The Real Deal Miami

Forcing developers to build workforce and affordable housing is a bad idea, panelists say

Panelists favor increasing density, offering incentives for developers and other measures
By Francisco Alvarado | February 03, 2017 01:30PM

From left: Anthony Graziano, Michael Wohl and Andrew Frey

When it comes to addressing the affordable housing crisis in Miami-Dade County, community land trusts, increasing surtax funding for workforce units, rent-to-own programs and expanding the density of multifamily properties are good ways to start tackling the problem.

But forcing developers to set aside a small percentage of their projects to be sold or rented at affordable rates is a terrible idea, according to a trio of real estate professionals at a Greater Miami Chamber of Commerce panel discussion on Thursday.

Citing a stalled measure that would have required developers of 20 units or more in Miami-Dade to reserve 10 percent for families making between $43,000 to $60,000 a year, panelists Andrew Frey, Anthony Graziano and Michael D. Wohl said such legislation has failed to work in other jurisdictions. The panel was held at Brickell View Terrace, an apartment building at 117 Southwest 10th Street developed by Wohl’s affordable housing company, Pinnacle Housing Group.

“Take the example of California, probably the most knee-jerk regulatory state in the union,” Frey said. “They tried to regulate their way to affordable housing [through workforce housing set-asides]. The state’s budget office issued a report that they were going about this the wrong way.”

Two years ago, the California Supreme Court ruled Los Angeles, San Jose, and other cities could pass legislation that required developers to sell a percentage of their units at below-market rates or pay into a low-cost housing fund  in order to obtain a building permit. Builders sued San Jose claiming the local law was unconstitutional. A similar measure proposed by Miami-Dade Commissioner Barbara Jordan last year was met with stiff opposition from the South Florida building industry.

Frey, founder and principal of real estate development firm Tecela, said the city of Miami is better off increasing the density of multifamily projects where zoning only allows for three-story buildings with 60 percent lot coverage in neighborhoods like Little Havana and Little Haiti, communities that have the most need for affordable housing.

Wohl, partner of affordable housing developer Pinnacle Housing Group, said he favors legislation that provides incentives for developers that voluntarily set aside units for affordable or workforce housing. He also said Miami-Dade County should prioritize funding and tax rebate programs for workforce housing and homeownership. He noted the success of  the Casa Grande Towers condominium project at 104 Southwest 9th Street.

“People need the opportunity to buy a house,” Wohl said. “At Casa Grande, everybody bought units for $75,000 with surtax-funded soft second mortgage.”

Yet, the county is funding more rental projects than giving low income families more opportunities to buy a home. “In the last five to 10 years, no county money has gone to home ownership,” he said, also noting renting-to-own would be good too. “You are rehabbing their credit and giving them ownership. That’s something we have never tackled.”

Graziano, senior managing director for Integra Realty Resources in Miami and Palm Beach, said local governments could also use housing funds to buy land that could then be leased to developers for 99 years for basically nothing, subject to building mixed-income for-sale homes. “We could create three to four times as much housing with the same amount of public money,” Graziano said.

Graziano also suggested local governments could buy apartment buildings and homes in foreclosure from banks or distressed borrowers that could be converted into workforce housing.