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

City of Palm CoastFINAL REPORT AFFORDABLE HOUSING STRATEGIES AND SURVEY OF EMPLOYEES REGARDING HOUSING AND EMPLOYMENT April 2007 Prepared By: Community Development Department Long Range

City of Palm Coast

FINAL REPORT AFFORDABLE HOUSING STRATEGIES

AND SURVEY OF EMPLOYEES REGARDING HOUSING AND EMPLOYMENT

April 2007

Prepared By:

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

Tracy L Johns, Ph.D.

Michael J Scicchitano, Ph.D.

University of Florida

Policy Management Research/

Florida Survey Research Center

633 NW 8 th Avenue Gainesville, FL 32601-5074

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 1

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

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 1 below presents this information in summary

form

Table 1: Flagler County Income by HUD Income Categories 1

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

1 Based on a U S Department of Housing and Urban Development data for a family of four.

HUD Income Category Income Range Extremely Low Income Up to $16,650 Very Low Income $16,651 - $27,750 Low Income $27,750 - $44,400 Moderate Income $44,401 - $62,280

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 1.

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.

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

moderate-income households For instance, for the period 2003 through early 2007, Flagler County

allocated SHIP funds to 5 homes for disaster assistance, 5 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 2 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

State-administered Multifamily Mortgage Revenue Bonds for development of attractive, functional and affordable rental housing.

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

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

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 3 includes an

article in the April edition of Planning Magazine about the Hannibal Square project.

2 *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 3 (Attachment) includes a summary

of the project.

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

moderate-income 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

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