Issue: Florida has a critical need for more affordable and workforce housing with a shortage of 384,743 rental homes that are available for extremely low-income renters.*
Background: In order for a new apartment community construction project to break ground, a developer must first secure financing from investors, who demand a specific rate of return in exchange for their investment. It is difficult for developers to achieve the necessary rate of return for affordable and workforce apartments, which are rented below market rate. As a result, it can be extremely challenging for a developer to even secure the financing needed to make an affordable or workforce housing construction project feasible.
Because of these challenges, developers rely on a combination of state and federal tax discounts along with private funding. However, the process of obtaining these government tax discounts is extremely competitive, with a very limited number of projects ultimately receiving this type of funding each year.
How This Impacts the Apartment Industry: Florida’s rapidly growing population has created a housing shortage and the lack of supply is impacting affordability across the state. Florida law currently lacks clarity regarding a local government’s ability to waive or reduce local property tax rates for affordable and workforce housing, which is an impediment to encouraging the construction of affordable and workforce apartments.
HB 495 would allow, but not require, local governments to reduce property taxes for affordable or workforce housing in multifamily properties with 50 or more units. Under the bill, a local government could offer up to a 75 percent property tax discount for affordable or workforce housing units if at least 10 percent of the units within the property were reserved for affordable or workforce housing. If the entire property was composed of affordable or workforce housing, a local government could offer up to a 100 percent property tax discount. To ensure the units remain affordable under the discount program, the property owner would be required to have a Land Use Restriction Agreement on file with the city or county.
The passage of HB 495/SB 1150 would empower local governments with a valuable tool that could be used at their discretion to make these construction projects feasible and stimulate the preservation of existing affordable and workforce housing.
Legislative Solution: The Florida Apartment Association urges the Legislature to pass HB 495 (Rep. Anthony Rodriguez) and SB 1150 (Sen. Ana Maria Rodriguez), which provides local governments with the ability to waive or reduce property taxes for affordable and workforce housing units at their discretion.
Where Does This Legislation Stand?
SB 1150 was passed unanimously as amended by the Senate Community Affairs Committee on Tuesday, January 18. The bill now advances to the Senate Finance and Tax Committee for further consideration.
Click
here to access the meeting recording via the Florida Channel. The FAA testimony on SB 1150 begins at timestamp 49:54.
