What now? The future of affordable housing

Nassau County is one of the most difficult places in the state for moderate-income, working households to make ends meet. Annual incomes once viewed as sufficient to provide a comfortable middle-class lifestyle are being stretched to the breaking point here, according to the United Way of Florida’s latest ALICE report, and the working poor are falling even further behind. In the last of our series on that report, the News-Leader looks at how community leaders are choosing to address the issue. Or not.


The acronym ALICE stands for Asset Limited, Income Constrained and Employed.

It is also the name of a recent report from United Way of Florida that shows working Floridians with incomes well above federal poverty guidelines are struggling to cover the basic necessities of housing, food, child care, health care and transportation.

Nassau County is one of the worst in Florida when it comes to ALICE families and individuals. It is one of four counties in Florida where both high-wage job opportunities and affordable housing options decreased by 20 percent between 2007 and 2015.

Income thresholds for ALICE, customized on a county-by-county basis, revealed that a Nassau County family of two adults with one preschool-aged child and an infant needs an annual household income of $53,088 to cover the basics, with nothing left for future emergencies. On this income, a household is typically one crisis away from financial instability. The median household income for Nassau County is $52,005. Half of the households in the county earn less, half more.

Sixty-seven percent of Florida jobs continue to pay less than $15 an hour. The minimum “stability” budget for a single-adult household with no children was calculated for the report at $31,482.

Factors contributing to Nassau County’s poor performance in the ALICE report are a chronic lack of affordable housing options for working families; the increasing burden of local housing costs to household income; a preponderance of low-wage jobs; and, in the case of Amelia Island, the increasing disparity of income between those who live here and those who work here.

The market rate for housing in Nassau County is out of step with the realities of the local economy. If half of the households in Nassau County earn $52,005 or less, then in theory, half of the housing in the area should cost no more than $1,300 a month. As many Nassau County residents know, that is increasingly rare.


Shortages in rental housing

Despite the new and planned developments along the S.R. 200/A1A corridor in Yulee, the short-term outlook for ALICE households in Nassau County does not seem bright. The report estimates there is currently a shortage of 5,000 rental units in Nassau County. Because of the shortage, rent is inflated. Sixty-three percent of all apartment dwellers in Nassau County are ALICE households, and of those, 45 percent are paying more than a third of their income for rent.

An informal survey of apartment rentals available countywide in early March revealed that out of 44 listings, only two rented for $1,000 or less per month. On the same date, seven homes were listed for rent, with only one house-trailer renting for $1,000 or less per month.

One program aimed at multi-family property developers is called the State Apartment Incentive Loan program (SAIL). It is one component of the Sadowski Affordable Housing Act trust fund created in 1992 by the Florida Legislature. Like SHIP — the State Housing Initiatives Partnership — the program is administered by the Florida Housing Finance Corp.

SAIL provides low-interest loans each year, on a competitive basis, to developers of affordable housing. SAIL dollars are available to individuals, public entities, not-for-profit or for-profit organizations that propose the construction or substantial rehabilitation of multifamily units for very low-income households. Twenty percent of the development’s units must be set aside for families earning 50 percent or less of the area median income. Eligible applicants apply to the Florida Housing Finance Corp.


We are not alone

Affordable housing issues have long plagued urban areas and resort communities like Amelia Island. As people are drawn to job opportunities, competition for a tight housing supply raises prices and leads workers to drive farther to find affordable housing. In resort communities, an influx of tourists, retirees and second homeowners drive up rental and real estate prices without bringing very many high-end jobs to stimulate the economy. An additional factor for many resort communities is limited geographical space to accommodate new development.

The term “workforce housing,” increasingly used by planners, governments, policymakers, real estate brokers and developers, appears to have originated in the mountain resorts of Telluride and Aspen, Colo., in the mid-1970s. When the average price of homes in Telluride approached $1million, it became clear that the workers needed to keep the community functioning had nowhere to live. Now it is defined as housing located in or near where people work because the added cost of commuting becomes prohibitive given workers’ incomes. Key occupations — from teaching to law enforcement to day care to sanitation— are now routinely grouped in the term “workforce.”


Dormant policies; ‘no driving force’

Local government actions to address the lack of affordable, workforce housing spelled out in the ALICE report have been limited. Policies discussed and created in the past lie dormant. But with the release of the ALICE report for Nassau County, some politicians are at least discussing the issue again.

