Housing Miami Together 2016

As Miami continues to experience economic growth and move toward becoming one of the most vibrant cities in the world, it is increasingly suffering from a housing crisis that is affecting the entire continuum, from the extremely low-income to young working professionals. Rising rents and stagnant incomes have left many residents unable to afford safe, stable housing without cutting back on other basic needs. Due to this mismatch between housing costs and wages, many lower-income households in Miami are increasingly at-risk of becoming homeless as they are having to spend more than half of their limited household income on housing costs. Housing affordability is a major and growing challenge in Miami-Dade County. According to the Center for Housing Policy, the Miami area has the highest percentage of working households spending more than half of their income on housing costs in the United States.1 Access to housing that is affordable is fundamental for attracting and retaining a talented workforce and for promoting economic growth and prosperity. On May 6, 2015, Miami Homes For All2 (MHFA) hosted a Housing Summit to bring together leaders in government, housing development, philanthropy, and advocacy to discuss how to address the current housing crisis in Miami through unique public/ private partnerships and other creative solutions. The Summit was held in conjunction with partners at the Greater Miami Chamber of Commerce, Florida Philanthropic Network, Funders Together to End Homelessness, and South Florida Community Development Coalition (SFCDC). 1  Center for Housing Policy, “Housing Landscape: 2015,” March 2015.

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2  Formally known as “Miami Coalition for the Homeless”.

With over 200 attendees, the event was successful in building local awareness to the criticality of the housing crisis and concluded with a list of policy recommendations for stakeholders to implement in our community. These recommendations ranged from creating a Housing Taskforce, to increasing incentives for developers to build affordable rental housing, modifying inclusionary zoning and local Affordable Housing Trust Fund programs, among various others. Since the Housing Summit and in part due to the continued advocacy from MHFA, SFCDC and People Acting for Community Together (PACT), Miami-Dade County has implemented a variety of different measures that are consistent with themes that emerged from the summit, including: • Requiring that 25% of proceeds from the sale of certain County-owned property be deposited into the Affordable Housing Trust Fund; • Restructuring the FY 2015 Surtax/SHIP Request for Applications (RFA) to better incentivize the development of housing that is affordable to extremely low-income households; • Setting aside 50% of the Affordable Housing Trust Fund for very-low and extremely low-income households; and • Providing 200 Section 8 Project-Based Vouchers through the Miami-Dade County Public Housing and Community Development Department over the next four years for MHFA’s loan fund initiative.3

3  This will be done in compliance with U.S. Department of Housing and Urban Development federal requirements.

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While this direction has been promising, it is still insufficient to meet the housing needs of Miami’s lowest income households. To maintain this momentum and to continue to sustain Miami’s economic growth, MHFA encourages adoption of the following policy priorities that have been informed by the findings of the Housing Summit to generate more mixed-income, mixed-use rental housing: 1. Form Public-Private Partnerships to Foster Innovative Sources of Funding for the Continuum of Rental Housing Needs; 2. Preserve and Increase State and Federal Resources for Affordable Housing; 3. Allocate More Housing Funding for the Lowest Income Households; and 4. Modify Existing Zoning Programs To Meet Local Needs. These opportunities to improve public policy will greatly expand housing supply and improve the quality of rental housing for families across Miami-Dade County. For most of these lower-income households, particularly extremely low-income, elderly households and people with disabilities, homeownership is currently out of reach. However, a stronger supply of high-quality, affordable rental housing is a viable means to enable cost burdened, extremely low-income, working families to save resources necessary to transition into homeownership. Furthermore, these opportunities will help to ensure Miami remains a vibrant City of economic opportunity that retains its residents and attracts new ones based on a high quality of life.

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The Need for Sustainable Housing According to the Center for Housing Policy, the Miami metro area has the highest percentage of working households spending more than half of their income on housing costs in the United States. As of 2015, roughly 38% of moderate-income households in greater Miami qualify as severely cost burdened.4

Percentage of Cost Burdened Renters in Miami-Dade County

24.39% 22.75% 45.65%

2000

31.40%

34.82%

35.79%

34.44%

29.08%

26.12%

27.42%

25.96%

34.24%

32.36%

30.88%

32.33%

2005

2010

2011

2012

Cost Burden Less Than 30%

Cost Burden 30.0% to 49.9%

Cost Burden 50% or More

Source: Shimberg Center for Housing Studies, 2014.

