- Florida workers across a range of industries are struggling to find affordable housing close to their workplaces.
- Liberal rent control policies are destructive. Conservative free market policies are reactive and too slow to deliver relief.
- The Sadowski Affordable Housing Trust uses free market principles to provide a proactive, steady flow of new, affordable housing.
- This year, GOP lawmakers are expected to pass the Live Local Act which will beef up the Sadowski Trust, among other fixes.
With more and more people flocking to Florida with each passing year, the Sunshine State’s success is also starting to cast some long, dark shadows that threaten to engulf hundreds of thousands of people who are steadily getting priced out of the state’s increasingly expensive housing market. The dream of living in a tropical paradise with a low cost of living is quickly fading as workers struggle to find affordable housing close to their workplaces while making ends meet in a nation where the cost of living continues to rise.
For many of Florida’s front-line hospitality workers, getting to work has become the hardest part of the job. Extended commutes are one of the biggest employee challenges in Florida’s tourism industry. Housing near key tourist attractions like Disney World or along Florida’s premier coastal vacation areas has gotten so expensive that restaurant and hotel workers can’t afford to be close to where they work.
Long Commutes, Shortage of Workers
Resort workers in the Florida Keys endure long bus rides because affordable housing is so scarce. Hawks Cay Resort in Duck Key estimates that it is understaffed by 15-20% due to the housing shortage, making it difficult to recruit and retain employees.
“We are doing all that we can to help, as we already provide affordable housing for 120 employees,” said Sheldon Suga, Vice President and Managing Director at Hawks Cay. “We have shuttles running daily to and from Florida City, an hour-and-a-half to nearly two-hour drive each way, for team members to commute to the property. We desperately need more affordable housing in the Keys to reduce these long days for our staff, improve their quality of life, increase their time with their families, and allow us to fully staff up and continue positively impacting our region’s economic health from tourism dollars.”
But the Florida Keys aren’t the only spot in Florida feeling the housing pinch. Good luck finding an affordable apartment anywhere close to key tourist attractions in Miami, Orlando, Tampa or just about any other Sunshine State hot spot. Neither is the problem unique to Florida, of course. The entire nation is experiencing an affordable housing crisis, with the cost to rent or buy a home spiking notably since April of 2021. The question, then, is what are we doing about it?
The Liberal Quick Fix…Isn’t
Democrat State Rep. Anna Eskamani thinks she has the answer to Florida’s affordable housing crisis: rent control. In a bill filed on Friday, Eskamani proposed getting rid of an existing state law that sets an extremely high burden of proof on local governments before they can impose rent controls. They have to show, in court, that a housing emergency is so bad that it constitutes “a serious menace to the general public,” and the law also requires proof that the rent control proposal would actually eliminate the “grave housing emergency.”
Two recent examples show why Eskamani’s liberal solution is a bad idea: Last year, St. Paul, Minnesota was forced to walk back their own attempt at rent control. When the lower rents kicked in, builders just shifted their new housing projects to nearby Minneapolis instead, making the housing shortage even worse.
More locally, right in Eskamani’s backyard, Orange County Commissioners tried to force rent control across the county, even though their own experts told them it was a very bad idea. Fortunately, the courts slapped the county’s proposed rent control ordinance down, pointing out that (a) it failed to prove it was a grave emergency, and (b) their own experts said it would only make the problem worse.
Unphased by overwhelming evidence, the hard-headed, extremely liberal Eskamani is pressing ahead anyway. Fortunately, her bill has a zero percent chance of survival in the GOP supermajority legislature.
But what, then, is the “conservative” solution?
The Free Market is Slow and Volatile
Pure free market champions know that normal economic forces will ultimately exert downward pressure on rent prices until they reach a stable new normal level. The laws of supply and demand are hard to argue with: high rents attract new developers, who build more housing, giving renters more choices, ultimately putting downward pressure on rents.
But Florida isn’t a perfect free market, and the laws of supply and demand take time to kick in. Housing development and construction take a lot of time and money, making a pure free market solution less effective. And as Florida’s population grows, housing costs will rise by default, unless new housing developments outpace new residents. But building more housing takes time.
In addition, developers will typically focus on building high-end housing, which has greater profit margins, so a glut of high-end housing will take longer to provide relief to the lower-end of the market. Thus, while free market relief will eventually arrive, families in the affordable housing crisis need more immediate solutions.
Florida’s “Long Game” Approach
Fifteen years after sensible Democrats and Republicans came together to ban rent control, they came together again to put forward an innovative approach that combined free market principles with a long-term view designed to provide a steady flow of new, affordable housing. The goal was to smooth out the boom-and-bust cycle with steady investments from a dedicated funding source to fix the problem.
In 1990, Republican State Representative Ken Pruitt won his first election to the Florida House. He was a small business owner and hard-charging conservative, who came to Tallahassee ready to deliver on his promises to voters to push for limited government and bedrock conservative principles. Then, as now, Florida was facing a critical juncture where its own success was leading to similar growing pains. Rapid growth and inadequate construction of affordable housing had rapidly converged to create pain for many Floridians.
Pruitt and other lawmakers in the state were faced with the stark reality that Florida’s housing demand curve was rapidly outpacing the supply curve, free market or not.
Over his first two years in office, Pruitt heard from a broad coalition of organizations that came together and proposed the establishment of the Sadowski trust fund that would generate revenue specifically to provide affordable housing for low-income Floridians. But to Pruitt, the idea sounded like “big government run amok.”
