California ports, key to U.S. supply chain, among world’s least efficient

By Lisa Baertlein

LOS ANGELES (Reuters) – Southern California’s Los Angeles and Long Beach ports handle the most ocean cargo of any ports in the United States, but are some of the least efficient in the world, according to a ranking by the World Bank and IHS Markit.

In a review of 351 container ports around the globe, Los Angeles was ranked 328, behind Tanzania’s Dar es Salaam and Alaska’s Dutch Harbor. The adjacent port of Long Beach came in even lower, at 333, behind Turkey’s Nemrut Bay and Kenya’s Mombasa, the groups said in their inaugural Container Port Performance Index published in May.

The total number of ships waiting to unload outside the two adjacent ports hit a new all-time record of 100 on Monday. Americans’ purchases of imported goods have jumped to levels the U.S. supply chain infrastructure can’t handle, causing delivery delays and snarls.

Top port honors went to Japan’s Yokohama and Saudi Arabia’s King Abdullah on the ranking. Finishing out the top five were Chiwan, part of Shenzhen’s port in Guangdong Province; South China’s Guangzhou port; and Taiwan’s Kaoshiung port.

Ports in Asia, the Middle East and North Africa dominated the top 50 spots, while just four U.S. ports cracked the top 100 – Philadelphia (83), the Port of Virginia (85), New York & New Jersey (89) and Charleston, South Carolina (95).

The COVID-19 pandemic has disrupted trade around the globe, snarling trade and exposing the frailty of a supply chain built for predictable, just-in-time movement of goods.

The United States is the world’s biggest consumer, importing goods valued at roughly $2.5 trillion a year. President Joe Biden is fighting for massive federal funding to modernize crumbling infrastructure – including seaports. Government control, 24/7 operations and automation help make many non-U.S. ports more efficient.

Biden is pushing port executives, labor union leaders and major retailers like Walmart to attack shipping hurdles that are driving up the price of goods and raising the risk of product shortages during the all-important holiday season.

Southern California port executives are coaxing terminal operators, importers, truckers, railroads, dock workers and warehouse owners to adopt 24/7 operations in a bid to clear clogs that have backed up dozens of ships offshore and delayed deliveries to stores and e-commerce fulfillment centers.

(Reporting by Lisa Baertlein in Los Angeles; Editing by Heather Timmons and Diane Craft)

Mask mandate returns to Los Angeles as coronavirus cases rise

By Sharon Bernstein

(Reuters) -Los Angeles County will reimpose its mask mandate this weekend in the latest sign that public health officials are struggling with an alarming rise in coronavirus cases tied to the highly contagious Delta variant.

The county, home to 10 million people and the nation’s second-largest city, Los Angeles, is one of several jurisdictions to recommend or mandate wearing masks or other pandemic restrictions in recent days as cases rise to worrisome levels in many parts of the United States.

“We’re requiring masking for everyone while indoors at public settings & businesses, regardless of vaccination status so that we can stop the increased level of transmission we’re seeing,” the Los Angeles County Department of Public Health said on Twitter Thursday.

The mandate will go into effect Saturday night at a minute before midnight, the agency said.

The announcement follows six straight days of more than 1,000 new COVID-19 cases reported in Los Angeles County, with nearly 400 people hospitalized with COVID-19 as of Wednesday, up 275 from the week before. Nine new COVID-19 deaths were reported on Wednesday.

More than 1,500 new infections were reported on Thursday, and the county has become a place of “substantial” transmission, based on criteria set by the U.S. Centers for Disease Control and Prevention (CDC), the Los Angeles County health officer, Dr. Muntu Davis, said in remarks provided to reporters.

Other California counties and other states are also grappling with a spike in coronavirus cases, led by a mutation of the coronavirus known as the Delta variant and predominantly affecting people who are unvaccinated.

Also on Thursday, Sacramento and Fresno Counties in California recommended that masks be worn indoors even by people who are vaccinated. Austin, Texas, on Thursday urged people who are not vaccinated or are otherwise high-risk to avoid travel, indoor gatherings, dining out and shopping, and to wear masks.

