Senate Bill 102: How the “Live Local Act” Incentivizes Affordable and Workforce Housing in the State of Florida

UPDATED SEPTEMBER 26, 2023

 

Over the past few years, Florida has experienced extraordinary growth and a booming real estate market. While this success has provided many benefits, it has also come with some costs, including a lack of affordable and workforce housing for Floridians. To address this, on March 29, 2023, Governor Ron DeSantis signed Senate Bill 102—the Live Local Act—to provide developers with incentives to construct affordable and workforce housing throughout the State of Florida. The Live Local Act is a transformative piece of legislation and the largest housing investment in Florida’s history. A detailed summary of key changes is outlined below and the section references are to Senate Bill 102, as codified in Chapter 2023-17. This article was originally published on April 6, 2023 and was updated on September 26, 2023 based on new guidance and information regarding the implementation of the Live Local Act. 

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 I. Price and Rent Controls (Sections 2 & 6)

1. Price Control: Local governments may not adopt an ordinance or rule imposing price controls on lawful business activity that is not franchised by, owned by, or under contract with a governmental agency.
2. Rent Control: Local governments may not adopt laws, ordinances, or rules imposing rent controls. Previously, local governments could adopt rent control measures (i) if necessary to eliminate an existing housing emergency which is so grave as to constitute a serious menace to the general public, (ii) for only one (1) year, and (iii) if the rent control measure did not apply to seasonal and tourist units, second homes, and luxury apartment buildings.
3. Statute(s) Affected: § 125.0103 (County), § 166.043 (Municipality)
4. Timeframe: Took effect July 1, 2023 and there is no expiration date.

II. Local Government and Land Use Changes (Sections 3 & 5)

1. Waiver of Local Processes for Multifamily Projects if 10% of Units are Affordable: a county may approve a housing development, including a mixed-use residential development, on any parcel zoned commercial or industrial if at least 10% of the units are affordable as defined in section 420.0004, Fla. Stat.
   • The prior law allowed counties to approve housing developments on any parcels zoned for residential, commercial or industrial uses if at least 10% of the units were affordable and the developer did not apply for or receive SAIL funding pursuant to section 420.5087, Fla. Stat. With the new law, such restriction was removed, expanding funding sources for these proposed projects.
2. Counties - Administrative Approval Affordable Multifamily Projects: a county must administratively approve a multifamily and mixed-use residential project and cannot require a rezoning, land use change, special exception, conditional use approval, variance, or comprehensive plan amendment for the building height, zoning, or density described in the Act, subject to the following parameters: 
   • Requirements:
     1. The area is zoned commercial, industrial, or mixed-use;
     2. At least 40% of the multifamily residential units in the proposed development are affordable, as defined in section 420.0004, Fla. Stat., for a period of at least 30 years;
        1. For this purpose, affordable means that the monthly rents, including taxes, insurance and utilities, do not exceed 30% of area median income (“AMI”) for extremely-low-income persons (persons earning less than 30% of AMI), very-low-income persons (50% AMI),  low-income persons (80% AMI), and  moderate-income persons (120% AMI).
     3. For mixed-use residential projects, at least 65% of the project’s total square footage must be residential; 
   • Maximum Density: a county may not restrict a qualifying project below the highest allowed density on any unincorporated land within the county where residential development is allowed.
   • Height: the multi-family building height for a qualifying project may not be restricted below the highest currently allowed height for a commercial or residential development in the same jurisdiction within one (1) mile of the proposed development or three (3) stories, whichever is higher.
   • Satisfaction of Local Land Development Regulations: the multifamily project must satisfy the county’s land development regulations for multifamily developments, including regulations related to setbacks and parking. Provided it satisfies these requirements and is otherwise consistent with the comprehensive plan, the proposed development must be administratively approved.
   • Parking: a county must consider reducing the minimum parking requirements described in its land development regulations if the multifamily project is within one-half (1/2) mile of a major transit stop, as defined in its land development regulations, and the major transit stop is accessible from the proposed development.
   • Recreational and Commercial Working Waterfronts: this “relaxed” multifamily development opportunity does not apply to property defined as recreational and commercial working waterfronts in section 342.201(2)(b) in any area zoned as industrial.
   • Required Mixed-Use Residential: if the multifamily development is (1) zoned for commercial or industrial use, and (2) within the boundaries of a multicounty independent special district created to provide municipal services and is not authorized to levy ad valorem taxes, and less than 20% of the land area within the district is designated as commercial or industrial use, then the county must only administratively approve otherwise qualifying multifamily projects if the project is mixed-use residential.
3. Municipalities - Administrative Approval Affordable Multifamily Projects: The above is identical for municipalities, except that if a municipality designates less than 20% of its land area as commercial or industrial, then the multifamily project must be mixed-use residential. Unlike counties, the multifamily development need not be within a multicounty independent special district to trigger the mixed-use residential requirement.
4. Implementation of the Administrative Approval Process: The implementation of the administrative approval process varies by jurisdiction. It is important to reach out to each jurisdiction to find out the implementation process and development standards prior to submitting an application.
5. Statute(s) Affected: § 125.01055 (County), § 166.04151 (Municipality)
6. Timeframe: Took effect July 1, 2023 and the administrative approval allowance for qualifying multifamily projects expires October 1, 2033.

