Miami finally has a strategy to tackle its housing affordability crisis. Here’s the plan
If Miami’s political leaders are serious about solving the city’s growing affordability crisis, here’s what a sweeping new plan to be unveiled Wednesday says they need to do:
Create a bank to finance affordable housing construction and renovations, streamline permitting and tweak zoning, then get small and mid-size developers churning out 3,200 units of housing every year for 10 years — a scale and pace that the plan’s authors call “unprecedented.”
If it sounds ambitious, it is nonetheless necessary to solve an acute crisis that’s not just making it harder for Miamians to find housing they can afford, but also gentrifying character and people out of its neighborhoods. The crunch also acts as a drag on the local economy because residents can’t spend money on things other than housing, the plan’s authors say.
That’s the gist of the Miami Affordable Housing Master Plan, commissioned by the city from the Jorge M. Pérez Metropolitan Center at Florida International University. The plan, developed over the past year with extensive input from city staff members, community outreach efforts and focus-group meetings with bankers and developers, will go to a public workshop on Wednesday before city commissioners consider whether to adopt it on Thursday.
The plan addresses the needs of City of Miami residents making 80 percent or less of the area median household income of $33,999. (The median household income for Miami-Dade County residents is $49,930.)
The plan focuses exclusively on the City of Miami’s 470,000 residents. FIU is working on a separate housing master plan, this one tackling the housing crisis across Miami-Dade County, that will be released in February.
“This is a real critical economic issue,” said Kevin T. Greiner, a senior fellow at the Center and principal author of the study. “If the city doesn’t deal with this problem head-on and at the right scale, it will have consequences for Miami’s future viability. The mix of neighborhoods that make Miami unique will go by the wayside. We run the risk of Miami becoming this sort of generic tourist destination.”
A public-private endeavor
Under the innovative plan, the effort would be a largely private endeavor, with the city providing seed capital in the form of $85 million already set aside for affordable housing from voter-approved bonds. It would be driven not by large developers or the builders that now provide the bulk of affordable housing in Miami-Dade County, but by small and mid-size entrepreneurs creating “infill” projects on small and medium sized lots.
The principal focus would be on rehabilitating existing homes and apartments, and supplemented by new modestly sized multi-family buildings ranging from five to 50 units. Greiner called that a “sweet spot” for urban housing that, for various reasons, is rarely built within city boundaries.
The FIU plan outlines concrete steps the city should take quickly:
▪ Create a Miami Affordable Housing Finance Corporation that would work as an independent company to coordinate and provide loans and funding to developers and property owners;
▪ Form a Miami Housing Innovation Fund to create a pool of $1 billion through a combination of investments and loans from the public, private and philanthropic sectors;
▪ Focus on renovating existing housing and building new small and mid-scale housing complexes near transportation corridors;
▪ Streamline the permitting and zoning review process for affordable housing developers.
The plan represents a radical overhaul in the way local government has sought to support the construction of homes and apartments affordable to locals. The slow and laborious process, which often requires land assemblies and painstaking cobbling together of financing from multiple sources, would be streamlined under the proposed Miami Affordable Housing Finance Corporation.
“The city needs to tackle the affordability crisis with small-scale, infill developments to go along with the larger ones,” said Albert Milo, president of Related Urban, the affordable housing division of the Related Group, which is now working on the mixed-income Liberty Square and River Parc projects.
“There are small sites scattered throughout the city that have been vacant for years,” Milo said. “Larger developers will look past those because they are too small. But there are a lot of smaller developers who would be interested if the city had a comprehensive, infill plan that would expedite the process and get those developers out of the bureaucratic loop of permits and zoning that end up costing so much money.”
Growing the stock
The comprehensive approach would grow the proportion of affordable owner and rental housing in the local market from the existing 20 percent of all units to 25 percent of all units — or roughly 32,000 additional units — by the year 2030, according to the plan. The percentage of affordable housing in the city is now dipping below 20 percent, a worrisome level, the authors said. Every year in the city, 1,200 homes ‘disappear” from the local affordable housing market as their prices rise beyond what a significant segment of population can comfortably pay, they said.
The plan also aims to boost local workers and entrepreneurs. More than 14,000 new jobs could be created by investing a portion of the Innovation Fund into skilled trade training, equipment grants for small contractors and incentives for minority- and women-owned small businesses, the report concludes.
According to the report, Miami’s housing affordability crisis is an “existential threat” that has rendered Miami the least affordable large city in the U.S., with 57 percent of its households (94,638) paying more than 30 percent of their income on housing costs, and more than 33 percent of renter households (39,112) spending more than half their income on rent.
“We are losing people who just can’t afford to live here any more,” said Ned Murray, associate director of the Metropolitan Center and principal investigator and contributing author of the master plan. “Paying more than 50 percent of your income on housing is not sustainable. It eats away into the quality of life.”
For the plan to be most effective, Murray and Greiner stressed, it should be adopted in full as a governing master plan. The workshop on the plan will be held from 10:30 a.m.-1:30 p.m. Wednesday at Miami City Hall, 3500 Pan American Drive, Miami.
The proposed Innovation Fund would be seeded by $85 million in bond proceeds that had been set aside by the city until a plan for its use could be developed. That money, according to the plan, could be leveraged into $1 billion over 10 years with financing from banks, state and federal tax incentives and investments from philanthropic and corporate groups.
“When you have a problem as deeply entrenched as this one is, you need coherence from all three sectors: Public, private and philanthropic,” said Ines Hernandez, South Florida Market Manager for Citi Community Development. “This report creates that framework for all three sectors to work together.”
Some aspects of the master plan are sure to be controversial, such as a proposed one-percent tax on vacation homes and condos that sit vacant most of the year that could generate as much as $100 million annually. In 2017, Vancouver became the first city in North America to institute an Empty Homes Tax, which generated $38 million in its first year.
“We need a process to quickly access property, capital and funding that also has a big-picture goal behind it,” said Mandy Bartle, executive director of the South Florida Community Land Trust, which is currently working on its first development in Miami-Dade that would add 13 townhouses to Little Haiti. “The most effective affordable housing plans are comprehensive and establish needs, goals and benchmarks. That is what this plan launches for the City of Miami.”
A radical plan
FIU’s Greiner and Murray said their housing plan is among the most radical in the country. But they contend Miami is well positioned to put it into effect quickly, thanks to the extensive skills and experience local developers, real estate investors and banks have honed over the last decade of the city’s growth.
Success, however, hinges on approval and adoption by city commissioners.
“We were asked to think creatively when we started working on the plan,” Murray said. “Now they need to show leadership on this and proceed with the recommendations we’ve provided. The city needs to take the lead and contribute that $85 million seed money and create the financing and management structure needed to address this crisis.”
The key elements of the plan were a response in part to an analysis that found an increasing shortage of suitable land within city boundaries for construction of new housing. and the need for speed and efficiency, Murray and Greiner said.
The plan aims for a combination of rentals and home ownership, though it refrains from defining a percentage for each. While the greatest immediate need is for rentals, Murray and Greiner noted, home ownership is popular with residents and elected officials because it’s a path to increased wealth and prosperity.
This story was originally published January 7, 2020 at 6:00 AM.
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