The overall percentage of renters in Miami-Dade County considered cost burdened has increased over time. Between 2000 and 2012, there was a nearly 50% increase in the total number of cost burdened renters in Miami-Dade County, from 154,066 households in 2000 to 231,703 in 2012.5 This increase is due to a variety of reasons including a growing disparity between stagnant incomes and rising housing costs. During that same period, median rents in Miami increased by more than 60% from $647 to $1,057 while the median renter income increased by less than 30% (from $22,773 in 2000 to $29,391 in 2012).6

4  Center for Housing Policy, “Housing Landscape: 2015,” March 2015. Under HUD regulations, “severe cost burden” is defined as paying more than 50 percent of one’s income on rent. 5  Shimberg Center for Housing Studies, Spreadsheet: Historical Rent Burden in Miami-Dade County, 2013. 6  Ibid.

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As the table below demonstrates, the average wage earned by renters in Miami is not enough to afford a 1-bedroom or 2-bedroom apartment at fair market rent in the Miami-Miami Beach-Kendall area. A 2-bedroom apartment at fair market rent is also out of reach for many occupations in Miami that have the largest total number of people employed. The mismatch between current wages and housing costs is so high that a household earning the average renter income of a Miami household would need 1.5 full-time minimum wage jobs to afford a 2-bedroom rental.7

Median Hourly Wages in the Miami Metro Area, Mean Renter Wages, and ‘Housing Wages’ for Fair Market Rent Units Retail Salespersons Customer Service Reps. Food Prep / Serving Workers Waiters & Waitresses General Office Clerks Security Guards Secretaries Janitors & Cleaners Restaurant Cooks

Mean Renter Wage Housing Wage for a 1-BR Housing Wage for a 2-BR

17.50

$

22.42

$

0

$

5

$

10

$

15

$

20

$

25

$

All occupations in the figure above are among the top 25 occupations by number of employed in the Miami metro area. Source: Florida Department of Economic Opportunity & National Low Income Housing Coalition, 2014.

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7  Ibid.

This situation is particularly difficult for extremely low-income (ELI) renters in Miami. ELI households earn at or below 30% Area Median Income, which in Miami-Dade County is $24,250 for a family of four. The Urban Institute estimates there are only 26 units available for every 100 ELI renter households in the County.8 Due to this substantial shortage, most of Miami’s 115,281 ELI renter households are spending more than half of their limited income on housing costs, making them increasingly vulnerable to homelessness. 9 According to the Miami-Dade County Homeless Trust, financial and housing-related reasons are the primary causes of homelessness for nearly 53% of Miami’s homeless population.10 Of those interviewed, nearly 2 out of 5 reported a first time experience with homelessness.11 By increasing the supply of affordable rental housing our community will effectively help mitigate the risk of cost burdened low-income renters becoming homeless. The increased creation and preservation of affordable housing and permanent supportive housing for ELI households, especially for persons with special needs and homeless individuals, is the Florida Council on Homelessness’s primary recommendation to reduce homelessness statewide.12

8  Urban Institute, “Mapping America’s Rental Housing,” http://datatools.urban.org/features/rental-housingcrisis-map/, 2015. 9  Ibid & Shimberg Center, “2013 Rental Market Study: Affordable Housing Needs,” 2013. 10  Miami-Dade County Homeless Trust, “2015 Point-in-Time Count Results,” 2015. 11  Miami-Dade County Homeless Trust, “Miami-Dade County Homeless Plan: Ten Year Plan to End Homelessness in Miami-Dade County,” 2011. 12  Council on Homelessness, “2014 Report,” 2014.