Earlier this week, Yolo County in California also recommended indoor masking, and in Springfield, Missouri, children and teachers have been required to wear masks during summer school.

“Everyone, including those who are vaccinated, should be aware of high-risk situations including being indoors, in crowds, and around unvaccinated and unmasked individuals and consider wearing a face covering in these settings,” said Fresno County Public Health physician Dr. John Zweifler.

Data from the CDC show high levels of coronavirus transmission in numerous states, including Missouri, Mississippi, Florida, Nevada and Utah.

Across the country, health officials urged residents who have not yet done so to become vaccinated. Vaccines are approved and available for all people as young as 12 years old. In Los Angeles County, just 0.09% of new cases were among people who had been vaccinated, officials said.

“Our best protection against COVID-19 continues to be the vaccine,” said Sacramento County Public Health Officer Olivia Kasirye. “We urge all eligible residents to get vaccinated in order to protect themselves, and their family and friends.”

(Reporting by Sharon Bernstein in Sacramento, California; Additional reporting by Steve Gorman in Los Angeles; Editing by Aurora Ellis and Leslie Adler)

L.A. teachers union agrees to reopen schools from April

(Reuters) – Public schools in Los Angeles are set to reopen from next month, after a teachers’ union approved a plan for a physical and hybrid return to classes.

Many schools continue to teach students remotely more than a year after the novel coronavirus prompted widespread closures across the United States, and the Biden administration has been aiming to reopen in-person learning for millions of public school students without sparking coronavirus outbreaks.

Education officials at the Los Angeles Unified School (LAUSD) district are tentatively planning for physical classes to restart at elementary and preschools by mid-April, while grades 7-12 are scheduled to return by about the end of April.

“While the improving COVID-19 situation is still fragile, we believe this agreement puts LAUSD on the path to a physical reopening of schools that puts safety first,” United Teachers Los Angeles union president Cecily Myart-Cruz said in a statement.

Under the agreement, elementary teachers will be expected to teach from their classrooms unless they have a verified medical reason to stay remote, while secondary teachers will teach most classes virtually.

The union said the district was also considering using outdoor tents for exceptionally large class sizes.

On Friday, the U.S. government updated its COVID-19 guidelines, halving the acceptable distance between students who are wearing masks to at least three feet (0.91 m) from at least six feet.

The teachers’ union said this change would not impact the agreement or its other safety measures – which include personal protective equipment, improved ventilation, daily cleaning and disinfection.

(Reporting by Sarah Morland in Gdansk, Editing by William Maclean)

Los Angeles mayor orders residents to stay home to avert ‘dreaded scenario’

(Reuters) – The mayor of Los Angeles warned on Wednesday the city was nearing “a devastating tipping point” and ordered residents to stay in their homes and avoid social gatherings in new lockdown measures to rein in a surge in COVID-19 infections.

His order limits nearly all social gatherings of people from more than a single household, mirroring a directive by county health officials last week, but exempts religious services and protests protected by the constitution.

“Our City is now close to a devastating tipping point, beyond which the number of hospitalized patients would start to overwhelm our hospital system, in turn risking needless suffering and death,” Mayor Eric Garcetti said late on Wednesday.

Los Angeles is the second-largest city in the U.S. and has a population of over 3.9 million. Los Angeles county, which is home to the city, has recorded 414,185 infections and a death toll of 7,740, according to LA Public Health.

The way to avoid a “dreaded scenario” is to refrain from gathering with people from outside your household wherever possible, Garcetti said.

He also directed businesses requiring the presence of workers to close, and set restrictions on travel, but specified certain exceptions to both.

People may “lawfully” leave homes to engage in exempted activities like healthcare operations, supermarkets and restaurants, the directive said.

The head of the U.S. Centers for Disease Control and Prevention warned on Wednesday that the pandemic was still raging nationwide and that the country faced its grimmest health crisis yet over the next few months, before vaccines become widely available.

