Significant rises in housing and development costs for the past several years — and a rapidly growing population — have strained an already tight housing market, which the Live Local Act aims to alleviate.
By Harrison Denman, Research Analyst @ The Euclid Group
Cities are not built in a day—just ask the Romans. It takes decades for communities to develop. They are also not built in a vacuum. Populations grow, economies change, and demographics shift. Miami and other fast-growing areas in Florida are prime examples of this.
Zoning regulations, though, typically lag in responsiveness to these rapidly changing dynamics.
The Live Local Act (“Live Local” or “the Act”) was enacted in 2023 by the Florida legislature in a bipartisan, near-unanimous vote to address the State’s housing crisis. It received similar support for the Glitch bill passed this year to clarify some ambiguities and allow for more effective implementation of the Act.
Live Local is designed to incentivize and foster affordable housing, particularly for households in the missing middle. The State uses the term to classify those earning 80-120% of their County’s Area Median Income (“AMI”). These are typically teachers, police, hospitality, and middle-income earners who provide vital services to local economies and have historically been overlooked as a crucial component to solving the housing issue.
Politicians devote so much time to discussing the middle class for a reason. Intra-community dynamics thrive on diverse populations and income groups. Building affordable units for the missing middle class is crucial to alleviating supply deficits and creating more varied, mixed-income communities.
Live Local has already resulted in dozens of project proposals and applications across the state. Still, its unprecedented overruling of “home-rule” powers has led to concerns, criticisms, and even legal challenges. Some local governments have, as the Act requires, published implementation guidelines and policies on their websites. Yet others, typically those with predominantly low-density single-family neighborhoods, have amended code provisions with more stringent development regulations, opted out of the ad valorem exemptions, or questioned the Act’s applicability to stymie implementation.
Big problems call for bold solutions. The Act is a necessary, ambitious legislative initiative addressing the lack of affordable housing in the State, which most local governments have not effectively addressed or accounted for. While not without flaws, many critics overlook the Act’s benefits and highlight its limitations. They disregard its potential to foster affirmative community improvement and instead promulgate the misconception that Live Local gives developers carte-blanche to build whatever they please, wherever they please.
Let’s examine some of the key points and concerns raised by the Act’s detractors.
Criticism #1: Questionable Affordability
A 120% AMI limit for tenant Incomes and Rents is “ostensibly” affordable and “guts” the usefulness of traditional affordable housing programs, which typically target the 60-80% AMI range or low and very-low-income households.
Housing “affordability” is determined by the percent of income allocated toward housing costs, not just the AMI threshold for tenant incomes or allowable rents to which a project is restricted. The State and HUD consider housing “affordable” when a household dedicates no more than 30% of annual income to housing costs, such as rent and utilities.
According to the most recent housing study from the Shimberg Center, which informs State policy, rents have increased over 40% statewide since 2020, and over 860,000 low-income renters are cost-burdened, meaning over 40% of gross income is dedicated to housing costs.
In Miami-Dade alone, the study identified a deficit of over 60,000 rental units for the 80-120% AMI range ($63,000 to $95,400 for an individual in the County, respectively). Addressing a broad range of household incomes is vital to solving the housing crisis; not doing so indicates a disconnect with today’s housing market and rising living costs broadly affecting Floridians.
Missing middle households are priced out of many areas, which adds pressure to the “unofficial affordable” rental market and raises the cost of lower-priced units. Though 120% AMI allows tenants in Live Local projects to have higher incomes than many conventional affordable projects, the current issue requires more units serving a broad range of incomes.
While a degree of opposition is expected from NIMBY community members toward any new development, accusations against Live Local’s AMI threshold as insufficient for solving the issue begs the question — Would NIMBY opposition be any different if the Act provided for conventional low-income housing? If history is any indication, likely not.
In addition to the land use incentives, Live Local allocates over $800 million to affordable programs like SAIL, SHIP, and HOME. These programs provide downpayment assistance to homebuyers, funding for local governments to maintain existing affordable projects, and funding for developers to build new projects. The Live Local Program, a corporate tax credit, also provides up to $100 million annually for SAIL to assist with gap financing for affordable projects.