The plan called for allocating a portion of the state’s documentary stamp tax on real estate sales to two trusts. The State Housing Initiatives Partnership (SHIP) fund would get 70% of the funding to provide local support for homeowners in the form of down payments, repairs, and rental assistance, while the remaining 30% went to the State Apartment Incentive Loan (SAIL) fund, which incentivized developers to create more affordable housing units.
“It took numerous visits by the Homebuilders, Realtors, Chamber of Commerce, AIF [Associated Industries of Florida], and other business organizations,” Pruitt recalls. “But I was won over by the merits of the legislation and voted for it.”
Pruitt explains there were a lot of things that were key to winning his support. One was the fact that the Sadowski plan didn’t just give money away to developers or homebuyers to build or buy more affordable housing. The funds are doled out carefully, as loans that, over time, are repaid to the Sadowski Trust. Another, he says, was that the program isn’t a top-down, big government solution. While the state collects and doles out the funding, the program is designed to be flexible across all 67 Florida counties.
For Pruitt, the Sadowski Act had the long game in mind, providing a steady source of funding for affordable housing construction – exactly the sort of thing needed to avoid the pitfalls of the free market boom-and-bust cycles.
Says Pruitt: “I still look back on the Sadowski bill as one of the important and meaningful votes I ever made.”
Since the law first passed, Florida has pumped billions into the Sadowski Affordable Housing Trust through the collection of documentary tax stamp collections on every home sale. The money has been the driving force in building affordable housing across the state.
After Florida’s economy improved, a housing boom followed. Lawmakers voted in 2002 to take tens of millions from the Sadowski Trust fund for other targeted spending. This became an annual tradition, diverting billions from affordable housing and moving away from the fund’s original purpose.
“A lot of times in government someone will see a very specific problem and write legislation to address it,” explains Mark Hendrickson, facilitator of the Sadowski Coalition and executive director of the Florida Association of Local Housing Finance Authorities. “If we don’t have enough farmer specific housing, someone will say ‘let’s create a program that gives grants to build farmworker housing in Dade County.”
But Hendrickson said those programs tend to have tunnel vision on a very specific problem, leading to inefficiencies in the market and government’s typical plodding.
“One of the beauties of Sadowski’s SAIL and SHIP programs is that you don’t need a new program to shift the funding from farmworkers to hospitality, to other types of housing,” Hendrickson says.
“Sadowski provides universal program funding with flexibility,” so that individual counties can tailor the funding to fit their unique needs.
Passidomo’s Live Local Plan
The sweeps continued year after year, leaving Sadowski with only a fraction of the funding it was originally designed to get. And since the pandemic, when the world economy started getting wobbly, through the recovery of 2021, the economic boom-and-bust cycle became even more exaggerated. The fallout has hit everyone through inflation, driving up the cost of everything, including housing.
State lawmakers, knowing that more needs to be done, are expected to pass sweeping legislation introduced by freshman State Senator Alexis Calatayud, a priority of Senate President Kathleen Passidomo. The “Live Local Act” is a legislative package that includes several provisions that would benefit the Sadowski Trust Fund, rerouting $150 million annually to the fund. Of that, 70 percent would go toward redeveloping existing buildings into housing projects near military bases. The remainder would cover housing for seniors, young adults, and developments in rural regions. Additionally, the bill would move $252 million into the Sadowksi’s SHIP program and $259 million into the SAIL program.
The bill would also take the final step that the 1977 legislature failed to take: it would ban local rent controls outright, striking the exceptions for “grave housing emergencies” and “serious public menace” exceptions that some liberal government officials have tried so hard to sidestep.
Hendrickson and Pruitt are among the bill’s most vocal allies.
“Is money the only answer to the affordable housing problem? No,” says Hendrickson. “But it’s essential to the answer. It’s the most important component of the broad range of things we need to do to address the problem.”
But they aren’t alone. The Live Local Act, which will lock in more funding for Sadowski and help it live up to its original vision, has wide support of the state’s leading business groups and industry leaders concerned that Florida needs to do more to protect its workforce.
“Florida’s ability to attract and retain the talent necessary to grow from the 16th to 10th largest global economy relies on the availability of affordable and attainable housing,” says Florida Chamber President and CEO Mark Wilson. “As Florida welcomes more than 1,000 new residents each day, we look forward to working alongside [Senate President Passidomo] and bill sponsor Senator Alexis Calatayud towards achieving our Florida 2030 Blueprint goal of ensuring access to diverse, attainable housing to meet future demand for our state.”
The state’s hospitality industry is also on board, in a big way.
“Florida’s economic strength relies on the stability and success of our hospitality and tourism industries, which is fueled by dedicated men and women from Pensacola to the Keys who provide excellent customer service for our guests. Hospitality workers should be able to live closer to where they work and work in the communities in which they live,” says Carol Dover, President and CEO of the Florida Restaurant and Lodging Association (FRLA). “Increased availability of affordable rental housing is necessary to make this happen. FRLA is proud to participate in the Sadowski coalition, where we all recognize the need for reliable, affordable housing for Floridians, and the necessity for consistent funding to support the programs that can make that housing a reality.”
If Passidomo gets her way, and she likely will, the Live Local Act will pass and the Sadowski Trust Fund will finally get a steady, uninterrupted source of funding that should allow it to achieve the mission it was designed for: helping to build a brighter future for low-income residents and essential industry workers in the Sunshine State.