Environmental Risk to Affordable Housing: The Crisis is Here

The escalating impact of climate change in Florida threatens the physical integrity of properties, the safety of tenants, and the overall stability of Citi Community Capital (CCC)'s portfolio of affordable housing investments, as well as creating extreme volatility in Florida's insurance market.  Waiting to be priced-out of insurance is not a sustainable strategy for CCC. The project recommends building beyond code to reduce risk, improve insurability, and control costs amidst rising premiums. The research revealed that relying on minimum Florida Building Code standards is risky long-term: enhancements are not keeping pace with climate events. Findings confirmed that FORTIFIED standards significantly reduce damage compared to code-compliant structures; they can enhance long-term stability, improve insurability, and secure more favorable premiums for CCC's portfolio.

The team illustrated specific climate vulnerabilities facing CCC’s existing Florida portfolio by overlaying its assets onto maps of expected annual economic loss from climate hazards; the team then identified platforms that project climate and economic risks for prospective investments that CCC can use to integrate climate risk assessments into the underwriting process. The team also developed a mitigant toolkit, with 13 high-impact physical resilience measures across critical building areas, including roofs and foundations, to equip CCC’s underwriters with a practical way to evaluate the resilience features of potential investments. This can prioritize lending to projects with enhanced standards and address vulnerabilities before committing capital. Embedding resilience into every stage of the investment process will allow CCC to reduce insurance costs, safeguard its portfolio, protect tenants, and ensure the long-term sustainability of its affordable housing mission.