Subfloor not flush with rim joist

[kwerk]

I have removed my old deck and opened the bottom of the wall because of some water damage to the rim joist. House is 25 years old.

I noticed the subfloor does not go all way the under the sole plate of the wall to be flush with the rim joist. It is 1" short. Is this something to worry about? It is a two story wall.

Also what are these nests?? The wood fragments are from holes drilled for electrical I believe. There does not appear to be any insect damage to the wood. I think the 8 million spider nests along the sill plate joist took care of that for me. The wall was covered with foam board sheathing. There is also a preventative termite perimeter done by a previous owner.

Short about 1":

 

[Cork-Guy]

Those actually appear to be mud wasp nests and not spider nests from the picture you showed up top.

 

[kwerk]

The spider nests were underneath all along the sill plate.

Is it going to cause a problem attaching a deck ledger to the rim joist? because it looks like the bottom plate of the wall is not nailed through the rim joist.

 

[nealtw]

Tthe plywood is not a problem clean out the mud wasps and cover with tar paper before you lag your new deck on

 

[cline]

mine was actually more far short than this. like about 2" and we still made it work. just get it even..

 

[joecaption]

I refuse to build a deck attached to any house except a second story one. I make all mine free standing. That way there's 0 chance of wall damage.
If you insist on doing yours that way then there needs to be OSB sheathing running past the top of the foundation, then covered with Storm and Ice shield over that, not just tar paper. Attach 12" long pieces of vinyl lumber every 4' along the new ledger board to act as a spacer and through bolt or at least use long lag bolts through the ledger and spacer into the bottom mud sill (also know as the foundation plate. Then water water can run down the wall and not lay on top of the decks ledger board.

Never have the decking material come in direct contact with the siding.
Never have the siding making full contact with the decking.
Never have the deck any higher the 4" min. below any door openings or it will take out the subflooring.