Building a New Home in New Orleans A Planning Guide for New Homeowners By INSIGHT HOME BUILDERS 2215 Burgundy St. New Orleans, LA 70117 (504)232-4246 www.insight-homes.com ”Restoring The Past- Building The Future” Copyright © 2011 by inSight Home Builders Forward INSIGHT BUILDERS is a licensed and insured New Orleans based residential and commercial construction company providing complete services for all phases of the building process. During the years following the storm and the numerous construction projects INSIGHT has completed, we accumulated a vast amount of knowledge and information pertaining to the post Katrina new home building process in New Orleans. This booklet covers many of the intricacies, pitfalls and short cuts involved in the rebuilding process. This booklet is dedicated to the spirited New Orleanian who to this day, is still fighting to get back home. We hope this this booklet make your journey a little easier. Throughout the building process, keep in mind that building a home entails the assembly of over one thousand line items. Proper planning is an essential element to a smooth building process and the process can be at times frustrating and stressful. Embrace your creative spirit and do your best not to speed up the process or have unrealistic expectations. Your home could take anywhere from sixty days to a year to build depending on the nature of the project and unavoidable delays. Work with your builder, he wants the building process to be as successful as you do. Remember to anticipate and expect delays. They are a natural part of the building process. You’re building a home. Take as much time as it takes to achieve your dreams. Remember, you are not building a house, you are building a home. InSight Home Builders Copyright © 2011 by inSight Home Builders Table of Contents If you are ready to build a new home in New Orleans, the following must be done before construction starts. Proper planning is essential to a smooth building process and will save you money and aggravation. Simply follow them to facilitate an easier building experience. 1. Demolition 2. Legal Description 3. Land Survey 4. Your Budget (Funding and Grant Opportunities) 5. Grant Opportunities 6. Designing Your Home 7. Construction Estimate 8. Building Permit 9. Builders Risk Insurance 10. Jobsite Security 11. Termite Treatment 12. Green Building/ Energy Efficiency/ Energy Tax Credits 13. Louisiana One Call 14. Temporary Power 15. Homeowners & Flood Insurance 16. First Day of Construction 1. Demolition/ Clearing The Site If a house currently exists on your lot, the first step is to demolish the home and clear the lot of debris. The cost of this varies but should be under $10,000 and can be paid for with Increased Cost of Compliance Insurance (ICC) and/or Road Home grants if eligible. Before demolition begins a demolition permit must be obtained (see permit section). Also, utilities must be removed from the home (see also Louisiana One Call). This can take some time so don’t delay both Entergy and N.O. Sewerage and Water Board must be contacted. Have the same company that does the demolition bring in dirt/fill to raise the elevation of your lot for proper drainage before construction of your new home begins 2. Legal Description The legal description of your property is the first item needed in the building process. The legal description provides information and legal details of the lot. It can be found on your appraisal or bill of sale documents. Legal descriptions for Orleans Parish properties can be found at the Real Estate and Records office in City Hall room 5W06. In St. Bernard, the legal description can obtained at the 34th District Court House. There is normally a $1 fee to get a copy of the legal description. You cannot use the legal description from the Orleans parish tax assessor website or any other “short form” version. This is needed so the land surveyor can accurately put the documentation together for determining zoning requirements. A legal description will also be used in the designing phase of your home. 3. Land Survey The first fee to be paid, is hiring a land surveyor. The land surveyor will survey your property, determine zoning for the property, mark all 4 corner boundaries of your property and record your property’s elevation. This elevation mark will determine how high you must build. Architects and/ or designers will need this information to design a permittable set of plans. It is advisable to order a “Builders Package” from the land surveyor to cover the entire building inspection process. Land survey fees generally cost between $900 and $1200 depending on the location of the property. There are many land surveyors in the city so be sure to shop around. See the appendix section for a list of licensed surveyors. How High Must I Build? The rules state your “finished floor” must be at or above Base Flood Elevation (BFE), or 3 feet higher than the highest curb elevation, whichever is higher. You can get a fair idea of the elevation height by reading a land survey