Miami-Dade County to Address Work Force Housing Shortage

Miami-Dade County to Address Work Force Housing Shortage

 

The cost of renting an apartment or buying a new home or condominium in Miami is expensive. In fact, according to Wallethub.com, Miami and Miami Beach ranked 299 and 300, respectively out of 300 U.S. cities in affordability. Rents and sale prices are both extremely high, making it extremely difficult for working class people to live in the downtown, urban and eastern areas of the county.

Miami-Dade Commissioner Barbara Jordan has proposed a remedy for this problem. The Commission will consider Commissioner Jordan’s proposal to require that new developments of 20 or more units provide at least 10% of its units for work force housing. Of these units, 50% would be set aside for those earning from 60% to 79% ($48,100) of the median county income and 50% would be set aside for those earning from 80% to 140% of the median county income. A developer meeting this requirement would receive a density bonus of 15% of the total units. If the developer has no work force units, the developer must pay a fee into the county affordable housing trust. Developers may earn additional density bonuses equal to 1% for every 1% increase in the amount of work force units.

The proposed ordinance will provide that municipalities may opt out of the requirement provided that the cities adopt adequate work force housing ordinances. Two cities, in particular, have been vocal in their opposition to Commissioner Jordan’s proposal. Aventura and Sunny Isles, two small, but affluent cities which are densely populated with luxury condominiums have formally objected to the Commission. Aventura has passed an ordinance objecting to the proposed county ordinance and Sunny Isles has directed its city attorney to send a letter of objection. Both cities have some work force components in their city code, however, there is not data available as to the number of work force and affordable housing residents living in the two cities.

Many builders and developers are concerned about the ordinance as well. Jose Gonzales of the Latin Builders Association believes that the ordinance could have “unintended consequences”. For example, the density bonuses could cause additional parking requirements which in turn could inflate construction costs. This adds risk to the developer and underwriting risk to the lenders that neither are prepared to take. Another concern is how condominiums would assess the lower priced units in a building. In a luxury condominium, monthly maintenance fees equate to the mortgage payment for an average homeowner. These payments would price such work force units out of the market even if set aside for work force residents. There are clearly solutions to this problem. The work force units in a condominium could remain rentals, owned by the developer or a third party investor, or, they may have to remain much smaller than the higher end units so that they may be assessed lower. New York developers often use a “2 door” method. But, that method creates a 2 class system, shutting the lower end unit owners off from the amenities of the higher end units.

Despite the high cost of Miami and the push back against the proposed ordinance, there are success stories of affordable and work force housing in Miami. Melo Group, for example, recently announced plans for Square Station, located between NE 14th Street and NE 15th Street next to the School Board Metro Mover Station. Square Station will consist of 710, 1 to 3 bedroom apartments in 2 towers. The developer has entered into a covenant with the city which provides that 96 of the 710 units will be reserved for workforce housing. Here, workforce will mean that the tenants can not earn more than 140% of the median county income. In return, the city has waived impact fees on the 96 units. This will be a tremendous cost savings to the developer.

This is not the first time I have written about the need for thoughtful affordable housing policy. It won’t be the last. Commissioner Jordan’s proposal is a good start. It might need some work, but the concept is correct. Encourage developers to provide affordable housing by offering incentives. Additional units is one way. Commissioner Jordan did not go so far as to offer an inclusionary zoning ordinance as I have previously discussed. If developers continue to push back and not accept the carrot, inclusionary zoning is a stick that needs to be wielded.