Being able to put a roof over your head is a sign that your life is stable — but other folks who can’t afford to do so may make life harder for you, by leaning heavily on services funded by your taxes.
In other words, if we don’t provide affordable housing to low-income families, they won’t have money for other things, like health care, clothing and food, and as a result, you may face higher patient fees to make up for families showing up at emergency rooms who can’t afford to pay for their care; and stores and eateries you like may struggle to remain open when other potential customers lack money to shop or eat out there.
It also has an impact on Central Florida’s business community because the lack of affordable housing forces workers to “drive until they qualify” — meaning they have to move further away from places they work. That’s because they typically don’t have the income to live in those job centers. For example, Osceola County is considered a bedroom community for Orange County’s workforce — leading to snarled traffic on the Turnpike as workers commute in and out of Orange and Osceola.
Meanwhile, the domino effect has been curtailed to some extent by incentives offered at the federal and state level to developers of affordable housing — incentives crumbling away due to recent tax reform, changes to the private activity bond structure and raided funds. A family of four with an annual income at or below $29,200, which is half of the median family income of $58,400 in Orange County, is considered very low income and eligible for assistance such as an Orange County’s homebuyer downpayment assistance program, according to the local arm of the U.S. Housing & Urban Development. Orlando’s average median home price is $220,000 and the average rent here is $1,202 per month.
Safe, affordable housing allows communities to thrive and has a positive effect on economic security, educational attainment and overall neighborhood quality — benchmarks that benefit every member of society of a whole, according to a November 2017 report by the Washington, D.C.-based think tank Bipartisan Policy Center.
Local affordable housing developer Scott Culp agrees.
He’s the principal of Atlantic Housing Partners, which is co-developing the $60 million, 256-unit Amelia Court at Creative Village residential complex containing 103 affordable housing units that will be priced at below-market rates for qualifying low-income families. Culp recently said that had the development been approved today, instead of two years ago, he wouldn’t have been able to do as many units.
Here are a few more takeaways Culp shared with us:
What’s contributing to the decline? Two factors impacting affordable housing are the rise in construction costs and the federal tax law changes, which impact what purchasers of tax-exempt bonds toward affordable housing are willing to pay on those bonds. (Translation: They don’t want to pay more and now they have to.) In the affordable housing world, we can’t charge more. The rents can’t going up. When an interest rate goes up, the amount you can borrow goes down. You lose the ability to borrow the money you need to build the community. That’s one piece of the challenge.
Are there any other factors? The other piece is the significant increase in construction costs. Part of that supply-and-demand issue is due to hurricanes [Harvey, Irma and Maria]. That will last years. So the volume of construction activity is enormous. It drives labor and material prices up. In the multifamily world, we deal with tariffs on lumber. A lot of it comes from Canada. The federal government decided it needed to increase those tariffs, leading to a 28 percent rise in the cost. What we’re seeing is a 15 percent increase in construction costs, as a result.
What is being done about the affordable housing dilemma? Orange County is working on adopting an impact fee discount program for affordable housing. That can bring down costs, but it’s not enough. Things cost so much and rents are up. Things aren’t going to cost less, you can’t generate additional revenue, because these are fixed-income. The only way to do that is some other form of economic support, whether it’s reduced fees, or a 15-year zero percent interest loan at the county level. Otherwise affordable housing dries up and goes away.
Why should anyone else care? If you have an entire workforce who doesn’t have the resources to purchases good nutrition, education, good health care and live close to their jobs, you are going to have an impact that continues the poverty cycle, for one. That puts a strain on every public service like emergency room visits, fire department and ambulance first responders, which everyone uses and pays taxes toward. The local community is impacted because those people can’t have a sustainable livelihood, leading to a revolving door effect that destabilizes neighborhoods.
You said 90 percent of your business is building affordable housing. If these incentives continue to go away, what happens to your company? We will manage the affordable housing we have — we have enormous holdings. We are able to maintain that if we can’t continue to develop new communities. As the population continues to grow, I don’t see our wages increasing in the short term. It won’t get worse for us as a company, but when your community’s quality of life is not improving, that is a disappointment. From our perspective, we are almost out of business as the largest affordable housing supplier in Florida. We’re getting to the end of economic viability. There isn’t another source. We can’t do these things for free. We still believe there is opportunity to reduce some costs. We can provide economics to help continue to build affordable housing so we don’t just perpetuate the blight of poverty, which old housing models just perpetuated. We want to see homes people are proud to own and reside in.
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