Storm-Readiness Retrofits Pose Financial Hurdles for Multi-family Affordable Housing

Owners of affordable, mutli-family housing in the FEMA floodplain face financial hurdles to complete storm-resistant retrofits.

Hurricane Sandy, Alphabet City. (Matthew Kraus, flickr)
Hurricane Sandy, Alphabet City. (Matthew Kraus, flickr)

As New York faces its second hurricane season since Sandy, thoughts turn to what has been done in the two years since to better protect the city should another major storm strike. Not nearly enough, experts agree, with an area of particular concern being the storm-resistant retrofits required at affordable, mutli-family developments located within the FEMA floodplain, according to a new report released by the Furman Center for Urban Planning at NYU. Owners of such buildings face the catch-22 situation of not being able to fund the costly modifications needed to meet the requirements of the federal flood insurance program, but not being able to pay the higher premiums should they fail to do so.

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Among the major difficulties facing the owners of multi-unit, affordable buildings, the report notes, is that the official retrofitting requirements for buildings within the 100-year FEMA floodplain are based on national standards that assume residential buildings in need of retrofitting will be 1-4 unit, detached structures rather than attached rowhouses or huge multi-unit housing complexes that cannot be easily raised and in some cases, raised at all. Additionally, one of the other major work-arounds—filling in the basement and shifting the habitable space to the second floor—would mean the loss of a significant number of housing units in buildings, which would have the side-effect of displacing lower- and middle-income residents.

While 19,115 of the 29,829 buildings located within the city’s floodzone are 1-4 unit structures, those buildings account for only 16.8 percent of housing units within the floodzone,or 27,840 units, with 83.2 percent, or 137,879 units in the floodzone being located within multi-family developments. Additionally, 84,136 of those units are affordable: Mitchell-Lama co-ops, rent-stabilized units, NYCHA units, or units paid for with other rent subsidies.

Complicating matters is the fact that the income provided by rent-regulated units is generally insufficient to pay for major retrofits, meaning that without some kind of city, state or federal subsidy, those modifications may not be made at all. And in the rare cases in which landlords are able to raise rents to pay for alterations, the apartments may become unaffordable to their inhabitants.

“Over 1,500 buildings in the preliminary 100-year floodplain, with over 90,000 units, are public housing, subsidized housing, or rent stabilized housing. Many more of them are unregulated buildings that house low- and moderate-income households with limited ability to pay more in rent,” the report states.

The median income for renters in the floodplain is just over $36,000, according to the report, and 50 percent are already rent-burdened, meaning that they pay more than 30 percent of their income in rent.

The need to retrofit buildings in a timely matter is not only pressing because of the possibility that another storm will strike—and Sandy damage, while significant, touched only a fraction of at-risk buildings in New York City’s floodzone, according to the Furman Center—but because building owners who fail to meet the federal retrofitting requirements will be hit with much higher insurance premiums as part of the Big Waters Law, enacted in 2012, that requires the program to better reflect the actual cost of insuring those properties. (Though President Obama passed a bill to soften the law’s impact, essentially phasing it in.)

The report recommends several changes to help the city preserve affordable housing in the floodplain: most significantly, creating separate rules and guidelines for dense, multi-family units in cities like New York—closer to the much laxer rules for commercial buildings—that would permit cheaper, less-disruptive modifications like accepting dry floodproofing as an alternative to raising structures or filling in basements, as well as permitting the continued use of basement space for auxiliary residential functions not necessary to the building’s operation: gyms, laundry rooms, staff offices, etc. The city should also ensure funding for resilience measures and try create policy changes that will enable buildings, even those outside the 100-year floodzone, to access money for retrofits.

As the report warns, the dilemma facing “this critical, and large, building stock faces is untenable.”

Storm-Readiness Retrofits Pose Financial Hurdles for Multi-family Affordable Housing