AFFORDABLE HOUSING IN THE CITY OF ST. PETERSBURG

AFFORDABLE HOUSING IN THE CITY OF ST. PETERSBURG Overview Housing is primarily a function of the private market, driven by economic development, whether or not a residential development is financially feasible and profitable. The government s role in housing is to make it more affordable to certain households who cannot afford the cost of market-rate housing. This study intends to identify how the City of St. Petersburg can maximize the efforts of government agencies, nonprofit organizations, and private entities to ensure a sufficient stock of decent, affordable housing, either owned or rented, for very- low to moderateincome families. It examines: The affordability of both rental and homeownership; The roles of various public and private organizations involved in the development and administration of affordable housing; The demand for and supply of housing, its condition (the extent to which it is substandard); Regulations and sources of funding for affordable housing; and Best practice programs both locally and in other communities, designed to expand the availability of affordable housing. Introduction The dream of most households is to own their homes. National housing market surveys report that the home ownership rate reached a peak in the late 1990s, to almost 67 percent in 1999-due mainly to a thrieving economy with record levels of low interest rates and low unemployment. However, this economic expansion enabled many Americans to purchase their own homes, it has pushed housing prices and rental rates higher, preventing many other households, with insufficient incomes, from either finding safe, affordable, and decent rental housing or becoming homeowners. Federal and State governmental guidelines, primarily those established by the U.S. Department of Housing and Urban Development (HUD) and the Florida Housing Finance Corporation (FHFC), define affordable housing as costing no more than 30 percent of a household s gross monthly income. The income counted is derived from all wages earned by people 15 and older in the household. For homeowners, affordability means owning a house with a value equal to slightly more than twice the household s annual income. The homeowner costs typically counted includes the mortgage principal, taxes, interest, and insurance. For renters, the costs usually include contract rent and utilities. The 30 percent rule leaves 70 percent for food, clothing, medicine, child-care, transportation to work, and other basic expenses. Because of increased housing costs, many lower income residents are forced to make tradeoffs and go without necessities. 1

Tenants experiencing unexpected emergencies typically fall behind in their rent and face eviction, if not assisted, they may become homeless. Having a supply of decent, affordable housing is a critical concern of every local government, enhancing its stability and contributing to its quality of life and prosperity. A shortage of housing can lead to overcrowded housing conditions, people doubling-up, living in substandard conditions, interruptions in childhood education because of increased mobility, and increase in family hardships and dysfunctions. The Florida Legislature proclaimed in 1990 that by the year 2010, Florida will ensure that decent and affordable housing is available for all its residents. Since that time the State has instituted housing assistance programs which have established it as a leader among the states (see sources of funding beginning at the bottom of Page 8). Affordability This review uses the 30 percent rule to define affordability and focuses on four categories of households, corresponding to HUD and FHFC s income guidelines: Extremely-low income those earning below 30 percent of an area s median income (AMI); Very-low income those earning below 50 percent of AMI; Low-income those earning between 50 percent and 80 percent of AMI; and Moderate-income those earning between 80 and 120 percent of AMI. Though these households income categories represent general thresholds necessary to participate in various affordable-housing programs, some entities (particularly financial institutions) use slightly lower AMI thresholds and designate a low (less than 50 percent of AMI) and moderate (50-80 percent of AMI) income category to guide decisions on providing assistance. According to HUD and FHFC, the 2004 Tampa-St. Petersburg-Clearwater Metropolitan Statistical Area (MSA) median income was $51,200. The following income limit is recorded for 2004: Median Income by Family Size-Tampa-St. Petersburg- Clearwater MSA 2004 Family Size 1 2 3 4 5 6 7 8 Extremely Low Income (< 30% of AMI) 10750 12300 13800 15350 16600 17800 19050 20300 Very Low Income (< 50% of AMI) 17900 20500 23050 25600 27650 29700 31750 33800 Low Income (50%- 80% of AMI) 28650 32750 36850 40950 44250 47500 50800 54050 Moderate Income (80% - 100% of AMI) 35800 41000 46100 51200 55300 59400 63500 67600 Moderate Income (100% - 120% of AMI) 42960 49200 55320 61440 66360 71280 76200 81120 Source: HUD and FHFC 2