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The Impact of Sustainable Housing on the Local Economy Affordable housing has a significant impact on the local economy by creating jobs, increasing opportunities for employee retention, and expanding a household’s disposable income. Using national averages, the National Association of Home Builders estimates that a 100-unit Low-Income Housing Tax Credit (LIHTC) development leads to the creation of more than 120 jobs during the construction phase.13 Additionally, the ongoing consumer activity of new residents in wholesale/retail trade, health and education, and dining establishments creates roughly 30 new long-term jobs. The total number of jobs created by an affordable housing development is almost equal to the number of jobs created by a market-rate rental development.14 Affordable and workforce housing also affects job recruitment and retention. More than half of the members of the Greater Miami Chamber of Commerce indicated that Miami’s high housing costs have a negative impact on employee retention, and 59% reported that it makes it difficult to recruit employees.15 The high cost of housing in Miami could also have a significant impact on young professionals and even cause some to leave South Florida for other more affordable metro areas.16 According to Zillow, Miami has the smallest share of housing that is affordable to millenials. Their research indicates 92% of all rental listings in Miami are unaffordable to young adults.17 As the state’s projected job growth is in low-wage service jobs, it is critical to increase the supply of affordable rental housing for these workers who will need an affordable place to live.18 Affordable rental housing further stimulates the economy by impacting consumer spending. Lowering the high housing cost burden increases households’ residual income, which can then be spent on local goods and services. Through job creation, employee retention, and increased consumer spending, affordable and workforce housing significantly impacts the regional economy.

13  Center for Housing Policy, “The Role of Affordable Housing in Creating Jobs and Stimulating Local Economic Development: A Review of the Literature,” 2011. 14  Ibid. 15  FIU Metropolitan Center, “Greater Miami Chamber of Commerce: Workforce Housing Survey,” 2006. 16  FIU Metropolitan Center, “Policy Briefings: House Hunters in South Florida: Where Will Our Workers Live?,” 2013. 17  Bloomberg Business, “These are the 23 Cities Where Millennials Can’t Afford to Rent a Home,” 2015.

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18  United Way of Florida, “ALICE (Asset Limited, Income Constrained, Employed): Study of Financial Hardship,” 2014.

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Policy Opportunities 1) Form Public-Private Partnerships to Foster Innovative Sources of Funding for the Continuum of Rental Housing Needs While existing resources need to be maximized, policymakers, developers, and local stakeholders should support the creation of new sources of funding for affordable rental housing development that can be adopted to the Miami market. Community leaders, nonprofits, philanthropic groups, businesses, and government must explore creative public-private partnerships to address the housing crisis. For example, MHFA is launching a loan fund made up of private foundation and other investor capital to finance the development of mixed-income rental housing with a percentage of the units set-aside for ELI households.19 The loan fund seeks to use private capital to leverage financing from public sources in order to maximize the loan fund. Together, the loan fund will be dispersed as flexible, low-cost loans to developers through a financial intermediary, ensuring the loan fund’s sustainability. MHFA anticipates producing between 5001,000 units in a ten-year period by developing loan products that are both responsive to the Miami market and that meet the capital needs of local affordable housing developers. By exploring creative partnerships, resources are maximized to meet housing needs. Various opportunities exist for collaboration to implement innovative funding sources for the continuum of housing needs, from the extremely low-income (ELI) all the way to young professionals, through a coordinated approach.

Policy Opportunities: • Create a Housing Solutions Task Force: Local stakeholders should create a permanent, independent County-wide task force to examine how to best leverage public and private resources to address the housing crisis. This task force should be made up of local community leaders and experts to ensure the implementation and oversight of programs that meet the housing need. This taskforce will complement the already-established Miami-Dade County Affordable Housing Advisory Board (AHAB). This taskforce should also examine how local stakeholders can effectively preserve properties with expiring affordability obligations. According to the Shimberg Center, there are approximately 4,500 assisted units in Miami-Dade County set to expire by 2020.20 19  This effort is modeled after a Boston-based initiative called “Home Funders” that successfully pooled resources to finance 3,000 units in a ten-year period, including 1,000 affordable units for ELI households.

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20  Shimberg Center, “Assisted Housing Inventory,” 2015.

