Town of Nags Head

Planning and DevelopmentPost Office Box 99Telephone 252-441-7016

DepartmentNags Head, North Carolina27959FAX 252-441-4290

MEMORANDUM

TO:Board of Commissioners

FROM:Planning and Development Staff

DATE:March 29, 2005

SUBJECT:Consideration of two RESOLUTIONS regarding the REGRESSION in the Town Building Code Effectiveness Rating (BCEGS)

John M. Bratcher from Insurance Services Office, Inc. (ISO) conducted a survey with the Building Officials for the Town of Nags Head onJune 10, 2004. This survey was conducted to update the Town’s current Building Code Effectiveness Grading Schedule (BCEGS) rating. The results of this survey will result in a regression of the Town BCEGS class 3 rating to a class 8 rating. This regression in BCEGS rating was a result of Building Code Councils (BCC) action several years ago not to include the wind borne debris provisions contained in the International Building Code into the North Carolina Building Code. These regulations if adopted would require protection of openings with shutters or debris resistant windows in new homes.

In 2006, the Building Code Council anticipates adopting into the Building Code a definition for a “wind borne debris region”. This definition if adopted by the Building Code Council would require protection of (openings) windows in buildings only within 1,500 feet the mean high water of the Atlantic Ocean. The existing Building Code classifies all areas that are generally east of the Inter Coastal Waterway in the same high wind zone. If code section (1609.1.4) was adopted without the proposed 1,500 foot amendment, all new residential structures in Nags Head would have to provide wind borne debris protection regardless of distance from the ocean. Staff does not feel that wind borne debris damage is limited to an area only within 1,500 feet of the Atlantic Ocean.

The BCEGS classifications are distributed by ISO for use by property/casualty insurers to assist in their insurance underwriting and premium development programs for residential and commercial properties. Most, if not all of the coastal communities that have be reevaluated by ISO have suffered the same loss of BCEGS rating. In a July 29, 2004 letter to Mr. George Brown (letter attached), Chairman Craven County Board of Commissioners, Department of Insurance Commissioner Jim Long discusses the loss of BCEGS rating states “Most discounting has ceased in your area due to perceived wind exposure. Therefore, this change in your BCEGS rating is not likely to have an immediate effect on homeowners rates in your area. However, it will have future impact if thelack of these code provisions result in higher losses and thus higher rates. My greater concern is the possibility of not renewing or offering coverage voluntarily by the insurance carriers licensed in the State.” Mr. Long further states “Interesting enough, only recently insurance companies shown an appreciable interest in construction code provisions. We have spent a considerable amount of time with them explaining code provisions and their relevance to insurability. You can expect that the actions of this BCC [Building Code Council] will likely have a greater impact on insurance availability and affordability from now on.”

Following notification by ISO that the Town’s BCEGS rating would drop, the Town was given the opportunity by ISO to initiate an “Action Plan” designed to improve our BCEGS rating. This Action Plan establishes a course of action the Town can take that will improve our BCEGS rating. Within this Action Plan there a two major initiatives. One is an enhanced program to continue training of our building inspectors and the other initiative is for the Town to lobby the North Carolina General Assembly for legislation which would allow local municipalities to adopt “high regulatory standards”. If this legislation were introduced and passed, the Town could adopt wind borne debris standards that would apply throughout the entire Town and our BCEGS rating would be restored.

Attached is a resolution number 1 requesting either the General Assembly or the Building Code Council to reinstate the wind borne debris standards applicable to the entire town. Staff feels that without these Building Code provisions (Section 1609.1.4) applicable for the entire town, the structural integrity of buildings and safety of our citizens and visitors will be compromised. Requiring protection from wind borne debris within 1,500 feet of the Atlantic Ocean does not offer the same degree of protection for all new structures built in the Town outside of the wind-borne debris region.

As a result of the regression in our BCEGS rating, the Town Community Rating System (CRS) classification will also regress. We are currently a CRS class 6 community. As a class six community in exchange for the town enacting a number of mitigation activities designed to reduce flood losses and in following through on these activities, homeowners flood insurance polices receive a 20% reduction in annual premiums. The Community Rating system uses the BCEGS community rating as one of its ranking factors to determine a CRS classification in a community. With the failure to adopt the wind born debris standards by the Building Code Council, our BCEGS rating has dropped from a class 3 to a class 8. With this drop in BCEGS rating, the highest CRS classification the town could receive is a class 8. A class 8 rating equates to a premium reduction from 20% to 10%. There are 3,399 flood policies in effect within the town. As a result of our participation in the CRS program we are currently able to save our homeowners annually $341,639.00. Resolution 2 requests that various agencies address and resolve the faulty link between the Community Rating System reliance on the BCEGS rating.

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