Commission explores incentives for affordable housing funds

The demand for affordable housing is only going to increase significantly through 2035, Caitlin Johnson told Pinellas County commissioners May 15.

Johnson, vice president of the economic development consulting firm SB Friedman Development Advisors, laid it on the line: “What we’ve seen is that housing costs have continued to outpace household income growth.” 

In a lengthy presentation, she discussed how Pinellas’ affordable housing program has “dramatically increased affordable housing production” for individuals who live on a low income. Johnson demonstrated that there’s a need for new development of all housing types, particularly multi-family residences (apartments, townhomes, et cetera) and lower price point homes.

The challenge is that Pinellas’ funding has become limited. This is because the county’s program relies heavily on Penny for Pinellas funding, dollars which come from a 1% sales tax in the county paid by residents and tourists, with 8.3% net proceeds (approximately $165 million) going to affordable housing and economic development projects.

83% of approved Penny affordable housing funding for this decade has already been spent or committed to a project. County Administrator Barry Burton confirmed this at the May 15 work session. This means only 17% of Penny dollars are left, which rightfully alarmed Pinellas’s commissioners.

Incentivization for private development is essential for affordable housing moving forward, the commissioners determined.

“We have to be the last funding source in. We’ve seen these where Largo has had to come up with money, St. Pete has had to come up with money, because otherwise, doing it alone, we just simply couldn’t afford it through our program,” Burton said.

Private development incentives have already been discussed with the Pinellas government. Alan Steinbeck, Vice President of 3TP Ventures (a third party hired by the county), spoke at the session about a recent partnership between Pinellas County and Forward Pinellas, which led to the creation of a Housing Regulatory Toolkit.

The toolkit was created to provide guidelines for housing policy including incentives that can encourage private development, such as density bonuses and expedited permitting/reviewing. With these incentives, developers can build bigger and taller buildings more quickly if they commit a percentage of units towards affordable housing.

Steinbeck’s presentation led to a productive conversation between the commissioners about additional funding options.  

Commissioner Chris Scherer was the first to discuss some ideas. He agreed that incentives are imperative. “The key to affordable housing is supply. So whatever you can do to increase supply. I think is a great idea.” 

Scherer’s main point, however, was that the county should try not to use its funds to subsidize affordable housing in the future. Because the Penny dollars are depleting, Scherer recommended a property tax credit program. “Cash is very hard to come by,” he elaborated. 

A tax credit program could provide flexibility to developers and housing owners by offering them tax breaks based on the amount of units they commit to affordable housing. Commissioner Chris Latvala suggested Scherer’s tax credit idea is worth looking into. 

However, Commissioner Kathleen Peters presented a worthwhile opposing point. Before a tax credit program were to go into effect, time limits should be established. 

If a tax credit was extended for years, developers would be receiving more money than what the Penny funding gave them. This would potentially cause a major budget problem later on, she warned. “It’s complicated, at least with Penny we know a set number but when you start doing tax credits …” 

Peters argued that tax credits’ longterm impacts should be explored before implementing a program.  

Commissioner Vince Nowicki discussed how mortgage credit certificates might be helpful for homeowners. Through a certificate, first-time homeowners can get up to $2,000 in an annual credit towards their income taxes from the IRS. These credits can help families pay mortgage payments, he highlighted. 

As the session continued, there was a general consensus about using incentives to fund affordable housing. Nowicki emphasized that government dollars can only go so far. 

“We really need to look at any and all possibilities for incentives for home ownership because what we’ve been doing since 2019, with everything that we heard, we’ve spent $100 million and it seems like a pebble down a well,” he said. 

While no set decisions were made, the Commission agreed that more research needs to be conducted about incentives and a potential tax credit program. 

Burton stated that he would discuss the day’s conversation with his staff and present some more information about incentive programs to the Commission by late summer or fall.