More than 270,000 Americans have died from COVID-19 to date. The University of Washington’s influential Institute for Health Metrics and Evaluation has projected the toll could reach nearly 450,000 by March 1 without greater social distancing and mask-wearing.

(Reporting by Aakriti Bhalla and Shubham Kalia in Bengaluru; Editing by Clarence Fernandez and Pravin Char)

Height of fashion? Clothes mountains build up as recycling breaks down

By Sonya Dowsett and George Obulutsa

MADRID/NAIROBI (Reuters) – Clothes recycling is the pressure-release valve of fast fashion, and it’s breaking under COVID-19 curbs.

The multi-billion-dollar trade in second-hand clothing helps prevent the global fashion industry’s growing pile of waste going straight to landfill, while keeping wardrobes clear for next season’s designs. But it’s facing a crisis.

Exporters are struggling, as are traders and customers in often poorer nations from Africa to Eastern Europe and Latin America who rely on a steady supply of used clothes.

The signs are everywhere.

From London to Los Angeles, many thrift shops and clothing banks outside stores and on streets have been deluged with more clothes than could be sold on, leading to mountains of garments building up in sorting warehouses.

Since the COVID-19 pandemic began early this year, textile recyclers and exporters have had to cut their prices to shift stock as lockdown measures restrict movement and business slows in end markets abroad. For many, it’s no longer commercially viable and they can’t afford to move merchandise.

“We are reaching the point where our warehouses are completely full,” Antonio de Carvalho, boss of a textile recycling company in Stourbridge, central England, wrote to a client in June, asking for a price cut for clothes he collects.

De Carvalho pays towns for clothing collected in his containers then sells it on at profit to traders overseas.

Since May, he said, the price he has been able to charge overseas buyers had dropped from 570 pounds ($726) a tonne to 400 pounds, making it hard for his company, Green World Recycling, to cover the costs of collecting and storing items.

Buyers were also asking to increase the credit periods before they had to pay from 15 days to 45-60 days, adding to cash-flow problems, de Carvalho wrote.

“We are losing … a huge amount of money, making a big loss for the operation.”

‘GOING OUT OF BUSINESS’

De Carvalho’s experience is mirrored across the sector, suggesting that, even once the pandemic passes, the battered trade could take a long time to recover.

Recyclers are removing clothes banks from streets, reducing the number of times they are emptied per week and looking at laying off workers to conserve cash, according to Reuters interviews with 16 market players in Britain, the United States, Germany and the Netherlands.

At the same time, in a bleak irony for such firms, donations have mounted as people stuck at home clear out their wardrobes – a boon in normal times.

“This is unlike any other recession in a century,” said Jackie King, executive director of U.S. trade body the Secondary Materials and Recycled Textiles Association (SMART). “I would anticipate there will be companies going out of business.”

The retreat of recyclers is having far-reaching consequences for an industry that has seen an annual average of more than $4 billion of used clothing exported globally over the five years to 2019, according to U.N. trade data.

Exports have shrunk this year.

In Britain, the weight of used clothing exported from March to July was around half what it was for the same period last year, official trade data shows. Exports improved in July – the latest month on record – as merchants rushed to shift stock as countries began to re-open, but were still down around 30%.

In the United States, the value of exports from March to July fell 45% compared with the same period last year, government data shows.

Up to a third of clothes donated in the United States – the world’s biggest exporter of used clothing – ends up for sale in markets in the developing world.

KENYAN WOES

The consequences of the decline can be seen in countries like Kenya, which imported 176,000 tonnes of second-hand clothing in 2018, equivalent to over 335 million pairs of jeans.

Business is sluggish in the open-air Gikomba market in Nairobi, one of the biggest second-hand clothes market in East Africa. Shop assistants stand idle while traders call out to shoppers asking them to try their garments

Traders have been hit with a double-whammy of the shrinking supply, exacerbated by the government banning the import of used textiles in March on concerns they could carry the novel coronavirus, and a drop in footfall due to people staying home.

