Multifamily Flood Insurance Affordability Study
In order to help preserve the affordability and stability of New York City’s waterfront neighborhoods, this report seeks to develop meaningful policy recommendations for flood insurance for multifamily and mixed-used buildings. The authors note the importance of this analysis given recent reforms to the National Flood Insurance Program (NFIP) and increasing flood risk due to extreme weather events and sea level rise. The study’s findings quantify the number of multifamily and mixed-use buildings in high-risk areas; determine the extent of flood insurance coverage; and seeks to understand potential rising costs and perceptions around future flood risk and attitudes toward investing in mitigation.
Buildings with Federally-backed mortgages in high-risk flood areas designated by FEMA’s Flood Insurance Rate Map (FIRM), are required to have flood insurance, which is available through the NFIP. Long-standing subsidies have benefitted many policyholders that live in buildings that were built before 1983, when New York City’s first FIRMS were adopted. Legislation known as the Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12) sought to strengthen the NFIP’s financial standing by reducing subsidies and moving toward higher flood insurance premiums and fees. While Biggert-Waters was revised by the Homeowner Flood Insurance Affordability Act of 2014 (HFIAA), policyholders will still see premium increases.
This report spotlights the particular vulnerability of multifamily affordable housing in NYC. Approximately 30% of multifamily and mixed-use buildings in the high-risk floodplain contain buildings with affordable or rent-stabilized housing units. This included 33,000 units that have received
city, state, or federal subsidies for affordable housing. Even though it is legally required, the authors find that only 45% of affordable buildings in the 2013 high-risk areas had insurance. Lack of insurance makes the uninsured buildings in the high-risk areas of the FIRM extremely financially-vulnerable to flood damage and more likely to experience slow recovery after storm events. Even buildings that have an NFIP policy are likely to be significantly underinsured, due to a limit of $500,000 in coverage which may not reflect the full future risk.
In addition, affordable housing assets may be more deeply affected by rising flood insurance costs. Significant premium increases that do not differentiate among buildings will potentially put a greater burden on affordable buildings, especially older and smaller structures. Tenants may face reduced quality of life if costs are covered through reduction in building services.
The report’s recommendations include a call for greater clarity and transparency in flood insurance offerings, a framework for partial flood risk mitigation, and for better coordination with the private market.
Publication Date: April 2016
- Legal Analysis
- Policy analysis/recommendations