Traditional affordable developers will likely remain the primary builders of low-income housing, as most programs and funding are directed there. At the same time, the Live Local land use preemptions utilize incentives to justify the financial investment for market-rate developers to dedicate units to be affordable.
Criticism #2: Community and Infrastructure Disruption
Live Local projects can burden areas, often with traffic and infrastructure that barely keep up with the current wave of redevelopment. The scale could transform neighborhoods, leading to a loss of charm and livability.
Florida, particularly Miami, has seen growth rapidly outpace the community’s appetite for change, resulting in a deficit of units for moderate to low-income households. Maintaining protections for single-family areas that, in many cases, only recently experienced gentrification diminishes the credibility of an “it’s disrupting the neighborhood’s character” critique.
Communities take decades to form. Miami’s Brickell, for example, was a row of mansions 60 years ago, an office district 20 years ago, and now the City’s premier mixed-use urban setting.
Due to the prohibitive living costs in historically exclusive enclaves such as Bal Harbour, Coral Gables, and Miami Beach, many individuals in the missing middle find it financially impossible to reside in the urban areas where they work.
Though seemingly contradictory, adding high-density, mixed-use development in core urban centers can alleviate traffic, not worsen it. Integrated live-work environments encourage walking and public transit use. When residents can live, work, shop, and play in one area, they are likelier to choose to do so, reducing daily car trips and long commutes.
Current traffic conditions are a concern throughout the County and, as a Miami native, I can confirm that this has been an ongoing issue for some time.
Infrastructure improvements and mobility projects are being proposed for the Wynwood area, and they are integral to innovative city development and effective planning. The planned Metrorail stop along the Northeast SMART Plan Corridor in Wynwood demonstrates that the area warrants high-density development. It is essential not to repeat the same mistakes made with the US-1 Metrorail corridor, where single-family homes and low-intensity uses surround the County’s only rapid rail system (something beginning to improve with Rapid Transit Zone projects such as Grove Central and Douglas Station).
Criticism #3: Zoning and Scale
Live Local allows greater intensity, height, and density than local zoning permits and preempts regulations that limit development size and scope. These projects exceed restrictions and disrupt the character and scale of districts with specific planning visions.
Unfortunately, Live Local overrides some targeted efforts to preserve and establish districts with distinct character. It is crucial, however, to recognize and balance the concerns about the Act with needed incentives for affordable housing to have a tangible impact on supply.
The City of Miami’s form-based zoning code, Miami21, is a leading example of intelligent planning. It designates specific areas, such as Wynwood, as Neighborhood Revitalization Districts (“NRDs”). The NRD regulations provide ways to accommodate affordable housing through incentives while allowing these areas to maintain a planned scale, massing, and character.
Often, jurisdictions with Special Area Plans or Planned Districts, such as Miami’s NRDs (nomenclatures change by jurisdiction), have Payment In-Lieu-Of [actually providing units] or Affordable Housing Funds, which are important initiatives contributing much-needed dollars for affordable developments. However, these conventional projects are typically far from urban centers on the outskirts of communities and historically underserved areas.
Despite good intentions, these programs fail to meet the needs of the community and effectively segregate the residents of traditional affordable housing projects by maintaining expensive, low-density areas. A combination of NIMBYism, restrictive development regulations, and representatives/residents focused on maintaining the status quo are to blame.
Several jurisdictions object to the preemption of local zoning, viewing it as a usurpation of “home rule powers.” Yet, these same jurisdictions have failed to use those same powers to create an environment where such legislation is unnecessary. District protections that maintain areas for exclusive uses like leisure and entertainment are often designed without the density or mix of uses needed to activate those districts. This leads to socio-economic barriers in many areas where urbanization and densification would result in positive growth of community character.
Development in culturally rich areas can seem overwhelming and disrupt neighborhood character, but it is necessary to solve a housing crisis years in the making. The crisis led to this bold solution, particularly the failure of elected officials to properly incentivize and accommodate affordable housing with initiatives like allowing Accessory Dwelling Units in single-family districts.
