FINAL REPORT AFFORDABLE HOUSING STRATEGIES AND SURVEY OF EMPLOYEES REGARDING HOUSING AND EMPLOYMENT

City of Palm Coast FINAL REPORT AFFORDABLE HOUSING STRATEGIES AND SURVEY OF EMPLOYEES REGARDING HOUSING AND EMPLOYMENT April 2007 Prepared By: In Tracy L Johns, Ph.D Michael J Scicchitano, Ph.D University of Florida Policy Management Research/ Florida Survey Research Center 633 NW 8th Avenue Gainesville, FL 32601-5074 Cooperation with: Community Development Department Long Range Planning Division “Securing access to decent, affordable housing is fundamental to the American Dream All Americans want to live in good-quality homes they can afford without sacrificing other basic needs All Americans want to live in safe communities with ready access to job opportunities, good schools, and amenities All parents want their children to grow up with positive role models and peer influences nearby The overwhelming majority of Americans want to purchase a home as a way to build wealth.” i City of Palm Coast, Commerce Blvd, Palm Coast, FL 32164 CITY OF PALM COAST AFFORDABLE HOUSING STRATEGIES The City of Palm Coast, Florida is a high-growth community facing a significant challenge in housing affordability The following presentation of strategies (see Exhibit for a summary list) for addressing affordable housing issues in Palm Coast is based on an analysis of responses to the affordable housing survey administered in late 2006 by the Florida Survey Research Center at the University of Florida, as well as on housing policy trends across Florida and the nation (See Exhibit 2) Most of those who responded to the affordable housing survey are already homeowners More than 81 percent of respondents reported owning homes, while the remaining 19 percent reported renting their homes Further, the majority of respondents who own homes already reside in Palm Coast Slightly less than 19 percent of respondents indicated that they have considered purchasing a home in Palm Coast in the near future More than 60 percent of respondents reported their monthly rent or mortgage payments were $1,000 or less Those who made mortgage payments of less than $1,000 per month likely bought their homes prior to the early 2000’s or were able to make sizeable down payments As with most communities throughout Florida, the primary challenge in housing affordability arises from a lack of housing units available for purchase or rent affordable to those with household incomes in the extremely low, very low, low and moderate income ranges, as defined by the U S Department of Housing and Urban Development (HUD) Extremely low income households are those with incomes at or below 30 percent Page of 20 The City of Palm Coast, Commerce Blvd., Palm Coast, FL 32137 386-986-3700 of area median income; very low income households are those with incomes above 30 percent of area median up to 50 percent of area median Low income households are those with incomes up to 80 percent of area median, while moderate income ranges from above 80 percent of area median through 120 percent of that figure The HUD-defined area median income for a family of four in Flagler County for 2007 is $51,900 Therefore, a family of four with an income at or below $16,650 is considered extremely low income; the same family with an income of $16,651 to $27,750 would be in the very low income category A low income family of four is one with an income of $27,750 to $44,400 A moderate income family of four in Flagler County has an income of $44,401 to $62,280 Table below presents this information in summary form Table 1: Flagler County Income by HUD Income Categories1 HUD Income Category Extremely Low Income Very Low Income Low Income Moderate Income Income Range Up to $16,650 $16,651 - $27,750 $27,750 - $44,400 $44,401 - $62,280 Who can be found in these income categories? Those in the extremely low income category may include retail clerks, food service workers, child care workers, housekeepers and janitors, certain clerical workers, and others Very low income occupations may include emergency medical technicians, nurse assistants and other health care workers, pre-school teachers, many administrative support staff, bookkeepers, and others Based on a U S Department of Housing and Urban Development data for a family of four Page of 20 The City of Palm Coast, Commerce Blvd., Palm Coast, FL 32137 386-986-3700 The low income category may include those who provide police and fire protection, nurses and other health care workers, elementary and secondary school teachers, many beginning professionals, and others Moderate income households may be made up of more experienced professionals The income category into which a family will fall depends not only on the occupation of the head of household, but also on whether there are two or more employed adults Many families with incomes ranging from extremely low to moderate income may have a wage earner working multiple jobs or two or more adults contributing to household income In addition, many persons with disabilities and elderly citizens tend to be in the extremely low income group Addressing Diverse Housing Needs A community’s housing needs exist along a continuum, ranging from rentals to homes for purchase Multiple housing policy tools are necessary to address diverse housing needs Thus, the City of Palm Coast’s strategy for addressing housing needs should be aimed at creation of a portfolio of tools that can be used flexibly to meet local housing