By Ted Thurn
IREM has joined with the National Affordable Housing Management Association (NAHMA) and Southeastern Affordable Housing Management Association (SAHMA) to reach out to government officials in the U.S. Virgin Islands and Puerto Rico after learning of skyrocketing insurance premiums on HUD project-based Section 8 (PBRA) properties in these territories.
For example, one member’s property’s premium has gone from $200,000 (renewal cost before last year’s hurricane) to $500,000 (recently quoted). The communication expressed concern that the cost of insurance will cripple this property’s financial feasibility, greatly increasing annual operating expenses while annual rental income remains fixed.
Of critical concern is the large number of properties that may be similarly affected: over 203 properties with over 19,000 units in the Hurricane Maria-impacted area of Puerto Rico, and over 17 properties with 1,474 units in the impacted area of the U.S. Virgin Islands.
In the groups’ communication to officials in the U.S. Virgin Islands and Puerto Rico, they indicated that a long-term solution could exist, but “Unfortunately, the cost to renew insurance is due now, and PBRA property owners are faced with an immediate financial challenge. Left unresolved, the cost could cripple the property’s financial feasibility, and put the property at risk of default, and potentially cause residents to lose their homes.”
The communication also pointed out that “The preservation of the PBRA portfolio in the U.S. Virgin Islands and Puerto Rico is of utmost importance to the families who call these communities home, as well as the NAHMA, IREM and SAHMA members who own and manage these communities.”
For more information about this issues, contact IREMlegislation@irem.org