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How affordable are non-market rate rents?

Mark Parker

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An agreement between the City of St. Petersburg and development firm Stoneweg stipulates that 20% of the Coquina Key Plaza redevelopment's units are for those earning between 80% and 120% of the area median income. Screengrab, city documents.

Many new St. Petersburg housing developments – and projects proposed under the Live Local Act – offer workforce housing units for tenants earning up to 120% of the area median income (AMI). However, those rents often surpass market rates.

City councilmember Richie Floyd recently noted that monthly rents for a two-bedroom apartment at those levels can reach $2,580. The average market rate is between $1,800 and $2,200.

Floyd proposed a resolution at a May 30 committee meeting that explicitly states the city’s goal of only subsidizing units for households earning below 80% AMI. That is about $70,000 annually for a family of four in St. Petersburg.

“I was thinking that if we could make it our policy that we wanted to do 80% and below with our cash subsidies and gap financing, explicitly, that would mean a lot to the people in our community,” Floyd said. “And it would get us on the record as not wanting to continue to subsidize these quite expensive apartments.”

A graphic showing area median income (AMI) limits for completed and proposed housing units. Screengrab, city documents.

Amy Foster, housing development administrator, said the city provides workforce density bonuses to developments at those income levels but not cash subsidies. She also noted that “100%” of all new projects feature units at 120% AMI.

Foster expects that to continue due to 2023’s Live Local Act. The recently amended legislation permits mixed-income projects in non-residentially zoned areas if at least 40% of housing units are for those earning less than 120% AMI. Developers must offer a 10% market rate discount.

Live Local developments can include a jurisdiction’s maximum allowable units per acre, up to 150% of its floor area ration allowance and match the height of the tallest commercial or residential building within a mile of the site. Foster said the city is now subsidizing units above 80% of AMI for the first time under Mayor Ken Welch’s Housing Opportunities for All plan.

“We would never be able to finance an entire affordable housing deal,” Foster added. “Unless you want to budget more money for that, which we would take and happily produce more units with.”

St. Petersburg is meeting its housing goals. Administrators hope to create and preserve 7,800 homes by 2030 while prioritizing units with rents capped at 80% AMI.

Just 4% of subsidized apartments built last year are above that income restriction. However, recent statistics show that 63% of in-progress units are for those earning between 80% and 120% of the AMI.

City officials dedicate $750,000 annually to mitigate financial gaps for affordable housing projects. Foster explained that developers mostly rely on state and federal funding.

“A lot of the new dollars available from the state are for 80% and above AMI because of the Live Local Act,” Foster said. “The administration certainly supports this (Floyd’s) policy direction and this decision, but you have to recognize that when folks are successful getting 90% financed by the state and the feds, we won’t be able to give any dollars. And that means no deal comes across the finish line.

“That is why building affordable housing takes five, eight years – getting enough money stacked together to make this work.”

Councilmember Gina Driscoll noted that local incomes are not keeping pace with soaring rents. She said fostering high-income job opportunities should remain a priority.

A map highlighting the hourly wage people must earn to afford a “modest” apartment. Screengrab, city documents.

Driscoll said she would also like to codify an 80% AMI goal while maintaining administrative flexibility for development negotiations. Foster said the city only subsidizes projects at 120% AMI in the South St. Pete Community Redevelopment Area (CRA), and those rents are “absolutely” above the CRA’s market rates.

She also explained that many new developments feature various income restrictions, with the city only subsidizing units below 100% AMI. Councilmember Brandi Gabbard supported an 80% AMI policy directive but noted the Affordable Housing Advisory Committee should also offer its thoughts on a resolution.

She also questioned why the $750,000 budgeted for affordable housing financing hasn’t increased in three years. While Assistant City Administrator Tom Greene said the funding comes from multiple other city sources, Gabbard said the community focuses on the official allocation.

Floyd said he would work with the legal department to draft a resolution stating the city’s 80% AMI goal. The housing advisory councils will offer feedback before the full city council votes on the initiative.

 

1 Comment

1 Comment

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    S. Rose Smith-Hayes

    June 4, 2024at10:04 pm

    Think about it, pre COVID, one bedroom apt/home $650, 2 bedroom apt/home/ $800, 3 bedroom apt/home $1200. 2024, One bedroom apt/home $1800, 2 bedroom apt/home $2,000 to $2200, 3 bedroom apt/home $2500 to $3,000 a month. Average salary for ‘regular people’ $12 an hour, $24,960 annually. Who are you planning to help???????

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