of the property in section 1. Certificate of Construction Benchmark. The top right section of the survey will show the base flood elevation. This is the number you compare your elevation to. Under Sect. 1 Cert. of Construction Elevation, take the average elevation of the four corners of your property. The difference between this average number and the BFE is the height you must build from the ground, or 3 feet above the highest curb, whichever is higher. Example: Base Flood Elevation for property: -2.5’ Existing top of highest curb elevation: -7.4’ Existing lot elevations (property corners or edge): Front (right): -7.5’ Rear (right): -7.3’ Front (left): -6.7’ Rear (left): -6.5’ -28.0’ divided by 4= -7.0’ existing lot Diff. between existing lot -7 & BFE-2.5’=4.5’ Diff. between highest curb -7.4 & BFE -2.5’=4.9’ The required height is 4.9’ above the existing lot elevation since it is the larger number. (Note: you may receive an insurance discount for building above the required building elevation. Inquire with your insurance advisor as to what is best.) Insight Home Builders recommends building at least one foot above the required elevation. 4. The Budget Before spending any money on plans, you must determine what your construction budget will be for your home. It is important to design a house you love but also one you can afford. A good per square foot new construction estimate for budgeting is $120 under roof. This includes porches. This should be a turnkey price, it should include permits through moving in and should include any allowances for finishes, cabinets, floors, fixtures, etc. (Note: the more extravagant your finishes are, the higher the cost will be.) Once your budget is determined you can begin inquiring about funding sources. Banks and or mortgage companies can calculate your optimal loan amount based on your income and debt. This will keep you from extending yourself too thin. Elevation grants are being offered for qualified homeowners to defray the cost of elevating your construction. There are several nonprofit agencies that will assist you in navigating the maze of financing opportunities and grants available to the public. A list of these agencies can be found on the Finance Authority of New Orleans website. 5. Grant Opportunities There are many federal, state and city funding and grant programs available to citizens wishing to build a new home. Do your research to see if you qualify for assistance. The State of Louisiana and the City of New Orleans have Soft Second Mortgage Loan programs that can provide up to $65,000 to families of low/moderate income plus closing cost assistance. Typically, to be eligible, the total household income cannot exceed 120% of Median Family Income. Information on these programs can be found on the FANO website in the attachments section. Road Home Elevation Grant The Road Home program offers a grant of up to $30,000 to those who qualify. In order to qualify for this grant, you must be a member of the Road Home program, and have received a form in the mail asking you if you are interested in applying. The deadline to apply has passed, however extensions may be granted for extenuating circumstances. Call the Road Home elevation hotline at 1-(877) 234-1513 for more information about extensions. If you choose to take this money, you are making a commitment to having an elevated home on your lot within 3 years. HMGP Money The Hazard Mitigation Grant Program, operated through the Office of Community Development Disaster Recovery Unit , can reimburse up to $100,000 (based on actual construction costs) to eligible Road Home Option 1 homeowners for expenses incurred in elevating or reconstructing their homes to meet current elevation (ABFE or BFE) requirements. HMGP is a reimbursement program. Homeowner eligibility and eligible expenses are determined by FEMA based on HMGP regulations. These funds are not subject to the Road Home $150,000 maximum cap. If you are building a new home, these funds can be applied to the cost of constructing your entire house, not just your foundation. For more information, an application, and to determine your eligibility, call (877) 824-8312 or visit www.mitigatela.org. ICC Funding Increased Cost of Compliance funding may be available through your insurance agency if you had flood insurance when Katrina or Rita damaged your property. If your home was more than 50% damaged and the house falls below base flood elevation requirements, you may be eligible for up to $30,000 to tear down and/or elevate your house. Your ability to secure ICC funding does affect the amount of money you receive from the Road Home program. Visit the FEMA ICC site for more information. 