City to offer new affordable housing tax exemptions

The City of St. Petersburg will be the first in the county to leverage a new tax abatement program to promote the construction and longevity of affordable housing developments. 

The newly passed Live Local Act, Senate Bill 102 allows affordable housing in otherwise impermissible areas. It also grants several local tax exemptions, including a nonprofit-owned land used for affordable housing with a 99-year ground lease and the “missing middle” property. 

Amy Foster, the City’s housing and community development administrator, and her team crafted an ordinance focusing on the local tax exemptions, which will be available for properties with 50 or more housing units that have at least 20% earmarked for residents earning at or below 60% of the area median income.

“We hope you will be the leader today. No one else has yet taken advantage of this incentive in our county,” Foster said during the Nov. 2 St. Petersburg City Council meeting. 

The City of Jacksonville, she noted, implemented a similar exemption process. 

If all units are affordable in a St. Pete housing project, the developer can receive a 100% tax exemption. If there are less than 100 affordable units, the developer may still benefit from a tax exemption capped at 75%. 

The potential exemptions will apply to all new developments and existing developments if at least two of the three criteria are met: 

• Extend period of affordability for 15 years 
• Undertake substantial renovation that exceeds 40% of the value (excluding the land value)
• The developer has experienced insurance increases of 50% or more over the last three years 

“Based on conversations with developers, many will meet two of the three criteria, but it allows us to get something in return,” Foster said. 

The ordinance, which the council unanimously supported, would include penalties for non-compliance. 

The applicable projects in St. Pete: 

• 51 developments that have over 50 units with a portion of affordable housing (there are over 80 developments with over 50 housing units, but do not offer affordable housing, according to the Pinellas County Property Appraiser’s data)
• There are 36 developments that have over 50 affordable housing units 
• There are three projects under development a developer has paid taxes on with 50 or more affordable housing units 

The tax relief for existing developments with 50 or more affordable housing units would be roughly $208,800. Exemptions for communities with a smaller portion of affordable housing would total just over $213,340. 

In late August, the city’s Budget, Finance, and Taxation Committee discussed creating this new section of the city code to allow granting ad valorem tax exemptions for certain properties used to provide affordable housing. 

The exemptions would be tiered based on the unit count and pending a local application review process. Any citations must be remedied, and the developer can’t have any outstanding debt to the city. 

There is one looming issue with the tax abatement program – it’s scheduled to sunset at the end of 2026. 

“I believe the legislature didn’t think this through properly,” Foster said. “Developers are saying it’s unstable [because it’s going to sunset].” 

Foster said she hopes other local officials and representatives will ask legislators to extend the termination date.