The Florida legislature recently passed the Live Local Act to ease housing affordability in the state, and the result could be more residential construction in Florida. While we don’t advocate for housing policies, we do monitor programs to see how they might impact both Florida and the broader housing markets.
Live Local Act will create a record $711M for housing projects and assistance through the Florida Housing and Finance Corporation (FHFC) to create or build upon housing programs. The bill goes into effect July 1, 2023. Here are the major components and potential impact:
- More households qualify. “Affordable” is taking on a new meaning with an increased threshold of serving households with incomes of up to 120% of the Area Median Income (AMI). The previous maximum AMI threshold was 115%. The increase to 120% raises the capture rate of families in the “missing middle.”
- Higher rents qualify for tax exemptions. Rental Rates must be 10% or below market rate units to benefit from the outlined tax exemptions, but rents have increased at least that much in several markets over the last year. While the bill does not define “market rents,” we applied the median rental rate to some of Florida’s most expensive metros as an example:
- Immediate zoning approvals. Zoning approvals are about to get much faster if your development has an affordable housing component. The ability for local officials to approve zoning and planning requests has been removed from local governments for any stakeholder seeking approvals for residential projects that include an affordable housing component (a minimum of 40% of units).
- Tax breaks. Tax advantages could entice developers to get creative and find ways to incorporate an affordable component into future projects. A few examples of the tax benefits include a $5,000 refund for sales tax on building materials per eligible unit and a tax exemption for developments that set aside at least 70 units for affordable housing.
- No rent control allowed. The amendment removes the statutory language which allows, under certain circumstances, a county or local government to pass an ordinance to impose rent controls.
- Promotion of vacant land. The new bill requires local governments to publish online the inventory of local government-owned property that may be suitable for the development of affordable housing.
- Property tax exemption. The bill creates a “Missing Middle” property tax exemption which encourages new or recently constructed and substantially rehabilitated developments to offer attainable units.
If Florida’s Live Local Act spurs additional construction, we expect more states to consider similar measures. Our Florida team will be watching the progress and will update our clients as the bill goes into effect this summer.
Thank you to David Leon at Nelson Mullins and Sydne Garchik at MRK Partners for providing insight regarding the Live Local Act.
Sources: Florida Senate, Nelson Mullins, The National Law Review