Business and Legal Insights

The shortage of affordable housing in Florida has been building for many years. Within a time span of 2 years, median rental prices in Florida increased over 30 percent and now the shortage of affordable housing has reached crisis levels. 

To address this problem, the Florida legislature passed the “Live Local Act” (the “Act”), the State’s most impactful housing legislation in decades. The scope of the legislation is broad; in summary, it includes: (i) over $700 million in new funding allocations for affordable housing development, (ii) tax credits, exemptions and refunds to developers to encourage the construction of affordable housing, (iii) interest-free loans to help homeowners afford down payments, and (iv) provisions that preempt local land use and zoning regulations that would otherwise limit the development of affordable housing.

Additional Funding

Florida Housing Finance Corporation (“FHFC”) is charged with the task of distributing the additional funds provided by the Act. Through competitive requests, these additional funds will be funneled to projects not only for the construction of new affordable housing developments, but also for the rehabilitation of existing developments.  The Act addresses urban infill, including the conversion of vacant, dilapidated, or functionally obsolete buildings and provides for mixed-use housing developments and housing near military installations.  The Act also encourages developers to use funds for projects that propose use or leasing of public lands. It provides financing of projects that address the housing needs of young adults aging out of foster care, elderly persons, and rural communities.

Corporate Tax Contribution Program

The Act created a new tax contribution program to allow direct payments to FHFC for use as State Apartment Incentive Loan (“SAIL”) funds in exchange for tax credits against corporate or insurance premium tax liabilities. FHFC must use all of these contributions for the SAIL program and it may use up to $25 million to provide loans for construction of large-scale projects of significant impact. Such projects must include a substantial civic, educational, or health care use and may include a commercial use, but the SAIL loan amount cannot exceed 25 percent of the total cost of the project. Contributions under this program are capped at $100 million each fiscal year. 

Florida Hometown Hero Program

The Florida Hometown Hero Program was created under the Act to assist Florida’s hometown workforce in attaining homeownership by providing financial assistance to residents to purchase a home as their primary residence. Under this program, a borrower may apply to FHFC for a loan to reduce the amount of the down payment and closing costs.  The loan is a minimum of $10,000 and up to a maximum amount of five percent of the first mortgage loan, not to exceed $35,000.

FHFC will charge zero percent interest and the loan will have a term equal to the first mortgage loan on the home. The criteria for eligibility are the following:

• Homebuyers in all industries are eligible;
• Household income cannot exceed the greater of (i) 150 percent of the state median income (which for 2021 equaled $92,665.50) or (ii) local median income, which varies by location.
• First-time homebuyers who have full-time employment (35 hours or more per week).
• First-time homebuyer requirement does not apply to a borrower who is (i) an active duty service-member of a branch of the armed forces or the Florida National Guard or (ii) a veteran.

Property Tax Exemptions

The Act clarifies and broadens the existing affordable housing property tax exemption found in Section 196.1978, Florida Statutes. The Act clarifies that land owned entirely by a not-for-profit corporation and that is leased for a minimum of 99 years for the purpose of providing affordable housing is exempt from property taxation.  In addition, the Act adds a third exemption which includes a two-tiered structure that grants between 75-100 percent property tax exemption for newly constructed multifamily projects of more than 70 units that serve households with incomes up to 120 percent area median income (“AMI”).

An optional local property tax exemption is now available to local governments to adopt ordinances to certain affordable housing units that serve households with incomes up to 60 percent AMI. Such developments must have more than 50 units and at least 20 percent of those units must be dedicated to affordable housing. Here, the exemptions are two-tiered as well and depend on whether 100 percent of the units or some lesser amount is dedicated to affordable housing.

Sales Tax Refund for Construction

The Act provides a refund of the sales tax levied on building materials used to construct affordable housing units.  This sales tax applies to affordable housing units subject to a land use restriction agreement with FHFC. The person seeking a refund must submit an application within 6 months after the eligible residential unit is deemed to be substantially completed by the local building code inspector and the refund amount must exceed $500, but may not exceed the lesser of $5,000 or 97.5 percent of the sales tax paid on the cost of the building materials.

Preemption of Local Zoning and Land Use Regulations

For developments that include at least 40% of the residential units for rent which are restricted as affordable for at least 30 years (the “40% Rule”), the Act provides that local governments: (1) must authorize multifamily and mixed-use residential in any area zoned for commercial, industrial, or mixed-use, (2) must not require zoning or land use changes, special exceptions or conditional use approvals, variances, or comprehensive plan amendments for height, zoning or density, (3) must not limit density of a development below the highest density  permitted in the jurisdiction where residential density is granted, (4) must not restrict the height below the highest permitted for either commercial or residential development within the jurisdiction, within one mile of the proposed development, or three stories, whichever is higher, (5) must administratively approve – without public hearings – if the regulations applicable to multifamily development in areas zoned for that use are met (including setbacks and parking) and is “otherwise consistent with the comprehensive plan,” except for density, height, and land use, (6) must “consider” reduced parking for developments meeting the 40% Rule, to the extent such development is within ½ mile of a major transit stop.