Chris Dawson | April 27, 2023
Governor Ron DeSantis recently signed into law Senate Bill 102, the Live Local Act. This landmark legislation was a top priority for Florida Senate President Kathleen Passidomo (R-Naples) and was carried by Senator Alexis Calatayud (R-Miami). This new law allocates $711 million toward affordable housing initiatives statewide. However, SB 102 was far more than an appropriations bill. It incentivizes the development of affordable housing and eliminates barriers to the development of housing. The new law has implications for both developers and local governments.
Changes to Local Government Land Development Codes
SB 102 makes a number of changes to Florida law impacting how local governments can treat certain proposed affordable housing developments. It also changes what policies local governments may enact to address housing. These changes align with the Florida Legislature’s substantial rewrite of section 420.0003, Florida Statutes, which encourages private development of affordable housing. That section requires local governments provide incentives, such as density bonus incentives, to encourage the private sector to be the primary driver for developing affordable housing.
- Rent Control: SB 102 amends sections 125.0103 and 166.043, Florida Statutes, to remove local government authority to enact rent control. Previously, local governments could enact rent control measures via a referendum for a period not exceeding one year in instances where such controls were necessary and proper to eliminate an existing housing emergency so grave as to constitute a serious menace to the general public. The preemption of rent control included in SB 102 was in part a response to a recent rent control referendum approved by Orange County voters but subsequently invalidated by the courts.
- Development Incentives: SB 102 makes a number of changes to sections 125.01055 and 166.04151, Florida Statutes, which will preempt local governments from enacting policies that would hinder the development of certain affordable housing projects. These changes sunset October 1, 2033.
SB 102 requires local governments make multifamily and mixed-use residential allowable uses in areas zoned commercial, industrial, or mixed use if at least 40% of the proposed development’s multifamily residential rental units are affordable as defined under state law for at least (30 years (Affordable Multifamily Housing). SB 102 preempts local governments from taking a number of actions that might hinder the development of Affordable Multifamily Housing:- Prohibits local governments from requiring a proposed Affordable Multifamily Housing development obtain a zoning change, land use change, special exception, conditional use approval, variance, or comprehensive plan amendment for the building height, zoning, and densities authorized under sections 125.01055 and 166.04151.
- Requires mixed-use residential Affordable Multifamily Housing projects have at least 65% of the total square footage dedicated for residential purposes.
- Prohibits local governments from restricting the density of a proposed development of Affordable Multifamily Housing below the highest allowed density of any land under its jurisdiction where residential development is allowed.
- Prohibits local governments from restricting the height of a proposed Affordable Multifamily Housing development below the highest height for a commercial or residential development located in its jurisdiction within one mile of the proposed development or three stories, whichever is higher.
- Removes zoning decision-making authority from local governing boards by requiring that Affordable Multifamily Housing development be administratively approved if the development complies with regulations for multifamily developments in areas zoned for such uses and is consistent with the comprehensive plan, with the exception of provisions establishing allowable densities, height, and land use.
- Requires local governments consider parking reductions for proposed Affordable Multifamily Housing developments where the development is a half mile from a major transit stop that is accessible from the development.
- Requires those municipalities that designate fewer than 20% of their land area for commercial or industrial uses authorize a proposed mixed-use residential Affordable Multifamily Housing projects in areas zoned for commercial or industrial uses.
The amendments to these sections also remove the prohibition on developers of affordable housing receiving funds from the State Apartment Incentive Loan (SAIL) Program provided that 10% of the units are dedicated for affordable housing.
Local Government Administration and Affordable Housing
SB 102 amends sections 125.379 and 166.0451, Florida Statutes, and requires local governments list real property owned in fee simple by any dependent special district within that local government’s jurisdiction that is appropriate for affordable housing, as well as requiring the inventory list of properties be publicly available on the local governments’ websites. Those properties may now also be used for affordable housing through a long-term land lease requiring the development and maintenance of affordable housing. SB 102’s amendments to these sections also encourages ordinances adopting best practices for surplus land programs. These best practices include establishing eligibility criteria for the receipt or purchase of surplus land by developers, making the process for requesting surplus lands publicly available, and ensuring long-term affordability through ground leases by retaining the right of first refusal to purchase property that would be sold or offered at market rate and by requiring the reversion of property not used for affordable housing within a certain timeframe.
