St. Pete’s affordable housing subsidies continue rising

City council members unanimously approved reallocating $2.15 million in South St. Petersburg Community Redevelopment Area (CRA) funding to address “unexpected requests” for additional housing subsidies. The money will help over 60 units spread throughout several “in various stages of completion” projects come to fruition.

The Namaste project, Sixteenth Square, was first proposed in October 2020. The city council previously approved $286,000, and the $770,000 increase would provide $1.056 million in tax increment financing from CRA coffers.

“This is a huge increase in the subsidy,” Floyd said. “We want the deal to happen, so we’re in this situation. And I just wonder, where are the consequences for saying you’re going to do something and then failing so spectacularly?”

In addition to the funding request, Namaste will increase the maximum sales price from $213,00 to $275,000. Project cost estimates have soared from $2.5 million to $4.08 million.

Namaste would lose $1.056 million, or $96,000 per unit, without the additional CRA funding.

City Administrator Rob Gerdes said he understood Floyd’s frustration. However, he explained that city leadership also realizes townhomes can mitigate the city’s workforce and affordable housing issues through ownership opportunities.

“Since we moved in that direction, to be frank, Namaste is the only one that has produced,” Gerdes said. “And I feel very strongly that those that build should be rewarded because that’s what this is all about.

“They could walk away from the agreement that they have with us, and they can sell these units at any price point that they want to.”

A current view of the site. Screengrab.

Gerdes noted that city officials are encountering the same problem with several proposed projects, including the stalled Shell Dash and Deuces Rising townhome developments. City documents state that year-over-year construction costs have increased 20.4% – and 33% since the start of the pandemic.

Amy Foster, housing and neighborhood services administrator, said interest rates have also jumped from 1.5% to 7.5%. While Namaste’s request has significantly increased, she explained that the city will receive something in return.

The original agreement capped rents at 120% of the area median income. That is now down to 100%, or $60,900 for a one-person household.

“We’ve heard this council body loud and clear,” Foster said. “We have brought deals back – and we will continue to bring deals back that require more funding. But when we do that, we’re trying to get additional benefits for our citizens.”

She added that the project’s investment group would also provide 5.5% financing that saves homebuyers “a considerable amount of money” over time.

Floyd noted the increased sales price essentially mitigates the reduced AMI limits. However, he appreciate the lowered interest rates and administrative perspective.

“Maybe my frustration is with inflation,” Floyd said. “But the frustration’s real, no matter what.”

Councilmember John Muhammad asked if administrators could implement a guaranteed maximum allowance on housing subsidies. Foster said developers could then ask for the limit, regardless of the funding gap.

She also cautioned against a “one-size-fits-all approach” and said the council would continue hearing proposed agreement changes necessary to increase the city’s housing stock. Councilmember Gina Driscoll agreed that officials need flexibility to address varying circumstances.

While she said it feels like the council has discussed the Namaste project “forever,” Driscoll noted it still costs the city less than other projects. It is also progressing.

“So, there is something to be said for projects that are moving forward, even if it doesn’t look perfect,” Driscoll added. “I certainly support this one and look forward to it finally being done.”

A graphic showing affordable housing income limits according to household size. Screengrab.

The council unanimously approved allocating $2.15 million to complete over 60 South St. Petersburg CRA units. Here is the funding breakdown:

• Namaste Homes – $1.056 million
• Habitat for Humanity of Pinellas and West Pasco Counties – $640,000
• Contemporary Housing Alternatives of Florida (CHAF) – $300,000
• Other single-family home developers – $140,000

“People are looking for impactful opportunities to protect and nurture their families, which means safe neighborhoods and high-quality housing that is stable and affordable,” said Mayor Ken Welch in a prepared statement Monday. “We are not only strengthening our partnership with Namaste Homes, Habitat for Humanity and CHAF Properties to produce and build the homes but also ensuring a lower mortgage interest rate and greater affordability for families and individuals.”