“Before coronavirus came in, I would manage to sell at least 50 (pairs of) trousers a day,” said trader Nicholas Mutisya, who sells jeans and hats. “But now with coronavirus, even selling one a day has become difficult.”

“We cannot buy bales (of clothes) directly, so we buy our stock from those who have already bought them.”

The ban on used textiles imports was lifted in August after pushback from traders in Kenya and industry bodies in Europe and the United States who said second-hand clothes were safe as the virus could not survive the journey to Africa.

Yet the struggle continues for traders like Mutisya and Anthony Kang’ethe, who works as a driver for a shop selling second-hand clothes in bales shipped from Britain. He said the business had been hit hard by the supply crunch.

“Before we used to have five workers in our company,” Kang’ethe said. “We are left with two.”

DARK SIDE OF FASHION

Large-scale commercial trade in second-hand clothing from Europe and the United States to emerging markets took off in a big way in the 1990s due to growing African and Eastern European demand for Western fashion.

Such demand has provided a badly needed release value for a booming fashion market, where clothing production has approximately doubled over the past 15 years, according to sustainability charity the Ellen MacArthur Foundation.

The fashion industry is the second-biggest consumer of water and is responsible for up to 10% of global carbon emissions – more than all international flights and maritime shipping combined, the U.N.’s environment program said in March 2019.

Meanwhile, clothes account for a massive, and growing, pile of waste that ends up in landfills.

In Britain, shoppers buy more clothes per person than any other country in Europe, amounting to some five times more than what they bought in the 1980s, according to a 2019 UK parliamentary report by the Environmental Audit Committee.

About 300,000 tonnes of clothing goes to landfill or incineration per year, the report said.

The United States produces just under 17 million U.S. tons (15.4 tonnes) of textile waste per year, according to the Environmental Protection Agency – equivalent to around 29 billion pairs of jeans. Two-thirds of this ends up in landfills.

Many fashion retailers, including Zara owner Inditex and H&M, encourage shoppers to bring unwanted textiles to their stores for collection and, in the case of H&M, even offer discounts on new purchases in exchange.

Only a small proportion of clothes collected by Inditex end up for sale in international markets, a company spokesman said. H&M said clothing collected in its stores was processed by I:CO, a unit of German textile recycling company Soex.

“The whole problem is just getting bigger,” said Anna Smith, a doctoral researcher at King’s College London looking at a so-called circular economic system, which aims to eliminate waste.

“People are consuming more and more.”

(Additional reporting by Lisa Baertlein in Los Angeles and Anna Ringstrom in Stockholm; Editing by Pravin Char)

Crews make headway against massive California wildfire

By Mimi Dwyer

LOS ANGELES (Reuters) – Firefighters notched a victory in their battle to beat back a massive blaze raging outside Los Angeles, more than doubling containment in the past 24 hours, the U.S. Forest Service said on Wednesday.

The Bobcat Fire, which has been burning in the San Gabriel Mountains north of Los Angeles since Sept. 6, was 38% contained as of Wednesday morning, John Clearwater, USFS spokesperson for Angeles National Forest, said in an email update.

The fire has so far burned more than 113,000 acres but remained relatively stable overnight. The flames were 17% contained on Tuesday.

The Bobcat Fire, one of the largest and most dangerous fires in recorded Los Angeles history, is just one element stoking the worst fire season California has seen to date.

For more than a week it has threatened to overtake the Mount Wilson Observatory, a California landmark and beloved historical site that was home to major astronomical advancements in the early 20th century.

Some 1,556 firefighters are currently deployed to combat it, the Forest Service said.

Wildfires have ravaged the West Coast this summer and pushed firefighters to their limits. At least 26 people have died in fires across California since August 15, including three firefighters, according to the state agency CAL FIRE.

One of those firefighters died as a result of a fire sparked by a botched gender reveal party.

Roughly 3.4 million acres have burned across California during the same period.

