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Developers and advocates urge state action on surging insurance and construction costs that threaten affordable housing
Summary
Affordable‑housing developers told the Assembly Housing Committee that insurance premiums and construction costs have risen sharply — in some cases 30–100% — jeopardizing projects and increasing rents; they proposed a state‑supported pooled insurance option and a task force to explore solutions.
Developers and affordable‑housing advocates told the Assembly Housing Committee on Dec. 5 that sharp increases in insurance and construction costs are undermining both existing affordable communities and projects in the pipeline.
Chris Folio of Community Investment Strategies described recent cost shocks: he said insurance premiums on affordable projects have risen between 30% and 100% in the last three years and gave a project example where per‑unit insurance rose from $850 to $1,200 between underwriting and occupancy. Folio said those cost increases often end up being borne by residents through higher rents or stalled projects.
Policy proposal: Folio and other witnesses urged the committee to consider a state‑supported pooled or captive insurance mechanism to reduce premiums for mission‑driven affordable housing, and asked the committee to convene a task force including Department of Banking and Insurance (DOBI), the Housing Mortgage Finance Agency (HMFA) and insurance professionals to evaluate options.
Why it matters: Witnesses said that without interventions to control insurance and certain regulatory bottlenecks, many projects in the pipeline cannot satisfy financing conditions, which would reduce new affordable units and increase pressure on rental markets.
Next steps: Developers asked the committee to create a task force and to examine policy levers — including potential state assistance for capital or collateral that pooled insurance functions may require. The committee invited written comments and follow‑up materials from witnesses.
