In Florida, media outlets and other critics (read: Democrats) have long blamed Republican lawmakers in Tallahassee for the state’s ongoing affordable housing shortage, and in particular, they blame so-called “raids” of a Florida based program called the Sadowski Housing Trust Fund for the escalating “crisis.”
Established in 1992 to provide funding for affordable housing initiatives such as direct financial aid to potential homebuyers and renters, to tax breaks and other incentives paid to developers who build low-cost housing units, The Sadowski Affordable Housing Trust is funded through documentary tax stamp collections on real estate deals, and typically accumulates hundreds of millions of dollars every year.
But each spring for the last 20 years, when lawmakers negotiate a new state budget, they have typically raided, or “swept” some portion of the money out of the Sadowski trust and used it for other purposes. Over those two decades, The Florida Housing Coalition estimates that about $2.2 billion has been redirected for other purposes, often to be spent on other programs with nothing to do with affordable housing. And, they say, that equates to a shortfall of around 177,000 affordable housing units that could have been available, but aren’t.
Yet despite all the finger-pointing and political rhetoric, a deeper dive into available data shows that Florida’s affordable housing crisis isn’t really unique to Florida. Across the United States, housing prices, which include mortgages and rental payments, have climbed dramatically over the last two years thanks to a variety of factors, including just general inflation. Rapidly rising lumber and building material prices has driven up the cost of developing all types of homes, including “affordable” housing units.
Virtually everyone looking for a place to live recently has felt the impact. Data available through the Bureau of Labor Statistics’ Consumer Price Index (CPI) shows that housing costs (which they track as “shelter”) consumed 34.4% of household budgets last month, and one look at a chart of the growth in the cost of shelter shows that it increased 8 percent since January 2022. That’s the steepest year-over-year climb in housing costs since 1982.
In Florida, the story is nearly identical, whether it’s the CPI data or Zillow’s Observed Rent Index (ZORI), which measures asking rents rather than the rent actually paid by consumers. The latest ZORI data shows Florida’s major metro areas – and even Tallahassee – following the same overall trends as the aggregate United States data:
In short, America’s affordable housing crisis can’t all be pinned on Sadowski trust fund sweeps by Florida lawmakers. The affordable housing crisis is a complex story with roots stretching in all directions, from overzealous local government regulations, to restrictive homeowners associations, to disastrous rent control policies and ruinous inflation and monetary policy.
But even so, Florida’s history of raiding the Sadowski trust fund begs the question: what if Florida had invested $2 billion more in affordable housing initiatives over the last two decades? How much better off might Floridians be if the money had been spent as it was intended?
A spokeswoman for the the Florida Housing Coalition, which has strongly advocated for Sadowsky funding for years, said CEO Ashon Nesbitt was traveling and not available to comment for this story. But a recent public opinion poll by Sachs Media shows that one in five Floridians say the trust fund sweeps have contributed to Florida’s affordable housing problem. And 95 percent of all Floridians agree that Florida is definitely facing an affordable housing crisis.
Politically, those kinds of numbers can’t be ignored. Long before the most recent Sachs media poll, lawmakers in 2021 had already taken steps to shore up the Sadowski trust, at least partially, ensuring that around $200 million per year was guaranteed to go into the program.
This year, however, state lawmakers are looking to do even more to address the issue. Florida Senate President Kathleen Passidomo recently unveiled a new “Live Local” plan aimed at addressing Florida’s affordable housing issues. The plan includes a provision to increase the availability of affordable housing options for low-to-moderate-income workers, seniors, and veterans in the state. The bill, SB102, offers incentives for private developers to create affordable housing units and provide down-payment assistance for first-time homebuyers, military families, and veterans.
More directly, it allocates $252 million to the State Housing Initiatives Partnership (SHIP) program and $259 million, including $150 million in new recurring funds, to the State Apartment Incentive Loan program (SAIL), both of which are major components of the Sadowski Trust. The proposed legislation has been praised by Florida House Speaker Paul Renner and is therefore likely to pass both chambers of the state legislature sometime in the next few months.
Another affordable housing proposal starting to gain traction is HB 133, sponsored by State Rep. Jim Mooney, which would would authorize landlords to offer tenants an option to pay a smaller monthly fee instead of paying a much larger security deposit up front – cash which many renters just don’t have.
Opponents, though, say the fees amount to little more than a “poor tax,” noting that unlike security deposits, the fees are nonrefundable because they act similar to an insurance policy to protect landlords against property damage. Assurant, Jetty, and LeaseLock are among a handful of security deposit alternative companies pushing for passage of the bill. Rather than fork over around $1,000 to the landlord, which the tenant might get back at the end of a lease, tenants instead would pay about $35 per month, or around $300 per year. While the up front cost for renters is reduced, they won’t get that money back. Last year, the proposal was defeated, and it could suffer the same fate this year.
One final bright spot for renters: Zillow says its ZORI data on rental asking prices is a leading indicator for national trends, with real rents paid trailing ZORI by about one year. And in the last four months of of 2022, Zillow says asking rents actually decreased, which means lower rent prices might start showing up in national data sometime in the second half of 2023. But they also caution that mortgage interest rates haven’t gone down over that same period, and the general direction of the economy is still not entirely clear.
For low and middle income families looking for the light at the end of the housing tunnel? Take heart. The changes coming in Florida might be the relief they need.