What is life like in this Miami affordable housing building?
More from the series
Priced out of paradise: Workforce solutions
Over the past decade, South Florida’s housing costs have far outstripped wages. Those who work here — teachers, firefighters, wait staff, architects, nurses, custodial workers, police officers, clerks — are struggling to get by. Part II of this series explores how local government entities are partnering with for-profit developers and nonprofit agencies. Our interactive tool helps renters and buyers match their budgets to affordable neighborhoods. Future stories will explore more solutions to South Florida’s housing crisis.
Clifford Johnson was born and raised in Miami. He grew up in Liberty City and graduated from Miami Beach Senior High in 1976.
For the past 18 years, he has been employed by Miami-Dade County, first on custodial duty, then working his way up through environmental services and other departments.
He currently works for the county at Miami International Airport, painting the giant warehouses and hangars that house commercial airliners. He works from 6:30 a.m. to 2:30 p.m. Monday through Friday.
But despite his long service, Johnson would not be able to afford to live in Miami-Dade County without the help of affordable housing. He earns $44,000 per year — less than the county’s area median income of $50,000.
Johnson has been able to make things work, thanks to an affordable housing complex in Brownsville. His one-bedroom apartment costs $850 per month.
But his plight is increasingly common in Miami-Dade, where the cost of housing has far outstripped wages. In the decade spanning 2007 to 2017, Miami-Dade’s median wage rose only 14 percent — to $17.20 — while home values shot up 66 percent.
Though the skyline has often looked like a forest of construction cranes, most of the new condos and homes have been pitched to buyers with deep pockets — most of them foreign or out-of-towners. Those who work here — teachers, firefighters, wait staff, architects, nurses, custodial workers, police officers, clerks — struggle to get by.
The numbers tell the story. According to Harvard’s 2019 State of the Nation’s Housing report, the stock of low-rent units priced under $800 in South Florida’s tri-county region shrank 39 percent between 2011 and 2017, while the number of low-income renters dipped only 2 percent.
And only one of five new single-family homes built during this period was priced under $200,000. Miami now ranks first when it comes to the percentage of renters paying more than 30 percent of their income on rent.
It doesn’t take an economics degree to figure out the impact: higher prices for everyone.
Even in a modest neighborhood like North Miami, market-rate rents for a two-bedroom apartment run about $1,900 per month — meaning a family would need to earn about $70,000 per year for the rent to fit under 30 percent of the budget. That’s well above the Miami-Dade median of $50,000.
“The crisis has spread up the income scale over the last five years, so it’s no longer just extremely low-income households,” said Annie Lord, executive director of Miami Homes For All, a non-profit housing advocacy group. “Now you have middle-class and even higher-income people in Miami-Dade who are also [spending more than a third of their monthly income on housing].“
The result, says Florida International University’s Metropolitan Center: a shortage of 134,295 homes, rented or owned, to meet the demand by Miami-Dade residents earning less than $40,000 — 80 percent of the county’s median household income of $49,930.
“A lot of people believe affordable housing means you have a free ride and you don’t have to work and the government and taxpayers are taking care of everything, but that couldn’t be further from the truth,” said Kenneth Naylor, chief operating officer of Atlantic | Pacific Communities, a national development firm that owns and operates more than 40,000 affordable, workforce and market-rate units around the U.S., including Florida.
“People who live in affordable housing may be on the bottom rung of the economic ladder, but they’re pulling themselves up to the next rung,” Naylor said. “A healthy economy depends on giving people a real shot at upward mobility. An unhealthy economy where every dollar gets sopped up in rent doesn’t allow people to make any progress.”
And the problem is likely to get worse. Far worse, according to Ned Murray, associate director of Florida International University’s Metropolitan Center.
“Employment projection for 2018-2026 from the Florida Department of Economic Opportunity shows an increase in 144,493 jobs, most of them in low-wage employment,” Murray said. “This would result in an additional demand of an estimated 40,000 low-income renters over the next eight years.”
Private developers say they can’t solve the problem on their own. The cost of land continues to go up, especially in desirable locations near the urban core (the developers of the Aston Martin Residences in downtown Miami paid a record-setting $125 million for a 1.25 acre-site on the Miami River at Biscayne Bay in 2014.
Construction costs for residential properties in Miami-Dade also continue to rise, from $4.8 billion in 2014 to $8 billion in 2018 — and are projected to reach $10.1 billion by 2021, according to the property and cost management company Cumming.
