Affordable Housing Market Still Booms
Developers are racing to build affordable apartments - the only segment of residential real estate still thriving - but are the projects what Florida's communities need?
Construction is under way on Norstar’s Renaissance Preserve in Fort Myers. Tax credits and low-interest loans allow developers to build affordable housing projects with very little of their own money. But the incentives have encouraged overbuilding of ‘middle market’ affordable housing in parts of the state, including Lee County. [Photo: Jason P. Smith]
In 2000, developer Vestcor Cos. completed construction of a 360-unit apartment complex on Jacksonville’s west side called Courtney Manor. The garden-style community, with a pool, clubhouse and after-school programs, was financed with taxpayer funds as part of Florida’s effort to help alleviate a shortage of affordable housing. Courtney Manor is considered “middle-market” affordable housing — residents earn 60% or less of the area’s median income.
Florida’s system for building complexes like Courtney Manor combines federal and state funds to make the projects attractive to private builders like Vestcor. Tax credits and low-interest loans allow developers to build the projects with very little of their own money.
Courtney Manor in Jacksonville competes for residents like Desiree Garrison and her children in the overbuilt middle-market affordable housing market.
[Photos: Kelly LaDuke]
But the incentives may have gotten a bit too sweet. Developers have overbuilt middle-market affordable housing in several parts of the state, including neighborhoods in Indian River, Duval, Collier and Lee counties. In Jacksonville, six nearly identical affordable communities have gone up in the same neighborhood as Courtney Manor, where occupancy rates have fallen from a high of 94% in early 2007 to the low 80s a year later.
These days, large pink and green flags wave outside Courtney Manor to lure renters. A sign screams, “Free rent!” The other complexes have similar flags and similar offers. Meanwhile, the system continues to dole out incentives, and developers, hungry for projects amid the real estate downturn, line up to build even more. A seventh taxpayer-subsidized complex is proposed in the same neighborhood as Courtney Manor, with $8.5 million in tax-exempt bonds from the federal government and a $4.7-million, 1% interest loan from the state.
“Affordable developers are good at overbuilding when given these levels of resources,” says Stephen Frick, president of Vestcor. Company executives have complained to the Florida Housing Finance Corporation, the state agency that oversees the projects, that the new complex will “cannibalize” the existing ones.
The real estate bust is partly responsible for the empty apartments. Rents for single-family homes have fallen to levels competitive with those of affordable subsidized apartments, which rent for $750 to $1,275 a month in Jacksonville.