III. County and Municipal Property Appropriate for Affordable Housing (Sections 4 & 7)

1. Inventory List: Each county and municipality must prepare an inventory list of all property within its jurisdiction or any dependent special district within its boundaries that may be appropriate for use as affordable housing. To encourage potential development of multifamily housing, the list must be available to the public on the county/municipality’s website. In addition to a traditional sale of such property to a developer (with restrictions imposed thereon for affordable housing) or the donation of such property to a nonprofit housing organization for its use in building affordable housing, housing may be developed on the property through a long-term land lease requiring affordable housing.
2. Best Practices: Counties and municipalities are encouraged to adopt best practices for surplus land programs, including:
   • Establishing eligibility criteria;
   • Making the process for requesting surplus lands publicly available; and
   • Ensuring long-term affordability through ground lease by retaining a right of first refusal (“ROFR”) to purchase property that is sold or offered at market rate and requiring a reversion of property not used for affordable housing within a certain timeframe.
3. Statute(s) Affected: § 125.379 (County), § 166.0451 (Municipality)  
4. Timeframe: Requires the county/municipality to create the inventory list by October 1, 2023 and every three (3) years thereafter.

IV. Ad Valorem Property Tax Exemptions (Sections 8 & 9)

1. Nonprofits: Land that is owned entirely by a qualified Section 501(c)(3) organization is eligible for an ad valorem property tax exemption if such land is leased for a minimum of 99 years for the purpose of and is predominantly used for affordable housing that serves extremely low income, very low income, low income and/or moderate income as described in section 420.0004, Fla. Stat. Land is predominantly used for affordable housing if the square footage of the improvements on the property used for affordable housing is greater than 50% of the square footage of all improvements on the property.
   • Please note that the this exemption specifically applies to land, not the improvements.
2. The “Missing Middle”: Affordable housing developers shall receive what is being commonly referred to as a “Missing Middle” ad valorem tax exemption for units in a multifamily project that meet the following requirements:
   • 75% of the assessed value of the unit if the unit provides housing to natural persons or families whose annual household income is greater than 80% and no more than 120% AMI, or
   • 100% of the assessed value of the unit if the unit provides housing to natural persons or families whose annual household income does not exceed 80% AMI.
   • Qualifications:
     • The multifamily project must meet the income limits described above.
     • The multifamily project must be newly constructed and contain more than 70 units dedicated to housing natural persons or families meeting the above income limits.
       • Newly constructed means an improvement to property which was substantially completed within five (5) years before the earlier of: (i) the date the applicant first submitted a request for certification, or (ii) an exemption application. Substantially completed means the improvement or some self-sufficient unit within it can be used for the purpose for which it was constructed. It is unclear at this time whether a substantial rehabilitation qualifies for the Missing Middle exemption.
     • The multifamily units must be rented for an amount that does not exceed the amount specified by the most recent multifamily rental programs income and rent limit chart posted by the Florida Housing Financing Corporation and derived from the Multifamily Tax Subsidy Projects Income Limits published by the United States Department of Housing and Urban Development or 90% of the fair market value, whichever is less.
   • Application Process: the property owner must apply to the Florida Housing Financing Corporation to receive a certification notice, which will be sent with an application form and required documents to the property appraiser. The application requires several documents, including but not limited to a rental market study and the rent received for each unit for which the property owner is requesting the exemption.
   • Certification Application: the property owner must submit a certification application to the Florida Housing Finance Corporation by December 31. The certification application includes a list of the units for which the property owner seeks the exemption, a rental market study, a sworn statement restricting the units to affordable/workforce housing for the following three (3) years, and the rent received for each unit for which the property owner seeks the exemption. The certification must be submitted through the Florida Housing Finance Corporation application portal on a yearly basis. Between January 1 and January 15, the property must update and/or confirm that the rents charged fit within the qualifying AMI levels and that the tenants meet the income requirements. On or before February 15, the Florida Housing Finance Corporation will release its certification approvals or denials and send the certification approval to the property owner/applicant and the local property appraiser.
   • Deadlines: the property owner must submit the certification application to the Florida Housing Finance Corporation by December 31. The property owner must submit the application form, which has not yet been released by the Florida Department of Revenue and certification notice from the Florida Housing Finance Corporation to the property appraiser by March 1.
