Florida Passes Live Local Act to Incentivize Affordable Housing Development for the State’s Workforce

The Act introduces several new Florida Statutes, which are aimed at improving affordable housing opportunities in Florida, and modifies several existing Florida Statutes. A summary of the modifications and additions to some of those existing statutes are as follows:

• Section 2 of the Act modifies Fla. Stat. § 125.0103(1) to now state that local government may not impose price controls upon a lawful business activity that is not franchised by, owned by or under contract with the governmental agency. Additionally, Fla. Stat. § 125.0103(2) now precludes local government entities from imposing rent control.
• Section 3 of the Act amends and expands Fla. Stat. § 125.01055 by inserting various provisions to facilitate the development of affordable housing, including:
  • A board of county commissioners may approve the development of affordable housing, including a mixed-use residential development, on any parcel zoned for commercial or industrial use so long as at least 10% of the units included in the project are for affordable housing.
  • The following provisions, which are included in Subsection (7), expire on October 1, 2033:
    • A county must authorize multifamily and mixed-use residential as allowable in any area zoned for commercial, industrial or mixed-use if at least 40% of the resident units in a proposed multifamily rental development are affordable for at least 30 years.
    • A county may not restrict the density of a proposed development below the highest allowed density on any unincorporated land where residential development is allowed.
    • A county may not restrict the height of a proposed development authorized under this subsection below the highest currently allowed height for a commercial or residential development located in its jurisdiction within one mile of the proposed development or three stories, whichever is higher.
    • A county must consider reducing parking requirements for a proposed development if the development is located within one-half mile of a major transit stop, as defined in the county’s land development code, and the major transit stop is accessible from the development.
• Section 8 of the Act creates a new ad valorem tax exemption, codified in Fla. Stat. § 196.1978.
  • Subsection (2)(b) of the provision provides that any land owned by an Internal Revenue Service (IRS)-recognized 501(c)(3) organization that is leased for at least 99 years for the purpose of providing affordable housing for extremely-low-, very low-, low- or moderate-income (as defined in Fla. Stat. § 420.0004) is entirely exempt from ad valorem taxes. This exemption is applicable for tax years 2024 through 2059.
    • Section 420.0004 uses the following definitions:
      • “Extremely low-income persons” means one or more natural persons or a family whose total annual household income does not exceed 30% of the median annual adjusted gross income for households within the state.
      • “Very low-income persons” means one or more natural persons or a family, not including students, of which the total annual adjusted gross household income does not exceed 50% of the median annual adjusted gross income for households within the state or 50% of the median annual adjusted gross income for households within the metropolitan statistical area (MSA) or, if not within an MSA, within the county in which the person or family resides, whichever is greater.
      • “Low-income persons” means one or more natural persons or a family, of which the total annual adjusted gross household income does not exceed 80% of the median annual adjusted gross income for households within the state or 80% of the median annual adjusted gross income for households within the MSA or, if not within an MSA, within the county in which the person or family resides, whichever is greater.
      • “Moderate-income persons” means one or more natural persons or a family, of which the total annual adjusted gross household income is less than 120% of the median annual adjusted gross income for households within the state or 120% of the median annual adjusted gross income for households within the MSA or, if not within an MSA, within the county in which the person or family resides, whichever is greater.
    • Subsection (3), also a new tax exemption provision valid for taxable years 2024 through 2059, provides that some portions of a multifamily project can be considered charitable under the law and eligible for an ad valorem tax exemption. Specific requirements listed under the statute must be met to qualify.
• Section 9 of the Act creates Fla. Stat. § 196.1979, which details county and municipal affordable housing property exemptions. This section states that the governing body of a county or municipality may adopt an ordinance to exempt portions of property used for affordable housing.
• Section 12 of the Act amends and expands Fla. Stat. § 212.08(5)(v). This provision now allows building materials used in eligible residential units to be exempt from the tax imposed if an owner demonstrates (to the satisfaction of the department) that all necessary requirements have been met. This exemption inures to the owner at the time an eligible residential unit is substantially completed but only through a refund of previously paid taxes. A refund may not exceed the lesser of $5,000 or 97.5% of the Florida sales or use tax paid on the cost of the building materials.
• Section 21 of the Act creates Fla. Stat. 220.1878, which states that for taxable years 2023 and later, all eligible contributions to the Live Local Program may be credited against any taxes due under chapter 220 of the Florida Statutes.
• Section 23, “State-owned Land; Uses,” modifies Fla. Stat. § 253.034(5) to declare that non-conservation state-owned land use plans shall be used to determine whether the lands should be transferred to the local government in which the land is located to provide affordable multifamily rental housing.

Members of Florida’s workforce who stand to benefit the most include frontline workers, like teachers, nurses and first responders, who are purchasing their first homes. Given the recent increase in private inbound investment into Florida, this new law aims to keep housing prices within reach for locals who are serving their communities.

At almost double the 2022-2023 housing investment, the Act appropriates $711 million for housing projects through the Florida Housing and Finance Corporation (FHFC). The housing investment is broken down as follows:

• $259 million is designated for the State Apartment Incentive Loan (SAIL) program, which provides low-interest loans to affordable housing developers.
• An additional $252 million is allocated toward the State Housing Initiatives Partnership (SHIP), a program that grants funds to local governments as an incentive to create partnerships that will retain affordable homeownership and multifamily housing.
• Another $100 million will support the second year of the Hometown Heroes Program so that qualified first-time homebuyers can purchase homes in neighborhoods in which they work. The Act has codified this down payment assistance program and increased the borrowing limit per loan.
• Finally, $100 million is allocated to FHFC to implement a loan program to alleviate inflation-related cost increases for FHFC-approved housing builds.

Aside from its multitude of funding benefits, the Act brings an array of tax incentives for Floridian taxpayers. For example, it creates a new tax donation program for corporations in the state (Fla. Stat. § 220.1878.) and corporations can now direct certain tax payments to help fund housing projects. (Fla. Stat. § 420.50872.) Additionally, the new law has increased the amount of available tax credits through the contribution tax credit program by more than $10 million, jumping from $14.5 million to $25 million. (Fla. Stat. § 212.08(5)(p)(1)(e).) Finally, and as noted previously, the Act creates additional tax benefits through the ability to obtain up to a $5,000 refund for sales tax spent on building materials for housing units funded through FHFC. (Fla. Stat. § 212.08(5)(v).) In turn, FHFC will have a greater capacity to invest in housing for foster care children who may be aging out of the state’s care soon. (Fla. Stat. § 420.5087(10).)

Despite the Act’s significant benefits to the local Floridian workforce, it has also faced some criticism. Specifically, critics have expressed disapproval of the prevention of local rent control and possible preemption of local governments to enforce rules on zoning, building heights and density. Concerns relating to the bill’s ban on rent control and preemption from enforcing zoning restrictions are rooted in the fact that the state has limited decision-making authority from local governments who may best understand the specific needs and challenges of the area. The bill has also removed voters’ rights to advocate for rent control in their municipalities.

This new law ultimately carries a host of benefits for affordable housing developers, “hometown heroes” who are first-time homebuyers, children needing housing through FHFC and other potential beneficiaries of affordable housing options. McDermott Will & Emery has begun advising clients on the implications of the Live Local Act. For assistance with this bill, please contact the authors of this article.

Olivia Sica, a summer associate in the Miami office, also contributed to this article.