6. Designing Your Home Once your budget is established, it is time to have your home designed. Your builder, an architect or a residential home designer can help you design your home. If you use a designer to design your plans you must pay to have a licensed structural engineer complete the engineering of the foundation and structure and stamp the plans. The engineering fee should cost approximately 25-50 cents per foundation square foot. Architects that design homes will do a much more thorough set of plans but will cost more. Their fee generally will cost 10% of the construction cost including the engineering fees. Also keep in mind that survey, permit fees and builders risk insurance are not included with plan fees. Any contractor should be able to give you a preliminary estimate for funding purposes if one is needed. But remember, without a detailed set of plans it is very difficult to get an accurate cost of construction. Allowances for finishes should be decided in advance to ensure an accurate construction cost. Also, your architect or designer should communicate with your contractor to design your home to be as cost efficient as possible. You don’t want to design a home that can’t be built in your budget. Insight Home Builders offers our own in-house design service. Our design fee starts at $2,000.00 with the fee deducted from the construction cost if you use Insight to build your home. Please contact us if you would like us to design your home. 7. Construction Estimate With your land survey and a set of plans in hand and an idea of your budget, it is time to get bids on your home from contractors. Try to get three bids and make sure they are a Louisiana licensed and insured with general liability insurance as well as workers compensation insurance. Check references, try to view previous work they have done and ask questions about how they plan to build your home. The current rate for new construction in New Orleans ranges from $100-$160 per square foot, depending on your needs. If you need items such as custom cabinets, granite countertops, exotic hardwood flooring and a complex floor plan, be ready to pay more. Also REMEMBER, you get what you pay for, if it sounds too good to be true, it probably is. 8. Building Permit Take two sets of stamped plans and the elevation certificate from the surveyor to the Permit Department at New Orleans City Hall to get a construction permit. (Note: be wary of contractors that ask you to pull permits, it usually means they are not licensed.) As of February 1, 2008 all new homes in Orleans Parish must go through a plan review process. This process may take one to two weeks before a building permit is granted. Building permit fee: $50 plus $5 per $1000 construction value Also a plan review charge of 1/10 of 1% of the total construction value (minimum of $50) Example permit fees: $100,000 house $50 administration fee $500 permit fee + $100 plan review fee TOTAL: $650.00 fee *A penalty of 200% of all fees in addition to the required permit fee is assessed to any project commenced without the necessary building permit. Demolition permit fee: $75 plus $5 per $1000 of the total demolition cost. ** A penalty fee of 500% of all fees in addition to the required permit fee is assessed to any project commenced without the necessary demolition permit Note: Any project done in the areas regulated by the Historic District Land Commission (HDLC) or the Vieux Carre” Commission, will pay a 50% surcharge added to the total permit fees and plan review fees. 9. Builder’s Risk Insurance. Builder’s Risk Insurance covers your home for theft, vandalism, fire, and acts of god during the building of your home. It is an additional cost that the owner pays for in place of homeowners insurance for the duration of the building process. The deductable is usually $1,000.00 and is covered by the home owner. 10. Jobsite Security Jobsite security is a real cost of building that must be addressed before construction begins. It is the responsibility of all involved to address security concerns. If security is not addressed additional construction costs and delays may be incurred. 11. Termite Treatment Termites thrive in the near-tropical conditions of New Orleans, and cause close to $300 million in damage every year. It is vitally important for homeowners to protect their investment against termites because of the severe damage that an infestation can cause. Elevation is the first step toward preventing termite infestation. In addition, make sure all wood material used under the elevation level is treated and that the site is treated for termites before construction begins. You may want to treat you’re your lot before construction begins. 