In 1983, the New Jersey Supreme Court, in the landmark case, Burlington NAACP v. Mt. Laurel Township, limited the use of exclusionary zoning as a means of preventing the construction of affordable housing in wealthy communities. The Mt. Laurel case shaped zoning law across the country in the ensuing decades and the Mt. Laurel Doctrine is established precedent. Over the last 3 plus decades, we have seen the growth of low and moderate income housing in the suburbs, giving lower income families access to ownership of homes, in many cases for the first time. As such, these families have had access to crime free neighborhoods and better schools and to better long term success that come with these opportunities.

Mt. Laurel, in many respects, was the next logical step following the passage of the Fair Housing act in 1968 which outlawed racial discrimination in the sale and rental of housing. While that Act certainly helped many people of color move to more affluent suburban communities, it didn’t do enough for lower income families. It was, and is only a single law dealing with discrimination. Mt. Laurel exposed a problem. Local governments manipulated zoning laws to segregate communities by income and consequently, by race.

Despite the Mt. Laurel Doctrine, local governments have done nothing to encourage economic desegregation. Recognizing this problem, Senator Cory Booker (D-NJ) recently introduced the Housing, Opportunity, Mobility and Equity Act (HOME Act) (not yet assigned a bill number). The bill would close the loop on Mt. Laurel and take the Fair Housing Act to its natural next step. It would promote more inclusive zoning policies in order to economically and thus racially desegregate housing and make it more affordable.

The Act provides that states, cities and counties receiving funding under the Community Development Block Grant Program for infrastructure and housing would be required to develop new strategies to reduce barriers to housing development and creating the housing supply. Governments would be required to support new, inclusive zoning policies which create a “more affordable, elastic and diverse housing supply.” Best practices should include: authorizing higher density, eliminating off street parking requirements, establishing density bonuses, removing height limitations, prohibiting income discrimination, relaxing size restrictions and allowing accessory dwelling units. This list is not complete and are examples of things you don’t see in the suburbs and in planned communities.

The Act would also create a new refundable tax credit for renters who pay more than 30% of their income on rent and utilities.

The legislation would also provide local governments with incentives to allow “by right development” so that projects meeting zoning requirements could be administratively approved. If developers can save on the costs of lengthy hearings, the costs could be passed on to the end users, further reducing housing costs. Local elected officials (and staff, for that matter) are painfully blind to their role in the end cost of rents and sale price.

The topic of economic segregation in housing is not often talked about. The fact that it leads to racial segregation means that it should be discussed and addressed. That is not yet addressed by the Fair Housing Act makes it an important topic. President Obama sounded the warnings and Senator Booker’s proposed legislation goes a long way to addressing this important issue. However, ultimately, it will be up to the states to mandate that local governments eliminate economic segregation and take steps similar to Senator Booker’s proposals.

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        The cost of renting an apartment or buying a new home or condominium in Miami is expensive. In fact, according to Wallethub.com, Miami and Miami Beach ranked 299 and 300, respectively out of 300 U.S. cities in affordability. Rents and sale prices are both extremely high, making it extremely difficult for working class people to live in the downtown, urban and eastern areas of the county.

             Miami-Dade Commissioner Barbara Jordan has proposed a remedy for this problem. The Commission will consider Commissioner Jordan’s proposal to require that new developments of 20 or more units provide at least 10% of its units for work force housing. Of these units, 50% would be set aside for those earning from 60% to 79% ($48,100) of the median county income and 50% would be set aside for those earning from 80% to 140% of the median county income. A developer meeting this requirement would receive a density bonus of 15% of the total units. If the developer has no work force units, the developer must pay a fee into the county affordable housing trust. Developers may earn additional density bonuses equal to 1% for every 1% increase in the amount of work force units.

             The proposed ordinance will provide that municipalities may opt out of the requirement provided that the cities adopt adequate work force housing ordinances. Two cities, in particular, have been vocal in their opposition to Commissioner Jordan’s proposal. Aventura and Sunny Isles, two small, but affluent cities which are densely populated with luxury condominiums have formally objected to the Commission. Aventura has passed an ordinance objecting to the proposed county ordinance and Sunny Isles has directed its city attorney to send a letter of objection. Both cities have some work force components in their city code, however, there is not data available as to the number of work force and affordable housing residents living in the two cities.