• Encourage the creation of new forms of capital: Encourage the City of Miami and Miami-Dade County to provide leadership on creating new partnerships that will create new streams of “impact investing” capital for affordable housing development like the Low Income Investment Fund’s Los Angeles County Innovation Fund. Initiated with $20 million in seed funding from the Los Angeles County government, this $60 million public-private partnership provides low-cost predevelopment and acquisition financing for affordable and permanent supportive housing in Los Angeles County. State and local governments should also explore the feasibility of developing a social impact bond or “pay for success” program related to affordable housing and homelessness. A city-led social impact bond uses private capital to fund social programs, which is only repaid by the participating government if the program achieves a set of targeted outcomes that generate positive public savings and benefits. Denver is currently working on a city-led social impact bond program with the Corporation for Supportive Housing and Enterprise Community Partners to raise $8-15 million in financing to provide supportive housing and case management for up to 300 chronically homeless individuals with the goal of reducing the $11 million the city spends annually on the homeless in jail, detox, and hospital costs.21 Massachusetts launched a similar initiative in 2014 to build 500 affordable housing units with $3.5 million in philanthropic funding and private capital. 22 A similar program is currently being explored in Miami-Dade County to serve the chronically homeless. • Implement a linkage fee program: Miami-Dade County should consider implementing a linkage fee program to increase funds for affordable rental housing development. Under this model, a ‘linkage’ fee is charged to commercial development to increase the supply of affordable housing. This fee is based on the interconnection (‘linkage’) between the construction of new workplace buildings and the demand for housing by new employees who work within these buildings. Linkage fee programs have been established in various cities throughout Florida, including Key West and Coconut Creek. Miami-Dade County and Broward County are currently exploring linkage fee programs for their communities.

21  Denver Post, “Denver Homeless Initiative Would Be the Latest to Tap Social Impact Bonds,” 01/25/2015. 22  CBS Boston, “Gov. Patrick Announces ‘Pay for Success’ Plan to Aid Homeless,” 12/08/2014.

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2) Preserve and Increase State and Federal Resources for Affordable Housing Miami is presented with the unique opportunity of having access to the local Documentary Surtax (Surtax) Program for affordable housing development. Based on a tax on real estate transfers, the Surtax is a major source of affordable housing funding locally. Miami is also a direct recipient of Florida’s State Housing Initiatives Partnership (SHIP) program, of which 65% is focused on homeownership activities. While these state and local funding resources have seen recent increases, federal resources to Miami have decreased significantly between 2011 and 2014.

Federal, State, and Local Affordable Housing Funds, Miami-Dade County

$

2011

19,332,132

0

$

6,232,309

$

19,174,163

$

2012

728,086 $ 3,512,701

$

28,074,780

$

2013

827,847 $ 3,324,357

$

38,711,683

$

2014

2,345,213 $ 3,462,571

$

$

2015 (Projection)

4,838,850 1,595,405 $

$

Surtax

SHIP

HOME

Source: Miami-Dade Public Housing and Community Development, 2015.

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35,000,000

Between 2011 and 2014, the total amount of federal HOME Investment Partnerships Program (HOME) funds allocated to Miami-Dade County decreased by nearly 44%. Tenant-based rental assistance for homeless prevention in Miami-Dade County alone decreased by roughly 65%, from $1 million to just $340,000 between 2014 and 2015.23 Because of the high-level of need in Miami, we must preserve and increase existing state and federal resources that are available for affordable housing.

Policy Opportunities: • Appropriate full amount of funding available for the state and local housing trust funds: Ensure the Florida Legislature appropriates the full amount of tax revenue available to state and local housing trust funds. During the recession, the Florida legislature used these funds for non-housing uses. Local stakeholders must continue to monitor the annual appropriation process and advocate for full funding of the state housing trust fund and SHIP to meet current needs. • Renew and Restore Vouchers: Urge Congress to increase funding for housing choice vouchers to renew the vouchers issued in 2014 and to continue to work towards restoring the vouchers lost due to the 2013 sequestration funding cuts. The Center for Budget and Policy Priorities estimates that as of 2014 roughly 4,000 vouchers were lost in Florida because of the sequestration cuts, of which 125 were in Miami-Dade County (85 in Hialeah and 40 in Miami Beach).24 Cuts to vouchers have prevented thousands of low-income Floridians from receiving the housing assistance they need to escape housing instability and homelessness. During budget negotiations for FY2016, existing vouchers were renewed but none of the additional vouchers lost during sequestration were restored. The bill did provide $60 million for new HUD-VASH vouchers. • Fund the National Housing Trust Fund: Advocate for the continued funding of the National Housing Trust Fund (NHTF). The NHTF was created by Congress in 2008 to primarily serve ELI households through dedicated funding from Freddie Mac and Fannie Mae. This funding obligation was suspended during the financial crisis until 2014 when the Federal Housing Finance Administration Director ordered the government sponsored agencies to begin setting aside funds for the NHTF. After lengthy budget negotiations for FY2016, Congress approved funding for the NHTF. Because of this program’s unique focus on ELI renters and dedicated source of funding, the NHTF must continue to be monitored by advocates. The NHTF must continue to be funded and protected as it continues to grow.