As the number of cost-burdened households continues to grow, non-profits and investors are looking to help ease the situation.
Miami entrepreneurs David and Leila Centner seeded $40 million into a fund to build housing for teachers in Opportunity Zones around the U.S. The investment by the Centners will help pay for a 34-story tower at 3350 Biscayne Blvd. that will offer 251 workforce rentals priced for teachers, plus condo units, a hotel and retail and office spaces.
The Broward-based South Florida Community Land Trust (SFCLT), which has housed 171 people in affordable homes and rentals in 11 cities around Broward County, became the first community land trust to purchase property in Miami-Dade.
The nonprofit bought the land, which sits in the heart of Little Haiti, from the Haitian American Community Development Corporation for $303,800 — with a promise to protect its affordability. SFCLT is now finalizing plans for 13 townhouses, which they expect to price under market value for residents making 60 to 120 percent of the area median income. (In today’s terms: $30,000 to $60,000.)
Janisse Schoepp, vice president of operations and strategy for the non-profit Health Foundation of South Florida grant maker, said her group is exploring the possibility of granting low-interest loans to help non-profit developers acquire land and compete with market developers.
“People believe this is only about poor people and it’s not,” she said. “We need to do a better job of explaining the definition of affordable and workforce housing and telling the stories of individuals who live there. We’re talking about firefighters, nurses, teachers. who are still cost-burdened. These people are well-educated and have jobs.”
But for those who work here to continue to live here, government must play a leading role, say experts. Only government has both the broad reach and taxing authority needed for sweeping impact.
That message appears to be taking hold. “Our numbers show that affordable housing is becoming a political concern,” said Daniel McCue, a Harvard senior research associate and principal author of the school’s report. “It’s rising up the priority list. Mayors have been sounding an alarm to build solutions at the city level.”
That doesn’t mean subsidies for the poorest residents or public housing owned by government.
Increasingly, city governments and county agencies are pairing up with universities, advocacy groups and developers to identify vacant public land, reshape zoning codes, design new tax incentives and create new funding streams.
For example, the University of Miami’s Office of Civic and Community Engagement recently launched a real-time mapping tool that revealed 500 million square feet of vacant or underused land around Miami-Dade County that is either publicly or institutionally owned.
The tool allows developers and community advocates to identify potential land assemblages for affordable housing. City and county planners have scheduled demonstrations with UM analysts to learn how to best use the tool.
In the City of Miami, the Omni Community Redevelopment Agency has partnered with a private developer, Avra Jain, to refurbish existing low-income housing buildings. Miami-Dade County is collaborating with the school board and the library system to create housing as part of existing projects.
AFFORDABLE VS. PUBLIC
For years, the core of the government response has been public-private partnerships that marry the expertise of private developers with tax incentives that make such projects an attractive business proposition.
Although they’re often lumped together, affordable housing is entirely different from public housing. Public housing is financed and overseen by the U.S. Department of Housing and Urban Development (HUD). Residents who live there must meet strict eligibility requirements that favor extremely low-income households, which means they earn 30 percent or less of a county’s median income. In Miami-Dade, that means less than $15,000.
Affordable housing is designed for households earning between 60 and 120 percent of the area median income — in Miami-Dade, between $30,000 and $60,000.
But because the guidelines are so complex, only specialist companies focus exclusively on affordable housing.
“Whenever there’s a suitable parcel of land available, people want to build high-end housing on it,” said Stephanie Berman-Eisenberg, president and CEO of Carrfour Supportive Housing, a non-profit organization established in 1993 by the Greater Miami Chamber of Commerce to develop housing and support for the homeless in Miami-Dade. Carrfour currently oversees an inventory of 2,000 units around the county, with 250 more on the way across South Florida.
“It’s very hard to make an affordable housing development work — make it truly affordable and still make it profitable,” she said.
But although it remains a small industry, experts say affordable housing remains popular because there is less competition.
“It’s a small niche and everyone stays in their lane, because they all go about it differently,” said Kevin Morris, senior director of affordable housing services at Colliers International. “It’s also one of the rare industries that gets support from both Democrats and Republicans, because of its social importance and because of the tax credits.”
A typical affordable housing development begins with the Low Income Housing Tax Credit (LIHTC). Created in 1986, the program provides tax credits to developers who build rental properties with rents at lower-than-market rates. Developers then sell the tax credits to financial institutions such as banks or hedge funds to amass the initial capital for the proposed project.
