Palm Beach commissioners debate how to spend $200 million bond to stem housing crisis

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Palm Beach County commissioners spent hours this week debating how to spend millions in bond funds on new affordable and workforce housing proposals.

Officials unanimously moved forward on some developments, tabled others, and struggled to define what monthly rent payment would be considered affordable in a housing market that’s pricing out workers.

Commissioners on Tuesday wrestled with how to allocate the Housing Bond Loan Program (HBLP), a $200 million bond passed in a referendum in 2022 — when voters approved a countywide property tax increase to finance the program aimed at addressing the county’s housing affordability and supply crisis.

After several recent bids from private developers, county staff recommended to commissioners for approval of $123 million in funding from the HBLP for more than 1,100 affordable and workforce units.

But commissioners argue the housing bond, a program intended to be a “gap financing program” — which closes the financing gap between the cost of projects and capital lenders — is being overused for some individual housing projects.

READ MORE:New affordable homes in Palm Beach County help ‘build a community’ – one family at a time

Struggling with funding guidelines 

Because there were no guidelines for how the bond funds would be distributed, according to the staff recommendation, some developers requested nearly 50 percent of their individual projects to be funded by the housing bond.

County commissioner Marci Woodward said despite many of the projects being stacked with multiple outside investing sources, from tax credits to equity loans, the county is “subsidizing more than I believe we should on these projects.” Woodward wants “developers to find other sources of help” and suggested a percentage cap before issuing bond funds to developers.

County Commissioner Mack Bernard, who championed the housing bond program, agreed.

“I’d like for us, as a board, to go back to staff and work with the Housing Leadership Council and the Economic Council to create a cap and to create the amount,” Bernard said. “We’re going to have to create a cap so that way we can reduce the amount that we’re putting as gap financing,” Bernard added.

During public comment, representatives from the Housing Leadership Council and the Economic Council of Palm Beach County, outside firms who advocated and helped craft the bond, said now is the time to set guidelines.

“The goal was to do 10% to 15% of project costs to supplement other private sources of debt and equity and an affordable deal of support,” said Jack Weir of the Housing Leadership Council.

“You don’t need to rush. You don’t need to issue $120 million in bonds at this stage.”

For context, the goal of the bond was to entice developers to build 20,000 units — for rent and for sale — in urban areas over the next decade, by allowing developers to bid for low-interest loans out of the $200 million pot. Advocates say they can’t build 20,000 units through the bond alone.

Added Weir: “The 20,000 units is a goal for the housing plan. It was never intended for bonds to get us there.”

Michelle Jacobs, president and chief executive officer of the Economic Council of Palm Beach County, said guardrails need to be put in place now and cap bond funding to “nothing more than 15% of a total project and or $5 or $10 million for any one project.”

Purchasing a home isn’t easy for a large segment of the population in the Palm Beach County. Despite a slight increase in housing inventory in the county, the median sales price for a single-family home in the county hovers over $600,000, according to recent data from Broward, Palm Beaches and St. Lucie Realtors group.

Zillow, the online real estate listing firm, reports that the median rent for apartments of any size in the West Palm Beach area is $2,719 monthly, which is 29% higher than the national median rent.

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Palm Beach County Commissioner Marci Woodward is debating how to spend millions in bond funds on new housing development proposals, as commissioners unanimously move forward on some affordable and workforce housing projects while tabling others for a later date.

Some projects move forward others put aside for now

Commissioners tabled projects that use more than 15% of the housing bond.

The board unanimously approved specific projects that meet the conceptual 15% cap, such as the multifamily projects like Residences of Marina Village and Calusa Point, allowing staff to negotiate and meet with developers before a scheduled June 4th meeting with the board.

“It is choking me up to recommend this level of funding,” said Verdina Baker, the County administrator. “However, we desperately need these units to come on board. “We will continue to negotiate with our developers to see how we can further bring this down.”

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Commissioners used the Residences for Marina Village project as an example of how the housing bond should be used –– as mere supplement for other funding sources.

What happens next

Commissioner Marci Woodward noted that the county has seen an influx of high-paying jobs, which has impacted Area Median Income (AMI), the methodology used to determine who is eligible for workforce housing.

To qualify for these specific workforce housing projects, an individual worker must earn at least 50% of Median Family Income or nearly $55,000 a year. She argues rent hovering “between $2,500-$3000” per month is not considered affordable.

“And if we’re going to spend 65% of the bond to get 5% of the hopeful units, I’m very concerned about this. I’m very concerned that the rents aren’t truly affordable.”

Jonathan Brown, the county’s Housing & Economic Development Director, said he is in talks with the U.S Department of Housing and Urban Development to adjust the formula.

“We’ve had a conversation with the state of Florida about adjusting the methodology because the methodology of AMI is based on Median Family Income (MFI), which is about 20 percent higher than Median Household Income.”

Median household income is the formula HUD makes the county use to determine eligibility for any individual. County staff say the annual median income (AMI) in Palm Beach County has soared to more than $104,000.

Brown said if Median Family Income was adjusted, it “could bring some level of reductions in the rents because it would adjust the overall AMI.”

Brown also said staff will send housing project recommendations, which were “conceptually” approved, to a third party underwriter who will bring back final budget terms to consider for the next meeting in June.

Bond proceeds can actually be set aside until projects become available but once the county issues the bond, voters will start paying it back in fiscal year 2025.