Legislative action uncertain on potential sweeps of Florida affordable housing fund
New apartments in downtown West Palm Beach, Florida,
The Florida governor and legislature have until the end of the legislative session to reconcile the state’s budget, which impacts affordable housing funding. Prior to the budget process, which began in January, two housing agencies produced reports that detail the grim reality of Florida’s affordable housing crisis.
The crisis is two-fold: the need for affordable housing is great, and Florida’s legislators have historically diverted intended affordable housing funds elsewhere.
Florida ranks second behind Nevada in having the least available and accessible affordable housing for low-income residents in America, according to a report produced by the National Low Income Housing Coalition (NLIHC).
In Florida, “79 percent of extremely low income households are considered severely cost burdened."
Florida also has the third highest population of homeless people in America, according to another report produced by the Florida Housing Coalition (FHC), a nonprofit housing advocacy group.
Nationally, NLIHC states that “the supply of rental housing has not kept pace with demand over the past decade” and the shortage is worst among those with the lowest incomes.
“In no state can a minimum wage worker afford a one-bedroom rental home at the average Fair Market Rent (FMR), working a standard 40-hour work week, without paying more than 30 percent of their income,” it asserts.
The federal Housing and Urban Development Agency sets the FMR for rental units and determines the minimum income needed to rent them. The NLIHC calculated that in Florida, the FMR for a two-bedroom apartment is $1,075. Without paying more than 30 percent of the household income on housing, a low-income Florida household would need to earn $3,584 per month, or $43,007 annually.
In order to afford a modest one-bedroom rental home at FMR at $8.10 per hour, NLIHC estimated that the worker would need to work 82 hours per week.
The report provides comparisons of household wages, area median income, and FMR values by county. In Duval County, Florida, for example, workers would need to earn $18.63 an hour in order to rent a modest, two-bedroom unit. That’s roughly $2 more than what the average renter in Jacksonville earns. The state minimum wage is $8.10.
The FHC report shows that 31 percent of all homeowners in Florida and 18 percent of all renters spend more than 50 percent of their income on housing. This is 20 percent more than the cost burden identified by NLIHC’s 30 percent benchmark.
FHC also points to a University of Florida’s Shimberg Center assessment that 744,662 low-income renters paid more than 40 percent of their income on housing in 2015, which represented a 35 percent increase in 10 years.
Over the last decade, lawmakers have been asked—“will there be another raid on affordable housing funds?” Since the early, 2000s, state records show that Florida lawmakers have taken money intended for affordable housing programs and spent it elsewhere to help balance the budget.
Since 1992, Florida law has required that affordable housing programs be funded through a “documentary stamp tax,” which is paid on all real estate transactions.
Dating back to the early 1990s, Florida lawmakers recognized that wages were not keeping up with population growth, and there was an increased demand for low-income housing. To address the gap, they first added a 10-cent surcharge per every $100 spent on each real estate transaction. This surcharge was collected and put into the William E. Sadowski Affordable Housing Trust Funds, according to a new 1992 law. In 1995, they added another 10 cents to the requirement. By 1995, this meant that 20 cents out of every $100 spent on real estate transactions was dedicated toward affordable housing development.
The intended purpose of the Sadowski Trust Funds was to leverage private and federal funding to develop or rehabilitate affordable housing units for low-income wage earners, the elderly and the disabled.
This year, the fund is estimated to receive between $292 million and $322 million.
For more than a decade Florida lawmakers have consistently taken out at least half of the earmarked money for affordable housing and spent it on other initiatives and to fill budget gaps, otherwise known as “fund sweeps.”
Under former Gov. Jeb Bush, the legislature diverted millions every year from the trust fund to implement tax breaks and fund other initiatives. According to a report from the Senate Committee on Community Affairs, since 2001 (when legislators first started “fund sweeping” the Sadowski Funds) more than $2 billion was redirected to fill budget gaps, finance tax relief and other programs instead of investing in affordable housing.
Local municipal governments have addressed affordable housing challenges differently. In Palm Beach and Tallahassee, municipalities have historically required affordable housing units to be built next to FMR units.
Others utilize the linkage fees system incorporated into Community Land Trusts. Companies pay linkage fees on non-residential developments when applying for building permits. The more companies that apply for permits, the more fees are collected to help fund affordable housing projects.
In January, State Sen. Kathleen Passidomo, R-Naples, introduced SB 874, which would effectively stop fund sweeps. Her bill would keep affordable housing revenue in the trust funds and ban future legislators from using it for something else.
Both houses passed opposing budgets on Feb. 8. According to the Orlando Sentinel, the governor’s proposed $87.4 billion budget would redirect nearly $92 million from the Sadowski funds.
The Senate’s $87.3 billion budget, which passed on a vote of 33-1, would keep the expected $308 million to $320 million in the trusts, meeting the goals of SB 874.
The House’s $87.2 billion budget, which passed on a vote of 85-27, would divert roughly $182 million from the funds. After it passed, Rep. Joe Geller, D-Aventura, said, “These sweeps are not only wrong, they ought to be illegal.”
The governor and legislature have 18 days to reconcile budget differences. The 60-day legislative session is scheduled to conclude on Friday, March 9.