The Florida Keys post-Irma
Tourism has rebounded strongly in the Keys since Irma, but the storm decimated the stock of housing where workers could afford to live. Rebuilding is accelerating the trend toward an upscale future — further worsening the housing crisis.
Among the several rental homes David Rice owns in the Florida Keys is a duplex in Marathon, built in the 1970s across the street from the water. Rice rented the duplex to a school employee and a person who works in resort marketing. Each paid $1,200 a month — cheap for the Keys. The low rent reflected what Rice, Monroe County’s mayor, calls his “altruistic part” and his belief he was getting a decent return for a property he’d owned for a long time.
Then Hurricane Irma crossed the Keys on Sept. 10 by Cudjoe Key, forcing the sea across the road into his duplex. Given the scale of damage, government regulations require that Rice rebuild to the current, tougher building code and elevate the structure to avoid future flooding. His insurance will leave him $130,000 to $150,000 short of what he needs to do that. If he borrows, he’ll have to raise rent to about $2,000 a month. Annual rents for those two working Keys residents will suddenly rise by nearly $10,000 each.
Multiply Rice’s duplex by perhaps thousands and you begin to understand the quandary for the Keys and its economy as it moves forward.
The hurricane destroyed 1,179 homes in the Keys and caused major damage to another 2,977. The total amounts to at least 8% of the Keys’ housing inventory. Houses built to recent code — elevated, with metal roofs, impact-resistant windows and tougher siding — sailed through unscathed. “We are a great case study of the old building code versus the new building code. It was like night and day,” says Keys state Rep. Holly Raschein.
But older properties like trailer parks and Rice’s duplex took a beating. And much of that damaged housing stock was home to working-class Keys residents, already living on the edge in the county with the highest cost of living in Florida.
Without an affordable place to live, many have left. Some 724 workers disappeared from the county labor force in October, the month when the Keys’ labor force typically grows as the tourist season gears up. Unemployment in the Keys in October was just 3.2%, compared to 3.6% for the state. Hiring signs abound — from a public school looking for teacher subs to the Key West Courtyard Marriott, where the high-def digital sign showcases images of resort beauty alternating with a helpwanted message.
“The Keys are going to survive and thrive. They always have,” says Key West attorney Bart Smith, but, he adds, “You’re going to see a lot of employers without employees.”
The crux of the problem is housing. “We have literally been talking about this for 30, 40 years,” says County Commissioner Heather Carruthers.
Workforce housing — the nomenclature preferred over “affordable housing” in the Keys — is an issue in many upscale Florida markets, but most have a relief valve: Workers can commute from a cheaper suburb or county. (The joke for years was that Palm Beach County’s affordable housing program was St. Lucie County.) Many workers in the Upper Keys can drive down from Florida City, but the farther from the mainland you go, the harder it is to make a commute work.
According to a study, a Keys household needed to pull in $26.27 per hour — about $54,640 a year — to afford a two-bedroom, market rate rental. That’s a tough nut for a tourism worker. With Irma, “the housing crisis has exploded,” Raschein says.
The Keys’ trouble is four-fold: High land values, a land-poor county, an economy founded on low-paying tourism jobs and a housing supply constrained by a peculiar Keys institution: The Rate of Growth Ordinance — known to all by the shorthand ROGO, which limits the number of building permits that can be issued there.
ROGO stems from a decision by the state in 1975 to designate all of Monroe County an “area of critical state concern,” the only such county in Florida. To ensure that the Keys can be evacuated in 24 hours, the state has capped the number of dwellings that can be built. (Many in the Keys say it’s an anti-growth measure masquerading as a hurricane safety issue.)
And so someone who wants to build a home or hotel has to either acquire an existing dwelling or seek an “allocation” through ROGO’s byzantine points and rating system. “If there’s five people down here who understand all the rules, I would be surprised,” says Jim Saunders of Bayview Homes in Key Largo, a modular home developer who also makes a business of navigating ROGO.
The Keys are down to their final 300 or so allocations. In 2023, those run out. “What’s going to happen after 2023, God knows,” says Brian Schmitt, managing broker of Coldwell Banker Schmitt Real Estate. Unless the law changes by then, the only way a new house or hotel will be added in the Keys will be by tearing another down.
That dims the prospects for more workforce housing. Already, with some exceptions, a mobile home can no longer be replaced by another mobile home. Mobile homes could give way to modular homes factory-built to the Keys’ strict building codes, but they are “by no means cheap,” acknowledges county property appraiser Scott Russell, who says they can be valued at $399,000 to $499,000.