What is Senate Bill 102 a.k.a. The Live Local Act
A new bill passed by the Florida Senate, Bill 102, also known as the Live Local Act, which has been hailed as a kind of housing Magna Carta, went into effect July 1st. It has generated a lot of positive press and is being hailed as representing the most significant land use change Florida has seen in decades and it’s the largest investment in housing in state history—including over $1 billion in housing funds. Jake Morrow, principal of multifamily ownership and asset management firm Interurban called the new bill, “the most impactful legislation to stimulate the new construction of affordable housing that’s taken effect in Florida.” According to a recent The Real Deal real estate article, Florida real estate lawyers agree, “This [Senate Bill 102] opens up a whole are of potential of potential development that was not there before.”
The bill is aimed at expediting housing construction that will provide the majority of Florida’s huge influx of new residents and its current wage-earners with affordable housing. Affordable housing is defined under the Florida law as “housing that will not cost more than 30% of an individual’s annual income.” Bill 102 will potentially accelerate new home availability with residential new construction and alterations of current multi-family housing.
Who qualifies for the Live Local Act of 2023
To avail the Live Local Act, developers must reserve 40% of a housing project for workforce housing, specifically households earning up to 120% of a county’s area medium income (AMI) for the next 30 years. While the law focuses mainly on rental development, condos and other for-sale properties may be able to qualify.
The Senate Bill 102 Broadens Zoning Requirements
The new bill eliminates public hearings where the county and/ or municipality may not require zoning or land use changes, special exceptions or conditional use approvals, variances, or comprehensive plan amendments for height, zoning or density for qualifying projects.
This gives developers the ability to construct the maximum number of units as long as its withing the maximum allowed, and to build at the maximum allowed height without public hearing approvals.
Basically, administrations must approve projects – without public hearings or meetings – if the regulations applicable to multifamily development in areas zoned for that use are met.
This single incentive is a powerful incentive that can significantly affect a developer’s bottom line. Not only does legislation smooth the path to maximize potential occupancy in their projects—and therefore encourage larger ventures, it can also shorten pre-construction windows, which means added income for owners and investors. Hearing dates are typically available only once every month, and a developer’s placement on the roster does not guarantee approval—an adjustment usually requires another hearing appearance the following month or thereafter.
Real estate lawyers who often appear at municipal hearings for clients involved in investment property construction understand that every month of delay can cost their clients’ additional months of post-construction income. When ground-breakings are pushed back, a common sore spot for developers, business plans are vulnerable to income projection alterations.
While the law doesn’t interfere with other zoning rights reserved by state and county municipalities such as parking requirements, setbacks, and historic preservation, it does require cities and counties to consider reducing their parking requirements for affordable projects built within half a mile of a transit stop.
More Tax Exemptions for Developers and Additional Incentives
The new law also gives developers tax breaks with newly constructed properties and properties that have been substantially rehabbed in the last five years where at least 71 units qualified as affordable housing. This amounts to a 75% tax reduction for those apartments if they are reserved for people who earn between 80% to 120% AMI. For households earning below 80% AMI, a landlord can get a 100% reduction on their property tax bill, so long as rents conform to HUD rent income restrictions for the next three years. The tax breaks are granted only to the affordable units, not the land itself.
- Property Tax Exemption: This exemption allows counties and municipalities to adopt an ordinance to exempt qualifying portions of a property from ad valorem taxes up to 75% and 100% for properties that have partial or full affordable housing units.
- Building Materials Exemptions: Developers and existing multi-family owners are allowed sales tax refunds on building materials on qualifying affordable housing new construction and improvements.
- Automatic Charitable Contributions: The law provides a 75% ad valorem tax exemption for years 2024 through 2059 if qualifying land is owned by a charitable entity
No More Rent Controls—Common Sense Economics Instead
The 106-page bill strips local governments of their authority to impose rent controls, but ensures that rent for these designated units does not exceed 30% of the median family income.
The Live Local Act comes at a crucial time when Florida is in the midst of a housing shortage. During the pandemic, thousands of people, many of them wealthy households, fled the bad weather and COVID restrictions of other areas of the country for the sunshine and no state income tax of Florida. According to the Tampa Bay Economic Development Council, nearly 444,500 people moved to Florida from July 2021 to July 2022, a gain of 185,000 over the previous year. Florida leads the nation in net migration, while New York and California experienced the largest population exodus.
Targeting the “Missing Middle” wage earners
In housing parlance, the “missing middle,” includes those who make too much money to qualify for the programs already on the books, yet are having difficulty affording a place to live in Florida near their place of work. The Florida Senate unanimously passed the bill which promises to be a boon to developers who will no longer have to wait months for project approval from city and county leaders and can get new developments to market much faster than in previous years. They will be able to bypass density and height restrictions and they will have the right to build maximum number of residential units allowed in that city or county.
Florida Bar Board Certified in Real Estate, Attorneys David E. Klein, Esq. and Guy Rabideau at Rabideauklein.com, have the expertise and experience you need to ensure that your interests are protected throughout your real estate transactions across the Palm Beaches and throughout Florida. Contact Rabideau Klein to discuss the legal implications of your next property transactions.