“The current (city) commission has had several discussions about affordable and workforce housing. … The low supply of rental properties drives the price up, and then it forces those who work on the island to live off the island, thus creating more traffic trips,” Fernandina Beach Mayor Robin Lentz said. “These are issues we will need to work cohesively to address – county and city – with policy and perhaps incentives for those who want to specifically develop affordable and workforce housing.”

The Northeast Florida Regional Council Affordable Housing Ad Hoc Committee has not met since October 2016, “when it was determined to have fulfilled its intended purpose of establishing priorities on a regional basis.” The consensus of the committee was that increasing the number of affordable housing units per community and establishing transportation links between where workers live and work were “top priorities” for Northeast Florida, yet no action has been taken.

Fernandina Beach Vice Mayor Len Kreger, who participated in the committee, said he has found “no driving force” to address housing issues within Fernandina Beach. Although he said “lots of innovative stuff” came out of the regional planning meetings, nothing has been implemented locally.

“(Fernandina Beach) is an affluent community becoming more affluent all the time, and people don’t want to talk about ‘affordable housing’ here,” Kreger said.

He added that he was disappointed that no other city commissioners seconded his recent motion to require new developments to set aside “5 percent” for affordable housing.

Kreger revealed he is in the process of negotiations with the developer of the new apartment complex planned for the corner of South 14th and Lime streets about setting aside 10 of the proposed 224 new rental units, five at a $750 monthly rental and five at $1,200 a month, but nothing has been promised to date, and it depends on the goodwill of the developer.

One issue with the term “affordable housing” is that people envision large and often problematic federal housing “projects,” shorthand for low-income housing. Kreger knows firsthand what can come to mind. At one time, he was a maintenance supervisor for a Chicago low-income housing project. Despite his empathy for those needing low-income housing, even Kreger has difficulty framing the issue in terms of middle-income households: “They tell you that firefighters and teachers can’t support themselves, but that’s not true.”

An online search of average salaries for common occupations in the area’s public service sector and service industries suggests otherwise. Many service occupations pay less than the county’s median income.

And Kreger is not optimistic that a proposal to increase downtown property density in Fernandina Beach would provide more affordable housing units. He was disappointed that the Eighth Street Small Area Plan, which generally covers the South Eighth Street corridor, was approved for a density of 16 housing units per acre instead of the 30 developers suggested.

Kreger perceives that negotiations for set-asides for affordable housing units will be limited in Fernandina Beach because developers need a large parcel of land for set-asides to work and “the city is almost built out.”

Projected Kreger, “I don’t see much improvement for the future. Of the five new developments that have been approved for Fernandina Beach, all are for more of the same – upscale, single-family homes.”

He also cites concerns about tree preservation and historic preservation as competing priorities with affordable housing options. For all of these reasons, Kreger believes opportunities to expand affordable housing will lie primarily with the county instead of the city.


Glimmers of hope

While the availability of federal subsidies for renters has been in decline for years, and long waiting lists exist for low-income housing in almost every community nationwide, those resources are for near poverty-level households. Many of those households are dependent on fixed incomes such as disability or Social Security for survival.

Poverty households are included in the ALICE report, but the problem of affordability has spread well beyond “poverty” to include middle-income working households. 

For Nassau County Commissioner Justin Taylor, the only county commissioner to respond to requests for comment on this issue, affordable housing is personal. Taylor was raised by a single mother who struggled to make ends meet. He said he was homeless for a time.

And though his compassion and interest in addressing the problem are sincere, Taylor also defines the issue in terms of “poverty” instead of the gap between workforce wages in Nassau County and local housing affordability.

In his response to the News-Leader’s inquiry into the ALICE report, Taylor said, “I was unaware of the poverty issue in Nassau County and hope we can find ways to make improvement.”

He recently requested that the County Commission form a new housing task force to look into solutions.

Among the first to respond with interest in a new county task force was Carlene McDuffie, owner of Palm III Realty, Fernandina Beach, who shares Taylor’s personal interest in affordable housing.

Said McDuffie, “My mother never got to own a home of her own … I never had that growing up.”

She attributes her personal experience with the decision to enter real estate and to specialize in helping first-time homebuyers into the market.