Criticism #4: Developers Win at Community’s Expense
The Act is a giveaway to developers, providing significant incentives without sufficient safeguards for community interests. It aims to alleviate housing shortages at the expense of local character and community input.
Urban land is a limited resource, particularly in the state’s major metropolitan areas, where land values have soared and vacant land is scarce.
A key component of Live Local is that it opens the market to new investors and developers, particularly many property owners who previously never considered, or were not permitted, to develop multifamily (let alone affordable housing) on certain properties due to use restrictions. Further, restrictive zoning regulations limit the viability of reserving a meaningful portion of new projects for affordable housing without incentives to make it financially feasible. The Act’s preemption of use on Industrial, Commercial, and Mixed-Use property has the potential to transform and revitalize underutilized areas and compensate for years of rampant urban sprawl.
Developer incentives are a practical response to a growing need that leverages private investment in a way the government alone cannot. The assertion that Live Local serves only to enrich developers misses the larger picture; without such incentives, it is financially infeasible, or at least far less likely, that new projects could be built with such a large percentage of units dedicated as affordable. Developers are keenly attuned to market dynamics and growth shifts, and land-use incentives play a significant role in development feasibility. However, projects will not be built without a strong financial analysis to back them up.
The free market is pivotal in how and to what extent the Act’s implementation will ultimately affect local communities. Generally, development will follow opportunity and growth, mitigating the disruption to less developed areas.
It is easy to view developer incentives skeptically, but development incentives are necessary to make affordable housing economics feasible. Without them, the private sector’s role in addressing the housing crisis would be limited. The incentives are not just about profitability, but also about making it viable to build the housing necessary to meet community needs. Local governments would benefit from viewing this as an opportunity to work with developers creatively and collaboratively to enhance local communities.
Criticism #5: Ad Valorem Tax Exemptions
The Act exempts “affordable” portions of a project from property taxes, which can be challenging for local officials who must contend with impacts to services and infrastructure.
To receive ad valorem, aka real estate property tax exemption, a property owner must undergo additional restrictions and compliance measures.
Much of the concern about the ad valorem exemptions is predicated on a position that units at 80-120% AMI are not really affordable, referencing higher FHFC rent and income limits. Yet, these critiques often overlook the required fair market rent (“FMR”) study to obtain ad valorem exemptions (which requires rent to be the lesser of 90% of an approved FMR study or the FHFC Rent and Income limits). Owners must also have a local property appraiser review the area eligible for exemption and obtain a certification by FHFC every three years.
Further, the exemptions do not entirely exempt property from ad valorem taxes. Live Local projects are only eligible for an exemption on a “proportionate” share of land value and building area attributable to the affordable potion. For example, if 40% of the property is affordable at 120% AMI, the maximum exemption is 30% using the Act’s 75% exemption.
Further info Ad Valorem Tax Exemptions/Opt-Out can be found here. [Link to Opt-Out Article?]
Conclusion
To solve the housing crisis, we must ask, “If not Our Backyard, Whose?”
Live Local isn’t a silver bullet, but it’s a critical part of a broader strategy to tackle housing challenges in Florida. Its statewide applicability unavoidably generates friction with local land development regulations and preferences — the very regulations and preferences that created the dire housing challenges we now face. Thus, the friction is not only inevitable, but necessary.
Continued refinement of housing policy and initiatives like Live Local serves both developer interests and long-term community needs. Some critics unfairly villainize developers, often relying on NIMBY talking points, and overlook the fact that local officials approached development proposals with a collaborative rather than combative approach, there may not be such severe unit shortages in the State.
The State, particularly Miami-Dade County, is suffering from a demand shock across the income spectrum. Live Local addresses this gap by incentivizing developers to build more and faster, i.e., adding supply. With nearly a million “cost-burdened” low-income renters across Florida, alleviating the supply crisis is crucial for the overall health of the housing market and the state’s growth.
Through the Act, developers can help solve the affordable housing problem while providing moderate-income individuals the ability to live, work, dine, and contribute valuable tax revenue to the communities they support.
Harrison Denman is a lifelong Miami resident and the research analyst for The Euclid Group, a full-service land-use development and real estate consulting firm based in South Florida.