Developers in South Florida are increasingly considering the addition of affordable housing units to projects already under construction or completed, rather than incorporating them at the initial approval stage. This shift is influenced by incentives offered through Florida’s Live Local Act, according to a panel discussion at the Urban Land Institute’s Fort Lauderdale Forum.
The Arcadian, a 502-unit apartment development in Fort Lauderdale by Fuse Group Investment Companies, serves as an example. Eyal Peretz, founder of Fuse Group, stated that the project began without plans for affordable housing but is now being transformed under the Live Local Act. “The Arcadian started as a non-Live Local project and went through some transformation, and we are going through a process right now where we are about to submit [it as] a Live Local project,” Peretz said. Construction on phase one is expected to finish by year-end.
Panelists noted that higher interest rates and construction costs have slowed residential development. The incentives provided by the Live Local Act—such as property tax breaks for offering below-market rents—can make marginal projects financially viable. Doron Broman, founder and CEO of Moderno Development Group, explained: “Every project we’re looking at, we’re looking at adding a Live Local component to it. Most projects don’t pencil in today. So, with the Live Local Act that gives you additional income, that means, maybe, the project will pencil in.”
Moderno’s Rivr Lofts in Fort Lauderdale was constructed before the law passed but may soon include units designated for affordable housing. Broman said: “We are looking right now at converting some of the units into the Live Local pool.” He added that smaller studios fit well for this purpose and that eligibility would be limited to those earning up to 120 percent of area median income—about $90,000 annually—matching many current residents’ incomes. “A lot of our residents already fit that criteria, so it’s worthwhile for us to lower the rent a little bit more and get the tax benefit,” he said.
However, integrating market-rate and below-market apartments presents challenges. Russell Galbut of Crescent Heights pointed out: “It’s really a small percentage, and that’s because you have 60 percent of your building that has to pay for the other 40 percent. If it doesn’t work in paper and pencil, it will never work in brick and mortar.” Galbut highlighted expedited municipal approvals as another advantage: “Time kills many great projects.”
Financing remains an obstacle for mixed-income developments under this program. Peretz commented: “We see an issue with financing… But I’ve been hearing from a lot of developers with issues on that side of things.” Alfonso Costa Jr., chief operating officer of Falcone Group who moderated the panel discussion, noted ongoing efforts with agencies like Fannie Mae and Freddie Mac: “Working with the takeout agencies Fannie Mae and Freddie Mac on takeouts, and then HUD as well… it’s more of an educational process.”