goals No single tool offers a panacea, and local policy makers may find some approaches more viable than others for their community The following strategies have the potential to be part of an effective portfolio of housing tools for the City of Palm Coast A complete list of the 15 Strategies to address affordable housing needs is attached as Exhibit Strategy 1: Continue working closely with Flagler County to facilitate use of federal Community Development Block Grant (CDBG) funds and State Housing Incentives Partnership (SHIP) funds within the city limits of Palm Coast Page of 20 The City of Palm Coast, Commerce Blvd., Palm Coast, FL 32137 386-986-3700 The City of Palm Coast has already established a strong working relationship with Flagler County aimed at the creation of housing opportunities for low- to moderateincome households For instance, for the period 2003 through early 2007, Flagler County allocated SHIP funds to homes for disaster assistance, homes for foreclosure prevention, 11 homes for rehabilitation and 14 homes for assistance with down payment and closing costs Flagler County also made available CDBG funds for a Palm Coast housing development in the mid-1990s Because Palm Coast has a need for housing for lower-income workers, expanded rental housing opportunities will be needed to meet that need SHIP jurisdictions may use up to 35 percent of their funds for multifamily housing purposes However, Flagler County allows SHIP funds to be used only for single-family, townhouse or condominium In addition, while CDBG cannot be used to directly fund new construction of multifamily housing, it can be used to provide funds for infrastructure necessary to facilitate development, such as the addition of water and sewer lines The most effective use of any funds Flagler County would share with the City of Palm Coast for the development of multifamily rental housing opportunities would be as additional subsidy layers used with other state and federal resources This strategy relates to Strategy below Strategy 2: Actively seek partnerships with affordable housing developers —both for-profit and nonprofit—who are willing to seek resources such as the Low Income Housing Tax Credit, the State Apartment Incentive Loan (SAIL), and Stateadministered Multifamily Mortgage Revenue Bonds for development of attractive, functional and affordable rental housing Page of 20 The City of Palm Coast, Commerce Blvd., Palm Coast, FL 32137 386-986-3700 Multifamily rentals make housing available to workers and others in the low- to moderate-income categories Many will eventually transition to homeownership but need affordable rental housing as a stepping stone For those in the extremely low and very low income categories, affordable rental housing may be a long-term need Many sources of assistance for the development of new, multifamily rental communities are available through competition for resources administered by the Florida Housing Finance Corporation Some of these resources are allocated to the State from the federal level, such as the Low Income Housing Tax Credit Other resources, such as the State Apartment Incentive Loan (SAIL) are based on Florida’s State Housing Trust Fund The State’s authority to issue Multifamily Mortgage Revenue Bonds with interest payments exempt from federal taxation is associated with federal private activity bond provisions The City of Palm Coast could open a dialogue with multiple developers who may be interested in providing affordable rental housing development, including both nonprofit and for-profit developers The process of developing rental housing affordable to those at the extremely low and very low income end of the spectrum is complex and typically requires multiple subsidy layers to make development financially feasible Palm Coast might make available additional subsidy layers to defray development costs to developments meeting pre-defined criteria through general revenue, a local housing trust fund and/or coordination with Flagler County to obtain commitment of resources from CDBG and SHIP Page of 20 The City of Palm Coast, Commerce Blvd., Palm Coast, FL 32137 386-986-3700 Strategy 3: Consider creation of a Palm Coast Affordable Housing Trust Fund through an addition to the current documentary stamp tax requirements The trust fund could be used to provide down payment assistance and a subsidy for the production of multifamily rental housing Funding to meet local housing needs is typically highly dependent on the availability of federal and state-administered funds Creation of a local Affordable Housing Trust Fund allows local jurisdictions not only to have local control over how funds will be used, but also allows communities to accumulate funds that can be used to deal with reductions that may occur due to federal or state budgetary decisions The Pinellas County Community Housing Trust Fund is currently making available more than $4 million for affordable housing activities in Pinellas County, Florida This trust fund makes use of funds derived from the State of Florida’s State Housing Incentives Partnership (SHIP) funds, but it has been established in such a way that additional sources may be used, including those obtained at the local level Because Palm Coast does not receive its own allocation of SHIP funds, another source of funds would be necessary A small addition to the State documentary stamp tax could provide the basis for establishment of a trust fund which could be supplemented with other sources as they became available Strategy 4: Consider creation of a Community Housing Land Trust The land trust would provide affordable homeownership opportunities in perpetuity for the Palm Coast community Recent trends throughout the U.S.