Each year, the Internal Revenue Service allocates LIHTCs to state housing agencies on a per capita basis, so larger states get more than smaller ones. (The average amount of dollar values allocated from 2018-2022 is projected to be $9.9 billion each year).
There are 4 percent tax credits, which generally pay for approximately 30 percent of the budgeted costs, and 9 percent credits, which pay for approximately 70 percent of the budgeted cost of the development of a rental property.
In Florida, the program is overseen by the Tallahassee-based Florida Housing Finance Corporation (Florida Housing), which creates a plan for allocating tax credits throughout the state. The credits can be used for new construction, refurbishing of existing units or hurricane recovery.
Once the plan is approved by the governor, Florida Housing puts out requests for applications (RFAs) for the 9 percent tax credits and affordable housing developers compete for those tax credits. The 4 percent credits are administered through a rolling non-competitive application process.
A requirement for all applicants: The average rents of the housing credit units must be affordable to families making 60 percent or less of the area median income. (Income averaging allows some units to be priced at more than 60 percent AMI, as long as other units in the building are priced lower.)
The applications are scored and ranked, and tax credits are awarded to the selected projects.
Developers turn those tax credits into equity by selling them to banks and funds, who can claim those credits on their federal tax returns for a period of 10 years.
Case in point: Matt Rieger, president and CEO of the Housing Trust Group development firm, which specializes in affordable housing, said his proposal for the 150-unit Princeton Park in southern Miami-Dade County, was one of two (out of 100) applications selected by Florida Housing for tax credit allocation in 2016.
The project was budgeted at $36 million and comprised of four three-story residential buildings, a clubhouse and a swimming pool. Rieger received $23.7 million in equity by selling his allotted tax credits through the National Equity Fund and SunTrust.
The building was completed in June and is 100 percent occupied. Monthly rents range from $411 for a one-bedroom unit to $1,104 for a three-bedroom unit. There is a six-to-nine-month wait for apartments .
The remaining gap in the project budget was met via traditional bank loans and other forms of funding, such as Miami-Dade County’s documentary stamp surtax.
The Miami-Dade surtax is unique. When any property changes hands or a mortgage is issued, every Florida county except Miami-Dade charges a stamp surtax of 70 cents on each 100 dollars. Miami-Dade charges 60 cents per 100 dollars, along with an additional 45 cents on commercial real estate transactions that stays in the county.
That surtax is the county’s largest source of construction financing for affordable housing funds. Currently, 49 affordable housing projects — totaling 5,941 units — are underway. All were partly financed by $154 million of county funds. — including $117 million from the surtax.
In other counties, 20 cents of the stamp surtax are funneled into the William F. Sadowski Affordable Housing Trust Fund, established in 1992 to support local and state housing programs.
But since 2003, the Sadowski fund has been routinely raided by Tallahassee lawmakers for other uses such as hurricane recovery and general funding. From 2008-2017, the Sadowski fund generated $1.9 billion, but only $578.5 million of that money went to housing.
And the raiding continues. In January, when Gov. Ron DeSantis filed his proposed 2019 budget in advance of the Florida legislative session, every dollar of the $350 million the Sadowski fund contained was earmarked for affordable housing.
But when DeSantis signed the negotiated budget into law on June 21, he did not veto a line item that removed $125 million of the money intended for affordable housing and swept it into the “general revenue” fund to be used for unspecified programs across the state.
The bulk of this year’s Sadowski fund — $115 million — will help rebuilding efforts in counties affected by Hurricane Michael. The remaining $85 million will be split between financing for affordable housing developers and funds that provide individual counties the flexibility to address their specific needs, such as helping first-time home buyers or retrofitting apartments for the disabled.
In the cities
Complicating the picture is the county’s municipal structure. Broward’s municipalities have come together under a single unified plan. But in Dade, each of the county’s 34 municipalities creates its own plan. For uber-wealthy ZIP codes where any home under $1 million is considered a bargain, affordable housing is an afterthought, often left to the communities in which workers actually live.
The largest of those is the city of Miami. With more than 470,000 residents and a median household income of $34,000 — far below the county median of $50,000 — the problem is particularly acute.
“Every person in Miami should have the opportunity to be successful and a place to be proud to live in,” said City of Miami Mayor Francis Suarez. “Government cannot solve everyone’s problems. But we can use the resources that are available and use existing capital and land to address one of the most critical needs in our community.”
On Thursday, Suarez announced the city received a $5 million grant from HUD to be used to fund 443 subsidized units, housing opportunities for people with AIDS, and repairs and rehabs for existing homes.