For families that number more than 8, multiply the relevant four-person limit by 132% plus 8% for each additional child. For example, a family of 10 at 100% median income would equal: $44,700 x 148 = $66,156. Housing Affordability Estimates by Household Income St. Petersburg 2004 % of Median 30% AMI 50% AMI 80% AMI 100% AMI 120% AMI Annual Income $15,350 $25,600 $40,950 $51,200 $61,440 Monthly Income $1,279 $2,133 $3,413 $4,267 $5,120 Maximum affordable purchase price $64,000 $106,000 $170,000 $210,000 $255,000 Maximum affordable monthly gross rent or mortgage payment $383 $640 $1,024 $1,280 $1,536 1. Data shown are for a household of four people. 2. Source: Consumer Mortgage Guide. Sales price at 6% interest for 30 years, with no other excessive debts which disqualify the buyer. 3. Figure is for housing costs and includes no subsidy. For homeowners, cost includes principal, interest, taxes, and insurance. For renters, cost includes contract rent and utilities. This review assumes that housing must be safe, decent and affordable for living. Substandard and overcrowded housing units are not considered viable housing options. City s Priority Affordable Housing Needs The City of St. Petersburg identified in its 5-year Consolidated Plan and Comprehensive Plan, the following needs that pertained to affordable housing: Permanent and supportive housing and services for homeless and special needs population. Improve existing affordable housing for extremely- low, low-, and moderateincome homeowners. Assist rental households from 0-80% of median income to become homeowners. Provide affordable rental housing, concentrating on households at 0-80% of median family income. Developers of Affordable Housing In addition to the City s provision of affordable housing, private for-profit developers are also providing this service to the community. The private sector is contributing with the construction of new single and multi-family affordable housing in the City and are as follows: Mobley Homes New Millennium Homes General Home Development Corporation Ken Williams Construction The Wilson Company 3

Additionally, Community Housing Development Organizations (CHDOs) assist with the provision of affordable housing to the community. Some of the organizations provide affordable housing to the general public who meet income guidelines, while others provide housing to our disabled, special needs, and homeless population. Some of these organizations include the following: St. Petersburg Neighborhood Housing Services: Develops new single-family housing and provides rehabilitation assistance to owner-occupied households. Mt. Zion Human Services: Develops new single-family housing and assists those homebuyers with downpayment and closing costs. Pinellas Affordable Living (PAL/Boley): Produces affordable rental housing for very-low and low-income residents of the City, some of which may have mental illness, and some of which may have been homeless. Homes for Independence: Assists disabled individuals to obtain/purchase housing. City s Affordable Housing Strategies and Accomplishments The City of St. Petersburg accomplished the following as it provided housing assistance to existing households during the past four years: Owner Occupied Housing Assisted 5 Year Goal Aggregate Through 9-30-04 Funding Expended Provide Assistance to 500 Households 340 Units Completed $5,114,017 The City has also provided purchase assistance to various households to obtain affordable housing. New additions to this strategy have been the A+ Housing Program ( Teacher ) and the Police in Neighborhood ( PIN ) program that have both been implemented this past fiscal year. During the past four years the following have occurred: Renter Occupied Housing Assisted to Become Homeowners 5 Year Goal Aggregate Through 9-30-04 Funding Expended Assist 500 Rental Households to Become Homeowners 506 Units Completed $4,986,618 The documents attached as Attachment A represent a sample of units that have been assisted with purchase assistance through the City s Working to Improve Our Neighborhoods (WIN) Program. The City also included a strategy to assist developers with the construction of new homes, for which the following information is presented: 4

New Home Construction by Developers 5 Year Goal Aggregate Through 9-30-04 Funding Expended Provide financial assistance to developers to construct 50 homes 27 Units Completed $2,209,448 Need for Affordable Housing With all of the help that the City provides through affordable housing, the Census has documented that there is need for additional affordable housing and that many households have severe cost burdens. The Shimberg Center for Affordable Housing at the University of Florida, has documented the affordable housing needs of each community in the State of Florida through 2025. For sake of this document we will concentrate on the need for affordable housing in the City through the year 2015 and is as follows: Construction Need for Low-Income Households by Income as a Percentage of AMI Growth in Household from 2002 Place Household Income as % of AMI 2002-2005 2005-2010 2010-2015 St. Petersburg <20% 22 155 301 20-29.9% 20 144 281 30-39.9% 23 164 319 40-49.9%- 25 175 343 50-59.9% 26 183 357 60-79.9% 55 399 780 Total 171 1,220 2,381 Source: The Shimberg Center Affordable Housing Need Summary 2002-2005 Finally, the study defined the prime homeowner segment as those renters between the ages of 35 and 54 whose incomes are between 50% and 80% of area median; prime renters include renter households aged 15 to 34 with incomes less than 50% of area median. The tables listed below shows total households for each of these segments by year: Renter household aged 35-54 with income between 50% and 80% of area median Place 2002 2005 2010 2015 St. Petersburg 3,528 3,559 3,468 3,247 Renter household aged 15-34 with income less than 50% of area median Place 2002 2005 2010 2015 St. Petersburg 4,052 3,977 4,139 4,284 Source: The Shimberg Center Affordable Housing Need Summary 5

