Concerns Arise Over Affordable Housing Plans in Palm Beach

To make room for teachers, police officers and other individuals that don’t bring in a huge salary - yet are still interested in a Florida home loan - plans for affordable housing developments are springing up across Palm Beach County. Builders, however, warn that such proposals could price them out of town.

Local housing industry concerns stalled an effort this month to make Palm Beach County one of the first Florida communities to require developers to include reduced-price homes in new neighborhoods.

Builders argued the economic ramifications of limiting prices on 20% of new homes would be too costly.

Palm Beach County already has a voluntary affordable-housing program, which allows developers to build more homes than usual if they limit some prices. However, after more than a year, the program has failed to produce any affordable home prices for many below the upper class tier.

“Voluntary doesn’t work,” said Deputy County Administrator Verdenia Baker, who is leading the effort to craft new mandatory affordable-housing guidelines. “We have to try something. … We can’t wait.”

The focus of affordable Florida housing proposals

Past housing efforts focused on the poor. However, with median home prices in Palm Beach County now at $400,000, county officials plan to create more homes for people the Florida middle class making up to $75,000 a year.

Officials proposed requiring 20% of new homes be affordable, which the county considers up to $275,000. Builders then would get to build more homes than otherwise allowed on the property.

The rules were supposed to let developers “buy out” of the affordable housing requirement. The county would use the money to build reduced-price homes elsewhere. But requiring builders to include affordable housing will drive up the costs of other homes in new neighborhoods by as much as $22,000 to $44,000 per home, making it harder for more people to afford homes, said Edie Ousley, spokeswoman of the Florida Home Builders Association.

The trouble with these Florida home loans

Building-industry representatives contend the new rules will reduce profits and scare off developers. They say building more homes than otherwise allowed would not compensate for the cost of including affordable housing.

A reduction in the number of homes built each year could be an “unintended consequence” of the affordable-housing proposal, said Jeff Spear, president-elect of the Gold Coast Builders Association.

Other examples of affordable housing plans

More than 100 communities, mostly in California, have their own rules requiring developers to build affordable homes. In California, communities as small as Isleton, with 1,000 residents, and as large as San Diego, with 1.2 million residents, have housing requirements, the study shows.

New York and some California cities use rent control to preserve affordable housing. Rent control and “rent stabilization” rules limit rental rates in hot housing markets.

“The new solutions look more toward addressing … the inherent inequity in the market,” said Chris Bender, spokesman for the affordable-housing advocacy organization Housing California.

In October, Tallahassee started requiring developments with at least 50 homes to reserve 10% for affordable housing. The city’s program sets the maximum price for an affordable home at $159,378, which can be adjusted annually.

Protecting and creating affordable housing requires communities to use a variety of tools, said Anne Williamson, of the University of Florida’s Schimberg Center for Affordable Housing.

She said creating land trusts and requiring developers to include affordable housing in new neighborhoods can address the problem.

Palm Beach County commissioners agreed in November to form a land trust to acquire property that could be used to build affordable homes. The land trust also could buy mobile home parks, apartment buildings and other existing rental units to protect them from pricey real estate redevelopment.

Baker said a new proposal could go before the County Commission next month, but builder representatives continue to object to limiting prices.

Summation: This is an important topic to keep your eye on. If you are not in the highest income bracket, but would like to pursue a Florida home loan, follow stories such as these and see how the affordable housing debate is settled.