Florida legislators will be called on again this year to navigate a solution to the state’s housing affordability crisis that balances the intent of the groundbreaking Live Local Act with the needs of cities and counties, after modifications last year were blasted for undermining the housing incentives in the law.

Florida approved the Live Local Act in 2023 as a response to record-high rent escalation immediately after the COVID pandemic, and multifamily developers jumped on board, taking advantage of zoning flexibility and tax breaks codified by the act.

But last year, the Legislature modified the law to allow cities and counties to deny property tax exemptions for “missing middle” housing — rental units restricted to tenants who earn less than 120% of the Area Median Income. And last year, every municipality in Central Florida that could opt out of the program did, so only a handful of apartment complexes qualified for the exemption.

Cities and counties could deal a huge blow to Live Local affordable housing projects

Developers who specialize in building attainable, workforce housing, like Alliance Residential and Hillpointe, say they had the rug pulled out from under them. Both are lobbying lawmakers in Tallahassee to provide some relief. Cities and counties, meanwhile, have their own complaints that Live Local curtails their power over developments and reduces their revenues — which is what led to last year’s limits on tax exemptions.

Bobby Anderson, managing director for Alliance Residential, said one of the biggest problems is that lenders aren’t willing to underwrite a missing middle project without the exemption, so developers can’t get financing to build new workforce housing at the reduced rents mandated by Live Local.

“Right now, Live, Local is broken,” Anderson said. “I do think it’s a well-intentioned bill, and I know there’s a lot of people that don’t like it. But the reality is, we have a housing crisis, and we’ve got to come up with a way to address it.”

The eligibility for the tax exemption changes from year to year based on whether a county or region is deemed to have enough housing units for the population in the 80-120% median income bracket.

Last year, the Central Florida region (Orange, Osceola, Lake and Seminole counties) had a surplus of 799 units, according to the University of Florida’s Shimberg Center for Housing Studies. This year, the number of surplus units shot up to 5,274 because so many new apartment complexes were completed in 2024.

At the same time, Polk County’s availability number went from a surplus last year to a deficit of 2,636 this year. This means projects that weren’t eligible to claim the 2023 tax deduction in Polk now can. The landlords must agree to keep the rents below market rate for 30 years.

Hillpointe recently completed new workforce housing communities in Lakeland and Davenport, and Managing Partner Steven Campisi said they intend to claim the exemption for 2025.

“So if it’s still available, which I hope it will be, we will file and restrict those units going forward,” he said.

Anderson said his company has been stymied by other technicalities with the Live Local Act. He has projects in Osceola and Orange counties that entered the program before the counties opted out of the missing middle break, so he can keep the tax exemption — but he can’t sell the assets. He had a buyer under contract to purchase workforce housing in St. Cloud, but the Osceola County property appraiser told him the exemption couldn’t be transferred to the new owner, so it killed the deal.

“I’m not putting any more into the program. There’s no benefit,” he said. “I get it — we get tax savings on it, and it’s a substantial amount. But compared to an $80 million deal, it’s a small percentage of money of what the incentive is, and nobody is giving us the benefit of putting stuff into the program.”

Hillpointe prepping for construction on Live Local apartments in Minneola

Some of these issues could be resolved in the 2025 legislative session through HB 923/SB1594. The bills, filed by Rep. Vicki Lopez, R-Miami and Sen. Stan McClain, R-Ocala, propose multiple changes to the Live Local Act, including:

• assigning the tax exemption to the property, not the owner, so it would be transferable
• requiring municipalities to have a surplus of available missing middle units for three consecutive years before they can opt out of the tax exemption
• allowing developers to lock in the tax exemption at site plan approval, rather than at completion/lease-up.
• allowing developers or property owners to sue for damages or injunctive relief if a municipality changes its code to restrict Live Local projects

Campisi said that despite the headwinds affecting multifamily development, Hillpointe is moving forward with new projects, including Pointe Grand Minneola. It was the first apartment community in Lake County to secure development permits without having to rezone, a process it avoided because of Live Local. Hillpointe will break ground in Minneola this month and has another Lake County site under contract.

Campisi said he’s confident that by the time the project is built and occupied, the Orlando region will be back in the negative column for missing middle housing due to the drop in new multifamily construction starts. “Our estimation is that Lake County, and many of these Florida counties, will be back in a spot in 2027 and 2028 where they have a shortage of attainable housing units and therefore cannot opt out” of the tax exemptions, Campisi said.

Have a tip about Central Florida development? Contact me at lkinsler@GrowthSpotter.com or (407) 420-6261. Follow GrowthSpotter on Facebook and LinkedIn.