Years of escalating prices for homes, property taxes, insurance and consumer goods and services are taking a toll on Southeast Florida. “Affordability is absolutely our No. 1 issue for 2008,” says Michael Y. Cannon, managing director of Integra Realty Resources in Miami. “Everyone talks the talk, but nobody walks the walk.” Cannon says the largest stakeholders in the issue — the region’s public and private employers — must partner with government to promote greater property tax and insurance reform. Developers must be offered incentives to build workforce housing, he says.

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Stephen O. Morrell, a professor of economics and finance at Miami’s Barry University and a senior research fellow at Florida TaxWatch, says the flush coffers of municipalities earlier this decade discouraged streamlined, innovative service delivery. “Consequently, many local governments now are not prepared to adjust to lower tax revenues.”

High housing costs trickle through the economy. Morrell says cost-of-living indexes, especially in Miami-Dade, are rising faster than in other regions.

Despite the high costs, Southeast Florida may be sheltered from a nationwide downturn this year by an increasingly diversified economy. Healthcare and biotech will grow in 2008, analysts say, while tourism should remain strong thanks to a weak dollar — foreign visitors will find value here while domestic visitors opt for alternatives to pricey overseas vacations.

International trade and banking will also boost the region’s economy. Cannon calls the sector an “absolute insulator” from recession, provided the political climate in the U.S. remains favorable to free trade.

POPULATION TREND

Corporate expansions and relocations remain a tough sell as companies opt for smaller Sun Belt communities with lower costs of living. Monroe County’s population of 78,030 — virtually flat since 2004 — may dip this year as costs remain high. Palm Beach, with 1.3 million, showed the largest growth over the past five years increasing an average of 2.31% annually. Broward, increasing 1.7% a year since 2004 now stands at 1.87 million, while Miami-Dade, with 2.48 million, has inched up 1.36% annually, with much of the growth coming from a steady influx from Latin America.

Miami

Biotech Center (Miami) Dr. Pascal J. Goldschmidt » Dr. Pascal J. Goldschmidt, senior vice president for medical affairs and dean of the University of Miami Miller School of Medicine, is leading the efforts to transform the city’s gritty health district west of downtown into a world-renowned biotechnology research center that may rival Scripps Florida up the road in Jupiter. University officials say the school’s Life Science Park could cover 1.4 million square feet on more than seven acres if fully built. [Photo: Brian Smith]

Miami remains the top choice for foreign and domestic companies doing business in Latin America, with more than 1,000 multinational firms maintaining an office or headquarters here. But increasingly strict immigration policy is complicating business travel to and from Latin America, says David Denslow, a University of Florida economist. “Trade is built on trust,” he says. “We need to encourage, not hinder the process.”

LEADERS

» Miami Mayor Manny Diaz, who will be forced from office next year by term limits, is betting his legacy on a multibillion-dollar spending plan for downtown Miami. The plan, which won approval from both city and county commissioners last December, includes funding for the performing arts center, a new streetcar line, two new museums, a new baseball stadium for the Florida Marlins, an underwater tunnel linking the Port of Miami to I-95 and other smaller projects. But opposition is mounting from business leaders who object to using community redevelopment dollars to fund the projects.

Miami-Dade County

Housing fueled Miami-Dade’s economic boom in recent years, and it will also douse the fire. Housing starts will drop more than 30% this year, pushing the county’s unemployment rate to 4%, its highest since 2005, reports the University of Central Florida’s Institute for Economic Competitiveness. Miami-based home builder Lennar Corp. reported a record loss of $1.25 billion in the fourth quarter of 2007. Meanwhile, cranes still dot the downtown skyline with dozens of condo projects under construction. The housing crisis will affect local retailers, economists say, as homeowners will be unable to count on home equity for extra cash.

LEADERS

» Miami Art Museum Director Terence Riley is taking a leading role in a city that has rapidly emerged as a key international center for modern art sales. Miami’s blossoming art scene contributes nearly $1 billion to the local economy each year, officials say.

» Brian Keeley, CEO of Baptist Health South Florida — the county’s second-largest employer with more than 10,000 workers — leads a healthcare sector expected to show solid growth in Miami-Dade this year.

Fort Lauderdale

Fort Lauderdale is focused on its transition from fast-growing boomtown (a lower-cost haven for retirees and commuters from Miami-Dade) to international urban metropolis. With raw land virtually gone, city planners are encouraging downtown infill. Business leaders are demanding first-rate infrastructure that can support the city’s younger, more diverse population.

LEADERS

» The growing pains that come with having one of the nation’s fastest-growing major airports falls onto the lap of newly appointed Broward County Aviation Department Director Kent G. George, who oversees Fort Lauderdale-Hollywood International Airport.

» With the economy in flux, local residents will seek diversion in the latest efforts of billionaire H. Wayne Huizenga, who plans to sell 50% of the Miami Dolphins, the NFL’s worst team in 2007.

