” being responsible for an additional surcharge, or facing suspension from the flood insurance program.

If FEMA booted Brattleboro from NFIP, residents would also lose their flood insurance coverage, she said.

“If a structure has been damaged by flooding and is in the regulatory floodway, the highest risk of flooding in a floodplain, it stands to reason it will flood again, especially if the town officials allow the structures to be repaired with no additional protection,” wrote Ivy Frances.

“As a CRS community, Brattleboro should be going beyond the minimum to mitigate the flood hazard,” she wrote.

“Brattleboro should take every opportunity to use its leadership and innovation to consider alternative housing when deliberating the decision to place its most vulnerable citizens in the most dangerous place in the floodplain,” Frances continued.

Evans included Ivy Frances’ letter when he wrote to Cuthbertson on Dec. 2.

“We are very concerned about the appeal being considered by the Brattleboro Development Review Board, filed by the Brattleboro Housing Authority to overturn five Substantial Damage determinations by Zoning Administrator Brian Bannon,” wrote Evans.

In his letter, Evans told Cuthbertson that the zoning administrator’s decisions are “based on technical guidance materials and methodology developed and recommended by FEMA.”

He said this methodology and materials ensures that all determinations comply with the NFIP in an “equitable, consistent, and defensible manner.”

“Overturning the Zoning Administrator’s Substantial Damage determinations will result in a vulnerable population living in the regulatory floodway again, the most dangerous portion of the Special Flood Hazard Area,” said Evans. “This has major implications with respect to public safety and municipal liability.”

Evans expressed appreciation for the challenges facing local governments post-Irene. He also said that the “intent” of floodplain management was safety and resiliency in the face of future “catastrophic flooding.”

“If the DRB does not have the expertise to critically evaluate the information provided by BHA, I strongly recommend the board hire a consultant to evaluate the methodology and resultant estimates,” said Evans.

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Originally published in The Commons issue #130 (Wednesday, December 7, 2011).

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