SHARE:
Residential Real Estate
Affordable Housing Challenge
In Florida, a family of four must have 2.6 wage earners working full time at minimum wage or one full-time wage earner working 102 hours a week in order to afford a modest two-bedroom apartment, according to a report from the National Low Income Housing C
Deal-Breaker
Developers in the tax-credit market say the state needs to reassert its leadership in creating affordable housing by boosting subsidies.
In Florida, construction of affordable rental apartment units is dominated by just a few developers using federal tax credits provided through the Florida Housing Finance Corp. The developers compete for the tax credits, then sell them to Fortune 500 companies and use the proceeds to finance the apartment projects.
One example: Last month, developer Lloyd Boggio and his Carlisle Development Group, which has built or initiated 8,000 units in 20 counties since it was founded in 1998, completed work on Santa Clara II, a $30.1-million, 204-unit apartment project in Miami. Rents are as low as $646 per month for a two-bedroom unit. Boggio and Carlisle sold tax credits to raise $19.1 million in equity, got $3.16 million in county money, impact fee waivers from Miami and a $6.5-million loan. Carlisle also deferred $753,894 of its developer's fee.
Boggio says if he were starting construction today, the increased cost of labor and materials means Santa Clara would cost him at least $8 million more. And its 204 units wouldn't get built.
The picture is equally ominous around the state: In a typical year, only one or two tax-credit developers return credits because a deal doesn't work out. Last year, however, developers of six projects returned credits to the state -- a record number of givebacks. The developers, once they tried to hire laborers and order construction materials, found they couldn't make their projects work financially.
In response, the Housing Finance Corp. upped the per-unit subsidy. But since the federal government apportions the pool of credits according to a state's population, raising the per-unit subsidy means building fewer units. Through the tax credit program and others, Housing Finance produced 13,000 units in 2004 but only 7,500 in 2005. Now, with the per-unit subsidy costs up, Executive Director Steve Auger expects to do only 7,500 this year as well. (Development costs for projects in southeast Florida are now more than $200,000 per unit, Auger says.)
Boggio has joined those who complain the state has blown its lead relative to other states in providing affordable housing. In 1992, Florida enacted the Sadowski Affordable Housing Act, which increased the documentary stamp tax to raise money for two trust funds for affordable housing. The money goes to local governments and the state to fund housing construction and other affordable housing initiatives.
"The state has been making a significantly lesser contribution to affordable housing," Boggio says. "Every year we fill a smaller percentage of the measurable need, and the trend line is negative," he wrote to the Housing Finance Corp. in November.
Gov. Jeb Bush and the Legislature in recent years raided the housing trust funds to fill the state's needs for education, Medicaid and environmental restoration. In January, however, Bush announced he would recommend an increase in funding for affordable housing in 2006 from $193 million to $243 million, a 26% boost as part of Bush's recommendations for hurricane preparedness and recovery.
Boggio believes the state should treat affordable housing like roads, schools, airports and other public works. "Affordable housing is either infrastructure or it isn't -- things the community needs to function that the free market doesn't supply. The free market cannot supply affordable housing. You cannot build homes and apartments at today's costs and make them affordable. It cannot be done."