Broward County

International Focus (Broward County) Kathy Koch » Under Chairwoman Kathy Koch, president of Ambit Marketing, the Broward Alliance will help promote the county as an international business location while addressing deep budget cuts to its operation following municipal belt-tightening. [Photo: Eileen Escarda]

Like other counties that rode the housing wave in recent years, Broward will feel the strong tug of a receding tide. But Broward leaders will focus on establishing the county as a lower-cost, more convenient alternative to Miami for multinationals. Five years ago, the county commission challenged its Office of Economic Development to create a program that helps municipalities expand their international presence.

School Note

Broward County ranks first in the nation in the number of teachers who achieved National Board Certification in 2007. In all, six Florida school districts ranked among the nation’s top 10:

1. Broward
3. Miami-Dade
6. Hillsborough
7. Orange
8. Brevard
9. Duval

LEADER

» Facing declining enrollment in the nation’s sixth-largest public school district, newly appointed Broward County School Superintendent James F. Notter is focused on reducing costs. Among his efforts: The new Energy Tools for Schools program, which allows schools to receive additional funding when they reduce energy consumption.

West Palm Beach

Officials are worried that a U.S. recession will send the local housing market, long an engine of growth here, in a deep tailspin. Existing single-family home prices in Palm Beach County dropped almost every month last year — reaching $369,400 at the end of 2007 — and sales dropped 19% overall in 2007.

LEADERS

» State lawmakers said property insurance would become more accessible and more affordable after they passed an insurance reform bill last year. Sen. Jeff Atwater, (R-North Palm Beach), wants to find out why it hasn’t. Atwater, whose great-grandfather, Napoleon B. Broward, was governor of Florida from 1905-09, is co-chair of the Select Committee on Property Insurance Accountability, set up in January to investigate why rates remain high even as the state added billions to its hurricane catastrophe fund.

» West Palm Beach Mayor Lois Frankel will focus on core issues this year — crime prevention, neighborhood improvements and the revitalization of the downtown waterfront.

Year	Student decline	% Decrease
2002-03	-5,018	-1.4%
2003-04	-2,216	-0.6%
2004-05	-3,046	-0.8%
2005-06	-4,161	-1.2%
2006-07	-8,097	-2.3%
2007-08	-5,522	-1.6%
2008-09	-6,083	-1.8% (projected)
Source: Miami-Dade Public Schools

SCHOOL ENROLLMENT / PALM BEACH COUNTY

The Palm Beach County School District expects enrollment to drop by almost 1,200 next fall — the third straight year of declining enrollment. Officials project total enrollment of 168,278 for the 2008-09 school year, representing a 3% decline from four years ago.

Boca Raton

Boca Raton residents often rank public safety, traffic and other quality-of-life issues among their key concerns. This affluent community of 84,000 is frequently included in high-profile lists of most livable U.S. cities. Susan Whelchel, who was unopposed in her bid to become mayor this month after the popular Steven Abrams was forced out by term limits, will be faced with trying to maintain a high livability index amid fiscal belt-tightening by the region’s municipalities.

LEADERS

» Richard Van Lith, as new president and CEO of Boca Raton Community Hospital, must shepherd plans for a teaching hospital. Officials say the project, which would support a joint medical program between the University of Miami and Florida Atlantic University, is behind schedule.

» As a board member of the county’s Workforce Alliance, Greater Boca Raton Chamber of Commerce President and CEO Troy McLellan will help connect workers with Boca’s growing biotechnology sector.

Palm Beach County

Palm Beach County’s unemployment rate topped the state average last year. Not surprisingly, the construction sector was the hardest hit — a net loss of 1,400 jobs. But local officials say the county is better insulated from an economic downturn by virtue of the still-hot biotechnology sector. In December, Germany-based Max Planck Institute announced it would open a research facility here, generating 1,824 jobs and $2.4 billion in salaries over a 20-year period. Palm Beach’s fastest-growing occupation, computer software engineering, pays an average salary of nearly $40 per hour.

LEADERS

» Palm Beach County Administrator Robert Weisman oversees a $4-billion budget that will likely decline as property tax reform becomes a reality. Will residents in this largely affluent county accept cuts in service to match?

» Biotech is the buzzword, but other high-tech relocations and startups — including HGI Industries and Coastal Optical Systems — also are arriving in Palm Beach, thanks to Michael Corbit, executive director of iCoast, a regional initiative to position South Florida as a global science and technology hub.

Monroe County

The tourism-dependent Florida Keys continue to struggle with affordable housing and other cost-of-living challenges. Median single-family home prices are about three times the state average. In January, the median list price of 474 single-family homes in Key West was $949,500. A study by the Monroe County Tourist Development Council found that two-thirds of all tourism workers are expected to move from the region by 2011.

LEADERS

» Key West Housing Authority Executive Director J. Manuel Castillo will grapple with an affordable housing crisis compounded by cuts in state funding for programs that help construct workforce housing.

» With a weak U.S. dollar, Monroe County Commissioner Mario Di Gennaro is serving his term as chairman of the Monroe County Tourist Development Council by pursuing an aggressive plan to attract more overseas visitors to the Florida Keys.