Category: Affordable Housing

Cincinnati City Hall’s proactive approach to addressing pressing housing issues takes center stage as city leaders meticulously craft the budget for fiscal years 2024 and 2025. In this proposed budget, the city showcases a resolute commitment to tackling housing-related challenges head-on, ranging from eviction prevention to improving code enforcement.

A Dual-Purpose Approach

One notable allocation in the proposed budget is $1 million for a program designed to provide tenants with access to counsel and emergency rental assistance for those who are at risk of eviction. This initiative seeks to offer a safety net for vulnerable renters and prevent homelessness. Additionally, the city wants to establish a code enforcement team that will be dedicated to addressing issues related to code violations and inadequate property conditions. This team will consist of nine full-time positions incorporated into the city’s building and inspection department. The team’s mission goes beyond mere enforcement, as it aims to protect tenants and improve housing conditions, which, in turn, can boost property values.

This dual-purpose approach is expected to generate revenue, both directly through citations and indirectly through the preservation and enhancement of property values. On top of this, the proposed department will oversee various aspects of housing policy, including blight enforcement, nuisance mitigation, and tenant protection. To support these endeavors, the city’s budget earmarks approximately $1.46 million annually. Another significant inclusion in the proposed budget is the allocation of roughly $550,000 for a pilot rental rehabilitation loan program. This initiative is aimed at smaller rental properties, with the goal of increasing the availability of affordable housing. By focusing on rehabilitating existing rental units, the city hopes to contribute to its affordable housing stock.

What Is the “Live Local Act”?

Florida’s affordable housing crisis has recently taken center stage with the passing of new legislation. The state’s “Live Local Act” (Chapter 2023-17, L.O.F.) was recently approved by the Governor and has been in effect since July 1^st,2023. As a comprehensive piece of legislation designed to make significant changes and additions to affordable housing programs and policies at both the state and local levels, below are the main takeaways and the impact it will make in the affordable housing space.

Empowering the FHFC

This landmark legislation touches on various aspects of affordable housing, with a primary emphasis on the Florida Housing Finance Corporation (FHFC). This public-private entity administers two of the state’s most critical affordable housing programs:

• the State Apartment Incentive Loan (SAIL) program
• and the State Housing Initiatives Partnership (SHIP) program

 

The legislation provides substantial appropriations for these programs, injecting $252 million from the Local Government Housing Trust Fund into the SHIP program and $109 million from the State Housing Trust Fund into the SAIL program for the 2023-2024 fiscal year. Additionally, a $100 million allocation from the General Revenue Fund is designated to create a competitive loan program to counter inflation-related cost increases for FHFC-approved multifamily projects that have not yet commenced construction. Any unallocated funds as of December 1, 2023, will also be allocated as additional SAIL funding.

Recognizing the importance of homeownership as a crucial measure to address housing stability, the “Live Local Act” establishes the Florida Hometown Hero down payment assistance program. This initiative is designed to assist first-time homebuyers with incomes at or below 150 percent of the area median income (AMI) who are employed by Florida-based employers. The program is bolstered by a $100 million appropriation from the General Revenue Fund, offering significant financial support to aspiring homeowners.

Additional Funding and Resources for FHFC Include:

• Up to $5,000 in a refund for sales tax paid on any building materials used to construct affordable housing units.
• Adds requirements to its annual legislative budget request.
• The creation of a tax donation program that would allow corporate taxpayers to direct specific tax payments, up to $100 million annually, to the FHFC’s SAIL program.
  • Of these funds, up to $25 million can be given to loans for the construction of large-scale projects of significant regional impact.
• Two members of the FHFC Board of Directors will be added with one appointed by the leader of each chamber of the Legislature.
• Allow the FHFC to invest in affordable housing developments for those in and/or aging out of foster care.

 

State-Level Resources, Local Government Initiatives, and Ad Valorem Property Tax Exemptions

The legislation takes a comprehensive approach, not only focusing on the FHFC but also addressing state-level resources and local government initiatives. It revises the State Housing Strategy to align with current best practices and goals, fostering efficient resource allocation. Furthermore, it mandates the analysis of state nonconservation lands to determine if they could be more appropriately transferred to local governments for affordable housing purposes, optimizing land utilization. In a significant move, the legislation expands Job Growth Grant Fund eligibility to include public infrastructure projects that support affordable housing, encouraging economic growth and development in the sector. The Community Contribution Tax Credit Program for affordable housing also receives a boost, with the annual tax credits increasing from $14.5 million to $25 million, incentivizing private sector contributions to affordable housing initiatives.

