Q&A
Rising insurance costs and their impact on affordable housing
1:17:09
·
4 min
The discussion focuses on the dramatic increase in insurance costs for affordable housing developments and its impact on rent affordability. Commissioner Carrión and First Deputy Commissioner Tigani explain the efforts being made to address this issue.
- An example is given of a development where insurance premiums rose from $200,000 to $900,000 per year
- The city is working with private sector partners and exploring legislative options to address the insurance cost issue
- Potential solutions include putting pressure on insurance companies, exploring captive insurance options, and partnering with the state government
Adolfo Carrión Jr.
1:17:09
The the the cost of insurance has exploded.
1:17:12
In your district, in particular, one development went from an insurance premium of $200,000 a year to an an annual insurance premium of $900,000 a year in 1 year, in 1 year, which raises a whole other issue about insurance costs in the insurance industry and and what we ought to be doing to to deal with that.
1:17:35
And we look forward to calling back outside of a fiscal year 25 budget hearing and thinking out loud with you about that.
1:17:45
But the costs have gone up.
1:17:48
The income in these Mitchellama developments has has not increased.
1:17:54
And there's been often a refusal to accept increases.
1:17:58
And then when eventually, when when When the development does come to us, the ask is so large for the catch up that it shocks, it's it's really sticker shock, but Ahmed, do you wanna add anything to that?
Ahmed Tigani
1:18:12
Very quickly, I'll say, when we're talking about preservation, it's not simply financial in terms, right, we are using housing choice federal vouchers in order to keep people in place.
1:18:23
We're dealing with the distress that comes from either legal mandates, sustainability, energy, proactive changes.
1:18:30
So we have green energy term sheets that they can put on top of other preservation term sheets in order to not only bring in dollars to repaired buildings but extend the affordability so we continue those affordable homes.
1:18:44
We are also looking at ways that housing supervision can help if there are other costs.
1:18:49
We are often working closely with the property management or the boards as they have inquiries from the outside to figure out how the government can help them triangulate those issues, whether it's utility costs, whether it is mandates requirements from other agencies.
1:19:03
We provide a technical resource as a partner to those boards and the property management.
1:19:08
So we're thinking about how we can talk them through and work through mandates.
Eric Dinowitz
1:19:12
So I I I wanna pause.
1:19:14
I just I I know a lot of work's done, but, you know, this, in particular, these buildings have been going on years.
1:19:19
And it is wonderful to hear that you wanna sit down and talk about insurance, for example.
Adolfo Carrión Jr.
1:19:25
Mhmm.
Eric Dinowitz
1:19:25
But this was something I've been raising for years, and you are h you are a city agency.
1:19:31
You're the you're I I mean, if you're if if if insurance is an issue.
1:19:37
This is something that I've been speaking to HPD about for for years.
1:19:42
And there's no reason why those conversations shouldn't have been happening years ago as we started to see increases in insurance.
Ahmed Tigani
1:19:50
And and and
Eric Dinowitz
1:19:51
the result is and as as many programs as you say exist, we have issues accessing those programs.
1:19:59
Scree was one of the programs you said, well, just send it for scree, which you know only serves a few people, a handful of people.
Adolfo Carrión Jr.
1:20:06
Thank you for what you did, by the way, on scree.
Eric Dinowitz
1:20:09
Thank you for for saying that, but there was resistance to to doing that, trying to streamline that in the recent law that we passed.
1:20:16
Just
Gale A. Brewer
1:20:17
just really
Ahmed Tigani
1:20:17
On the insurance piece, we actually just to be clear, we are actively talking in a meeting on it.
1:20:22
We're working with partners in the private sector especially in the affordable housing sector, we've recently saw the bell ideas in which the city and the state can partner with them.
1:20:31
The governor just recently announced legislation to look at this from an discriminatory practice perspective with the Department of Financial Services.
1:20:39
We're looking at both legislation.
1:20:41
Thinking about this is as a area that we can put more pressure on insurance companies to put fair prices.
1:20:48
We're looking at captives on a local level and whether to sit your can have a role to help move other options that are more affordable.
1:20:56
And then on the screen bill, again, while I echo the commissioner, we're we're great for your partnership.
1:21:00
I think we had questions about implementation and how to make that happen in a way that would be streamlined and not create confusion or any issues with implementation.
1:21:11
But, again, we are committed to making sure that it's seamless and streamless.
1:21:15
That's not a word.
1:21:16
That's even the word.
Eric Dinowitz
1:21:17
It is a word now.
1:21:18
You're you're on a roll.
1:21:19
If you have to speak only the truth, it's a word now.
Ahmed Tigani
1:21:21
Thank you.
1:21:21
But we are committed to making sure that the partnership and the ideas laid down in the building.
Adolfo Carrión Jr.
1:21:27
I I have to I have to, for the record, say that we have been just echo a little bit.
1:21:34
We have been working on this issue for years, but it exploded.
1:21:39
It exploded in the last few years.
1:21:41
To the point where developments are coming to us and saying, we're choking on insurance costs.
1:21:48
We're gonna have to refinance.
1:21:51
So that cost is out of control and it's gonna require us at the city level along with you as a partner and the state to do something about it, and and the partnership with the private sector.
1:22:01
Because there are there are tools that can be created, responses that can be created, to bring the cost down.