Extremely Low Income Households The City is aware that there is need for additional affordable housing, ad this was documented by the 2000 Census and the Shimberg Study. The Census documented the need for affordable housing by household income. This information was supported by information from the Comprehensive Housing Affordability Study (CHAS) Tables prepared by the U. S. Department of Housing and Urban Development (HUD). Extremely-low income households (Owner and Renter) made up 12 percent of the City s 109,484 households. The household income of persons in this category is a maximum of 30 percent of Area Median Family Income and are as follows: One person household with maximum income of $10,750 Two person household with maximum income of $12,300 Three person household with maximum income of $13,800 Four person household with maximum income of $15,350 According to CHAS data, this income group faces a shortage of 3,166 affordable rental units as documented below: Number of Extremely Low-Income Renter and Owners Compared to Availability of Units Total 2000 Renters 2000 Owners 2000 Number of St. Petersburg Households at 0-30% MFI 12,840 7,451 5,389 Percent of all Households in each category 12% 7% 5% Number of Housing Units Affordable at 0-30% MFI Occupied 3830 3830 N/A Vacant 455 455 N/A Total Affordable 4,285 4,285 N/A Deficit/Surplus N/A -3,166 Units N/A Source: 2000 Census HUD CHAS Data Tables Very Low Income Households Households considered very-low income represented 13,012 units or 12 percent of the City s overall 109,484 households. The household income of persons in this category is a maximum of 50 percent of Area Median Family Income and are as follows: One person household with maximum income of $17,900 Two person household with maximum income of $20,500 Three person household with maximum income of $23,050 Four person household with maximum income of $25,600 The data reflected that there were 34,290 housing units in the City that is affordable to very low-income households. The data shows a surplus of 21,278 housing units for this income group. However this statistic is misleading since often units that are affordable are occupied by households with higher incomes and are not, available to very lowincome households. The unavailability of these housing units often leads to overcrowded housing conditions for very low-income persons (see table below): 6

Number of Very Low-Income Renter and Owners Compared to Availability of Units Total in 2000 Renters in 2000 Owners in 2000 Number of St. Petersburg households at 31-50% MFI 13,012 6,610 6,402 Percent of all Households in each category 12% 6% 6% Number of Housing Units Affordable at 31-50% MFI Occupied 31,570 8,580 22,990 Vacant 2,720 1775 945 Total Affordable 34,290 10,355 23,935 Deficit/Surplus 21,278 Units 3,745 Units 17,533 Units Source: 2000 Census HUD CHAS Data Tables Low Income Households HUD defines low-income or families or households as those whose incomes are between 51 to 80 percent of MFI. The household income of persons in this category is as follows: One person household with maximum income of $28,650 Two person household with maximum income of $32,750 Three person household with maximum income of $36,850 Four person household with maximum income of $40,950 The CHAS data indicated that 20,020 or 8 percent of the City s 109,484 households have low-incomes. The table below shows there are 46,970 housing units available in the City that are affordable to low-income households for a surplus of 26,950 units. Again, this statistic is misleading in that often, affordable units are occupied by households with higher incomes and are not, in reality, available to households in this income category. Number of Low-Income Renter and Owners Compared to the Availability of Units Total 2000 Renters 2000 Owners 2000 Number of St. Petersburg Households at 51-80% MFI 20,020 8,782 11,238 Percent of all Households in each category 18% 8% 10% Number of Housing Units Affordable at 51-80% MFI Occupied 45,085 21,365 23,720 Vacant 1,885 1,355 530 Total Affordable 46,970 22,720 24,250 Deficit/Surplus 26,950 13,938 13,012 Source: 2000 Census HUD CHAS Data Tables Moderate-Income and Above The U.S. Department of Housing and Urban Development defines moderate-income households or families as those whose income is between 80 and 95 percent of the area s median family income, subject to adjustments for smaller and larger households. Households that fit this category are generally ineligible for Consolidated Plan assistance. However, housing units within this category are eligible for housing assistance under the Consolidated Plan if they meet the national objective of eliminating slum and blighting influences that are a danger to safety and public health. 7