Empowering Streamlined Housing Development

In an effort to expedite the construction of affordable housing in areas that need it the most, the “Live Local Act” preempts local governments’ requirements related to zoning, density, and height under certain circumstances, facilitating more efficient construction processes. It also removes the local government’s authority to approve affordable housing on residential parcels by bypassing state and local laws, ensuring a consistent regulatory framework for all developments. Moreover, it preemptively removes the possibility of local governments imposing rent control under emergency circumstances, further eliminating potential barriers to affordable housing growth.

Government Accountability

Local governments are also held accountable through the legislation, with requirements to update and electronically publish inventories of publicly owned properties suitable for affordable housing development. Technical assistance from the FHFC is provided to facilitate the use or lease of county or municipal property for affordable housing purposes. The bill further mandates local governments to establish public written policies outlining procedures for expediting building permits and development orders for affordable housing projects, promoting efficiency and transparency. Specifically relating to the Keys area, this act will exempt the Department of Economic Opportunity’s 1,300 affordable housing units constructed by the 2018 Keys Workforce Housing Initiative from evacuation time requirements that are applied in Monroe County.

Tax Exemptions

Lastly, the “Live Local Act” introduces three ad valorem property tax exemptions, which will apply to the 2024 tax roll. These exemptions incentivize affordable housing development, including exemptions for land owned by nonprofit entities leased for at least 99 years for affordable housing, rent-restricted units within newly constructed or substantially rehabilitated developments for low-income households, and the authorization for counties and municipalities to offer additional ad valorem tax exemptions to property owners dedicating units for affordable housing.

How Moran Construction Consultants Can Help

With the increased volume of affordable housing construction comes an increased need for construction risk mitigation and due diligence. Programs like the “Live Local Act” can greatly benefit from the expertise of professionals like Moran Construction Consultants. Through diligent oversight, Moran Construction Consultants can help identify and mitigate potential risks, ensuring that projects stay on track and within budget. This level of scrutiny and expertise is essential in safeguarding the success of these new initiatives. As Florida continues its mission to make housing more accessible and affordable, collaboration with experienced consultants becomes a crucial element in the equation. Give us a call at 866-545-3350 or contact us online to learn more about how we can help safeguard your next affordable housing investment.

Texas has seen a massive population growth in recent years, with some experts estimating a population increase of 1.6 million people by the end of the decade. Despite this, Texas’ state and local governments only spent 0.9% of total expenditure on housing and community development in 2020. This ranked them at 49th in state spending in this area. While the state’s major selling point for potential residents is the promise of a more affordable cost of living in comparison to other states, such as California and New York, Texas is having a hard time keeping up with housing demands and, as a result, the promise of more affordable housing.

This housing scarcity, on top of historically high rents and home prices nationwide, has created an undesirable market that has lawmakers eager to find a solution. With a growing body of research indicating that the increase in the development of market-rate housing can slow the increase in housing costs for lower-income neighborhoods, many Texas lawmakers are introducing bills to try and expedite the construction of multifamily housing (both affordable and market-rate) and homes, in hopes that building more housing overall will lead to lower costs. Below are some of the bills being introduced and the impact they may have on Texas’ demand for affordable housing.

SB491

Introduced by Senator Bryan Hughes, SB491 aims to address building height restrictions in certain municipalities, such as Austin, that limit the height of buildings that are within close proximity to single-family homes. Advocates for SB491 state that current building height limitations make it harder to build multi-family properties next to single-family homes. This limitation further exacerbates housing scarcity in neighborhoods that need it the most. It is worth noting that if this bill does pass, it will only affect municipalities that have a population of over 725,000 people. 

HB1058

Introduced by Representative Craig Goldman and James Talarico, HB1058 would create a state housing tax credit that would supplement the existing federal Low-Income Housing Tax Credit program (LIHTC). With the LIHTC program being the most utilized resource for developing affordable housing communities in the state and country, the hope is that this additional state tax credit will further incentivize developers to build affordable housing for their communities. Although this bill was introduced before and never made it out of the House of Representatives, advocates hope that with the growing need for affordable housing, lawmakers will see the importance of incentivizing development and turn this bill into law.

