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Developers Question Whether Florida’s Live Local Act Can Actually Help Residents Live Local

The Live Local Act, which overhauled rules over zoning and development across Florida, was drafted to address the Sunshine State’s affordable housing crisis. But as the law approaches its second birthday, developers say it hasn't been enough for them to get projects off the ground and deliver more lower-cost housing.

“I keep hearing ‘Live Local, Live Local,’ but I don't hear anything about how it solves affordable housing,” RPC Holdings CEO Dan Kodsi said. 

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Miami Homes For All's Annie Lord, Miami-Dade Housing and Community Development's Alex Ballina and Bilzin Sumberg's Anthony De Yurre.

While the law provides some incentives, including density bonuses and tax breaks, it doesn’t go far enough to provide subsidies or tax incentives to offset escalating costs, developers said at the event, held at the Four Seasons Hotel Miami in Brickell.

“It doesn't reduce the cost of construction,” Kodsi said. “It doesn't reduce the cost of capital, insurance, and just go down the list.”

Signed into law in 2023 by Florida Gov. Ron DeSantis and amended last May, its provisions to attack the affordable housing problem include increased tax breaks for income-restricted projects, reduced parking requirements and limits on local governments’ control over zoning processes.

The law allows developers to build far above allowable density if they incorporate enough workforce housing. That aspect of the legislation has inspired huge proposals across South Florida, including a more than 3,000-unit, 37-story proposal in June in West Little River, a 2,200-unit pitch in North Miami and a 1,000-unit Little Havana proposal from Related Urban last week. 

But few of these projects have actually started construction. 

“Now that we've got projects entitled, everybody thinks, ‘Oh, the pretty picture, you get entitled, you start with a shovel the next day,’ is not exactly how it works,” said Anthony De Yurre, a partner at Bilzin Sumberg who has been behind several Live Local filings. “Now we're working with lenders to educate them on the statute, and we're getting a lot of questions.”

There are still key terms in the law that the state hasn't fully defined, which has given many lenders pause when they go to underwrite construction loans or property mortgages.

A key sticking point is the tax exemption. Developers can be exempt from 75% of property taxes on units rented to those making up to 120% of the area median income and exempt from 100% of taxes for units at 80% AMI. 

But De Yurre says the exemption doesn't kick in until after construction is complete. That gap between when a construction loan is handed out and when the exemption takes effect has made lenders hesitant to commit to funding the projects.

“When we submit a site plan, we want the project to vest for the tax exemption at that point in time. We don't want to wait until we finish the project and lease it up, because the construction lenders are just not going to,” De Yurre said. “They're going to have heartburn underwriting it if they have to wait for three years.”

Daniel Lopez, founder and president of Leverage Live Local, a consulting firm, said this hurdle has made it challenging for new projects to find their footing. 

“That's a meaningful difference in cash flow that can offset the exorbitant cost of construction insurance premiums that we're seeing,” Lopez said. “So, right now, it's a little bit challenging for new starts because many lenders are not comfortable valuing the tax exemption when in the underwriting process.”

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Hanover Co.'s Lauren Goebel, Crescent Heights' Russell Galbut, Leverage Live Local's Daniel Lopez, The Calta Group's Gaetano Caltagirone and Greenberg Traurig's Brian Dombrowski.

While developers are still struggling to land financing to get rental projects out of the ground, the need for their developments is only increasing.

“Miami-Dade County, we're at the epicenter of the affordable housing crisis,” said Alex Ballina, director of Miami-Dade Housing and Community Development.

Miami-Dade County has a shortage of more than 90,000 affordable and available units for rental households with incomes below 80% of AMI, a number that is expected to grow to more than 100,000 by 2030 unless a significant number of new units is added, according to Miami Homes For All.

Miami Homes For All Executive Director Annie Lord said onstage that she applauds the legislature for the additional flexibility it gives developers of workforce housing.

But what Miami-Dade needs is housing for below 80%, or the county will start to witness higher homelessness rates and a flight of labor, things that are already occurring, Lord said. The law doesn't incentivize developers to attack those roots effectively.

“What it doesn't do as well is really get to that level of affordability. It really focuses in on 80%, 120%, 140% of the median income,” she said. 

Inflationary pressures have created a heavy burden on developers in the last four years, pushing up costs. Construction costs have risen by 38%, concrete prices increased by 77%, and power equipment costs rose by 72%, according to data from the Bureau of Labor Statistics. 

That's why public subsidies for lower-income housing are even more critical moving forward, Lord said.

“You really can't get below that 80% in the median income. Maybe you can't even get below 100% without public funding,” Lord said.

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RPC Holdings' Dan Kodsi, Florida Housing Coalition's Ashon Nesbitt, Place Projects' Joseph Furst and Stantec's Arturo Vasquez Del Mercado.

Another provision of Live Local was the allocation of $700M to projects geared toward lower-income renters, but that funding hasn't been doled out quite as expected.

More than $100M of Live Local Act funding has been allocated to 30 existing projects, rather than new developments, to help them manage escalating costs. This has left newer projects in a precarious position, as rising costs make it difficult for developers to meet demand.

With these challenges in mind, some developers are looking to alternative approaches, like Gaetano Caltagirone, president and co-founder of The Calta Group. He suggested incorporating market-rate condos into affordable rental projects as a strategic move to ensure the financial viability of projects.

“Sometimes just doing a pure rental building might not work because of some of the factors that there are,” Caltagirone said. “If you have a rental constriction on your property and you have to build a high-rise to make it work, well, then probably it's not going to work out.”