—and Florida, in particular—have caused homeownership to be out of reach for many low- to moderate-income households These Page of 20 The City of Palm Coast, Commerce Blvd., Palm Coast, FL 32137 386-986-3700 trends have fueled strong interest in community land trusts both in Florida and throughout the nation Community land trusts have the potential to reduce the cost of housing by allowing the homebuyer to purchase a house, but not the land on which it is located The homebuyer enters into a long-term land lease (frequently 99 years) with the community land trust This reduces the amount necessary to purchase the home, thereby increasing affordability Homebuyers in these arrangements must be income qualified, and any future purchaser of the home must also meet income qualifications Thus, unlike down payment assistance programs, the community land trust ensures that the home will be part of the community’s affordable housing stock in perpetuity The City of Winter Park, Florida has won both national and statewide acclaim for its Hannibal Square Community Land Trust Hannibal Square is known for preserving the community’s character and affordability.2 This segment of Winter Park was historically African-American; over the years, gentrification threatened the continued viability of the area for those of low- to moderate-income The Hannibal Square Community Land Trust has made great strides forward in securing a future in which the area will continue to be home to people of all income levels Exhibit includes an article in the April edition of Planning Magazine about the Hannibal Square project *In April 2007, the project received the 2007 Innovation in Neighborhood Hood Planning Award in Honor of Jane Jacobs Revitalization of Hannibal Square from the American Planning Association The City of Winter Park used not only a community land trust to provide affordable housing, but also housing funding through its affordable housing linkage fee ordinance and through tax increment financing revenues generated by the CRA, in which Hannibal Square is located Exhibit (Attachment) includes a summary of the project Page of 20 The City of Palm Coast, Commerce Blvd., Palm Coast, FL 32137 386-986-3700 The New Columbia Land Trust in Washington, D.C offers an example of low-, moderate- and upper-income households working together to develop resident-controlled housing in the northwest area of the district Gentrification intermingles with disinvestment in this area The New Columbia Land Trust has tackled land acquisition, housing development and community education for more than a decade The organizing effort has attracted an especially diverse coalition of people, not only in terms of income, but also in terms of cultural and educational background The efforts of the land trust have resulted in a permanent stock of attractive, affordable housing with access to commercial and other built spaces Because Palm Coast is a high-growth area with more recent development resulting in higher-end housing development, a community land trust may be an attractive and viable means for providing homeownership opportunities for low- to moderateincome households Expert assistance is available to Florida local governments interested in land trusts The Florida Community Land Trust Institute is a collaborative effort between 1000 Friends of Florida and the Florida Housing Coalition The Institute provides both training and technical assistance opportunities for local governments as they work through the issues associated with establishment of a land trust Page of 20 The City of Palm Coast, Commerce Blvd., Palm Coast, FL 32137 386-986-3700 Strategy 5: Consider creation of a Palm Coast Housing Finance Authority for the issuance of tax-exempt bonds Proceeds of bond sales could be used to issue mortgages at reduced interest rates for homebuyers, as well as for production of multifamily rental housing There are more than 25 local housing finance agencies in the State of Florida They are represented by the Florida Association of Local Housing Finance Authorities, a nonprofit organization dedicated to education, advocacy and support for affordable housing efforts throughout the state A careful analysis of costs and benefits associated with establishment of a housing finance authority should be performed prior to decision making Benefits for the community will primarily arise from the ability of the housing finance authority to offer lower-than-market-rate mortgages to qualified homebuyers, as well as providing funds for construction of multifamily rental development Bond issuance is a costly process, however, and specific costs should be studied so that an informed decision may be made Strategy 6: Identify parcels of land suitable for affordable housing development that may be owned by the public or by an entity willing to donate the land for the development of affordable housing opportunities The rising cost of land in Florida—particularly in coastal areas—is an impediment to the creation of affordable housing opportunities One means of dealing with this issue is through the identification of land owned by the public or by an entity willing to donate land for the use of affordable housing