“I get such emotional reward from helping a young couple get into that first home. It’s not an easy market, though, because some of them haven’t yet established credit. It takes a lot of work to find an affordable property and then to help them qualify for it,” McDuffie said.

Forty-one percent of all Nassau County homeowners fell under the ALICE threshold incomes in 2016, and more than half of them were paying more than a third of their income toward mortgages.


Expect limited state help

Florida became a pioneer in developing a mechanism for funding affordable housing with the implementation of the William E. Sadowski Affordable Housing Act in 1992. Funds from real estate transactions throughout the state are set aside in a trust fund to assist in the development of affordable housing for the workforce, the disabled and the elderly. Several programs funded by these resources are administered by the Florida Housing Finance Corp., an independent agency. The program available to help homeowners is SHIP, the State Housing Initiatives Partnership. Funds are allocated to county governments on a population-based formula. Under the program, buyers of homes costing up to $215,000 may be eligible for assistance. An informal survey in March found a reasonable supply of homes in this price range on the market in Nassau County.  According to Carol Gilchrist, who manages SHIP applications for Nassau County, before the county could receive SHIP funding in the first place, it had to develop a comprehensive plan “to establish a local housing assistance program by ordinance; develop a local housing assistance plan and housing incentive strategy; amend land development regulations or establish local policies to implement the incentive strategies; form partnerships and combine resources in order to reduce housing costs; and ensure that rent or mortgage payments within the targeted areas do not exceed 30 percent of the area median income limits ...”

However, the SHIP program has not helped very many buyers. Local governments are not promoting it or even paying attention to it.

Said Kreger, “The thing is, everybody needs to stop talking words and start talking money.”

The county was allocated $850,000 between 2015 and 2017 to help with down payments and closing costs on the purchase of homes and home repairs/modifications needed for homeowners to remain in their own homes. Just 26 Nassau County residents have benefited from the program since 2015.

Challenges with SHIP include a complicated formula for allotment of limited resources, but the major problem with SHIP funding, as recently reported by the Tampa Bay Times, is that most of it never makes it to local communities at all: $1.3 billion in funds have been diverted by legislators for other purposes since 2003.

The Sadowski Coalition, a diverse group that includes the Florida Housing Coalition, Florida Realtors Association, Florida Chamber of Commerce and Florida Home Builders, is urging lawmakers to spend
the money on what it was collected for.


Learning from others

John Griffith, policy director of the nonprofit Enterprise Community Partners Inc., an organization currently working with 12 major cities on workforce housing initiatives, said there are obstacles to affordable housing at every level of a community, every level of government.

Griffith does not want people to give up. He said the first step is for citizens to make their voices heard at the federal level about the need to preserve resources already established for affordable housing.

“The Trump administration proposed eliminating both the HOME Investment Partnership program, a crucial source of gap financing for affordable housing developments, and the Community Development Block Grant program,” Griffith said in a presentation March 29 in Broward County. Griffith believes the eliminations would mean “draconian cuts to federal housing programs” and “be devastating for cities and towns across the country who are already being asked to address a growing problems with fewer federal resources.”

Griffith suggested that the second step is to tell Florida legislators to stop diverting the Sadowski Affordable Housing Act funds and use them for the purpose for which they are collected. He also believes the formula for the allocation of SHIP monies and applications for assistance needs to be re-examined.

As for local governments, there is a wealth of information available about what other communities have done. For Aspen, it was deed restrictions and capped profits on real estate deemed affordable housing stock. For Palm Beach County, it is “set-asides” mandated in new developments and long-term caps on sale and rental prices.

Griffith outlined many policy tools available to cities and counties to raise local housing resources: housing bonds, dedicated sales and property taxes, linkage fees, document and recording fees and real estate transfer taxes, tax increment financing, and hotel and short-term rental taxes. Common to all successful efforts have been strong partnerships with the business community. A 2016 article by Chris Romer, a Vail, Colo., Chamber of Commerce executive, attributes Allan Kingston with the poignant line,  “Housing is where jobs go to sleep at night.”


The Florida Housing Coalition is scheduled to hold its 2017 conference Sept. 9-13 in Orlando.  For more information about the conference, email info@flhousing.org or call (850) 878-4219. Websites used in the research for this article include: www.enterprisecommunity.org, www.floridahousing.org, discover.pbc.org and www.nmhc.org.



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