January 13, 2009
TALLAHASSEE - With Florida near the top nationally in lost construction jobs and home foreclosures, state lawmakers are taking a $190 million bite out of a pot of money intended to build low-rent apartments and moderately priced homes.
More than half of the $2.6 billion in budget savings legislators scraped together for a final vote Wednesday comes from borrowing and sweeping up money that's sitting in "trust funds," accounts dedicated to a variety of state projects and policies.
Some $70 million will be taken from a fund intended to fight insurance fraud and support the state fire marshal; state conservation land buys will be frozen until at least July 1; $6 million will be diverted from radios for law enforcement.
Florida's affordable-housing trust fund -- created in 1992 to generate annual money for low-income housing and named for the late legislator William Sadowski -- stands to take the biggest whack: $190 million.
Lawmakers aren't just taking the money to help offset the $2.3 billon budget deficit. They also mandate the cut has to come from construction projects -- leaving untouched millions of dollars the Florida Housing Finance Corp. gives out as block grants to local governments and down-payment help on homes.
The fight over the housing dollars pitted Realtors laboring to sell vacant and foreclosed homes against home builders desperate to jump-start new projects.
"We have a market full of built houses that no one is living in," said Senate economic-development budget chief Mike Fasano, R-New Port Richey.
Affordable--housing advocates say the policy forces the state to abandon contracts it has inked with apartment developers and hits the lowest end of the income spectrum: those who can't qualify to buy homes even in Florida's depressed housing market.
"They've got the notion that because there's a lot of foreclosures, they don't need to build any more affordable housing," said Mark Hendrickson, a Tallahassee-based affordable-housing consultant whose clients include Hillsborough County. "What possible good is a $400,000 foreclosed house to someone making $25,000 a year?"
Florida's housing agency had committed to spend $391 million this year on programs that range from construction to helping farm workers and the extremely poor with rent, to providing down-payment and mortgage assistance to workers close to the state's median income level.
Since the budget forces the agency to cut the construction spending first, housing experts expect virtually all of the $131 million pledged to developers through its apartment loan program will be on the chopping block.
Lloyd Boggio, a Miami developer and chairman of the state's Coalition of Affordable Housing Providers, said builders anticipating those state dollars had committed at least $115 million in financing on 36 projects, totaling 4,000 units, in 17 counties.
In a letter to Florida Housing Corporation executive director Steve Auger, he called the funding raid "wrongheaded, shortsighted, dishonorable, and arguably illegal."
In Orange County, at least three projects, totaling 298 units, could be delayed, along with 90-plus-unit projects in Lake and Seminole counties. However, officials said Monday that the state had yet to determine which projects would lose their funds.
Besides the apartment projects, another 80 deals to construct 6,000 rental units through two other state programs could be at risk, housing officials said.
Florida Housing Finance Corp. spokeswoman Cecka Rose Green said the cuts were "unprecedented in amount, and we're still looking at how we'll do this."
Fasano and his House counterparts also steered another $24 million away from apartment construction and into a program that helps local governments assist would-be homeowners with down payments.
Fasano defended the action Monday by saying some of the money for apartment projects had been committed for several years and builders still hadn't lined up underwriting to start construction.
"I've asked many of them, 'When do you think you'll get underwriting?' They can't give me an answer," he said.
"The strategy was to put as many dollars in an area where we can get the biggest bang out of the taxpayers' money."
Senate Ways and Means Chairman J.D. Alexander, R-Lake Wales, conceded Monday that the result was "not perfect policy" but defended lawmakers' action.
"We've got a glut of housing in Florida, and we want to look at reshaping the policy to help people stay in their homes or use existing housing stock rather than building new housing stock," he said.
However, Florida Housing Coalition president Jaimie Ross said reneging on contracts could scare away builders from doing business with the state in the future.
"There's going to be an immediate economic detriment," she said, "but the damage may be longer."