development For instance, Hillsborough County’s Affordable Housing Task Force recommended that all publicly owned land within the county be inventoried and further, that an effort be made to Page 10 of 20 The City of Palm Coast, Commerce Blvd., Palm Coast, FL 32137 386-986-3700 identify suitable property owned by nonprofit organizations (including churches and other faith-based groups) As a relatively newly incorporated area, Palm Coast may not have accumulated public land or property for development However, if land is available adjacent to school properties, it may be appropriate to develop housing opportunities there for school employees, including bus drivers, teachers aides, cafeteria workers, administrative support staff and teachers It may also be helpful to seek the assistance of private foundations in acquiring land for future affordable housing development Strategy 7: Identify local employers willing to innovate with various forms of employer-assisted housing For instance, employers may be willing to provide down payment assistance to employees Employers such as school districts may also have developable land that can be dedicated to production of affordable rental and/or homeownership opportunities for school employees Innovation in employer-assisted housing is already underway in the high-cost South Florida region For example, Baptist Health South Florida plans to build or acquire housing to draw the 800 employees necessary for the operation of their newest hospital There will be no deposit or lease required; the only requirement is that the householder work for Baptist Health This program will be particularly important in attracting nurses and other health-care support workers who would otherwise be priced out of housing in reasonable proximity to their work Other employers, including the University of Miami, are also investigating ways to assist employees with housing Employees may receive down payment assistance or assistance with rental deposits The trend towards employer-assisted housing is likely to grow throughout Florida, particularly in areas where housing prices are most out of reach for low- to moderate- Page 11 of 20 The City of Palm Coast, Commerce Blvd., Palm Coast, FL 32137 386-986-3700 income workers In the City of Palm Coast, where resources available for affordable housing purposes are limited, engaging employers in efforts to address workforce housing needs may be particularly important to the success of those efforts Strategy 8: Work closely with the Florida Housing Finance Corporation to identify current and emerging opportunities to bring affordable housing resources to Palm Coast While most of the funding opportunities available through the Florida Housing Finance Corporation flow directly to developers through the annual Universal Application process, the design of this competitive process is the subject of one or more public meetings each year During this period, local government representatives and other members of the public have the opportunity to advocate for project selection criteria that will heighten the likelihood that affordable housing developers seeking to provide housing in Palm Coast will be successful in the rigorous competitive process In addition, Florida Housing administers the Community Workforce Housing Innovation Program (CWHIP) This legislatively created program was designed to foster public-private partnerships that create housing opportunities affordable to essential services personnel The program provides a unique opportunity for local governments to work with a private sector developer (nonprofit or for-profit) in this important task Finally, Florida Housing’s policy unit actively seeks the input of local governments and other organizations as it strives to design and implement affordable housing solutions for the state A continuing dialogue with Florida Housing policy representatives can help to stimulate new solutions to workforce housing issues It is interesting to note that the average per capita income for City Employees is $38,191.78 A single person with no other person in the household bringing in any income would find it extremely difficult to buy a home See Exhibit (Attachment) Page 12 of 20 The City of Palm Coast, Commerce Blvd., Palm Coast, FL 32137 386-986-3700 Strategy 9: Consider proportional impact fees Impact fees are intended to cover additional costs incurred by local government in serving residents of new homes Typically, impact fees are passed along to the buyer and thus may pose a barrier to affordability Proportional impact fees based on size of dwelling may serve to alleviate at least some of the problems associated with affordability Impact fees tend to be flat rate charges on new development For example, park facility impact fees are routinely based on the average household size of new residential units If the average household size is four persons per home and the average cost to provide park facilities is $500 per person, the impact fee assessed against all new residential units is $2,000 regardless of house size or income of the buyers On a $50,000 home, the fee is four percent of value; on a $100,000 home the fee is two percent of value; and on a $1,000,000 home the fee is two-tenths of one percent of value As higher value homes are purchased by higher income households, such a fee is regressive since lower income households are paying proportionately more for the same service than higher income households