Lawmakers in Florida are moving to fine-tune the state's affordable housing law, potentially granting tax incentives sooner and placing further restrictions on the regulatory powers of local governments.
The Live Local Act, adopted in 2023 and updated a year later, offers density bonuses and tax incentives to developers who commit to setting aside at least 40% of their projects for so-called workforce housing. The state defines that as housing that's affordable to residents who make up to 120% of an area's median income and who don't have to spend more than a third of their monthly income on rent.
Notably, the law also overrode local municipal zoning rules and allowed multifamily and mixed-use projects to be built in industrial areas. It made project approvals a strictly administrative process, doing away with often time-consuming public hearings and comment periods. But a lot of municipalities didn't like being powerless and fought back, looking for ways to avoid or skirt implementation and slow down newly proposed projects.
The law was a response to the state’s rapid population growth — up 8.5% since April 2020 and now over 23 million residents — that led to skyrocketing rents. For a time, cities in Florida dominated eight of the top 10 markets for the biggest increases in apartment rent since 2019.
“Everybody knows Florida affordability has become our Achilles' heel right now,” said Anthony De Yurre, a real estate attorney with Miami-based law firm Bilzin Sumberg who has had a hand in drafting much of the Live Local Act legislation, in an interview with CoStar News.
State lawmakers are now preparing new updates to the law they hope will speed up construction and entice more developers to build. The changing law shows how lawmakers across the country face difficulties trying to combat affordable housing shortages while balancing the needs of communities and developers.
Masoud Shojaee, CEO of Miami-based developer Shoma Group, said when the law first passed in 2023 "there were so many unknowns and ambiguities" that the firm demurred on trying to use the law's benefits.
"We didn't look at it really seriously," he said.
Updates
After last year's updates, Shoma Group felt more confident and moved forward with Shoma 88, a 405-unit apartment complex in the suburbs south of Miami with about 40% of the units planned as workforce housing. The mixed-use project includes a medical office component to support the nearby West Kendall Baptist Hospital.
De Yurre said it has become clear that more updates are needed to ensure the law lives up to its original legislative intent. “That's the message loud and clear,” De Yurre said he heard as he conducted dozens of workshops with developers, architects and lenders to get feedback.
The first of two bills that have been filed this session — both by state representative Vicki Lopez — is House Bill 923. The bill would update the Live Local Act language to help get tax incentives to developers as soon as they submit a site plan and it receives preliminary approval.
Right now, developers get a 75% tax break for units that are affordable to someone making 120% of an area's median income, and a 100% break for units that someone earning 80% of the area's median income can afford. But developers don't receive those benefits until the project is completed.
Many of the multifamily projects taking advantage of the tax breaks so far were already far along in their development process that they were ready to "put a shovel in the dirt," De Yurre said. Other new and proposed multifamily developments found it difficult to obtain financing without the tax credits in hand, what with high interest rates and rising constructions costs. Their grand plans were just "pretty pictures" stuck in limbo, De Yurre said.
“We need to have these projects vest earlier when they go in for site plan approval than later on. That's number one… If that happens, I'm telling you right now, there's not going to be a single multifamily deal that's not" taking advantage of the credits, De Yurre said.
Unnecessary barriers
The second bill, House Bill 943, codifies some of the lessons learned in the Live Local Act’s early days, where apprehensive local officials used floor-area ratio rules, parking requirements, or issued new fees and permit guidelines to slow down development.
“This legislation removes unnecessary barriers to affordable housing development, streamlines approval processes, and modernizes land use policies to promote sustainable growth,” Rep. Lopez said in a statement accompanying the bill. She added that Florida’s “critical” housing challenges were making it increasingly difficult for young professionals and essential workers to stay in the state.
In addition to barring restrictions based on density, lot size, height or floor-area ratio below the highest allowed zoning within a municipality for Live Local Act projects, the bill bars municipalities from enacting new permit fees or requiring projects to have a mix of uses.
It's an effort to stop the tactics some municipalities have resorted to in an effort to stymie new development. Since the law passed, municipalities across the state have argued, often after being brought to court by developers, that Live Local Act projects are too tall, too dense, or unaffordable for the potential residents the law is trying to help.
Shojaee told CoStar News that not all local governments were "willing to cooperate" when it came to Live Local Act projects that would otherwise meet all of the law's requirements. "They're just using that to not participate," he said.
The changes themselves “are simple… boring stuff” that “you’d never see in a headline,” De Yurre said, and include barriers such as the need for “off-site infrastructure improvements, like water and sewer review, or plating review, or permitting fees and costs that have nothing to do with a particular project, but they exist on a citywide basis,” he added.
“Anything that we can do to take away the obstacles from a time and cost standpoint to make it more efficient. That's what we're looking at right now,” said De Yurre.
Although there's still time for changes to be made to the bills, precedent suggests that Florida legislators aim to pass some form of the proposed updates, having already done the same last year. And both house bills already have counterparts filed in the Florida senate. Florida's legislative session ends May 2.
“The only way to get out of this problem is to build. That's it. There's no other solution,” De Yurre said.