Developers in Fort Lauderdale are increasingly considering the addition of affordable housing units to projects already under construction or completed, rather than only during the pre-approval phase. This trend is influenced by incentives provided through Florida’s Live Local Act, according to a panel discussion at the Urban Land Institute’s Fort Lauderdale Forum.
One example discussed was The Arcadian, a 502-unit apartment development by Fuse Group Investment Companies. Eyal Peretz, founder of Fuse Group, stated that phase one of The Arcadian will be finished by year-end and that the project is undergoing changes to include affordable units as part of the Live Local initiative. Peretz explained, “The Arcadian started as a non-Live Local project and went through some transformation, and we are going through a process right now where we are about to submit [it as] a Live Local project.”
Panelists noted that high interest rates and increased construction costs have slowed residential development. They said incentives from the Live Local Act—such as property tax breaks for providing below-market rents—can improve profitability for marginal projects.
Doron Broman, founder and CEO of Moderno Development Group, commented on this shift: “Every project we’re looking at, we’re looking at adding a Live Local component to it. Most projects don’t pencil in today. So, with the Live Local Act that gives you additional income, that means, maybe, the project will pencil in.” Moderno’s Rivr Lofts building was constructed before the law took effect but is now considering converting some units into affordable housing under Live Local guidelines. Broman added that smaller studios fit well with this model and said such units would be available to people earning up to 120 percent of area median income: “So, we’re talking about aiming units at people making around $90,000 a year. A lot of our residents already fit that criteria, so it’s worthwhile for us to lower the rent a little bit more and get the tax benefit.”
However, not all developments can successfully incorporate both market-rate and below-market rate apartments. Russell Galbut of Crescent Heights described these challenges: “It’s really a small percentage, and that’s because you have 60 percent of your building that has to pay for the other 40 percent. If it doesn’t work in paper and pencil, it will never work in brick and mortar.”
Galbut also highlighted expedited municipal approvals as an important advantage: “Time kills many great projects,” he said while describing state-level processes as “prompt and professional” compared to lengthy local reviews.
Financing remains another obstacle for mixed-income developments using Live Local provisions. Peretz noted issues securing loans: “We see an issue with financing… But I’ve been hearing from a lot of developers with issues on that side of things.” Alfonso Costa Jr., chief operating officer at Falcone Group who moderated the panel discussion, said there needs to be better alignment between developers’ cash flow projections and lender expectations: “Working with the takeout agencies Fannie Mae and Freddie Mac on takeouts, and then HUD as well, both on the new construction and takeout side, it’s more of an educational process.”
