New York state’s economic development arm is stepping in to help solve what many owners of government-subsidized affordable housing in New York City say is a growing crisis affecting their ability to keep up with building repairs and maintenance: the rising cost of property insurance.
The Empire State Development Corporation is issuing a $2 million low-interest loan to a collective of landlords who pooled their resources to fund their own liability insurance coverage after private-market premiums roughly doubled over the past five years. The owners pay an annual rate to the collective, known as a “captive” in insurance parlance, which they can then draw on to cover costs of damages or lawsuits.
Members of the Milford Street Captive Insurance Company are now insuring about 3,000 apartments and say they’re able to do it at a fraction of the rates charged by the few private companies still covering low-income housing in the five boroughs.
Their complaints have reached the desk of Gov. Kathy Hochul, who said she wants to tackle the problem as part of her priorities for 2025.
Property insurance is just one operating expense for building owners, but the cost is eating up a bigger and more unpredictable slice of their budgets, said John Crotty, whose Bronx company Workforce Housing Group is one the Milford Street members. Crotty said the new arrangement gets those costs under control, freeing up more money to fund renovations and maintenance and making life better for tenants.
“ If you don’t have the money for repairs, a $10 problem can become a $50 problem if you ignore it long enough. And a $50 problem can become a $500 problem if you ignore that longer,” he told Gothamist. “So it’s a doom loop that we just could not allow ourselves to have happen.”
Crotty said funding from the Empire State Development Corp., along with Hochul’s acknowledgement of the problem, will give other affordable housing owners confidence to join the collective and potentially attract money from philanthropic groups.
“It’s a big, big deal,” he said.
Landlords purchase property and liability insurance to cover the cost of damages or lawsuits. It’s a non-negotiable expense because lenders, including government agencies, won’t provide mortgages or other loans without it.
Many private landlords choose to offset rising insurance costs by raising rents. But that’s not possible for owners of government-subsidized affordable housing like the Milford Street members, who receive a set amount of public funds or loans in exchange for capping rents.
Still, the growing cost of insurance factors into decisions by the city’s Rent Guidelines Board, which sets the annual increases for roughly 1 million regulated apartments. The board’s nine mayoral appointees have voted to increase rent by a combined 10% over the past three years, but landlord groups have called for far higher hikes.
Former Bronx Borough President Ruben Diaz Jr., who serves on the board of the collective, said controlling insurance costs could benefit renters.
“Lower operating costs translates into lower rents for millions of rent-stabilized tenants,” Diaz Jr. said in a written statement.
Soaring insurance costs have become a nationwide problem, with many insurers retreating from specific cities or states where they say writing coverage isn’t profitable. Insurers, state regulators and landlords blame the increases on an array of factors, including the increased risk of flooding and fires caused by climate change and a sense that lawsuit settlements and jury awards are rising.
Discrimination against low-income tenants has also played a role. As Gothamist previously reported, many insurance companies raised prices or refused to provide coverage for buildings that house tenants who earn below a certain threshold or use rental assistance vouchers. The reporting spurred a new state law prohibiting insurers from asking landlords about tenants’ source of income and using the information to make coverage decisions.
Nonetheless, insurance rates continue to spike.
A March 2024 report from the policy group New York Housing Conference found insurance rates for New York City’s affordable housing increased by an average of more than 25% each year from 2019 to 2023. In the case of apartments priced for the lowest-income New Yorkers, nearly a quarter of tenants’ rent checks went toward covering the cost of the landlord’s insurance bill, the researchers found.
A separate analysis of over 38,000 apartments tracked by the affordable housing investor Enterprise Community Partners found the per-unit costs had increased by 75% since 2017. The average cost rose from $694 in 2017 to $1,217 in 2023, they found. The highest cost was in the Bronx, where prices reached an average of $1,478 per year.
Patrick Boyle, senior director of Enterprise’s New York office, said the sharp increases are throwing regulated budgets “out of whack” and jeopardizing other expenses.
“Ultimately, what these rising operational costs mean is that a greater subset of the affordable housing stock in New York is in financial distress,” he said. “It’s both a quality-of-life issue for current tenants and a threat to the continued viability of the mission-driven affordable housing operators.”
So far, the collective includes seven large for-profit landlord companies. It has strict criteria to ensure its members can cover their payments and maintain their buildings in good condition.
In her 2025 “State of the State” policy book released in January, Gov. Hochul said she wants the state to help nonprofit housing groups meet the criteria so they can benefit from the lower insurance costs.
Will Depoo, senior campaign organizer at the Association for Neighborhood and Housing Development, said the insurance hikes pose “a major challenge” to his group’s nonprofit members who hope to get the costs under control.
But “it still remains unclear what are the ways to join” a collective, he said.