New Florida affordable housing funding bill to spur massive redevelopment
Florida Governor Ron DeSantis
A new bill signed by Florida Gov. Ron DeSantis that aims to spur development of affordable housing across Florida could lead to a wave of redevelopment of low-density areas.
The Live Local Act (SB 102) increases funding for affordable housing projects, makes it easier for developers to win approval for affordable housing in commercial districts, and prohibits government rent control.
Central Florida has become one of the least affordable housing markets in the nation over the last few years. A surge in migration from other states created frantic competition for homes and apartments, which drove up housing prices and rents.
“To have housing for teachers, police officers, firefighters, all these important things, you can’t do it if they have to drive an hour to work every day,” DeSantis said at the signing ceremony in Naples.
The Live Local Act was approved 103-6 in the House and unanimously in the Senate.
It contains $771 million in funding for affordable housing programs through the Florida Housing Finance Corp. (FHFC). That breaks down to $259 million for the SAIL programs with low-interest loans for developers; $252 million for the SHIP program with loans to developers in partnership with local government funding; $100 million to alleviate inflation-related costs for affordable housing projects; $100 million for Hometown Heroes to provide down payment and closing cost assistance to first-time homebuyers who work in law enforcement, firefighting, education, health care, child care or military/veterans.
It also created a sales tax refund of up to $5,000 on building materials for affordable housing projects funded by FHFC.
“This is transformative,” said David O. Deutch, a partner at Miami-based Pinnacle, one of the largest affordable housing developers in Florida. “There is now a certainty of funding and an iron-clad commitment to affordable and workforce housing in the state.”
The Florida Housing Finance Corp. always has more projects seeking funding than it has money to award, so this act means more projects will obtain funding and move forward. Additionally, Pinnacle can seek out more projects because it has a higher chance of winning funding, he said.
Right now, a lot of worthy affordable housing projects in Florida were stuck because Florida Housing Finance Corp. funds weren’t available and the cost of construction has increased, he said. Those projects are now more likely to move forward.
The extra funding will help developers build affordable housing amid a challenging environment with increased construction costs and higher interest rates that make loans more expensive, said Brian Sidman, founder of Miami-based BAS Holdings, which builds workforce and affordable housing through its subsidiary Redwood Development Co. He’s going to ramp up his development team to take advantage of the new law and meet the overwhelming demand for affordable units.
“We have a significant housing crisis and we need a lower cost of capital and changing zoning in certain areas to allow for workforce development to come in.”
The Live Local Act preempts certain local zoning rules to make it easier for affordable housing developers to secure approval.
“The attainable housing law will immediately change the landscape of development in Florida,” said Keith Poliakoff, an attorney with Fort Lauderdale-based Government Law Group, which represents many developers. “For the first time I can recall in state history, the state government has overridden home rule and taken away the zoning and land use powers from local government.”
Under the act, a municipality must authorize a multifamily or mixed-use project in an area that’s already zoned for commercial, industrial or mixed-use if the developer agrees to make at least 40% of the residential units affordable housing or workforce housing for 30 years. That means the rentals would be for people earning up to 120% of area median income. This project would be approved by city administration without a zoning, land use change, special exception or comprehensive plan amendment, so the City Commission wouldn’t need to vote. If this is a mixed-use project, at least 65% of the building must be for residential.
The density allowed at such a project could be equal to the highest density allowed anywhere in the municipality where residential is permitted. As for height, the project could be as tall as any building within a one-mile radius in the same city, or three stories, whichever is taller. The developer could also reduce the number of parking spaces if the site is near a public transit stop.
Poliakoff said development dynamics will change across Florida and lead to developers seeking property in prime coastal locales to redevelop. For instance, the city of Hollywood has zoning and height restrictions that prevent the redevelopment of low-rise hotels on the beach into high-rise residential towers.
With this new law, he said developers could replace those hotels with a residential high rise containing the maximum density in Hollywood – 95 units per acre for a condo built on the ocean in the 1970s – and the same height. As long as 40% of the units are workforce housing, the city can’t deny the project, he said. Poliakoff noted the law has no limits on unit sizes, so the workforce housing units could be small studios and the rest of the project could be luxury apartments.
In Sunny Isles Beach, this law would allow redevelopment of the commercial centers on the west side of A1A with the same density as the condos on the beach, as long as workforce housing is included, Poliakoff said. The same goes for commercial areas in cities that have recently been resistant to more density.
He noted that some municipalities may struggle to afford infrastructure improvements to handle more dense development than they planned for.
“My clients are all looking to buy commercial, industrial and mixed-use properties that have significantly gone up in value because of this bill,” Poliakoff said. “Developers will make billions of dollars off this law and it will increase the amount of affordable and attainable housing in Florida.”
The Live Local Act will result in a wave of redevelopment, said Walter Duke, head of Fort Lauderdale-based appraisal and real estate consulting firm Walter Duke & Partners and chair of the Broward Workshop’s affordable housing committee.
There are many underutilized shopping centers and office buildings in locations that are functionally obsolete and could become affordable housing, he said. Older warehouses also could become affordable housing, he added.
“The days of building single-family subdivisions are over,” Duke said. “We need to go vertical. People will have to embrace density.”
Article Link: New Florida affordable housing funding bill to spur massive redevelopment
Author: Brian Bandell