One year after Hurricane Sandy ravaged the East Coast, residents, landlords, businesses and the government are still picking up the pieces. While some remain homeless, others see hope, as commercial leasing rebounds in Lower Manhattan and Howard Hughes Corp. breaks ground on the redevelopment of the South Street Seaport’s Pier 17. On Sandy’s anniversary, The Real Deal took a look at issues still plaguing the industry, from faltering infrastructure, to dune restoration, to spiking flood insurance to the notorious crane that dangled from Extell Development’s One57 skyscraper.
Rising flood insurance premiums
The triple whammy of higher flood insurance premiums, more homes at risk of floods and fewer insurers offering coverage could affect the mortgage market and the make-up of the New York City waterfront. Currently, the Federal Emergency Management Agency places 68,000 homes in flood zones, but that number could reportedly grow. Adding to the misery, the Biggert-Waters Flood Insurance Reform Act, which passed last year, ended federal subsidies for flood insurance, causing premiums for homeowners to spike by $5,000 to $10,000 a year on average, according to a study commissioned by Mayor Michael Bloomberg. (Some homeowners claim their premiums will go up by a whopping $30,000 per year.) Plus, many companies that have long offered flood insurance, such as State Farm, are no longer offering the policies in waterfront areas at all, Crain’s reported, causing rates to rise.
Because flood insurance (which previously cost about $430 per year) is required for any mortgage backed by a government-sponsored enterprise such as Fannie Mae or Freddie Mac, the overall impact on the mortgage and insurance markets could be profound. The endgame? “Waterfront properties will either be just for higher income individuals,” John McIlwain, housing chair for the Urban Land Institute, told Crain’s. “Or there will be far less development and far more parkland and open areas.”
Jersey Shore erosion
Dune reconstruction is a major worry for parts of the storm-beaten Jersey Shore, where towns decide whether to contribute to a federal fund that pays the U.S. Army Corps of Engineers to spray sand into dunes on their beaches. The program provided a proving ground for the thesis that dunes could spare communities flooding during Sandy. For example, while Seaside Park opted into the program, and was largely spared, Long Beach Island did not — and wound up with more than $200 million in damage, published reports show. Now many towns on the shore want dunes, and quick – before another storm hits.
But they are struggling with the question of who will pay for the expensive procedure of moving the sand and whether it will ruin homeowners’ views.
A lawsuit in Mantoloking, N.J., by a homeowner who said the revamped sand dune would obstruct his pricey view, was shot down in September. In Seabright, N.J., Mayor Dina Long told the Newark Star-Ledger she would have crews build makeshift dunes in her town, but was still in need of help from the feds, who say they don’t have resources to build up all the dunes at once. In Mantoloking, residents have even been trying to build up dunes by hand, biding time until the Army Corps can get to them and until the state can help out with the estimated $13 million bill, the paper said. And even then, dunes are only a partial solution, leaders told the paper. “What would be ideal is to get a sea wall, but the cost would be exorbitant,” Long told the Ledger.
One57 crane litigation
The dangling crane at the site of Extell’s condo and hotel development One57 was perhaps the most resonant image from the days after the storm. The crane mishap delayed the arrival of the 74-story project at 157 West 57th Street by roughly 60 days, The Real Deal reported.
These days, Extell is still negotiating litigation over the incident. Neighbors at The Alwyn Court and Briarcliff apartment buildings sued Extell after being displaced by the incident, while the developer and construction manager Lend Lease also filed suit – against their insurers, for the more than $11 million they’re allegedly owed in damages. A replacement crane hoisted to the top of the site in May was reportedly seen hanging dangerously in midair earlier this month, although that situation was also resolved without injuries, reports show.
After FEMA’s release of new projected floodplains (a project that is ongoing), a number of developers changed their construction plans. Two Trees Management pushed back its residential conversion at the Domino Sugar Factory site in Williamsburg an extra 100 feet from the East River, to 150 feet from the shore, and raised entrances by about 3 feet above water level, the New York Post reported in March. Meanwhile the 2 million-square-foot Cornell NYC applied sciences campus, rising on Roosevelt Island, revamped plans to make entrances at least 19 feet above sea level, as The Real Deal reported.
