City considers a new approach to workforce housing

Despite new comprehensive plan amendments and staff working to identify locations where zoning changes may create workforce and affordable housing opportunities, real progress in Sarasota’s housing shortage remains years in the making.

How to have a more immediate impact on creating workforce housing in the city was a topic of discussion during the City Commission’s Jan. 30 workshop. Free to engage in a more free-flowing exchange than permitted during regular meetings, commissioners embarked on some out-of-the-box brainstorming on how to bring hundreds of affordable rental residences on line at one time.

Why not have the city build workforce-priced apartments itself? Commissioner Erik Arroyo said. It was an idea that gained traction with fellow commissioners and staff jumping on board as the discussion progressed.

The city’s comprehensive plan amendments and planned zoning text changes aim to incentivize a handful of units here and there on a voluntary basis, but short of going all-in on inclusionary zoning — in which the city must make a developer financially whole if it requires a percentage of affordable units included in a development — tangible results promise to be sporadic and long term at best.

“That's a number of years down the road,” City Manager Marlon Brown told commissioners. “Just with the conversations that we've been having about a number of apartments coming to fruition, I just wanted to have a conversation with the commission on your thoughts on how can we really move this forward much quicker.”

Mayor Kyle Battie lamented the lack of progress that has been made toward providing workforce-priced housing for decades, only to be exacerbated by the crushing rise in property values here as a result of the pandemic. Housing stock in the city was far outpaced by the sudden rise in demand, causing even formerly affordable neighborhoods to be priced out of the reach of even mid-level professionals. 

Apartments and other rental units followed suit, and today remain typically double pre-pandemic rents.

“We did everything we could to spread the affordable housing throughout the city and get these incentives to developers,” Battie said. “Are we really accomplishing that? We've done that, but yet we still find ourselves in the place where we're begging developers to give us some affordable housing.”

Arroyo floated the idea of the city getting into the affordable housing business — not public housing per se, and nothing like the 1960s-era urban housing projects. His idea is to acquire or use currently owned city property, build apartment communities and cap rents at affordable and workforce levels — at or below 80% of the county’s average median income pricing — in perpetuity. 

“How could it make sense for the city if it doesn't make sense for developers?” asked Vice Mayor Liz Alpert.

Developers can’t do that, he said, because they are typically short-term owners of the apartment communities they build, holding the asset for a few years before selling at maximum price. There are very few that build and hold, he said, especially at workforce housing levels. 

“I just heard another another story today where a landlord said ‘I'm raising your rent $1,100,’” Arroyo said. “We’re handicapped by the state in terms of what we can do in these situations, and I think we're doing what we can. We’re incentivizing workforce housing in certain scenarios at different tiered levels.”

Arroyo said no other local government in the state has deployed a similar strategy for building workforce housing. Planning Director Steve Cover described the feasibility of the concept.

“You'd be investing in the property, maybe working with a private nonprofit entity to provide housing,” he said. “It can be in the form of land banking, eventually turning land over to entities that could be private or nonprofit. There are really a variety of approaches. Also, you could also create a revolving loan fund, which could be tied into where you build projects. You collect rent and then those monies eventually evolve into the creation of more projects.”

A holistic approach

Since the City Commission approved the comprehensive plan amendments last fall, a sprinkling of developments that include workforce housing have been making their way through the political and administrative approval processes. One example is the Bahia Vista Apartments, with 42 attainable residences. Another is the Bath & Racquet Club, which will offer 38 attainable condominiums for purchase. 

Those projects and others in the pipeline  include a percentage of the affordable units priced at 100-120% AMI, which while by definition is in attainable housing, it remains out of reach for many, particularly when considering the that figure includes the wealthiest communities in the county. The housing mix in those developments include rents at 80% and below and 80%-100% AMI.

Rather than the handful of attainable housing units created per development, Arroyo’s proposal would bring entire developments priced below 100% AMI, built on city-owned land or land it would acquire. 

“The city really kind of putting its money where its mouth is has some really good value,” Brown said.

Photo by Andrew Warfield

The city would fund construction, own the development, and contract with a third party — Arroyo cited One Stop Housing of Sarasota as an example — to manage and operate it. Rents at sub-market rates are feasible because, unlike the private sector, the city’s mission is housing, not maximizing profit. As a city-owned asset, it will also not be subject to property taxes.

“It will be our land and we'd have a developer come in and build it, then a property management company that would manage it,” Arroyo said. “All we would do is get a check every month, but 100% of the units would be under 80% of AMI.”

Commissioner Debbie Trice likened the idea to a community land trust, with permanent ownership by a not-for-profit entity. 

An example of what such a project might look like is Lofts on Lemon at Ninth Street and Lemon Avenue, which opened its first phase in October 2022. A Sarasota Housing Authority development, its 128 units are priced at workforce and affordable housing levels, all at 100% or less of AMI. That equates to a family of three earning roughly $50,000 a year paying $1,266 a month for a two-bedroom apartment.

Brown said he has been working with staff to develop a concept similar to Arroyo’s proposal.

“It stays affordable in perpetuity because we, the city, own the property and there are no issues about appreciation, trying to sell it to the highest bidder, and so on,” Brown said. “We’re exploring some things that we will bring back to the commission that I think really has some viability, and I think is worth taking a look at.”