The RiverCrest is a six-story, 95-unit cooperative perched beside the Hudson River in Nyack, New York. The name proved to be devastatingly apt when Hurricane Sandy unleashed its full fury in October 2012. The river crested its banks, pouring water into the co-op’s lobby and its below-grade community room and boiler and laundry rooms. The wooden deck around the swimming pool was rudely swept away.
But for the board and shareholders at the Rivercrest, the bad news was just beginning. Since the building is located in a flood plain, it was unable to purchase flood insurance from any commercial carrier. But the Federal Emergency Management Agency (FEMA) mandated that it buy a federally backed flood insurance policy, with a maximum coverage of $250,000.
Even that wound up providing no balm. “FEMA came in and did an inspection, but we were turned down for disaster grants because co-ops are not covered under the Stafford Act,” says Alfred Kramer, who has served on the Rivercrest’s board of directors since 1993 and is now its president. “FEMA didn’t give us a dime.”
He was referring to the 1988 legislation sponsored by Republican Senator Robert T. Stafford of Vermont. It amended the Disaster Relief Act of 1974, giving FEMA responsibility for coordinating government-wide disaster relief efforts. It also, crucially, categorizes co-ops and condos as businesses, making them ineligible for disaster grants even though they are not profit-making entities.
“To rub a little salt in the wound, there are so many exclusions in the FEMA flood insurance policy that we won’t be able to collect anything,” says Don Wilson, president of Blue Woods Management Group, who manages the Rivercrest. “The wooden deck around the pool was destroyed, but under the policy anything outside the building was not covered. The common room is two-and-a-half feet below grade, but anything below grade is not covered. The only thing FEMA offered was a loan from the Small Business Administration (SBA).”
The co-op suffered about $200,000 in damages from the storm. A small fraction of that sum was covered by a state disaster grant and an insurance board ruling; the bulk of it came out of the co-op’s reserve fund, which was nearly wiped out.
A similar tale unfolded at Rockaway Beach in Queens, where Shore View Condominiums, 20 units in seven seaside buildings, were hammered by the storm. The complex suffered nearly $250,000 in damage to its entranceways and basements, including residential areas, then received the same inadequate service from FEMA as the Rivercrest.
“The FEMA people said they don’t help condos,” says Janie Simmons, president of Shore View’s board. “We would have to apply for an SBA loan. We kept hearing conflicting information, and I ran myself ragged following leads on how we could get help.” Simmons adds that she recently learned that FEMA should have provided funds for the rebuilding of residential areas in the complex, which would have covered at least half the cost of rebuilding.
The condo ultimately applied for a $212,800 loan from the SBA, and is trying to get 20 percent more to build raised garden beds (to function as a riverbank) and storm gates between the property and the ocean to protect the complex when the next storm hits. A common refrain at properties like Shore View is that this is a matter of when, not if, the next devastating storm will hit.
But the problem at Shore View – and at Rivercrest and every other co-op and condo in the country – is that FEMA categorizes these housing units as businesses, which makes them ineligible for disaster grants.
“Condos are not businesses,” Simmons insists. “We sell nothing. We make no profit. We have to be seen as homes. It goes beyond FEMA. There needs to be more awareness about this issue, and laws have to change.”
To that end, Simmons is serving on the Queens Co-op and Condo Task Force convened by Queens borough president Melinda Katz. It comprises board presidents and property managers, and will address disaster relief and other issues facing the city’s co-op and condo residents.
And hard as it might be to believe, help just might come from a most unlikely source: Washington, D.C.
Israel to the Rescue
Last year, Representative Steve Israel, a New York Democrat, introduced legislation in Congress that would end the designation of co-ops and condos as businesses and make them eligible for federal disaster grants. The bill would also remove the current $30,000-per-household cap on such grants.
Warren Schreiber, president of the board at the Bay Terrace co-op in Queens and a member of the Presidents Co-op & Condo Council, said in a statement: “Making housing cooperatives and condominiums eligible for FEMA grants will assist those properties in recovering from natural and other disasters. Currently, the cost of disaster-related repairs falls squarely upon the shoulders of middle-class owners who are least able to bear additional financial burdens. Amending the Stafford Act will provide co-ops and condos with the same protections afforded other property owners. The co-op and condo community welcomes and supports the legislation being introduced by Congressman Israel.”
Israel’s legislation would list co-op and condo associations as entities eligible to apply for assistance through FEMA’s Individual and Households Program (IHP). It would also add definitions for housing cooperative and condominium to the Stafford Act, and would call for the rule-making process to determine a new cap on IHP assistance for co-op and condo associations.
The legislation has won co-sponsors from both political parties and the backing of numerous co-op and condo advocates, including the National Association of Housing Cooperatives and the Council of New York Cooperatives and Condominiums (CNYC).
“We’ve been trying increasingly hard to get co-sponsors for the bill across the country,” says CNYC Executive Director Mary Ann Rothman. “This isn’t Hurricane Sandy legislation; this is disaster legislation. FEMA’s interpretation is that we’re small businesses that provide housing. That’s a very bad interpretation.”
For now, the bill’s fate looks uncertain. The defeat of House Majority Leader Eric Cantor in the Republican primary earlier this year by a Tea Party candidate has cast a chill on Congress as the midterm elections approach. Movement on controversial legislation, already difficult, is now seen as nearly impossible.
But Kramer, the board president at Rivercrest in Nyack, says the opposite may be true – that the looming elections might provide a crucial lever for Israel’s bill. “Remember, this is an election year,” Kramer says. “Management companies need to get busy and correspond with politicians and see if we can get this bill passed.”