The pressing need for affordable housing in our region is not new, but it has undoubtedly become more palpable. Those of us involved in developing these housing options expect the demand to continue growing, regardless of the current economic conditions or the unfolding of the COVID-19 pandemic.
As concerns over the growing need for affordable housing prompt public and private sectors to explore creative solutions, I sat down with long time colleague and newest member of our Bilzin Sumberg team, Terry M. Lovell, to share our thoughts on the market. Terry, who has focused his practice on the financing of affordable housing for more than 20 years, recently joined our firm to head our Affordable Housing & Tax Credit Practice.
AED: Terry, we can certainly agree that there is a pressing need for affordable housing options in South Florida and that there has been a lot of discussion about that need. How do you contrast the market before and during the pandemic?
TML: Al, you are absolutely right. The growth in the average price of housing in our region is faster than the growth in average wages. The wider gap between housing costs and income also increases the need for affordable housing. The demand is huge right now, and unfortunately, the demand is not being met during or even before the pandemic. Under the current conditions, we have more people out of work or working fewer hours, which contributes to the cost/income gap.
I heard you say before, and I agree that before the pandemic, we saw a focus on updating and renovating exiting housing developments to provide more dignified housing. Now, we expect additional developments to be built that qualify as affordable housing.
AED: How do you see the related sectors responding to the current situation?
TML: As you mentioned before, the current situation has definitely sparked some creative solutions, such as bonuses and incentives. Recent legislative changes at the county and municipal levels provide new opportunities for developers to increase the supply of workforce and affordable housing in standalone and mixed-use projects.
Cities might look into the land that they own to partner with affordable housing developers to get these projects going. Especially in South Florida, where land is one of the most expensive components of a development, having the location available helps to facilitate the deal. This is something community leaders might be bringing to the table for these projects.
Governor DeSantis moved funds to the Florida Housing Finance Corporation for Florida families that have been negatively impacted by the COVID-19 pandemic. Developers can access some of those funds, see what’s available in local jurisdictions, and structure future deals to help our communities in need.
AED: What about financing, how has the pandemic impacted construction loans? Is it harder to acquire financing?
TML: We have been incredibly fortunate during the pandemic. I have not seen one deal that I thought would close, not close. Banks, lenders, and tax credit equity investors are on board, and deals continue to close. Our state and counties recognize the need for affordable housing and are working with developers to try to provide the financing to move these projects along
Some developers may have issues securing the loans they need for projects or are figuring out how to proceed under the atypical circumstances that we currently find ourselves. The wait-and-see approach does exist, but with the help of local governments, there are opportunities for developers to acquire and/or develop these much-needed projects.
AED: Absolutely, Terry- it is an industry that will withstand economic cycles. Bilzin Sumberg has, for years, represented affordable housing developers in acquisitions of property, especially if it involves government-owned land, rezonings, also in connection with environmental issues. Prior to you joining our firm, we worked together on multiple projects, where you assisted the client with the financing aspects. One of those projects was Liberty Square Rising, the first African-American affordable housing development in our nation. What do you enjoy the most about the type of work we do?
TML: One of my favorite things to do is to attend the Grand Openings for the projects and meet the residents that have new and safe housing. The work we do leaves such a tangible, positive impact in our community, and is incredibly rewarding for all involved.
Liberty Square Rising is, for sure, the largest public housing and the first public housing for African Americans, and one of the largest housing renovations we worked on for Related. I was also involved in similar renovation projects in the Encore and West River areas of Tampa, where very old public housing projects have been and are being turned into fabulous new neighborhoods.
That’s the type of work I have been doing for 22 years, and I am happy to have joined the Bilzin Sumberg team to continue to assist our clients in providing the kind of homes our community needs the most.
