Florida Voters Support Incentives for Affordable Housing, Poll Results Show
A majority of Florida voters support local property tax incentives to bolster affordable housing, a recent statewide poll shows. Support is significantly higher in Southeast Florida and among minorities, according to results of a recent Mason-Dixon Florida Poll. The poll included a question submitted by the Florida Apartment Association to gauge support for one of FAA's 2021 legislative priorities: to pass legislation to allow local governments to waive or reduce property taxes for affordable housing units (HB 563/SB 674). This is the first time that FAA has participated in a statewide poll.
Poll participants, who are registered voters from across the state were asked, "Do you feel local governments should or should not have the ability to waive or reduce property taxes for housing if it enhances access to more affordable housing within their community?" Statewide, 61% of respondents were in favor of such as incentive, as were 76% of respondents in Southeast Florida and 71%-74% of minorities. Interestingly, this type of incentive received broad bipartisan support among both registered Republicans and Democrats.
FAA will be using this great polling data to help educate Florida legislators and local governments about the importance of FAA's priority legislation (HB 563/SB 674).
In order for a new apartment community construction project to break ground, a developer must secure financing from investors, who demand a specific rate of return in exchange for their investment. It is difficult for developers to achieve the necessary rate of return for affordable apartments, which are rented below market rate. As a result, it can be extremely challenging for a developer to secure the financing needed to make an affordable housing construction project feasible.
Because of these challenges, developers rely on a combination of state and federal tax incentives along with private funding. However, the process of obtaining these government tax incentives is extremely competitive, with a very limited number of projects ultimately receiving this type of funding each year.
Florida law currently lacks clarity regarding a municipality’s ability to waive or reduce local property tax rates for affordable housing, which is an impediment to encouraging the construction of affordable apartment communities at the local level.
How This Impacts the Apartment Industry
According to a recent research study conducted by the Florida Apartment Association, regulatory requirements and municipal policies can increase the rent required to operate an apartment community by 12%-17%. To put this in perspective, local policies can shift affordability from requiring a household to earn $64,000 annually in order to afford a two-bedroom apartment to requiring a household annual income of $75,000 to afford the same apartment. As a result of rising construction costs and the challenges associated with obtaining the limited number of state and federal tax credits that are currently available, many housing developers are unable to construct new affordable apartments. In light of the dire need for more affordable housing, the Legislature should take action to provide local governments with the authority to offer additional tax incentives at the local level at their discretion to address this pressing need.