The inflation cost of land, infrastructure, and impact fees, shortage of materials and labor have pushed the cost of housing to an all-time high and it is nearly impossible for 70% of the population to become homeowners. Renters are paying up to 50% of their monthly income.
Indian River County has a backlog of 2,000 families needing affordable housing. I
estimate the need is 8,000 families.
There are proponents and critics of Community Development Districts. The cost of land,
engineering, water sewer, streets, and impact fees have driven the cost of the developed lot to $65,000 to $75,000. If you use the old 10% multiplier for a
lot ratio, the sales price for a new home would have to sell for $700,000. If we use a 20% multiplier, the home would sell for $350,000.
That's affordable, but the homebuyer would receive only half the square footage of the smaller house. Not good. The lot is too expensive.
If a developer purchases 10 acres, he will have 30 lots costing him $1.95 million. I am not aware of any bank that would make this loan. He therefore forms a CDC. He must
build and sell homes in the $700,000 range. Affordable? No.
There are housing subsidies available, but with a 1.5-year waiting list with down payment and closing cost assistance up to $25,000 this is insufficient for first-time homebuyers with limited funds.
This subsidy has income restrictions that limit the sales price to under $250,000. Where can a homebuyer find a new home in this price? It does not exist. This then results in families paying 50% of their income for rent, a serious financial burden.
One solution is forming multiple community redevelopment agencies. This is like a
CDC authorized by the state of Florida for a tax increment program. The real estate tax
is frozen by the present value of the land.
Let's assume that the present tax on the land is $300 per acre. Homes would be built to provide homes for the 70% of the population. Real estate tax income will skyrocket on each of these new homes.
Let’s assume the tax income for the new home would be $2,500 yearly for 20 years. This will total $50,000. This should double over 20 years due to inflation, which could result in possibly as much as $100,000. After 20 years, the county would receive 100% of this increase in taxes.
During the 20-year period, the additional tax funds would liquidate the bond cost on the property and provide future income to the county. This program would provide a lot for a nominal cost.
The developer then can build homes for low-income, moderate-income and workforce housing for under $250,000. Rental units could also be built and rented to families at 30% of their gross income, which is now affordable.
The CRA program has been rejected by the Indian River County Commission, who seem adamantly against it. Why?
I have heard that the objection is it will cause increase of taxes to the general public. I don’t see how.
Certain people want a “NOT IN MY NEIGHBORHOOD” policy. This is ridiculous; most of their present neighbors are in this income bracket. Politicians want to make sure they will be reelected so they do not want to pass anything that could be controversial.
Public employees do not want to make waves and jeopardize their weekly paycheck or their retirement and will only follow their manual or have committee meetings or tell you it’s under consideration. Nothing happens.
Here's a solution:
There is a 1.5-year waiting list for SHIP and HOME funds. These funds
come from Florida Housing Finance Corporation in Tallahassee. There is
no local housing subsidized county program patterned after SHIP or the
There is a bed tax program to develop the tourist industry, but no program for individuals and families who serve the tourist industry and local business. Housing costs will be worse.
Is the county willing to establish a county subsidized program patterned after the
SHIP and Surtax programs? Are they willing to consider a sales tax similar pattern after the bed tax or increasing the real estate tax for housing? The present real estate
tax covers public parks, roads, etc.
Why has housing been eliminated? Is government willing to solve this problem?
Jerry Flick, Vero Beach, has been involved in mortgage banking and for-profit and non-profit development of low- and moderately priced housing for more than 40 years in 12 states.
This article originally appeared on Treasure Coast Newspapers: How do you make housing more affordable on Treasure Coast? | Opinion