While solving regressivity may not be a direct objective of impact fee policy, impact fees can nonetheless be more precise in relating proportionality to house size, and by implication income Exhibit provides an example of how application of the same basis for impact fees used for all ranges of housing prices and types constitutes a regressive method to pay for impacts due to residential development Consider the following data from the American Housing Survey (2001) in Table 2: Page 13 of 20 The City of Palm Coast, Commerce Blvd., Palm Coast, FL 32137 386-986-3700 Table – Occupancy and house size relationships 2001 2500 Sq Feet Persons per unit 2.10 2.35 2.57 2.73 2.91 3.04 Lot size in acres 0.21 0.24 0.31 0.36 0.42 0.51 Household Income $19,800 $25,000 $35,000 $50,000 $61,700 $74,300 House Value $42,000 $57,000 $90,500 $124,800 $154,300 $210,700 Characteristic Source: American Housing Survey (2001) Table shows clearly that the larger the home, the higher the number of occupants Tailoring impact fees to dwelling unit size would result in more refined calculations of impact fees Generally, the higher household incomes and home values are associated with larger homes Thus, making impact fees proportional to reflect house size would lead indirectly to a progressive fee structure with respect to income and property value, although not perfectly While an impact fee calculated to reflect occupancy levels would result in the 2,500+ square foot home paying 50 percent higher impact fees than the home at 500 square feet, that home is worth about five times more than the smaller home, while the owners earn about 3.5 times more.4 There are other aspects of size For example, Figure shows the mean number of vehicles by number of people in a household based on the Nationwide Household Transportation Survey 2001 Larger households have higher numbers of automobiles See Exhibit for current (April 1, 2007) City Impact Fees calculated and compares the impact on lower and higher income buyers The example is generally based on Table above The fees are effective as of April 1, 2007 Persons buying a home priced at $200,000 pay 4.31% of the total cost for impact fees, whereas a person buying a $1 Million dollar property (500% cost) pays only 0.86% of the total impact for fire, school, transportation and parks Higher impact fees for higher cost housing can be justified because higher priced housing tends to use more land, more utilities, has more amenities, more vehicles per dwelling unit, and more persons per household Page 14 of 20 The City of Palm Coast, Commerce Blvd., Palm Coast, FL 32137 386-986-3700 Figure – Mean number of vehicles by number of people in household 2.5 1.5 0.5 Persons Persons Persons 5+ Persons Persons Source: Nationwide Household Transportation Survey 2001 Similar relationships are found with respect to trips per household and total vehicle miles traveled annually A relationship also exists between lot size and consumption Studies of water and wastewater consumption indicate that larger lots lead to higher rates of consumption Because we all know from Table that larger lots are also associated with higher occupancy levels, we may deduce a relationship between house size and consumption of water and wastewater Overall, proportional impact fees reflecting size of housing unit are a reasonable way to apportion impact fairly while indirectly addressing affordable housing concerns Strategy 10: Review land use code and regulations to determine whether it fosters affordable housing development and revise as appropriate Land use codes, building codes and comprehensive plans tend to be lengthy documents written over a period of time There may be aspects of codes and plans that tend to create barriers for affordable housing development, such as minimum unit size Page 15 of 20 The City of Palm Coast, Commerce Blvd., Palm Coast, FL 32137 386-986-3700 requirements Other regulations may foster affordable development, such as those that provide incentives for mixed-income and/or mixed-use development or permit accessory dwelling units Orange County, Florida’s comprehensive plan allows for the creation of separate affordable housing districts that include density bonuses as an incentive to build low- and moderate-income housing In addition to higher densities, such zones may include less restrictive setback and parking requirements Orange County only permits special zoning districts in areas where sufficient services (such as sewer, water and road capacity) exist Although Orange County’s comprehensive plan allows for the creation of special zoning districts for affordable housing, it also warns against the danger of segregating affordable housing in ways that may lead to slum conditions This concern may be addressed by designing an implementation strategy that promotes mixed-use development simultaneously with affordable housing; these uses will complement one another and minimize the potential for negative conditions to arise Strategy 11: Continue to work towards recognition for the City of Palm Coast as a federal entitlement city This will provide additional funds not only from the federal level, but through Florida’s SHIP program, as well Entitlement jurisdiction status is determined by the federal Office of Management and Budget (OMB).5 Although Palm Coast has rapidly grown to more than 50,000 residents—the typical threshold for designation as an entitlement city—it has not yet been recognized by as such by