   • Special considerations: this exemption is not available if units are subject to a chapter 420 agreement with the Florida Housing Finance Corporation to provide extremely-low-income, very-low-income, or low-income housing or if the property receives an exemption pursuant to the new section 196.1979, Fla. Stat. (County/Municipal exemption discussed below).
3. County and Municipal Property: the board of county commissioners or governing body of a municipality may adopt an ordinance exempting qualifying portions of property from ad valorem taxes up to:
   • 75% of the assessed value of each residential unit used to provide affordable housing if less than 100% of the multifamily project’s units provide affordable housing;
   • 100% of the assessed value of each residential unit used to provide affordable housing if 100% of the multifamily project’s units provide affordable housing;
   • Qualifications:
     • To be eligible for this exemption, the proposed project must be used to house natural persons or families whose annual household income:
       • Is greater than 30% but not more than 60% AMI; or
       • Does not exceed 30% AMI.
     • Must contain more than 50 residential units and 20% of those units must be used for affordable housing;
     • Units must be rented at the lesser of the most recent multifamily rental programs income and rent limit chart posted by the Florida Housing Financing Corporation and derived from the Multifamily Tax Subsidy Projects Income Limits published by the United States Department of Housing and Urban Development or 90% of the fair market value, whichever is less;
     • May not have been cited for code violations on three (3) or more occasions in the past 24 months;
     • May not have been cited for code violations that are still outstanding; and
     • May not have any unpaid fines or charges related to old code violations.
   • Application Process: the property owner must apply for certification to a local entity under the supervision of the board of county commissioners or governing body of a municipality to receive the exemption. The certification application requires several documents, including but not limited to a rental market study and the rent received for each unit for which the property owner receives the exemption. The local entity must verify the information submitted to it and provide a certification of qualification that will be forwarded to the property owner and the property appraiser.
   • Deadlines: the property owner must submit the certification documents and certification notice from the local entity to the property appraiser by March 1. The county or municipality must post the deadline to request the certification notice on its website.
   • Note that the exemption is still applicable if a unit qualified in a previous year for an exemption but is vacant on January 1^st of the tax year but remains held for occupancy by a qualifying tenant and a reasonable effort is being made to lease such unit to an eligible person or family.
4. Statute(s) Affected: § 196.1978 (Nonprofit and Missing Middle), § 196.1979 (County/Municipal) 
5. Time Frame: The Nonprofit and Missing Middle exemptions first apply to the 2024 tax roll and expire December 31, 2059. The County/Municipal exemption first applies to the 2024 tax roll and there is no expiration date, although each ordinance must expire before the fourth January 1 after adoption and the local government may renew the ordinance.

V. Distribution of Taxes (Sections 10 & 32)

1. Distributions to State Housing Trust Fund: Pursuant to section 201.15, Fla. Stat., after required distributions to the Land Acquisition Trust Fund, the lesser of 8% of the remainder or $150 million in each fiscal year shall be paid into the State Treasury to the credit of the State Housing Trust Fund and shall be expended pursuant to the newly created section 420.50871, Fla. Stat. This should significantly increase amounts available to be funded under Florida Housing’s SAIL program.
2. Allocations of Funding for Innovative Projects Providing Affordable and Attainable Housing for Persons and Families Working, Going to School or Living in Florida: Beginning in the 2023-24 fiscal year and annually for 10 years thereafter, pursuant to the newly created section 420.50871, Fla. Stat., funds from increased revenues that flow into the State Housing Trust Fund pursuant to section 201.15, Fla. Stat., shall be provided for innovative projects that provide affordable and attainable housing for persons and families working, going to school, or living in Florida.
   • Requirements:
     • The Florida Housing Finance Corporation shall allocate 70% of the funds to issue requests for applications (“RFAs”) for the redevelopment of an existing affordable housing development and the construction of a new affordable housing development within close proximity to the existing development to be rehabilitated.
       • The new affordable housing development must be completed first in order to relocate tenants of the existing development and then the existing development must be demolished and reconstructed with an affordable housing development with more overall and affordable units.
       • The affordable housing development must address urban infill opportunities, provide for a mix of uses, and provide housing near military installations.
     • The remaining 30% of funds Florida Housing shall issue competitive requests for applications (RFAs) for projects that propose using or leasing public lands, address the needs of young adults who aged-out of foster care, address the needs of elderly persons, or provide housings in areas of rural opportunity.
3. Statute(s) Affected: § 201.15 (Required Distributions), § 420.50871 (Allocations of Funding)
4. Time Frame: Section 201.15 expires July 1, 2033 and it shall revert to the language in effect on June 30, 2023. Section 420.50871 applies to the 2023-2024 fiscal year and annually for 10 years thereafter.

