Developers in Florida are increasingly considering the addition of affordable housing units to buildings that are already under construction or completed, as a result of incentives provided by the state’s Live Local Act. This trend was discussed by industry professionals at the Urban Land Institute’s Fort Lauderdale Forum.
The Arcadian, a 502-unit apartment project in Fort Lauderdale developed by Fuse Group Investment Companies, is one example. Eyal Peretz, founder of Fuse Group, said during the panel discussion that The Arcadian began as a standard project but is now being reclassified to include affordable housing under the Live Local Act. “The Arcadian ‘started as a non-Live Local project and went through some transformation, and we are going through a process right now where we are about to submit [it as] a Live Local project,’” Peretz stated.
Panelists noted that rising interest rates and construction costs have slowed residential development statewide. However, incentives such as property tax breaks for providing below-market rents can improve profitability for developers on projects that might otherwise be financially marginal.
Doron Broman, founder and CEO of Moderno Development Group, commented on this shift: “Every project we’re looking at, we’re looking at adding a Live Local component to it. Most projects don’t pencil in today. So, with the Live Local Act that gives you additional income, that means, maybe, the project will pencil in.”
Moderno’s Rivr Lofts building in Fort Lauderdale was completed after construction began prior to the law’s enactment. Broman explained their current approach: “We are looking right now at converting some of the units into the Live Local pool,” he said. “The smaller studios seem to be a very good fit for that type of product.” He added that eligibility for these units would be limited to people earning up to 120 percent of area median income—about $90,000 per year—and noted many current residents already meet this criterion.
Russell Galbut, managing principal of Crescent Heights, cautioned that not all developments can support mixed-income models due to financial constraints. “It’s really a small percentage, and that’s because you have 60 percent of your building that has to pay for the other 40 percent,” Galbut said. “If it doesn’t work in paper and pencil, it will never work in brick and mortar.” He highlighted expedited municipal approvals as one major benefit: “Time kills many great projects.”
Financing remains an obstacle for many developers pursuing mixed-income projects under the new law. Peretz observed ongoing difficulties: “We see an issue with financing,” he said. “I’m hoping it’s going to change …. But I’ve been hearing from a lot of developers with issues on that side of things.” Panel moderator Alfonso Costa Jr., chief operating officer of Falcone Group, echoed this concern: “It seems we need to get everybody on the same page and make sure … our cash flow matches with what the lenders are expecting,” he said. He described working with agencies like Fannie Mae and Freddie Mac as an educational process for both new construction loans and refinancing.