12. Green Building/ Energy Efficiency/ Energy Tax Credits Building green means that the architect and the developer make a commitment to build a structure that is resource-efficient and environmentally friendly. In some cases, this approach can make the building cost more up front, but may pay for itself in reduced energy costs. One way this can be accomplished is by using new technologies such as solar panels and water recycling systems to reduce the amount of resources that a building requires from the community's resource grid. However, because systems like this are very new to the market, purchasing and maintaining them is often costly. An alternative to using advanced technologies to build an energy-efficient house is to build a house using simple design principles and construction practices that have been around for generations. This "practical green" approach is one of the main ways in which a structure can be made more energy-efficient, and does not require the same degree of upfront investment that high-tech green systems do. In fact, just by carefully designing and constructing a home with energy efficiency in mind, an architect can reduce the homeowner's annual energy expenditures by up to 30%. Insight Homes Builders is a HBA Certified Green Builder. All our homes are Energy Star designed (for more information about the Energy Star program see the Energy Star website). Energy Efficient Building Techniques can result in up to a 30% savings on your monthly utility bill. Insight Home Builders embraces many design and construction principles that make our homes healthier to live in and more energy efficient, without a large up-front cost to the homeowner. Make sure to: - Properly size Central AC/Heating Design the home for proper building airflow/ ventilation Proper Sealing: Pay careful attention to sealing your homes. This will result in a steep reduction of the amount of air allowed to escape the inside of the structure. Quality Insulation: Use energy-saving, double-paned, low-E windows and proper insulation in the attic, walls, and floor. Natural Light: Design the home to take advantage of sun and shade. Recycle and source as much construction material locally. Energy Efficient Building Tax Credits: There are many credits for energy enhancements. See local, state and federal websites, especially www.energystar.gov, for tax credit programs. 13. Louisiana One Call Before construction begins make sure your contractor calls Louisiana One Call to have the property checked for underground utilities. This is a free service that must be done to ensure safe construction. There are penalties to be paid if underground utilities are damaged. The number to call is 1-800-272-3020. 14. Temporary Power Once your home is permitted, your builders must first arrange for temporary power. Your builder will need electricity and water to complete your home in a timely manner. If power and water are already supplied, leave them in service. Utility bills should be paid by the contractor while under construction and should be included in the contract price. 15. Homeowners & Flood Insurance Before you start building determine the cost of homeowners & flood insurance for your new home. This insurance is a substantial cost and must be determined as part of your expense projection for financing your home. Information in insurance providers in included in the attachments section. 16. First Day of Construction Congratulations! You’ve made it through the most difficult and important part of building your home, the planning stage. Remember, building a new home is long and be complicated. Be patient and don’t forget to enjoy the creative process. You are not building a house, you are building a home. Conclusion This booklet has taken you through the process of just getting to the building stage in New Orleans. Planning is by far the most important part of the building process. Don’t take planning lightly. After this stage is done it’s up to you to select the best builder you can find. Communication is essential to the building process so make sure you are absolutely comfortable with the builder you select. Once you select your builder make sure you work with them to build your home. Many home building projects fail due to unrealistic expectations, distrust, and breakdowns in the communication process. inSight Home builders is pleased to have shared our knowledge and experience. Should you have any questions, advice, or comments please contact us. InSight Home Builders 2215 Burgundy St. New Orleans, LA 70117 504-232-4246 [email protected] www.insight-homes.com Attachments: The following info changes constantly. Please contact us for updates New Orleans Neighborhood Associations www.npnnola.com/associations/neighborhoods City of New Orleans- Permit Office www.citypfno.com HDLC- New Orleans Historic www.nola.gov/en/RESIDENTS/HDLC-Home NORA www.noraworks.org Green Building www.thegreenproject.org www.globalgreen.org www.home-builders.org Energy Star www.energystar.gov LSU AgCenter www.lsuagcenter.com Insurance Companies www.louisiana-home-insurance.org Road Home Program www.road2la.org State disaster recovery unit www.doa.louisiana.gov/cdbg/drhome.htm Louisiana Recovery Authority www.lra.louisiana.gov State of Louisiana websites www.louisiana.gov www.gohsep.la.gov www.getagameplan.org New Orleans Architecture site www.jefflamb.worldpress.com/style/ Building Surveyors: Krebs Ph: 889-9616/ Edwards: Ph: 733-2902/ Gilbert: Ph: 837-9842 Finance Authority of New Orleans Soft second info/ Home buyer counciling/ www.financeauthority.org Banks Dion Davis Chase Bank [email protected] 504-522-2629 Carl Thompson [email protected] 504-240-3354 Karin Coleman Fidelity Homestead Savings [email protected] 