VI. Building Materials Sales Tax Refund (Section 12)

1. Qualifications:
   • A property owner must receive a sales tax refund if it uses building materials, including appliances but not including plants, landscaping, fencing, andhardscaping, for newly constructed units within an affordable housing development subject to a recorded chapter 420 agreement with the Florida Housing Finance Corporation binding the property to provide affordable housing to natural persons or families meeting the extremely-low-income, very-low-income, or low-income limits in section 420.0004, Fla. Stat.
     • Newly constructed means improvements to the property that did not previously exist or the construction of a new improvement where the old improvement was removed. It does not include renovation, restoration, rehabilitation, modification, alteration, or expansion of buildings already located on the parcel.
   • This exemption also applies to municipalities, counties, other governmental units or agencies, or nonprofit community-based organizations if the building materials are paid for from a community development block grant, the State Housing Initiatives Partnership Program, or similar grant or loan program.
2. Application Process: the property owner must file an application with the Department of Revenue, which includes several documents including copies of building permits, descriptions of eligible residential units, certifications, and sworn statements.
3. Deadlines: the property owner seeking the refund must apply to the Department of Revenue within six (6) months after the eligible residential units are deemed substantially completed by the local building code inspector or by November 1 after the improvement property is subject to its first assessment. The refund must be issued within 30 days after the Department of Revenue formally approves the refund application.
4. Refund Minimum and Maximum: a refund must exceed $500 per unit and may not exceed the lesser of $5,000 per unit or 97.5% of the Florida sales or use tax paid on the cost of building materials.
5. Statute(s) Affected: § 212.08
6. Time Frame: The building materials sales tax refund applies to the sale of building materials occurring on or after July 1, 2023.

VII. Surplus of State-Owned Lands (Section 23)

1. The State of Florida is required to evaluate whether non-conservation state lands are suitable for affordable housing and consider opportunities to transfer these lands to local governments for the development of affordable housing.
2. Statute(s) Affected: § 253.034

VIII. Florida Job Growth Grant Fund (Section 25)

1. The Department of Revenue and Enterprise Florida, Inc. may solicit proposals and make funding recommendations to the Governor, who may approve state or local public infrastructure projects for the development or construction of affordable housing.
2. Statute(s) Affected: § 288.101
3. Time Frame: The Governor’s ability to approve state or local public infrastructure projects for affordable housing expires July 1, 2033.

IX. State Housing Strategy (Section 26)

1. The State of Florida Housing Strategy was rewritten to emphasize state and local government cooperation to enhance affordable and workforce housing stock.
2. Statute(s) Affected: § 420.0003

X. Florida Housing Finance Corporation Board of Directors (Section 28)

1. The Florida Housing Finance Corporation Board of Directors is now comprised of the Secretary of Economic Opportunity or a senior-level agency employee designated by the Secretary, one member appointed by the President of the Senate, one member appointed by the Speaker of the House of Representatives, and eight citizens appointed by the Governor and confirmed by the Senate in select industries.
2. Statute(s) Affected: § 420.504