SB 102 amends section 553.792, Florida Statutes, to require local governments maintain a policy containing the procedures and expectations for expedited processing of building permits and development orders that are required to be expedited on the local governments’ websites.
Taxes
SB 102 also seeks to encourage the development of affordable housing by lessening the associated tax burden.
- Ad Valorem Property Tax Exemptions: SB 102 enacts two separate ad valorem tax exemptions available to owners of property used for Affordable Multifamily Housing developments under sections 196.1978(3) and section 196.1979, Florida Statutes. A taxpayer may only receive one of these exemptions.
- Sections 196.1978(3): Section 196.1978(3), Florida Statutes, makes portions of property in a multifamily project eligible for a tax exemption by deeming such property to be used for a charitable purpose. To be eligible, the property must provide affordable housing to those meeting the income limitations. The property must be within a multifamily project containing more than 70 units dedicated to affordable housing that was substantially completed within five 5 years before the taxpayer’s first submission of a request for certification or an application for a property tax exemption. The affordable housing units must be rented for an amount that does not exceed the lesser of the multifamily rental programs income as promulgated by the Florida Housing Finance Corporation (FHFC) or the rental market study, which the taxpayer is required to complete.
This section requires that qualified property which is available to house those whose annual household income is above 80% and below 120% of the median annual adjusted gross income for households within the metropolitan statistical area (MSA), or for households in a county that is not within an MSA, receive an ad valorem property tax exemption of 75% of the property’s assessed value. However, if the property is used to house those with income that does not exceed 80% of the median annual adjusted gross income for households within the MSA or county, then the property is 100% exempt from ad valorem property taxes.
- Section 196.1979: Permits local governments to adopt an ordinance exempting portions of property used to provide affordable housing by deeming the property as being used for a charitable purpose. To qualify for this exemption, the portions of the property must be used to house those whose annual household income is either less than 30% or between 30% and 60% of the median annual adjusted gross income for households within the MSA or the county where the person or family resides if not residing within an MSA. The property must also be within a multifamily project with at least 50 residential units, 20% of which are used to provide affordable housing. The affordable housing units must be rented for an amount that does not exceed the lesser of the multifamily rental programs income as promulgated by the FHFC or the rental market study, which the taxpayer is required to complete. The development may not have more than three local code citations in the last 24 months, nor may the development have any non-remedied code violations or unpaid code-related charges.
If all the residential units in a multifamily development are not affordable housing, then the property’s exemption may be up to 75% of the assessed value of each residential unit providing affordable housing. If all the residential units are affordable, then the exemption may be up to 100% of the assessed value on the multifamily residential units providing affordable housing.
- Sales, Rental, Use, Consumption, Distribution, and Storage Tax Exemption: SB 102 amends section 212.08, Florida Statutes, by creating a tax exemption for affordable housing building materials. Affordable housing building materials include all tangible personal property that becomes a component of the newly constructed residential units in an affordable housing development. To receive this exemption, the person claiming the exemption must file an application with the Florida Department of Revenue (DOR) and include all the application materials listed in this section, which includes invoices showing the actual cost of the building materials and sales tax paid. Local governments and nonprofits that pay for building materials from community development block grant funds, funds from the State Housing Initiatives Partnership (SHIP) Program, and the like may also apply for this exemption. Applications must be submitted within six months after the eligible residential united is deemed substantially completed by the local building code inspector. Only one exemption through a refund on paid taxes may be claimed per eligible residential unit. Such refunds will not be granted unless the amount of the refund is between $500 and the lesser of $5,000 or 97.5% of the Florida sales or use tax paid.
- Live Local Corporate Income and Franchise Tax Credit: SB 102 creates section 220.1878, Florida Statutes, which provides a corporate income and franchise tax credit of 100% for eligible contributions to the Live Local Program as codified in section 420.50872, Florida Statutes. This credit may be applied against any tax due for a taxable year under Chapter 220, Florida Statutes. The taxpayer must apply the credit after the application of any other allowable credits. The taxpayer must make the contribution before the taxpayer is required to file a return. This credit must be reduced by the difference between the amount of federal corporate income tax, taking into account this credit granted, and the amount of federal corporate income tax without application of this credit. But, this credit does not reduce the amount of tax due to for purposes of determining whether the taxpayer was in compliance the requirement to pay tentative taxes. The tax credit cap amount is $100 million per fiscal year.