In June, the City of Miami commission approved the use of $7.15 million of the $100 million Miami Forever Bond to help fund the construction or rehabilitation of 500 affordable/workforce units in Allapattah, Little Havana and Coconut Grove.
The City of Miami also is working with Florida International University’s Metropolitan Center to prepare an Affordable Housing Master Plan that will lay out a 10-year blueprint to increase the quality and quantity of affordable housing. That plan, which puts the shortage of affordable housing units within city limits at 50,000, is expected later this summer.
Under one proposal, Miami-Dade County would use the federal Rental Assistance Demonstration Program to transfer ownership of existing public housing to third-party owners. Those developers could turn a profit by increasing density and converting the properties into mixed-income communities. The county would share revenues with the private owners.
That proposal would add 5,433 permanent new housing units to the existing housing stock available to the poorest residents through the program known as Section 8.
Other tactics laid out by the non-profit Miami Homes For All advocacy group would create or preserve 12,000 affordable housing units in the city of Miami by the year 2024. One part of its plan calls for a fee on second homes and investment properties — perhaps as a 1 percent annual property tax, based on a percentage of the sales price.
About 62 percent of the City of Miami’s homes would qualify for the fee, resulting in an estimated annual revenue of $98 million, which would be designated for affordable housing.
Though Miami Beach ranks as the county’s fourth largest city, its icon-like status as a tourism center means the housing crisis hits particularly hard.
Today, Miami Beach manages 84 affordable housing units, including the 33 studio apartments priced at $739 per month that opened for application on July 2. The city also is expected to close on the acquisition of a five-unit building by the end of July, according to Miami Beach spokesperson Melissa Berthier.
But there are currently 2,079 people on waiting lists for studios and one- to three-bedroom apartments in Miami Beach — one indication of how gross demand exceeds supply.
“Unfortunately, the annual federal allocations for housing development have slowly decreased each year and are insufficient on their own to enable the consistent acquisition of new assets,” Berthier said. “It doesn’t appear as if these funds will grow in the near future either. When you couple such low working funds with the high cost of acquisition and rehabilitation in our city, it is very difficult to acquire/develop new units.”
That puts the problem most heavily on the county. More than one million make their homes in unincorporated Miami-Dade, where the median household income is approximately $59, 397, according to U.S. Census data.
According to data from the Miami-Dade County Affordable Housing Blueprint prepared by the Florida International University Metropolitan Center, only 32 percent of renter-occupied units in Miami-Dade are priced less than 30 percent of the household monthly income.
What’s worse, asking rents around Miami-Dade County run 30 to 40 percent higher than existing rents. Forget ownership: the current median sales price of a single-family home ($351,250) is out of reach for 82 percent of the county’s households, and prices keep going up.
Existing supply is a drop in the bucket.
As of May 6, the Miami-Dade County Public Housing and Community Development department had a total of 1,655 new and rehab rental units under construction or in the financing stages. One of those projects, the first phase of the Liberty Square mixed-income redevelopment, opened July 1, adding 204 new public, affordable and workforce units to the market.
But for Michael Liu, director of Miami-Dade County’s Public Housing and Community Development (PHCD), the county is finally approaching “a tipping point.”
“We have been able to enhance our building and zoning approval processes to make it easier and faster to get projects approved at the county level,” Liu said. “We have also started to get creative in working with entities that have land that has not been traditionally used for housing.”
Among some recent approaches:
▪ A collaboration with the Miami-Dade Public School Board will allow the county to redevelop the Phillis Wheatley Elementary school site at 1801 NW First Place in Overtown. The redo will include a new school and more than 200 housing units.
▪ Another agreement will allow the School Board to build a school on a small vacant public property at 945 SW Third Avenue in Brickell, along with ten affordable units with a preference for moderate-income school employees.
▪ In conjunction with the Miami-Dade Library System, the PHCD will rehab the Little River Library at 110 NE 9th Street and add 140 housing units to the location.
Within the last quarter, the county has overseen the completion or renovation of three public housing apartment buildings for residents aged 55 and up, including Martin Fine Villas near Marlins Stadium, which includes both public housing and affordable units; a 128-unit public housing building in Allapattah and the 23-unit Senator Villas in Westchester.
But as the county’s Liu points out, no one entity or approach can fix the problem.
“When you are looking at housing needs in the U.S., you have to look at everything — affordable and market-rate,” he said. “Because what is market-rate today become the affordable units of the future. The bottom line is all units help because they help to release the pressure.”