Insurance Rates Threaten Affordable Housing - Little Tokyo Service Center

Insurance Rates Threaten Affordable Housing

Insurance Rates Threaten Affordable Housing

Insurance Rates Threaten Affordable Housing

Affordable housing is facing a massive insurance crisis.

Like many California homeowners, affordable housing developers across the state are seeing an astronomical spike in insurance rates. But for values-driven developers like Little Tokyo Service Center (LTSC), this crisis threatens our mission.

an aerial view of an apartment building under construction, with the downtown LA skyline in the background
The Umeya (May 2024) - Photo by Masek Imaging

The Challenge:

LTSC has built over 1,000 units of affordable housing across Los Angeles benefiting 2,000 low-income families, seniors and formerly unhoused individuals. In the past year alone, our property insurance premiums increased by 300%, forcing us to dip into reserves and operating funds. Unlike market-rate apartments, we cannot raise rents to cover these costs due to rent restrictions and the financial stability of our residents.

The Ramifications:

These increasing insurance costs are unsustainable for our portfolio, and our options are slim. Do we decrease residents’ quality of life by reducing staff, services and maintenance? Or close our affordable housing doors and actively contribute to homelessness? Both go against our mission, and neither helps address the housing crisis.

What it will take:

Lawmakers need to act now to stabilize the affordable housing insurance market and bring insurance premiums down, or we risk losing affordable housing and putting countless families on the street. While the state is making huge investments to end the homelessness crisis by building more affordable housing, the insurance crisis threatens to reverse gains that have been made by losing existing affordable housing. With what’s at stake, it should be a no-brainer.

Rendering of an apartment building
Rendering of Go For Broke Plaza & First Street North Apartments, currently under construction
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