Those looking to take advantage of this tax credit must apply to DOR. Approved tax credits may be carried forward for a period not to exceed 10 years. If a taxpayer wishes to covey, transfer, assign, or carryforward a tax credit to another entity, it may only do so if the taxpayer conveys, assigns, or transfers all of its assets in the same transaction. The taxpayer must notify DOR before transferring, conveying, or assigning the tax credit to another member within an affiliated group of corporations.
State Programs
SB 102 amends section 201.15, Florida Statutes, diverting the lesser of 8% or the remainder of taxes collected or $150 million each fiscal year to fund the State Housing Trust Fund (Trust Fund). SB 102 also creates section 420.50871, Florida Statutes, which directs funds derived from these increased revenues to the Trust Fund to be distributed by the FHFC for innovative affordable housing projects. That section directs the FHFC to allocate the funds toward competitive applications for affordable housing projects. Seventy percent of the funds shall go toward projects that redevelop existing affordable housing or construct such housing near existing redeveloped affordable housing, address urban infill, provide for mixed use of the location, or provide housing near military installations. The remaining 30% of the funds shall go to projects that propose using or leasing public lands for affordable housing, address the housing needs of young adults that have aged out of foster care, meet the needs of the elderly, or provide housing to meet the needs in areas of rural opportunity. Section 201.15, Florida Statutes, sunsets July 1, 2033, and section 420.50871, Florida Statutes, sunsets June 30, 2033.
SB 102 amends section 288.101, Florida Statutes, authorizing the Governor to approve funding recommendations by Enterprise Florida for state or local public infrastructure project to facilitate the development or construction of affordable housing. SB 102 also substantially re-wrote section 420.0003, Florida Statutes, which outlines Florida’s policy regarding state-funded development. That section now emphasizes minimizing sprawl and the separation of housing from employment and services. It also requires public-private partnerships emphasize production and preservation of affordable housing and requires existing affordable housing stock be preserved and improved.
SB 102 creates the Florida Hometown Hero Program, codifying it in section 420.5096, Florida Statutes. The program allows borrowers to apply to the FHFC for a loan to reduce their down payment and closing costs by at least $10,000 and up to 5% of the first mortgage loan not exceeding $35,000. The program requires that these loans be made at a 0% interest rate and be available for the term of the first mortgage. The borrower must seek to purchase the home as his or her primary residence, be a first-time homebuyer unless the borrower is in the armed services or Florida National Guard, be a Florida resident, and be employed fulltime by a Florida-based employer or self-employed.
On the Horizon
While SB 102 has a number of provisions that will take effect July 1, 2023, it also directs state agencies and local governments to take action. For example, section 420.0003, Florida Statutes, encourages local governments to adopt ordinances to promote innovative housing solutions, such as utilizing publicly held land to develop affordable housing. That section also encourages local governments to engage in community led planning focusing on urban infill, flexible zoning, redevelopment of commercial property into mixed-use property, resiliency, and furthering development with preexisting public services. It encourages the development of policies that maximize high-density, high-rise, and mixed-use, as well as mixed-income projects. It even encourages the development of polices to modernize housing specifically naming things such as tiny homes, 3D-printed homes, and accessory dwelling units.
Additionally, SB 102’s amendments to sections 125.379 and 166.0451, Florida Statutes, encourage local governments to enact ordinances adopting best practices for surplus land programs. These best practices include establishing eligibility criteria for the receipt or purchase of surplus land by developers, making the process for requesting surplus lands publicly available, and ensuring long-term affordability through ground leases by retaining the right of first refusal to purchase property that would be sold or offered at market rate and by requiring the reversion of property not used for affordable housing within a certain timeframe. Local governments that wish to enact an ordinance providing for an ad valorem tax exemption under section 196.1979, Florida Statutes, will have to do so in accordance with the provisions and restrictions set out in that section.
SB 102 also directs FHFC to adopt rules relating to the ad valorem exemption available under section 196.1978(3), Florida Statutes. It directs DOR to adopt rules governing the administration of the tax exemptions under sections 212.08 and 220.1878, Florida Statutes. These rules must comply with the SB 102’s newly enacted provisions.
Questions?
Contact GrayRobinson Shareholder and Government Affairs Advisor Chris Dawson, or a member of the Real Estate and Land Use or Government Affairs and Lobbying Sections.
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