Number of Moderate-Income Renter and Owners Compared to the Availability of Units Total 2000 Renters 2000 Owners 2000 Number of St. Petersburg Households at 63,612 16,939 46,673 81% of MFI Percent of all Households in Each Category 58% 15% 43% Number of Housing Units Affordable at 81% MFI Occupied 29,035 6,045 22,990 Vacant 669 305 364 Total Affordable 29,704 6,350 23,354 Deficit/Surplus -33,908-10,589-23,319 Source: 2000 Census HUD CHAS Data Tables Fifty-eight percent or 63,612 of the City s 109,484 households have moderate-incomes and above. The table shows there are 29,704 housing units available in the City that are affordable to households at moderate-income and above. The data shows a shortage of 33,908 housing units for this income group, suggesting that the housing market is not providing and has not provided the number of units necessary to shelter households at this income level. Therefore, households at 81 percent or more of MFI are occupying housing units affordable at lower income levels. A further review of the moderate-income category shows that approximately 15 percent of renters and 43 percent of owners fit this income category. The 2000 Census documented the number of household units in the City to be 109,663, while the CHAS Tables reported 109,484. The number from the CHAS Tables will be used as the City prepares its Consolidated Plan for submission to HUD (see CHAS Tables in Tabs 8 and 9.) Regulations and sources of funding for affordable housing The City receives HOME Investment Partnership Act funding from the U.S. Department of Housing and Urban Development (HUD). It receives State Housing Initiatives Partnership (SHIP) funding from the Florida Housing Finance Corporation. Additionally, the City has a dedicated source of funding from general fund dollars that established its local Housing Capital Improvement Program (HCIP) funding. HOME funding allows the City to assist households up to 80% of Area Median Income (AMI) with housing rehabilitation, and up to 60% of AMI with construction of new assisted units. SHIP funding allows the City to assist households that are up to 120% of AMI with purchase assistance and closing costs, and up to 80% with rehabilitation. HOME funding is regulated under the guidelines found at 24 CFR Part 92. SHIP funding is regulated under Florida Statute 420.907 and Rule 67-37. The City s HCIP funding is regulated by local Resolution. Additional sources of funding for affordable housing includes the following: State Apartment Incentive Loan (SAIL) Program offered through the Florida Housing Finance Corporation; Low Income Housing Tax Credit; Housing Credits Program; Florida Affordable Housing Guarantee Program; 8

HOME Investment Partnership (HOME) Program; and Multifamily Mortgage Revenue Bond Program. Barriers to Affordable Housing The City also has households that are not able to transition to ownership at this time and must rent a unit, due to some of the following barriers: Economic resulting from market conditions that determine the cost of housing and the availability of government subsidies Regulatory resulting from local code enforcement, zoning requirements, and various impact fees that affect the cost of housing development; Individual resulting from poor credit, insufficient income, lack of understanding about financial management and lack of awareness about housing assistance programs; Social resulting from society s stereotypes about affordable housing and the impact it will have on other housing values in the community. The goal of this Committee is to review data that is applicable to affordable housing in the City and to develop outcomes/policies that may be used to better address the need for affordable housing into the future. Best Practice of Affordable Housing Examples of Best Practices in the City can be found in collaboration between the following entities and the City during the planning and development of affordable housing: The City contributed $260,000 in HOME Investment Partnership funding that allowed the Wilson Company (Twenty Nine Ltd.) to secure $22,793,691 in Florida Housing Finance Corporation s Low Income Tax Credits to construct the Wyngate Apartment Complex located at 4 th Street and 112 th Avenue North. The facility consists of 263 units that may only accept tenants whose incomes do not exceed 60 percent of Area Median Income. The facility is located in the North quadrant of the City among market rate rental developments and has amenities such as, swimming pool, computer center, children s play area, washer/dryer hookups, etc. 128 Place was developed by Boley Centers, who requested and received assistance from the City with HOME funding that leveraged more than $1,332,644 in Federal Home Loan Bank funding to construct an 18 unit rental complex for disabled individuals. The City contributed $62,000 in HOME funding to assist Boley with leveraging the other sources of funding. 9

The Dome District Apartments located at 1024 Burlington Avenue, was developed by Pinellas Affordable Living (PAL/Boley) with funding from HUD and the Federal Home Loan Bank. The City contributed $9,000 in HOME funding for transfer of development rights, which enabled Boley to leverage an additional $1,205,658 in other funding to construct an 18 unit complex which provides housing for disabled individuals. Dave Miller Apartments was developed by Boley for disabled individuals. The City provided $33,975 in SHIP funding that leveraged $983,900 in other funding to complete the construction of the complex, which has 14 apartment units. Menorah Center located at 250 58 th Street North is a facility in which the elderly reside. The City assisted the center with its rehabilitation by providing $400,000 in SHIP and $200,000 of HOME funding that allowed the agency to leverage $400,000 in funding from Raymond James Financial and $230,000 of its own money to rehabilitate its 196 unit facility, to preserve affordable housing for the elderly. 10