Another 10 people have died and approximately 2 million acres have burned in fires in Washington and Oregon.

California has seen five of its largest fires on record in this wildfire season alone. Outside Los Angeles, the momentary reprieve could dissipate by the weekend, when weather was expected to grow warmer and drier, and forecasts showed the possibility of gusty winds, the Forest Service said.

(Reporting by Mimi Dwyer; Editing by Dan Whitcomb and David Gregorio)

Quake rattles Los Angeles, no immediate reports of damage

(Reuters) – An earthquake of 4.2 magnitude hit about a mile (2 km) north of the Los Angeles community of Pacoima on Thursday, the U.S. Geological Survey said. There were no immediate reports of damage.

Though relatively small in magnitude, the quake, which struck at 4:29 a.m. Pacific time (1129 GMT), was felt in much of the Los Angeles area, social media reports said. A second quake of 3.3 magnitude struck nine minutes later, the survey said.

People on social media reported feeling the quake in areas such as North Hollywood and Sherman Oaks, with some saying they did not receive a #ShakeAlert message on their phones.

“Felt it in Sherman Oaks! Woke us up from a dead sleep. No alert on the phone, though,” Twitter user Joe Hubbard said.

Another Twitter user, Lee A Houck, said she received an alert after the shaking began.

“Usually there’s more notice to drop, cover, hold on,” Houck said.

(Reporting by Daniel Trotta; Editing by Edmund Blair and Steve Orlofsky)

With U.S. under coronavirus siege, Chicago cracks down, Florida cases soar

By Daniel Trotta

(Reuters) – The city of Chicago reimposed some coronavirus restrictions on Monday and the state of Florida reported more than 10,000 new cases for the sixth day in a row, as the pandemic showed few signs of abating in the United States.

In a rare ray of hope, New York state reported the fewest hospitalizations from the coronavirus in four months and New York City entered a new phase of reopening on Monday, but the progress, in the very city and state that were once the epicenter, was eclipsed by the grim news nearly everywhere else.

Metrics for the country have grown worse including a rising number of cases, deaths and hospitalizations along with rates of positive test results. The virus has killed 140,000 people in the United States and infected some 3.7 million, both figures leading the world.

Florida reported 10,347 new cases on Monday, the sixth day in a row the state has announced over 10,000 new infections. Another 92 people died in Florida, increasing the state’s death toll to 5,183.

Chicago Mayor Lori Lightfoot announced new restrictions due to take effect on Friday including a ban on indoor service at bars and shutdown of personal services such as shaves and facials that require the removal of masks.

“While we aren’t near the peak of the pandemic from earlier this year, none of us wants to go back there,” Lightfoot said in a statement.

The city of Los Angeles is on the brink of issuing a new stay-at-home order and at least 14 states have reported record hospitalizations so far in July, including Alabama, Arizona, Florida, Georgia, Nevada, North Carolina and Texas.

Meanwhile, the administration of U.S. President Donald Trump is pushing for schools to reopen in a few weeks and resisting a federal mandate that people wear masks in public, part of what New York Governor Andrew Cuomo called an “incompetent” federal government response.

“I’ve said to the president from Day One: This virus does not respond to politics,” Cuomo told a news conference. “The solution is medicine and science.”

WHITE HOUSE BRIEFINGS RESUME

The country remained “totally unprepared,” Cuomo said, as other states lagged in testing, contact tracing, and personal protective equipment for doctors and nurses.

“Their mistake was they listened to the president,” Cuomo said, while also blasting “stupid and reckless” people in his own state who persistently gather in large groups.

On Monday Trump, under fire over his administration’s response to the surging virus, said he would on Tuesday resume holding news briefings on the pandemic after a lengthy hiatus.

White House debate has centered on whether Trump should risk doing daily briefings after he was mocked for musing that people might inject household disinfectants as a way to protect themselves from contracting the virus.

Last Friday Trump senior adviser Kellyanne Conway told reporters she favored a return of the briefings, which she said had bolstered his approval ratings.