On the residential side, FEMA guidelines now call for many Staten Island residents to reconstruct their homes either on piles or on foundations above a new flood plain, said architect Glen Cutrona of Glen Cutrona Associates at a Staten Island Board of Realtors event last April. A new flood plain map includes four zones – V, A, AE and X, he said. In zone V, all new buildings will have to be built on a pile-supported structure, he said. New buildings in zone A do not have to be raised on piles, but their foundations must start 2 feet above FEMA’s new flood plain.
Dispersal of federal funds
Of the $648 million that the federal government promised New York City for Sandy-related housing recovery assistance, only one local person had actually received aid as of last week, the Wall Street Journal reported. “The spigot is open and money is beginning to flow,” Senator Charles Schumer, D.-N.Y., assured homeowners, noting Sunday that about $6.3 billion in Sandy-related federal aid will be directed to New York State in 2014, with $1.4 billion of the money going directly to homeowners hit by the storm.
But many remain skeptical, including New York State Attorney General Eric Schneiderman, who said he was monitoring charities who claimed to help Sandy victims’ activities closely.
The tedious pace of aid distribution is the result of time-consuming new requirements, such as environmental reviews and checks to be sure construction work isn’t happening above Native American burial grounds, officials told the Journal. Shoddy contractor work hasn’t helped: the city’s Department of Consumer Affairs received 600 complaints about contractors since the storm struck, including roughly two-thirds who are unlicensed and cannot be penalized, a department spokesperson told DNAinfo.
Seaport City’s future
Seaport City is a proposed new waterfront neighborhood in Lower Manhattan that Mayor Michael Bloomberg cooked up in June as part of a sweeping plan to protect the city against future hurricanes. The enclave would front on the East River, just south of the Brooklyn Bridge, and mimic Battery Park City, a neighborhood that weathered the storm with relative ease. Dutch engineering firm Arcadis came on board earlier this month to gauge the size and shape of the multibillion-dollar project.
However, Community Board 1, which covers the Financial District, has criticized Bloomberg’s plan, calling it little more than a high-end development scheme disguised as a storm shield. And it remains to be seen whether the plans will survive a change in leadership at City Hall.
Staten Island’s shaky recovery
Parts of Staten Island were among the hardest-hit residential neighborhoods in the city, and the recovery has been slow. A home in the Oakwood area was the first of about 400 city properties to be demolished by the Army Corps in December. By April, Staten Island homeowners continued to struggle as they awaited federal disaster assistance for the many properties stuck in limbo. As of last week, a resident of the stricken Tottenville neighborhood was New York City’s only homeowner to get help from a $648 million federal relief fund. The city bought the home of the woman, whose husband and daughter were killed in the storm. Part of the reason for the delay was that the legislation authorizing the aid was not passed until January, reports said.
Lower Manhattan’s office market
The Lower Manhattan commercial market took an immediate hit from Sandy – nearly 18 million square feet of office and retail space were closed for at least five weeks after the storm. Today, many retailers in the area are still closed, according to a report from local advocacy group the Downtown Alliance released today.
But, a year later, recovery has been strong. Since last year’s fourth quarter, 73 new retailers have set up shop, and the office leasing market is stronger than it was before Sandy, the Downtown Alliance said. Downtown office leasing jumped 73 percent in January and February, as reported by The Real Deal. Sandy also delayed many office tenants’ plans to move into new locations, but most of those deals wrapped up by June.
New York City’s aging infrastructure
Sandy shone a spotlight on the shortcomings of the city’s infrastructure. While the Metropolitan Transportation Authority hurried to drain the corrosive salt water that flooded subway tunnels last October, those were short-term fixes. Today, the MTA is spending $300 million upgrading the Montague tube, which connects Brooklyn and Manhattan, thus shuttering the R train until next fall, the New York Times reported.
Above ground, the city requires serious upgrades, such as an updated power grid, better building codes and “clear authority and responsibility for emergency response,” according to a June report from the New York Building Congress construction trade group.
The New York City Transit Authority plans to perform at least $3 billion in repairs next year and in 2015.