The Real Deal Miami

Offer affordable housing in Miami? Get density bonuses!

Miami floats proposal to require some developers seeking density increases to set aside units for low-income households
By Francisco Alvarado | November 19, 2018 02:30PM

Miami Plaza, Filling Station Lofts and Iris Escarra and Ken Russell

Miami officials are doing a test run on a measure that would force residential developers who want more density to carve out units for low-income wage earners in their projects. The Miami City Commission last week approved on first reading an an ordinance that new developments in the Arts & Entertainment District seeking density and floor lot ratio bonuses must include workforce or affordable housing.

“This is our first adventure into inclusionary zoning, which is a big move for the city of Miami,” said Commissioner Ken Russell, the measure’s architect. “It is bringing the people who are not in affordable development and bringing them there. They don’t understand or are not comfortable to what it means to bring affordability to their product. They are going to learn here. It is going to work financially for them.”

Yet, the proposed ordinance shouldn’t be a tough sell in the targeted neighborhood, which includes the Adrienne Arsht Center for the Performing Arts and a slew of loft-style condo and apartment buildings such as Canvas, Filling Station Lofts, Melody Tower and Square Station.  Companies like the Melo Group and NR Investments, which are the most active developers in the Arts & Entertainment District, have already voluntarily agreed to include apartments and condos aimed at households making between 80 to 120 percent of the Miami-Dade median income or less.

Iris Escarra, a shareholder with Greenberg Traurig who represents several projects in the neighborhood, said that other real estate investors in the Arts and Entertainment District have expressed interest in developing projects under Russell’s new mandate, which would apply to a geographical area between the I-395 bridge to the Miami Cemetery and Northeast Second Avenue to North Miami Avenue.

Under Russell’s proposal, workforce and affordable housing would only be mandated for properties in Transect Zone T6-24B-O, which is an area currently populated by Melo and NR projects that already have affordable and workforce housing set-aside units. However, the city is working on changing the designation of a large swath of land in the Arts & Entertainment District currently zoned T6-24A-O, Escarra explained. “There are property owners in the area requesting a change in zoning in order to take advantage of this,” she said. “With an aerial map, you can see there is quite a bit of vacant land there.”

Other major cities have adopted similar laws as a means to increase the affordable housing stock. For instance, last year, Los Angeles passed a measure that awards density and height bonuses to projects within a half mile of a public transit station in exchange for setting aside at least 8 percent of the total rental units for affordable housing. In 10 months, more than 1,000 units for low income households have been built through the program. Inclusionary housing laws have also been common in New York City for decades.

Escarra said developers in the Arts & Entertainment District have had the option of volunteering to set aside units to obtain density bonuses since 2010. But builders such as Melo and NR began using the option during Miami’s most recent building boom. Rather than buying air rights from a designated historic property, a developer can increase a project’s floor lot ratio by designating a certain percentage of the units for affordable housing under Miami 21. It’s considered a public benefit in exchange for the bonus, Escarra said.

“There have been six rezonings since 2015 and all have followed that sort of model,” Escarra said. “The developers have done it on their own.”