The commercial real estate market in NYC is concerned about the upcoming expiry of the TRIA.
New York City’s commercial real estate market is now facing worries about a threat that could shake its stability, when federal terror insurance reaches its expiry date in 2014.
The Terrorism Risk Insurance Act was enacted in 2002 and uses taxpayer dollars to cover these disasters.
The act was put into place the year following 9/11 and uses American taxpayer funds to provide protection for private insurers so that they can offer terror insurance to NYC buildings. This legislation has an expiry date at the end of this year and many wonder whether or not it will be renewed in 2014.
If Congress does not extend the terror insurance, it will be challenging for building owners to obtain coverage.
This could mean that the price of doing business in New York City will increase even further, particularly for skyscraper and hotel owners, which are considered to be the most likely targets for terrorists. This is because without the terror insurance act, the premiums would increase and the value of the buildings would be affected.
According to Jeffrey DeBoar, the CEO of Real Estate Roundtable, a lobbying group, “Waiting to take legislative action until the scheduled 2014 year-end sunset would be a mistake.” He added that “Starting in the next few months, as policies roll and terror coverage becomes less certain, increasing numbers of large and small transactions across the country will be delayed or canceled.”
In February, a bill was introduced by Congressman Michael Grimm (R-Staten Island) in an attempt to provide the terror insurance act with a five year extension. He said that the real estate industry is hoping that an early extension will be achieved and is pushing for that outcome. Grimm explained that they are moving as rapidly as possible and that the hope is that there will be an initial hearing ahead of the summer. He also added that he feels relatively confident that there will be an extension of the TRIA legislation in time for the start of next year.