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'Wake-Up Call:' As The Climate Crisis Becomes More Dire, Many Landlords Need Help Making Their Buildings Resilient

New York, one of the most powerful real estate centers in the world, felt the wrath of a changing climate as the remnants of Hurricane Ida crept up the East Coast two weeks ago. 

With mostly small and midsized landlords in some of the hardest-hit areas of the city left to foot a huge bill to recover from the storm, the industry is putting pressure on the government to improve infrastructure and provide incentives, financing options and support to get more buildings where they need to be for the city to withstand climate events. 

“This is a problem that needs to be a partnership between smaller property owners and the city,” Durst Vice President of Public Affairs Jordan Barowitz told Bisnow in an interview. “The capital cost of bringing these apartments up to code is far more than those landlords can afford.”

Long Island Expressway in New York City was shut down due to flash flooding from Hurricane Ida's landfall.

In a matter of hours on Sept. 1, the out-of-the-blue flooding event poured record volumes of rain on the city’s streets, buildings and subways, wreaking havoc on New York with total damages in the billions of dollars — CoreLogic predicts damages in the state of $3B to $4.6B. Thirteen people drowned in New York City, 11 of them in basement apartments. 

The state of crisis management harks back to Hurricane Sandy, a storm that formed similarly over the Caribbean Sea and caused $19B in damages throughout the city nearly a decade ago. The city signed new codes for buildings in flood areas after Sandy, but the onus was on individual private landlords to complete building improvements needed for the city to be resilient in another storm.

Sandy’s storm surges flooded commercial office buildings in central business districts, where huge real estate corporations could afford to invest in rebuilding. That feat is harder for small and midsized landlords impacted this time around by Ida, those in the real estate industry say.

“In this storm, areas that were affected were not affected by Sandy, so many of the folks who thought they were out of the woods in the inner areas got hit hard,” Community Housing Improvement Program Executive Director Jay Martin said. 

As part of its mission to prepare the city for a changing climate, the New York City Mayor’s Office on Climate Resiliency is attempting to make it easier for landlords to secure funds to make their properties more resilient. 

“There really needs to be more financing available for smaller property owners to be able to take the leap and invest in building retrofits,” the Mayor’s Office on Climate Resiliency Director Jainey Bavishi told Bisnow. “One legislation that we've been trying to push for at the state level is using the existing PACE program and expanding it to also include resiliency retrofits.”  

Flooding at Barone Management's 99-77 Queens Blvd. during Hurricane Sandy.

While the most tragic aspect of this event, and what has grabbed the most headlines, was deadly flooding in basement units, not much attention has been paid to another huge issue — the scope of the damage in apartment buildings that were up to code and what it means for the future, Martin said.

CHIP is a landlord lobby group that represents hundreds of landlords across thousands of units around New York state, many of which had their boilers destroyed during Ida. 

These boilers, which heat water for sometimes hundreds of residents, have a price tag of about $75K to $100K each. Boiler repair companies have been inundated with requests from landlords around the city, Martin said. 

“I've talked to two different boiler repair companies that a lot of our members use and they literally have had to go out and hire more people because they can't keep up,” he said. 

Lemor Development Group President Kenneth Morrison, a landlord who owns 1,000 market-rate and affordable apartments in Manhattan and the Bronx, said that some of his buildings suffered a different type of damage than Sandy — water from the extreme downpour permeated roofs and what Morrison calls “sideways rain” hit the facade on the building, causing leaks that are not typical in usual rainfall events. 

“The rain was coming in differently,” he said. “That was a major problem for us, and then what happens with that is it’s not easy to assess what kind of problems you have: Was that a one-off because of the extremely hard rain or do we have penetration problems? And these are the kinds of things that you just can’t easily go look at it.” 

In order to respond and prepare for future events, Morrison would have to hire an engineer or a contractor with a license to hoist themselves in the air to investigate the paneling, both of which cost a lot.

“These are not inexpensive fixes,” Morrison said. 

Flooding on the Major Deegan Expressway in the Bronx during Hurricane Ida

Francis Greenburger, CEO of New York-based Time Equities, which owns hundreds of commercial properties around the country, spent millions of dollars improving some of the company’s downtown Manhattan office buildings, which flooded during Sandy, to ensure they were safe for future events. 

The Durst Organization invested a lot of money in ensuring that its buildings were resilient too. 

But Barowitz said while there were changes in municipal code after Sandy, there weren't economic incentives for landlords to get their buildings up to code. The company did it because it was the prudent thing to do while rebuilding, he said. 

In the wake of Ida, CHIP is requesting that the city council extend the J-15 tax abatement, which provides a tax incentive for rent-stabilized landlords, which make up a huge part of the organization’s membership, to renovate and invest in their properties. 

The program expired in June of 2020, but Martin said it would make all the difference in helping affected landlords deal with the property damage fallout from the flood. The state does have funds that go to relief efforts but these are usually reserved for single-family homes or very small multifamily buildings. 

Ida, which occurred not even 30 days after an ominous United Nations report found climate change caused by humans had reached a point of no return, propelled a moment of reflection for the city that government officials suggested could be a turning point in ensuring its building and infrastructure can withstand a changing climate. 

In the weeks that have followed, President Joe Biden deemed the event a disaster and promised to send whatever aid was needed, the real estate lobby released statements urgently calling for critical infrastructure improvements and the city began investigations into basement apartments where 11 people drowned during the flood

“This is just another wake-up call,” Green Urban Council CEO John Mandyck said. “We're living the climate future that was predicted just 10 years ago. So while on one hand the devastating impacts of it came as a surprise and in retrospect, it really shouldn't be a surprise. It needs to serve as that wake-up call so that we can adequately plan for our future.”