New York state, where the virus took hold early this year before spreading to other states, recorded only eight deaths on Sunday while the total number of people hospitalized for the disease fell to 716, the fewest since March 18, Cuomo said.

However a Reuters analysis of data from the COVID Tracking Project showed cases rose by more than 5,000 in the past week, the first week-over-week increase since April, breaking a 13-week streak of declines.

New York City entered a new phase on Monday that will allow low-risk outdoor activity, entertainment at 33 percent capacity and professional sports events. But Major League Baseball’s Yankees and Mets will start their seasons in empty New York City ballparks, indoor dining in restaurants is still prohibited, and bars are subject to social distancing rules.

(Reporting by Daniel Trotta, Maria Caspani, Doina Chiacu and Lisa Shumaker; Editing by Howard Goller)

California, Texas see record COVID-19 surges, Arizona clamps down

By Dan Whitcomb and Maria Caspani

LOS ANGELES (Reuters) – California and Texas both marked record spikes in new COVID-19 infections on Monday, a Reuters tally showed, as Los Angeles reported an “alarming” one-day surge in America’s second-largest city that put it over 100,000 cases.

Los Angeles has become a new epicenter in the pandemic as coronavirus cases and hospitalizations surge there despite California Governor Gavin Newsom’s strict orders requiring bars to close and residents to wear masks in nearly all public spaces.

“The alarming increases in cases, positivity rates and hospitalizations signals that we, as a community, need to take immediate action to slow the spread of COVID-19,” Barbara Ferrer, director of public health for Los Angeles County, said in a statement announcing the sharp rise.

“Otherwise, we are quickly moving toward overwhelming our healthcare system and seeing even more devastating illness and death,” Ferrer said.

Los Angeles Mayor Eric Garcetti announced a “hard pause” on when movie theaters, theme parks and other entertainment venues can reopen. Los Angeles County is the biggest movie theater market in the United States.

Los Angeles County said its beaches will be closed for the Independence Day weekend and fireworks displays will be banned.

Statewide positive tests for COVID-19, the respiratory illness caused by the virus, rose by at least 7,418 in California Monday to nearly 223,000, the biggest one-day increase since tracking began. Los Angeles County, with a population of 10 million, has recorded 100,000 cases.

California is among a number of U.S. states including Florida, Texas and Arizona battling a new wave of infections as the nation emerges from weeks of clamp-downs on residents and businesses. COVID-19 infections in Texas rose by 6,545 on Monday to nearly 160,000, also setting a record for a one-day increase.

Nationally, cases rose by more than 40,000, for the fourth time in the past five days.

ARIZONA HIT HARD

Arizona Governor Doug Ducey on Monday ordered the closure of bars, nightclubs, gyms, movie theaters and water parks for at least 30 days. Ducey also delayed the start of public schools until at least Aug. 17.

“Our expectation is that next week our numbers will be worse,” Ducey said at an afternoon news conference. Vice President Mike Pence will travel to Phoenix on Wednesday to discuss efforts to fight the pandemic’s resurgence.

Texas and Florida ordered the closure of all their recently reopened bars on Friday.

New Jersey Governor Phil Murphy said on Monday indoor dining will not resume on Thursday as planned and would be postponed indefinitely.

In Kansas, Governor Laura Kelly imposed a statewide mandate requiring the wearing of masks in public spaces, which she said was necessary to avoid another shutdown.

Beaches in Florida’s Broward County and Palm Beach County will not open for the July 3-5 holiday weekend, officials said on Sunday, a blow to residents hoping to celebrate Independence Day there. Miami-Dade County has also announced beach closures for the holiday weekend.

AMC, the largest U.S. movie theater chain, on Monday said it was pushing back the reopening of its theaters to July 30 from July 15.

In June, 22 U.S. states reported record increases in new cases, often multiple times, including Alaska, Arkansas, Montana, New Mexico, North Carolina, Oregon and Utah.

