Federal Seismic Retrofit Funding Canceled: Impact on California Multifamily Properties
- ryan7482
- May 25
- 2 min read
The Trump administration's recent cancellation of $33 million in federal earthquake retrofit funding has significant implications for commercial real estate investors with California multifamily holdings.
The Financial Reality
The canceled Federal Emergency Management Agency grants would have supported retrofits for 750 to 1,500 multifamily buildings statewide. For investors, this represents a substantial shift in the financial landscape for older apartment buildings, particularly those classified as "soft story" structures.
Risk Assessment for Your Portfolio
Soft story buildings—typically featuring ground-floor commercial space with residential units above—proved catastrophically vulnerable during California's major earthquakes. The 1989 Loma Prieta and 1994 Northridge quakes saw numerous collapses of these structures, resulting in fatalities and total property losses.
Properties built before modern seismic codes remain at significant risk. Without federal assistance, retrofit costs—which can range from tens of thousands to hundreds of thousands per building—now fall entirely on property owners.
Market Implications
Senator Adam Schiff has called for reinstating the funding, citing the urgent need for seismic preparation. However, commercial real estate investors should plan for scenarios where federal support remains unavailable.
Key considerations include:
Due Diligence: Seismic vulnerability assessments are now more critical than ever for acquisition decisions in earthquake-prone areas.
Capital Planning: Budget for potential mandatory retrofit requirements, as local jurisdictions may still enforce seismic upgrades regardless of federal funding availability.
Insurance Review: Verify earthquake coverage adequacy, particularly for older multifamily properties that haven't undergone seismic strengthening.
The funding cancellation essentially transfers seismic risk mitigation costs from taxpayers to property owners, making retrofit planning a more pressing capital allocation decision for California multifamily investors.
Considering selling your multi-family property? Get in touch with CORE-CRE to discuss the steps necessary to put your property on the market: daniel@core-cre.com
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