As a result of high-density urbanization and climate change, both the frequency and intensity of extreme urban rainfall are increasing. Drainage systems are not designed to cope with this increase, and as a result, floods are becoming more common in cities, particularly in the rapidly growing cities of China. To better cope with more frequent and severe urban flooding and to improve the water quality of stormwater runoff, the Chinese government launched the national Sponge City Construction (SCC) program in 2014. The current SCC design standards and guidelines are based on static values (e.g., return periods, rainfall intensities, and volume capture ratio (VCR)). They do not fully acknowledge the large differences in climate conditions across the country and assume that the hydraulic conditions will not change over time. This stationary approach stems from the traditional engineering approach designed for grey infrastructure (following a “one size fits all” approach). The purpose of this study was to develop a methodology to assess the VCR baseline (before construction in the pre-development stage) and changes in VCR (difference between the VCR of the pre-and post-development stage). The VCR of the post-development stage is one of the required indicators of the Assessment Standard for Sponge Cities Effects to evaluate SCC projects. In this study, the VCR was derived from remote-sensing-based land use land cover (LULC) change analysis, applying an unsupervised classification algorithm on different Landsat images from 1985 to 2015. A visualization method (based upon Sankey chart, which depicts the flows and their proportions of components) and a novel and practical partitioning method for built-up regions were developed to visualize and quantify the states and change flows of LULC. On the basis of these findings, we proposed a new indicator, referred to as VCRa − L, in order to assess the changes in urban hydrology after SCC construction. This study employed the city of Nanjing as a case study and analyzed detailed information on how LULC changes over time of built-up areas. The surface area of the urban and built-up areas of Nanjing quadrupled from 11% in 1985 to 44% in 2015. In the same period, neither the entire city nor its subregions reached the VCR target of 80%. The proposed new methodology aims to support national, regional, and city governments to identify and prioritize where to invest and implement SCC measures more effectively in cities across China.