The city of Jacksonville, Florida, venue for part of the Republican nominating convention in August, said on Twitter it would be requiring masks in public starting later on Monday.

White House press secretary Kayleigh McEnany said on Monday that Trump “has no problem with masks and to do whatever your local jurisdiction requests.”

The New York Times reported on Monday that 43% of U.S. deaths from COVID-19 were linked to nursing homes and long-term care facilities. The paper cited its own tracking database.

(Reporting by Dan Whitcomb in Los Angeles and Maria Caspani in New York; Additional reporting by Susan Heavey and Doina Chiacu in Washington, Nathan Layne in Wilton, Connecticut, Lisa Shumaker in Chicago and Brad Brooks in Austin; Writing by Grant McCool and Dan Whitcomb; Editing by Howard Goller, Bill Berkrot, Cynthia Osterman, Leslie Adler and Jane Wardell)

From New York to Houston, flood risk for real estate hubs ramps up

By Kate Duguid and Ally Levine

NEW YORK (Reuters) – The number of properties in the United States in danger of flooding this year is 70% higher than government data estimates, research released on Monday shows, with at-risk hot spots in Houston, New York, Los Angeles and Chicago.

The higher risk identified could have implications for property values as well as insurance rates, municipal bonds and mortgage-backed securities, according to investors and researchers at First Street Foundation, which released the data. (http://www.floodfactor.com)

“This could change the calculus on whether a given property is resalable, or what price you sell it at,” said Tom Graff, head of fixed income at Brown Advisory.

The data, which covers the contiguous United States, found that around 14.6 million properties, or 10.3%, are at a substantial risk of flooding this year versus the 8.7 million mapped by the Federal Emergency Management Agency (FEMA).

FEMA maps are currently used to determine rates on government flood insurance and underpin risk assessments done by mortgage lenders, investors and home buyers. The maps, however, only account for coastal flooding – not rain or rivers – and do not incorporate the ways climate change has made storms worse.

A FEMA spokesperson said that First Street’s maps build on those created by the agency and the two are not incompatible.

Los Angeles, Chicago, Houston, New York and Cape Coral, Florida top First Street’s list of cities with the most number of properties at risk. At the state level, Florida, Texas, California, New York and Pennsylvania have the most to lose. Florida and Texas also top FEMA’s list, but with significantly fewer properties estimated to be at risk.

Washington, D.C., has the greatest deviation from FEMA’s numbers, 438.4% more properties at risk, because First Street accounts for potential flooding from the Potomac and Anacostia rivers and a drainage basin under the city. Utah, Wyoming, Montana and Idaho have the next highest deviations, all between three to four times greater than FEMA estimates.

Commercial mortgage-backed securities (CMBS), investments that pool loans for office buildings, hotels, shopping centers and more, are among the securities most exposed to flood risk because of the concentration of cities on the U.S. coasts.

“There is a moral hazard within the investment community of not pricing in the risk of something like this happening,” said Scott Burg, chief investment officer at hedge fund Deer Park Road.

Nearly 20% of all U.S. commercial real estate value is located in Houston, Miami and New York, according to CoStar data, each of which has been hit by hurricanes in the last decade.

Hurricane Harvey, which slammed Houston in 2017 and caused $131 billion damage, affected over 1,300 CMBS loans, 3% of the CMBS market in 2017, according to BlackRock research. Hurricane Irma in 2017 affected 2%.

The BlackRock report concluded that 80% of the commercial property damaged by those two storms was outside of FEMA flood zones, indicating that many of the buildings hit may not have been appropriately insured.

Any floods this year could compound the effects of the coronavirus pandemic, which has sent more than $32 billion of commercial loans into special servicing – negotiations for relief in the event of a default – according to Moody’s.

“For property owners that’s like getting your arm amputated and then your head lopped off,” said Jacob Hagi a professor of finance at the University of North Carolina and a First Street research partner.

(Reporting by Kate Duguid; editing by Megan Davies and Steve Orlofsky)