504-569-3451 Prax Melancon [email protected] 504-443-3095 Connie Kinney First NBC Bank [email protected] 504-671-3452 Gulf Coast Bank & Trust Linda Rousell [email protected] 504-599-5727 Ann Loggins Hancock Bank [email protected] 504-832-2962 Carly Gerkin [email protected] 504-366-1131 Carrie Curet Iberia Bank [email protected] 337-359-1575 800-264-7814 Mindy Dinicola Whitney National Bank [email protected] 504-619-4214 Frank Moresco [email protected] 504-838-6450 Mortgage Brokers: www.nola.com/mortgagerates Loan calculator: www.freddiemac.com Funding Sources for Your Home Elevation A) Increased Cost of Compliance (ICC)  You could claim up to $30,000 if you had flood insurance and if your property sustained “substantial” and/or “repetitive” damage.  For more information: www.fema.gov/business/nfip/icc.shtm B) Road Home Elevation Grants  Participants will receive $30,000 for site built or modular homes, in exchange for a personal obligation to elevate within three years.  For more information: www.road2la.org or call (888)762-3252 C) State Hazard Mitigation Grant Program (HMGP)  Up to $30,000 may be available to you—in addition to ICC and Road Home Elevation Grants—if needed to complete the elevation project (The usual HMGP cost share has been waived.)  For more information call (877) 234-1513 D) Traditional HMGP  Local governments have been implementing an HMGP program, which should not be confused with the new program described above. Normally, a local/owner cost share of 25% is expected. E) Severe Repetitive Loss (SRL) Pilot Program  Congress has approved special funding for the flood mitigation of certain properties designated by FEMA, whose owners had flood insurance. Eligible homeowners will be contacted by the local officials. 10% of the project cost must come from a local source, which could include ICC funding.  For more information: www.fema.gov/government/grant/srl/index/shtm. F) Small Business Administration (SBA) Mitigation Loans  the amount of money available varies, up to 15% in addition to the existing loan amount.  for more information: call SBA’s Disaster Customer Service Center: 800-659-2955 or email: [email protected]. New Orleans Municipal Zoning Code Information on setback and usage requirements by zoning district. CNOGIS Property Viewer Enter an address to find a variety of information relevant to rebuilding, including property ownership, zoning maps, damage assessment, flood zone maps, and more. Community on One Visit the City of New Orleans website that provides easy access to information on city services, permitting, recovery projects, and other topics relevant to individuals and businesses. HOPE Credit Union HOPE Credit Union provides mortgages on flexible terms with low down payments, competitive rates, and an easy application process. With HOPE, someone earning $30,000 a year may be able to qualify for a house worth up to $105,000, and loans are locked in at a set monthly rate that is guaranteed to remain the same. HOPE also provides homebuyer education services. See www.hopecu.org for more information. Louisiana Citizens Insurance Tax Credit Residential and commercial property insurance policyholders will receive an income tax credit for the Louisiana Citizens Property Insurance Corporation regular and special assessments they paid because of Hurricanes Katrina and Rita. This is only for people who have insurance through Citizens. You can still file for this credit. Find out more through their www.rev.state.la.us/sections/general.com Consumer Credit Counseling Service of Greater New Orleans CCCS is a non-profit community service agency dedicated to educating consumers in the wise and proper use of credit, and helping consumers to repay excessive debt. CCCS offers budget counseling & debt management planning, financial education programs, housing counseling, and more. Visit the CCCS website or call the main number at 504-529-2396. CCCS has locations in New Orleans, Metairie, Gretna, Slidell, and Houma, as well as locations in Mississippi. IRS Road Home FAQ On this page, the IRS covers the Road Home grant and how it applies to taxes. Louisiana Land Trust The Louisiana Land Trust is the non profit organization formed to manage the properties that have been purchased by the State of Louisiana under the current Road Home Program. FEMA Housing Portal This portal is a listing of housing resources throughout Louisiana. Call 1-(888) 294-2822, Mondays to Fridays, 8 a.m.-5 p.m. or visit the website. Landlords are encouraged to include available apartments or houses on the list by calling 1-(888) 294-2822. www.asd.fema.gov Useful Phone Numbers General Road Home Program New Orleans Redevelopment Authority (NORA) SBA Disaster Customer Service Center Lower 9th Ward NENA Louisiana Land Trust (888) (504) (800) (504) (225) ROAD-2-LA 658-4400 659-2955 373-6483 395-0777 Elevation Funding State-level HMGP Program Parish-level HMGP Program Road Home Elevation Hotline National Flood Insurance Program Claims Line (877) (504) (877) (800) 824-8312 658-8400 234-1513 767-4341