OMB Entitlement city status would translate into direct Generally, federal entitlement status is based on the decennial census The City had a population of less than the required 50,000 in 2000 Therefore, it is likely the City will have to wait until the 2010 Census to apply for the entitlement Page 16 of 20 The City of Palm Coast, Commerce Blvd., Palm Coast, FL 32137 386-986-3700 funding for the City of Palm Coast through the federal CDBG and HOME programs, as well as the Florida’s SHIP program Strategy 12: Create a citizen advisory board that will take an active role in promoting affordable housing for the City of Palm Coast Nearly every community in Florida is challenged by the need to foster additional development of affordable housing opportunities, but this challenge is particularly severe for Palm Coast Not only have population and home prices risen rapidly, it does not receive any direct assistance for housing programs from either federal or state government Any successful initiative to expand affordable housing opportunities will necessarily rely on strong community involvement Establishment of a citizen advisory board made up of diverse representatives from local business, government, citizens, advocates and members of the real estate and development community would help to educate the public in what affordable housing is and why it is necessary for community prosperity It would also stimulate innovation and assist with bringing additional resources to the table Page 17 of 20 The City of Palm Coast, Commerce Blvd., Palm Coast, FL 32137 386-986-3700 Hillsborough County, Florida’s Affordable Housing Task Force made a strong recommendation that a permanent advisory board be established so that affordable housing would continue to be addressed by the community in a systematic and effective way Strategy 13: Consider creation of a nonprofit housing foundation to facilitate affordable housing activities Miami-Dade, Florida has established a nonprofit affordable housing foundation for the purpose of increasing affordable housing opportunities in the community, while also reducing the financial demands placed on local government to meet affordable housing needs The Miami-Dade Affordable Housing Foundation, Inc seeks funds from consortiums of local and national organizations with affordable housing missions The foundation is a certified Community Development Financial Institution and seeks to serve a market niche for mortgages, grants and other financial products not typically served by more traditional financial institutions Given that Palm Coast currently has no dedicated source of funding for affordable housing activities, a foundation approach has the potential to bring resources to the city that might be unavailable without a formal, concentrated effort Strategy 14: Consider creation of a pre-development loan program for nonprofit or smaller, community-based for-profit housing organizations The expenses associated with the lengthy process necessary to create affordable housing opportunities are frequently a barrier to participation on the part of nonprofit or smaller, community-based for-profit housing organizations—organizations that may have Page 18 of 20 The City of Palm Coast, Commerce Blvd., Palm Coast, FL 32137 386-986-3700 a strong interest in working with the City of Palm Coast to meet its workforce housing needs A pre-development loan program might be funded through establishment of a local housing trust fund or an affordable housing foundation The Florida Housing Finance Corporation operates a pre-development loan program available to nonprofits, public housing authorities, local governments, and others This program could be used for a model for establishment of such a program in Palm Coast, or alternatively Palm Coast could tap into Florida Housing’s program as a means to engage in a public-private partnership with one or more developers This strategy links closely with Strategy related to fostering working relationships with affordable housing developers Strategy 15: Seek technical assistance from the Florida Housing Coalition for expert support in the implementation of housing policies and programs This assistance is free to Florida local governments The Florida Housing Coalition provides free technical assistance to local governments on affordable housing issues and is an important resource for successful efforts to increase affordable housing opportunities within Florida’s many communities Florida Housing Coalition staff members have experience working with local governments throughout the state and they bring detailed knowledge of what works best in practice to every technical assistance project Page 19 of 20 The City of Palm Coast, Commerce Blvd., Palm Coast, FL 32137 386-986-3700 i The Fairfield County, Connecticut Bipartisan Millenial Housing Commission, 2002  ... coalition of people, not only in terms of income, but also in terms of cultural and educational background The efforts of the land trust have resulted in a permanent stock of attractive, affordable housing. .. donate the land for the development of affordable housing opportunities The rising cost of land in Florida—particularly in coastal areas—is an impediment to the creation of affordable housing opportunities... systematic and effective way Strategy 13: Consider creation of a nonprofit housing foundation to facilitate affordable housing activities Miami-Dade, Florida has established a nonprofit affordable housing