Substantial improvement means any rehabilitation, addition, or other improvement of a building when the cost of the improvement equals or exceeds 50% of the market value of the building before start of construction of the improvement.
The term includes buildings which have incurred "substantial damage," or damage of any origin sustained by a building when the cost of restoring the building to its pre-damaged condition would equal or exceed 50% of the market value of the building before the damage occurred. Substantial damage is determined regardless of the actual repair work performed.
Substantial improvement or damage does not, however, include any project for improvement of a building to correct existing violations of state or local health, sanitary, or safety code specifications which have been identified by the local code enforcement official and which are the minimum necessary to assure safe living conditions. Also excluded from the substantial improvement requirement are alterations to historic structures as defined by the NFIP.