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Apartments
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?
 “We want and need redevelopment of the urban areas” — not in the suburbs, where developers continue to build affordable housing because land is cheap there. — Wight Gregor, director of Jacksonville’s Housing and Neighborhoods Department |
But the federal and state affordable housing programs also contribute to the problem. For one, the structure of the financing steers private developers to middle-market projects by making them the only kind of affordable housing that is profitable to build. It’s virtually impossible for private developers to build, at a profit, the types of projects most needed in many parts of Florida — those for extremely low-income residents. (Federal housing resources for people with extremely low incomes have dropped steadily in recent years.)
In addition, the state’s affordable housing finance machine awards public money to developers without enough input from local governments and non-profits. As a result, developers continue to build complexes where land is cheapest, rather than where local officials believe housing is needed most. “We didn’t want the exurban, large-scale development in the first place,” says Wight Gregor, director of Jacksonville’s Housing and Neighborhoods Department. “We want and need redevelopment of the urban areas.”
Jacksonville housing officials say that Duval County now finds itself with a surplus of suburban, garden-style affordable housing while lacking other kinds of affordable housing the city needs more. For example, the county is No. 1 in Florida in “extremely low-income, severely cost burdened households,” says Barney Smith, chairman of the Jacksonville Housing Finance Authority.
Meanwhile, the state continues to focus on suburban affordable rentals even as overall funding for affordable housing shrinks.
The state’s Housing Trust Fund is capitalized primarily by collections of documentary stamp taxes, which are assessed on each home sale. During Florida’s housing bubble, about a half-billion dollars a year was pouring into the fund, making it the country’s largest. Hand-wringing about a lack of workforce housing at the height of the real estate run-up — and lobbying by apartment developers particularly — helped keep funds flowing from the trust fund to the State Apartment Incentive Loan program, or SAIL.
With real estate slumping, doc stamp collections have fallen by more than half; the trust fund is expected to collect less than $240 million this year. At the federal level, the mortgage crisis has large investors and banks shying away from tax- exempt bonds and tax-credit deals.
Yet despite the funding crunch, the housing finance corporation spent more money on the SAIL program this year than any other year in its history: $115 million, compared to SAIL’s average appropriation of $41.7 million a year. The Florida Legislature ordered the extra funding after lobbying by some of Florida’s largest developers of affordable apartments, such as Winter Park-based Atlantic Housing Partners, which has 22,000 rental units across the state.
The frenzy for the SAIL money is even more intense for the 2009 funding cycle. The finance corporation has received more applications to build these projects — 282 statewide — than ever before. In the deflated economy, government subsidies make middle-market affordable housing one of the few lucrative markets left in the state, says Steve Auger, executive director of the housing finance corporation. “We had a stable of Florida developers who had stopped doing these deals in favor of condo developments,” says Auger. “Now they’re back.”
The developers returned just as the housing corporation was considering steering $100 million in Housing Trust Fund money for down-payment assistance to help get first-time home buyers into some of the thousands of foreclosed homes on Florida’s market. At a recent meeting of the housing corporation, W. Scott Culp, executive vice president of Atlantic Housing Partners, argued that demand for apartments is still strong in many parts of Florida, and that giving people down-payment assistance who should remain renters could perpetuate the mortgage crisis. He and others argue that more building will stimulate the economy.