XI. Live Local Program and Corporate Live Local Credit (Sections 21 and 34)

1. Live Local Credit: corporations are eligible for a credit of 100% of an eligible contribution to the Live Local Program (section 420.50872, Fla. Stat.) against any tax due for a taxable year after the application of any other allowable credits. The credit must be reduced by the difference between the amount of federal corporate income tax, taking into account the Live Local Credit, and the amount of federal corporate income tax without the Live Local Credit.
   • Taxpayer making the contribution may not designate a specific project, property or geographic area as the beneficiary of the contribution.
2. Requirements:
   • Projects funded through this donation program must be used to fund:
     • 100% through the SAIL program provided that up to $25 million of such eligible contributions may be used by the corporation to provide loans for the construction of large-scale projects of significant regional impact, which must include a substantial civic, education, or health care use and may include a commercial use. Such loans are subject to the competitive RFA process and shall not exceed 25% of the proposed cost of the project.
   • Taxpayers must receive a certificate of contribution from the Florida Housing Finance Corporation, which must provided to the Department of Revenue within 10 days.
   • The tax credit cap amount is limited to $100 million in each state fiscal year.
3. Statute(s) Affected: § 220.1878 (Live Local Credit), § 420.50872 (Live Local Program)
4. Deadlines: The contribution must be made on or before the date the taxpayer is required to file its state tax return. 
5. Time Frame: Applies to taxable years beginning on or after January 1, 2023.

XII. Florida Hometown Hero Program (Section 35)

1. Financial assistance for Florida residents: The Florida Hometown Hero Program will assist residents in purchasing a home as their primary residence. A borrower may apply to the Florida Housing Financing Corporation for a loan to reduce the amount of the down payment and closing costs paid by the borrower by a minimum of $10,000 and up to 5% of the first mortgage loan, not exceeding $35,000. Loans must be at a 0% interest rate and must be made available for the term of the first mortgage.
2. Requirements:
   • Must have a household income that does not exceed 150% of the state median income or local median income, whichever is greater;
   • Must be a first-timehomebuyer; and
     • The requirement to be a first-time homebuyer does not apply to an active duty service member of a branch of the armed forces or Florida National Guard, or a veteran.
   • Employed full time (35 hours or more per week) by a Florida based employer.
   • In addition to the funding of tradition single family homes, loans can be made for the purpose of acquiring a manufactured home which was constructed after July 13, 1994 and is permanently affixed to real property in the State.
3. Statute(s) Affected: § 420.5096

XIII. Keys Workforce Housing Initiative (Section 42)

1. Exemption from Evacuation Times in Section 380.0552(9)(a)(2), Fla. Stat.: The Department of Economic Opportunity’s Keys Workforce Housing Initiative is considered an exception to the evacuation time constraints in section 380.0552(9)(a)(2), Florida Statutes, by requiring deed-restricted affordable workforce housing properties receiving permit allocations to agree to evacuate at least 48 hours in advance of hurricane landfall. A comprehensive plan amendment approved by the Department of Economic Opportunity to implement the initiative is valid and may be implemented through local ordinances and regulations.

XIV. Appropriations from State Funds (Sections 44, 45, 46, 47)

1. Implementation of Florida Hometown Hero Housing Program: for fiscal year 2023-2024, $100 million shall be allocated from the General Revenue Fund to the Florida Housing Finance Corporation to implement the Florida Hometown Hero Housing Program.
2. Appropriation from the Local Government Housing Trust Fund: for fiscal year 2023-2024, $252 million in nonrecurring funds shall be appropriated from the Local Government Housing Trust Fund to the Florida Housing Finance Corporation in the Grants and Aids – Housing Finance Corporation (HFC) – State Housing Initiatives Partnership (SHIP) Program category.
3. Appropriation from the State Housing Trust Fund: for fiscal year 2023-2024, $150 million in recurring funds and $109 million in nonrecurring funds shall be appropriated from the State Housing Trust Fund to the Florida Housing Finance Corporation in the Grants and Aids – Housing Finance Corporation (HFC) – Affordable Housing Programs category. The recurring funds implement initiative set forth in section 420.50871, Fla. Stat.
   • The first $100 million will be allocated through RFA 2023-213, which opens October 3, 2023. All applications must qualify as a mixed-income development and either an urban infill or mixed use development. The Florida Housing Finance Corporation will fund 1 elderly, mixed-use development, 1 public lands development, and 1 youth aging out of foster care development before allocating funds to other types of multifamily projects (which can also include the above type projects).
4. Appropriation from the Local Government Housing Trust Fund: for fiscal year 2022-2023, $100 million in nonrecurring funds shall be appropriated from the General Revenue Fund to the Florida Housing Finance Corporation to implement a competitive assistance loan program for new construction projects that are experiencing verifiable cost increases due to market inflation.
   • Eligible projects are those entering credit underwriting with the Florida Housing Financing Corporation for funding between July 1, 2020 and June 30, 2022.

 If you should have any questions on this legislation please contact us.