23  Miami-Dade County Public Housing & Community Development, “FY2015 HOME RFA,” 2015. 24  Center on Budget and Policy Priorities, http://www.cbpp.org/cms/index.cfm?fa=view&id=3586#table3, 2014.

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3) Allocate More Housing Funding for the Lowest Income Households While various housing resources do exist at the local, state, and national level, these resources must be modified to better meet the needs of Miami’s lowest income households. Between 1990 and 2010, the FHFC awarded more than $900 million in the form of Low Income Housing Tax Credits, State Apartment Incentive Loan (SAIL), SHIP, state HOME as well as various other programmatic funds, to increase the affordable housing stock by 27,000 units in Miami-Dade County. However, less than 10% of these units were allocated to ELI households. While FHFC has led an impressive 47% increase in housing for persons with special needs and the homeless, there is still a significant unmet housing need for all other ELI households. HOME and Community Development Block Grants (CDBG) applications should also be monitored to ensure these resources are serving the lowest income households.

Policy Opportunities: • Increase state and local ELI set-asides: Restructure the point system in the local Surtax application to better incentivize the development of ELI rental housing. The Florida Housing Finance Corporation should increase the minimum ELI set-aside on its 9% Low Income Housing Tax Credit applications from 10% to 15% and provide additional points on applications and incentives if the developer agrees to provide units above 15%. • Mandate CRAs prioritize mixed-income affordable housing: Miami-Dade County should establish guidelines for Community Redevelopment Agencies25 (CRAs) that are new or updating their interlocal cooperation agreement mandating that any affordable housing development financed by a CRA be mixed-income and include a minimum of 20% of units to ELI, 40% not to exceed moderate-income households (120% AMI or less), and 40% market rate. Furthermore, the CRAs should be required to prioritize the development of affordable rental housing funding over non-housing projects, subject to compliance with the community redevelopment plan of the area. • Maximize underutilized resources: The Florida Housing Finance Corporation should set-aside a portion of SAIL funds to be used in combination with the underused 4% Low Income Housing Tax Credits to create more permanent supportive housing and affordable rental housing for ELI households.

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25  CRAs manage funding that is used for certain eligible activities in their designated “community redevelopment area.” This includes providing affordable housing, infrastructure, and other activities that represent the needs of the targeted area. Local governments designate areas as “community redevelopment areas” under Florida law.

• Modify the Community Contribution Tax Credit Program: The State legislature should modify the Community Contribution Tax Credit Program to facilitate the production of affordable rental housing. Under this program, Florida businesses that make contributions to approved community development projects are eligible to gain a 50% credit on the state corporate income tax, insurance premium tax, or a sales tax refund. At present, this program primarily benefits affordable housing for homeownership and should be amended to allocate a portion of the tax credits to projects in which 50% of the units provide rental housing that is affordable to ELI households.

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4) Modify Existing Zoning Programs To Meet Local Needs While new resources for affordable housing are necessary and existing resources need to be better tailored to meet our needs, administrative governmental processes like zoning should also be examined for opportunities to provide non-monetary incentives to developers to build affordable housing. Many communities nationwide, including Washington D.C., Montgomery County, Maryland, and Coral Springs, Florida, have an inclusionary zoning program. These are programs that provide incentives to developers in exchange for affordable housing. These programs are all structured differently, offering different incentives, with some programs being mandatory and others are completely voluntary. Miami-Dade County has a voluntary inclusionary zoning program called the Workforce Housing Development Program. This program provides density bonuses to private developers if they either commit 5-12.5% of units to households between 65% and 140% of AMI, or make a monetary contribution to the Affordable Housing Trust Fund. As of 2014, there was only $1.5 million in the fund, and even this low amount had gone unused. At this time, Miami-Dade County is exploring strengthening its voluntary inclusionary zoning program. Under Miami 21’s Public Benefits Program, the City of Miami allows for increased building capacity for developments that include affordable housing units onsite or make a monetary contribution into the Miami 21 Public Benefits Trust Fund for units up to 120% AMI.

