New Florida Law Adds Funds For Innovative Housing Programs, Encourages Land Donation
By Caitlin Jones & A. J. Johnson
6 min read
Tax Credit Advisor July, 2006: Florida Gov. Jeb Bush recently signed into law legislation that adds $271 million in new affordable housing funding, including money for an innovative program to expand workforce housing. House Bill No. 1363 also provides for a novel approach to the donation of land for affordable housing.
The $271 million is in addition to $243 million in funds the Florida legislature approved for ongoing affordable housing programs.
Housing advocates said that H.B. 1363 – the first major affordable housing legislation in Florida since lawmakers established a housing trust fund 14 years ago – turns a new page in the state’s efforts to meet a huge backlog of housing needs.
Florida is one of the few states with a housing trust fund backed by a dedicated, recurring revenue source. The fund, established by the William E. Sadowski Affordable Housing Act in 1992, taps a portion of real estate transfer fees, which in recent years have added about $500 million annually to the fund.
When the fund was established, Florida lawmakers envisioned a financing vehicle that, in combination with subsidies from the low-income housing tax credit and other funding sources, would dramatically increase affordable housing production. However, with the sharp rise in development costs in recent years, the number of such units built using the trust fund has dwindled from 16,399 in 2000 to 8,160 in 2005.
The new bill provides a framework to help reverse this trend by spurring public-private affordable housing partnerships and directing trust fund dollars to new areas, like workforce housing.
Creative Uses of Trust Fund Monies
The measure provides $50 million in housing trust fund monies for a new initiative, the Community Workforce Housing Innovation Pilot Program (CWHIP), to be administered by Florida Housing Finance Corporation (FHFC). CWHIP provides forgivable loans and incentives to affordable rental and home ownership projects for “essential service personnel,” including teachers, police and firemen, and healthcare workers. Units funded by the program will be available families making up to 140 percent of area media income.
Using a request for proposals (RFP) process, funds will be provided on a competitive basis, said Ian Smith, FHFC’s spokesman. He said the housing agency hopes to make the RFP available in early October, with awards announced in early 2007.
Smith said that ownership of CWHIP-funded projects must be partnerships that include at least one private-sector entity and a public entity. Funding will be provided in the form of soft loans bearing interest rates between one and three percent. The loans may be forgiven if the housing meets long-term affordability requirements. In order to be eligible, projects must have at least 15 percent of total development costs funded by grants or donations. In addition, developments must be in neighborhoods close to employers, services, and transportation.
“We see this as a model program encouraging public-private partnerships to pool dollars locally,” Smith said.
Another $30 million in housing trust funds is provided for extremely low-income (ELI) residents, defined as up to 30 percent of area median income. This program, also administered by FHFC, allows for forgiveness of loans for ELI units, and relief from loan-to-ratio requirements.
“This was the year of stretching the continuum of affordability at both ends: to meet the needs of the working poor at one end and the low-paid professionals at the other,” said Mark Hendrickson, a former executive director of FHFC, who now is president of the Hendrickson Company, a housing consulting firm.
The legislation also provides FHFC with about $108 million in housing trust funds to replace affordable housing destroyed by Hurricanes Wilma and Katrina in 2005.
In addition, H.B.1363 provides $83 million from Florida’s Small Cities Community Development Block Grant Program Fund. The statute specifies that this funding, to be administered through the state Department of Community Affairs, have a “prioritization towards housing in the most [hurricane] impacted areas of the state.”
Donation of Lands for Affordable Housing
Affordable housing advocates say that one of the most important aspects of the legislation is the incentives it provides to local and state government, as well as private developers, to donate land intended to provide permanently affordable housing.
Starting in July 2007 – and every three years after that date – each county and municipality in the state must prepare an inventory of all property that it owns which is appropriate for affordable housing. Three things can then be done with this property:
- It can be donated to a nonprofit housing organization for building permanent affordable housing;
- It can be sold with the restriction that it be developed to provide permanent affordable housing;
- It can offered for sale with the proceeds then used either to buy land for affordable housing development or to contribute to a local affordable housing trust fund.
The statute facilitates the donation of state surplus property for affordable housing by making clear that this is a valid public purpose, and by providing a formal procedure for local governments to make a request for this property. Private developers are encouraged to donate property to local governments in exchange for density bonuses from local governments.
“This is an extremely important provision that will help create public-private partnerships to provide more affordable housing in the long term,” said Michael W. Davis, executive director of the Florida Housing Coalition. “It certainly can serve as a model for other states,” he added.
Other Initiatives
The bill also provides for a number of other important initiatives, including:
- Authorizing school boards to provide housing and housing assistance for eligible persons, and,
- Directing property appraisers to appraise property based on rental income.
Disappointment with Limited Use of Trust Fund
Although affordable housing advocates were pleased with the scope and innovation H.B. 1363, they were disappointed that it left more than $500 million of housing trust funds untapped.
“We are thankful for what we got in the bill, but could have used a lot more of the housing trust fund,” said the Florida Housing Coalition’s Davis. “What we would like to see is every dime of it used for its intended purpose.”
Davis said that it was unfortunate that more money from the trust funds wasn’t appropriated at a time of pressing need. He noted that more than $507 million remains in the trust fund after $431 million was appropriated from it this year.