SB1787

A major bill that has the potential to make waves in affordable housing is SB1787. Introduced by Senator Paul Bettencourt, this bill focuses on decreasing the minimum sizes for residential lots currently being enforced in most cities in the state. Intending to fulfill many homeowners’ dreams of having a house with a yard, a high majority of cities enforce minimum lot sizes that range from 3,500 to 5,750 SF. Although larger residential lots may be more appealing to potential buyers, more land leads to more expensive purchasing costs. This can price some prospective homeowners out of the market. With this bill, lawmakers want to encourage builders to make smaller, more affordable homes for residents.

While some critics of the bill say selling a small, inexpensive house on pricier land does not economically make sense, advocates stress that larger lot sizes discourage an increase in population density. In turn, an increased population density would have positive effects on communities. These effects include expanded walkability, more accessible public transit, and increased commercial development within neighborhoods.

Like SB491, this bill does come with some stipulations. SB1787 will only impact, “a municipality that is wholly or partly located in a county with a population of 300,000 or more.” Also, not every neighborhood in the county would have to enforce the new minimum lot size. Homeowner associations and other groups can vote to opt out of the requirement and maintain their current lot sizes.

HB1514

Under current legislation, if a property owner wants to rezone their land in the state of Texas, this rezoning can be blocked if 20% of the surrounding properties protest the change. If this 20% threshold is met, the local city council must have a supermajority (3/4^th vote) in order to override the protest and move forward with the zoning change.

If HB1514, introduced by Representative Justin Holland, becomes law, it would increase the protest amount from 20% to 50%. Advocates of this bill expect resistance from neighborhood associations. However, they stress that the need for multifamily properties outweighs any neighborhood association’s dislike of increased apartments and traffic within their neighborhood.

A Lasting Impact on Affordable Housing

Although the need to increase affordable housing availability may take years to resolve, Texas lawmakers are introducing bills to address and hopefully solve growing concerns. While the bills listed above are only a few examples of the many pieces of legislation being introduced in the current sessions, all eyes are on the state of Texas to see what bills will pass and if they will truly make a lasting impact on the need for affordable housing.

 

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Why is there an increased demand for affordable housing?

Florida’s attractive market has long made it a major player in commercial real estate. With a desirable climate and no state income tax, Florida’s population has increased by 14.6% from 2010 to 2020 according to data collected by the 2020 U.S. Census. Even with the COVID-19 pandemic, Florida’s growth did not slow.

This continual growth causes housing prices and monthly rents to continue to climb – monthly rents in Miami, Orlando, and Tampa are increasing at a steadier rate than almost any other major city in the U.S. According to an article written by The Palm Beach Post, the median home price in Florida has risen 99.3% since 2012.

Unfortunately, incomes have not increased at the same rate which makes the need for affordable housing greater for those in the workforce, the elderly, people with disabilities, and income-restricted individuals.

THE IMPORTANCE OF ACQUIRING LOW-INCOME HOUSING TAX CREDITS (LIHTC).

Affordable housing construction in Florida is a strong and growing market. The Biden Administration has recently made changes that will further boost the availability of affordable housing and will increase the LIHTC cap for Freddie Mac and Fannie Mae. With the steadily increasing housing needs, developers look to the low-income housing tax credit (LIHTC) to secure and finance their development plans. The utilization of LIHTC requires a very stringent due diligence process as well as specific requirements that must be met.

HOW MORAN CONSULTANTS CAN HELP YOUR NEXT AFFORDABLE HOUSING PROJECT.

Moran Consultants has long-standing expertise in assisting lenders, syndicators, and investors in mitigating risks associated with affordable housing projects (both renovations and new construction) in Florida. We are one of seven consulting firms approved by Florida Housing Finance Corporation to provide Property Condition Assessments, Upfront Plan & Cost Reviews, and Monthly Construction Monitoring.

We tailor our reporting to provide extra oversight regarding the FHFC Features & Amenities. During the Due Diligence phase, we will verify that all required Features & Amenities are included in the Contract Documents. Once construction commences, we will monitor those Features & Amenities to make sure they are completed to ensure the appropriate tax credits are gained.

Our existing relationships with multiple developers and contractors in the Florida market allow us to proactively address any LIHTC related issues during due diligence as well as throughout construction. Call us at 866-545-3350 or contact us online to learn more about our construction loan monitoring services. Experience peace of mind knowing that your investment is protected.