Policy Opportunities: • Modify local programs to meet local needs: Modifications to the County’s Voluntary Workforce Development Program and the City’s Miami 21 Public Benefits Program should be made to best meet local housing needs. The County and City should strengthen the incentives provided in the program, like relaxing lot coverage and parking requirements or providing property tax abatement. Both programs should also better incentivize developers to provide housing for the lowest-income households by tiering the incentive structure. Finally, local leaders must consider making inclusionary zoning mandatory to address the shortage of affordable housing and spur the creation of mixed-income housing. • Expedite local permitting process: Encourage the City of Miami and Miami-Dade County governments to expedite the permitting process. Both government entities should use minimal timeframes for the review of affordable housing projects. The permitting process often delays housing projects from moving forward.

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A Vision for Miami’s Future As Miami continues on its path to becoming a world class city, it must embrace housing that meets the entire continuum of housing needs for its residents and workers. It is MHFA’s vision that this goal is shared by all industries in our community if we are to attract and retain a quality workforce, minimize public costs associated with homelessness, and increase positive social outcomes like health and education. With government resources dwindling, it is essential that the private sector work collaboratively to maximize available resources. Indeed, cities as diverse as Chicago, Atlanta, and Seattle have begun adopting comprehensive housing plans to best meet their local housing needs. MHFA hopes that through the creation of an Affordable Housing Taskforce, our community will establish a comprehensive affordable housing plan for Miami that includes policy advocacy, the creation of private-public partnerships, and other innovative methods to leverage funding and resources for housing. The opportunities and strategies presented here, from new funding streams (e.g. a loan fund), to maximizing the local, state, and federal resources, to modifying existing resources to better meet our needs, and even to procedural changes through zoning, will help us start to build a holistic approach to achieving housing stability for all residents in our community.

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Working to Prevent and End Homelessness For over 35 years, Miami Homes For All (formerly known as the Miami Coalition for the Homeless) has provided grassroots advocacy in support of all persons experiencing homelessness. Over the last 15 years, the organization has evolved into a philanthropic entity, awarding grant funds to various organizations in support of programming that aims to prevent and end homelessness. The cornerstone of MHFA’s mission is to prevent homelessness through increasing and sustaining a stock of housing that meets the continuum of housing needs in our community. Of all U.S. cities, Miami has the highest number of renter households that spend more than 30% (the national standard) of their income on housing. The lack of affordable housing for extremely low-income populations (ELI) to young professionals of moderate income is detrimental to our local community. MHFA advocates for public-private partnerships to maximize resources and to leverage funds that will promote affordable to workforce housing for all Miami-Dade residents and workers. Our advocacy on the local, state, and national level promotes continued funding of traditional as well as new and innovative resources for housing, for we believe that safe and stable housing is critical and essential to effectuating systemic and sustainable solutions within our community.

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B OA R D O F D I R EC TO R S Ana Castilla Community Development Manager TD Bank

BOARD PRESIDENT Jason Pittman Executive Director Touching Miami With Love VICE – PRESIDENT Luther Brewster Chief, Division of Policy and Community Development Herbert Wertheim College of Medicine SECRETARY Vance Aloupis Statewide Director The Children’s Movement of Florida

Barbara L. Romani Regional Director, South Community Relations Citi Bank Curtis Taylor Service Coordinator Carrfour Supportive Housing Benji Power Business Development & Operations Manager McKenzie Construction

TREASURER Anthony “Tony” Brunson President & CEO ABCPA Solutions

Alison Austin, PA Organizational Coach Educate Tomorrow

IMMEDIATE PAST PRESIDENT Monica Vigues-Pitan Advocacy Director Legal Services of Greater Miami

Donnovan Maginley, CPA Partner RSM US LLP

Maria Cristina Barros Former VP of Marketing & Community Relations NBC Universal / Telemundo

Tim Coffey 11th Judicial Circuit Court Criminal Mental Health Project

CO N TAC T U S Barbara “Bobbie” Ibarra, Executive Director Miami Homes For All, Inc. 140 West Flagler Street, Suite 105; Miami, FL 33130 786-469-2060 [email protected]

miamihomesforall.org