Hollywood Housing Market Hits Snag
Hollywood, Florida, of course.
After years of handing out millions in incentives to downtown developers, Hollywood officials think they are poised to see profitable returns as Florida mortgage demand hopefully picks up in the area.
But first they needed to borrow $20.5 million.
In their dual role as the city’s downtown Community Redevelopment Agency, city commissioners approved securing the loan to refinance the agency’s $23.5 million debt.
The money, received last week, would pay off three previous loans used primarily to finance developer incentives, Bryan Cahan, agency finance director, told commissioners during last month’s CRA meeting. Driving the refinance package are delays in completing most of the proposed downtown redevelopment projects.
“A couple years ago we stood here and we expected a number of those projects would already be generating those tax dollars,” Cahen said. “But because of the [housing] market, some of those projects have taken a bit longer.”
Slowdown in sales affects bottom line
Agency Executive Director Neil Fritz said the agency won’t pay more than what is already owed because interest rates are the same as they were when the loans were first taken out. Refinancing would only extend the time to pay them back, he said. The hope, instead, is that Alan Greenspan is correct and the Florida housing market has already been through its worst period.
Some criticize city leaders, however, for previously promising so much to developers without any guarantees of success.
“We are mortgaging our kids’ futures,” activist Howard Sher said. “If all of this doesn’t work or all of this collapses, what’s going to happen?”
The change in the real estate market and the slowdown in Florida mortgage loan applications is not all that’s hampered the agency’s projects.
Earlier this year, the developer of Young Circle Commons, one of the largest downtown projects, said he might have to scale back its size after his bid to obtain a nearby private property through eminent domain failed. The developer of SoHo Lofts also has asked for more incentives, citing rising construction costs.
And the developer who at one time planned to bring a condo project featuring a theater and charter school to Young Circle is on the verge of defaulting on a $5.2 million loan the CRA gave him, officials announced last month.
Luring in housing developers
According to the CRA, the majority of the $23.5 million debt went to lure developers to build in the downtown. The goal hasn’t even been affordable housing in Florida; just any housing in the city for now.
A $6.5 million loan obtained last year was used to buy land in one of the most blighted areas of Hollywood. Officials might hand over the now-vacant properties for free as an incentive to a developing group.
While many have criticized the CRA for the handouts, officials now say it’s only a matter of time before they will be reaping benefits. At least two sold-out projects are nearing completion of their first phases, guaranteeing a flow of property tax revenue to the CRA coffers, officials said.
As the market opens up to more and more buyers, these developments should pay off. Numerous borrowers are currently looking to cash in on low prices and apply for a Florida home loan.
