Inside Florida’s New Workforce Housing Law

Hollie Croft

Over the last five months, many developers across the county have been eyeing Florida’s new law known as the Live Local Act. The act provides incentives to developers for multifamily workplace or attainable housing such as zoning preemption and property tax exemptions—commonly known as the “missing middle” exemption—which are specifically targeted at addressing an important demographic not served by traditional affordable housing programs.

Florida, along with the rest of the nation, is currently in the midst of an ever-increasing housing crisis, and the Act takes direct aim at the “missing middle.” It breathes new life into many developments that have potential to alleviate the crisis but have been stymied by the increasing costs of building materials and insurance, as well as rising interest rates, and thus incentivizes developers to maintain all or a portion of their developments for the workforce.

For new construction projects, the zoning preemption provisions generally require municipalities to administratively authorize multifamily residential as an allowable use in any area zoned for commercial, industrial or mixed-use. The preemption also requires at least 40 percent of the proposed development’s residential units be affordable for a period of at least 30 years to tenants whose incomes are at or below

Nicholas Heckman

120 percent of the median annual adjusted gross income for the area. The development may be strictly multifamily, or it may be a mixed-use development that includes multifamily, so long as at least 65 percent of the total square footage of the development’s improvements are used for residential purposes.

In such areas, comprehensive plan amendments, rezoning, conditional use approvals or other special approvals for qualifying developments are no longer required, provided: (1) the development’s density does not exceed the highest density allowed on any parcel where multifamily residential use is already permitted in the municipality, (2) the building height does not exceed the highest allowable building height for residential or commercial structures within one mile of the property proposed for development within the municipality, and (3) the development satisfies all other applicable land development regulations.

Tax Benefits of the Act

The other notable incentive added by the Act is the missing middle property tax exemption, which provides qualifying multifamily workforce developments a discount of up to 75 percent of the assessed value of a unit if the unit provides affordable housing to natural persons or families. Their annual household income is required to be between 80 percent and 120 percent AMI, or 100 percent of the assessed value if the annual household income does not exceed 80 percent AMI.

David Leon

The missing middle exemption requires a development to be newly constructed or substantially rehabilitated in the last five years from its first application for certification from Florida Housing Finance Corporation, which is a necessary certification to apply for the exemption with the local appraiser, or application for exemption, whichever is earlier.

The development must contain at least 71 units that provide housing to tenants with incomes no greater than 120 percent AMI, and, in order to obtain an exemption for a specific unit, the rent for the unit must not exceed the lesser of: (1) the amount published by Florida Housing in its multifamily rental programs rent and income limit chart , which is derived from HUD published income limits, or (2) 90 percent of the fair market value rent as determined by a rental market study, which must be provided with the certification request.

Program logo from the Florida Housing Housing Finance Corp. website

The exemption is specifically targeted to workforce and attainable housing units and is not available to units that are otherwise subject to a recorded land use restriction agreement with Florida Housing. This creates an incentive for developers to provide housing to workforce tenants who are not otherwise served by traditional affordable housing programs such as the Low Income Housing Tax Credit Program.

While the Act is in its infancy, it has the potential to create many affordable units for the workforce that will forever change the lives of many members of our community. The Live Local Act is a game changer for Florida and should be looked at by other jurisdictions as they consider how to tackle the ever-growing crisis of affordable housing for our workforce.

David Leon and Hollie Croft are Orlando-based partners and Nicholas Heckman is an Orlando-based senior associate in the Affordable Housing & Tax Credits practice of Nelson Mullins.