             Many builders and developers are concerned about the ordinance as well. Jose Gonzales of the Latin Builders Association believes that the ordinance could have “unintended consequences”. For example, the density bonuses could cause additional parking requirements which in turn could inflate construction costs. This adds risk to the developer and underwriting risk to the lenders that neither are prepared to take. Another concern is how condominiums would assess the lower priced units in a building. In a luxury condominium, monthly maintenance fees equate to the mortgage payment for an average homeowner. These payments would price such work force units out of the market even if set aside for work force residents. There are clearly solutions to this problem. The work force units in a condominium could remain rentals, owned by the developer or a third party investor, or, they may have to remain much smaller than the higher end units so that they may be assessed lower. New York developers often use a “2 door” method. But, that method creates a 2 class system, shutting the lower end unit owners off from the amenities of the higher end units.

             Despite the high cost of Miami and the push back against the proposed ordinance, there are success stories of affordable and work force housing in Miami. Melo Group, for example, recently announced plans for Square Station, located between NE 14th Street and NE 15th Street next to the School Board Metro Mover Station. Square Station will consist of 710, 1 to 3 bedroom apartments in 2 towers. The developer has entered into a covenant with the city which provides that 96 of the 710 units will be reserved for workforce housing. Here, workforce will mean that the tenants can not earn more than 140% of the median county income. In return, the city has waived impact fees on the 96 units. This will be a tremendous cost savings to the developer.

             This is not the first time I have written about the need for thoughtful affordable housing policy (see Here and Here). It won’t be the last. Commissioner Jordan’s proposal is a good start. It might need some work, but the concept is correct. Encourage developers to provide affordable housing by offering incentives. Additional units is one way. Commissioner Jordan did not go so far as to offer an inclusionary zoning ordinance as I have previously discussed. If developers continue to push back and not accept the carrot, inclusionary zoning is a stick that needs to be wielded.

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New luxury condominium projects continue to come on-line in Ft. Lauderdale. The first sale in the newly completed Palms on Venice was recently closed. A penthouse unit sold for $2,150,000 in the 4-story, 10-unit, 10-boat slip project.

Palms on Venice is at least the 4th new high-end project that has been completed in Ft. Lauderdale since 2011. Cranespotters.com reports that developers have announced plans for 49 more new buildings, 16 of which are already under construction in downtown and on the beach. However, there is a glaring lack of affordable housing in and around Ft. Lauderdale and South Florida. The problem stems from a lack of affordable housing policies.

This is not to say that there are no new affordable housing projects under development. Wisdom Village Crossing recently broke ground in the Sistrunk area of Ft. Lauderdale after obtaining nearly $28 million in financing. The project will consist of 105 rental units and financing includes $100,000 through Broward County’s Home Investment Partnership. Pinnacle at Tarpon River, near the Broward County Courthouse is a 112-unit complex, 100 of which will be designated affordable. The project is under construction using tax credits.

Affordable Housing in Florida is primarily funded through documentary stamp taxes collected on deeds, the “Sadowski” funds. These funds are to go to counties and cities for housing development, construction and rent. Broward County, Ft. Lauderdale, Hollywood, Deerfield Beach and Dania Beach (and many other counties and cities throughout Florida) each have their own Housing Authorities and administer their own programs. However, most, but not all, primarily administer Section 8 programs, providing rent relief to low income families and direct payment to landlords. While an important program, Section 8 is not the only program to solve the lack of affordable housing in any community, particularly a community as diverse as South Florida. Adequate work force housing is necessary to attract people to work for government and to attract companies to relocate to a community. Unfortunately, the Sadowski funds are not sufficient to meet all of these needs and none of the local governments have adopted ordinances or regulations to require private participation in solving the affordable housing problem such as the inclusionary zoning regulations being adopted in New York.

The gap is filled through tax incentive financing like the Pinnacle project and through non-profit agencies. There is no easy answer to this problem. But clearly, the issue must be addressed in partnership between state and local governments, developers and non-profits. Ft. Lauderdale and other communities in South Florida must adopt comprehensive affordable home policies which go beyond “encouraging” developers to include affordable housing components in new projects. Affordable housing is good for every city, it is good for the residents and it is good for business.

 

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