Business and Legal Insights

The Live Local Act (SB 102) (the “Act”) amends multiple provisions of the Florida Statutes with the overarching purpose of spurring additional development of affordable housing in the State.  Importantly, for qualifying affordable housing projects, the Act preempts local zoning codes and comprehensive plans with regard to height, density and use.  Other provisions of the Act provide tax and financial incentives to foster affordable housing in the State.  The Act goes into effect on July 1, 2023, except for certain provisions pertaining to tax exemptions that are set to take effect on January 1, 2024.

What Constitutes “Affordable” Housing under the Act?

Rental housing is “affordable” under Florida law if: (i) it is restricted to households not making more than a specified percentage of the area median income (“AMI”), adjusted for family size, and (ii) the monthly rents (including utilities) do not exceed 30 percent of the tenant’s income.  There are four levels of affordability thresholds that are targeted by different provisions of the Act: at or below 30% of AMI (“Extremely Low-Income”), at or below 50% of AMI (“Very Low-Income”), at or below 80% of AMI (“Low-Income”), and at or below 120% AMI (“Moderate-Income”). 

Some of the most significant aspects of the Act – including the land use and zoning preemption discussed in Section I below – seek to incentivize the development of units rented to tenants at or below 120% AMI. For reference, 120% of AMI in Miami-Dade County for 2022 was $81,960 for an individual and $117,000 for a family of four. The maximum rents (including a utility allowance) that could be charged to such a Moderate-Income tenant in Miami-Dade would be approximately $2,049 for the individual, or $2,925 for the family of four.  The fact that the Act targets this Moderate-Income level is notable as most existing programs in Florida target the other, lower income categories of affordable housing.

An overview of the Act is set forth below. 

I. Land Use and Zoning Incentives for Eligible Projects

A.  The “40% Rule” (effective July 1, 2023, and expiring October 1, 2033)

For a development whose residential units consist of at least 40% affordable rental units (with tenants at or below 120% AMI) for a period of at least 30 years (the “40% Rule”), a county/municipality:

1. Must authorize multi-family and mixed-use residential (where at least 65% of the total square footage is used for residential purposes) in any area zoned for commercial, industrial,[1] or mixed uses.
2. May not limit density of a development below the highest residential density allowed in the jurisdiction.
3. May not restrict the height below (i) the highest height allowed for either commercial or residential development within the jurisdiction within one mile of the proposed development or (ii) three stories, whichever is higher.
4. May not require zoning or land use changes, special exceptions or conditional use approvals, variances, or comprehensive plan amendments for height, zoning or density under the Act.
5. Must administratively approve the proposed project – without public hearings – if the zoning code and comprehensive plan provisions applicable to multifamily development in areas zoned for that use are met (including, but not limited to, setbacks and parking) except for density, height, and land use.
6. Must “consider” reduced parking for developments meeting the 40% Rule, to the extent such development is within ½ mile of a major transit stop (as that term may be defined in the local government’s laws).

There are a few additional important points worth noting:

1. Many affordable housing laws require projects to have a mix of AMI limits for the affordable housing units (e.g., some units must be 60% AMI, some 80% AMI and the rest at market). Under the 40% Rule, all of the affordable units can be at 120% AMI.
2. There is no requirement relating to the location of the affordable units within a project or on the type of affordable residential unit (e.g., studio vs. 1 bedroom). For example, in a 20 story tower, all affordable units could be located on floors 1-4 with the market rate units above.
3. While the affordable units must be offered for rent, there is no prohibition on having the market rate units be “for sale” condominium units.

B.  The “10% Rule”

Notwithstanding any other law or local ordinance to the contrary, a county/municipality is now allowed to approve a residential development (or a mixed-use residential development) on any parcel that is zoned for commercial or industrial use, so long as at least 10% of the units included are affordable. Unlike the 40% Rule above, this section is permissive, providing the local government the option to approve a development that complies with the 10% Rule.

II. Four New Ad Valorem Tax Exemptions

1. 75% ad valorem tax exemption for projects that provide at least 70 units dedicated to those earning between 80-120% AMI. The exemption applies only to the affordable units, and applies for the 2024-2059 tax years.
2. 100% ad valorem tax exemption for projects that provide at least 70 units dedicated to those below 80% AMI. The exemption applies only to the affordable units, and applies for the 2024-2059 tax years.
3. 100% ad valorem tax exemption for any land owned entirely by a charitable entity qualified pursuant to 501(c)(3) of the Internal Revenue Code and in compliance with applicable IRS regulations and which is leased for at least 99 years for the purpose of providing affordable housing, and is predominantly used for such housing. This exemption applies for the 2024-2059 tax years.
4. Counties may now adopt an additional exemption for properties containing 50 or more units, with at least 20% of units being set aside for those earning not more than 60% AMI and rent restricted. This section first applies to the 2024 taxable year, and can remain in effect for so long as the county elects to keep it active (requiring an affirmative vote once every four years).

III. Sales Tax Exemption for Building Materials Used for Affordable Housing

The Act provides a new sales tax exemption for building materials used for the development of a newly constructed affordable housing unit.  After the unit is substantially completed, the refund is obtained via application to the Florida Department of Revenue. In the event that the building materials are paid for out of grant proceeds, the refund belongs to the government.  The refund is calculated on a per-unit basis and is capped at either $5000 or 97.5% of sales or use tax paid, whichever is less.  

 IV. Expedited Building Permitting and Development Orders

Local governments must now maintain on their websites the policy and procedures for expedited building permitting and development orders applicable to affordable housing.

V. Prohibition on Rent Control

The Act prohibits local governments from imposing rent controls. This was previously permitted by Section 125.0103, Florida Statutes.  

VII. Additional Funding Allocated to Affordable Housing Programs

• Over $700 million in funding for numerous existing affordable housing programs for fiscal years 2022-2023 and 2023-2024:
  • State Housing Initiatives Partnership program (“SHIP”) – $252 million
    • Funds are disbursed from the Florida Housing Finance Corporation (“FHFC”) to the local governments, which then make them available to developers who comply with the program’s requirements.
  • State Apartment Incentive Loan program (“SAIL”) - $259 million
    • Funds are made available to developers through competitive solicitations administered by FHFC.
  • Hometown Hero Housing Program - $100 million
    • Makes homeownership affordable for eligible frontline community workers such as law enforcement officers, firefighters, educators, healthcare professionals, childcare employees, and active military or veterans.
  • Construction Housing Inflation Response Program (“CHIRP”)- $100 million
    • Funds are made available to developers through competitive solicitations administered by FHFC.
  • Additional Funding for the State Housing Trust Fund
    • Redirects up to $150 million annually to this trust fund over the next 10 years.
    • At least 70% of funds to be made available to developers through competitive solicitations administered by FHFC.

• New Live Local Corporate Tax Donation Program:
  • New tax donation program allowing taxpayers to get tax credits against corporate or insurance premium tax liability by paying directly to FHFC. Capped at $100 million annually.

[1]             This does not apply to property zoned industrial that is defined as recreational or commercial working waterfront in Section 342.201(2)(b), Florida Statutes.