WORKFORCE HOUSING FEE WAIVERS

AN ORDINANCE OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, AMENDING THE LAND DEVELOPMENT REGULATIONS OF THE CODE OF THE CITY OF MIAMI BEACH, BY AMENDING CHAPTER 118, "ADMINISTRATION AND REVIEW PROCEDURES," ARTICLE I, "IN GENERAL," AT SECTION 118-7, "FEES FOR THE ADMINISTRATION OF LAND DEVELOPMENT REGULATIONS," TO WAIVE LAND DEVELOPMENT BOARD APPLICATION FEES ASSOCIATED WITH WORKFORCE HOUSING DEVELOPMENTS; AMENDING CHAPTER 122, "CONCURRENCY MANAGEMENT AND MOBILITY FEES," ARTICLE I, "PURPOSE AND GENERAL PROVISIONS," AT SECTION 122-5, ENTITLED "EXEMPTIONS FROM CONCURRENCY MITIGATION AND MOBILITY FEES," TO WAIVE CONCURRENCY AND MOBILITY FEES ASSOCIATED WITH WORKFORCE HOUSING DEVELOPMENTS; AND AMENDING CHAPTER 133, "SUSTAINABILITY AND RESILIENCY," ARTICLE I, "GREEN BUILDINGS," DIVISION 2, "GREEN BUILDING REGULATIONS," AT SECTION 133-3, "SUSTAINABILITY REQUIREMENTS," TO EXEMPT NON-ELDERLY AND ELDERLY LOW AND MODE RATE INCOME AND WORKFORCE HOUSING DEVELOPMENTS FROM THE CITY'S GREEN BUILDING REGULATIONS; AMENDING CHAPTER 82, "PUBLIC PROPERTY," ARTICLE VII, "ART IN PUBLIC PLACES," DIVISION 4, "PROCEDURES," AT SECTION 82-537, "DEFINITIONS," TO EXEMPT, FROM THE ART IN PUBLIC PLACES REQUIREMENTS, LOW OR MODERATE INCOME HOUSING OR WORKFORCE HOUSING DEVELOPMENTS CONSTRUCTED ON CITY-OWNED LAND; AMENDING CHAPTER 58, "HOUSING," ARTICLE I, "IN GENERAL," BY CREATING SECTION 58-1, "FINANCIAL INCENTIVES FOR AFFORDABLE AND WORKFORCE HOUSING DEVELOPMENTS," TO ESTABLISH FINANCIAL INCENTIVES FOR AFFORDABLE AND WORKFORCE HOUSING DEVELOPMENTS; AMENDING ARTICLE VI, "WORKFORCE HOUSING," SECTION 58-501, "DEFINITIONS," AND SECTION 58-503, "WORKFORCE HOUSING REQUIREMENTS," TO AMEND THE MINIMUM REQUIREMENTS FOR THE DECLARATION OF RESTRICTIVE COVENANTS, INCLUDING THE CONTROL PERIOD; AND AMENDING APPENDIX A, "FEE SCHEDULE," TO EXEMPT WORKFORCE HOUSING UNITS OR DEVELOPMENTS FROM MOBILITY FEES; AND PROVIDING FOR REPEALER, CODIFICATION, SEVERABILITY, AND AN EFFECTIVE DATE. 

The Administration recommends that the City Commission approve the subject Ordinance at Second Reading Public Hearing on September 28, 2022.

With rent and home prices reaching historic highs locally and nationally, addressing barriers to financing and building attainable and inclusionary housing is critical to our economy and the ability of our employees to live near their workplace. The availability of affordable and workforce housing inventory is a vital component of personal survival and economic resiliency.

Essential employees, including teachers, emergency service workers, nurses, bus drivers, restaurant workers, janitorial staff, and retail clerks, are finding it increasingly difficult to secure existing and recently constructed affordable housing in Miami Beach. This results in an increase in cost-burdened households – those spending more than 30% of household income on housing costs. Unfortunately, in urban centers and coastal areas, land and development costs are increasing, with the end result of more employees living further away from their jobs and significantly increasing their commute time, total workday, and cost of living.

When more of the Miami Beach workforce can afford to live close to their places of employment, the community reaps the benefits because employers are able to attract and retain diverse employees at all levels. Shorter commute times enable employees to increase productivity, engage with and build community, support the local economy, become environmental stewards, and reduce traffic congestion.

High rental and housing costs are a reflection of inadequate affordable housing stock and rising demand, compounded by foreign investment and wealth migration. As housing costs are outpacing wage growth in Miami-Dade County, it is increasingly challenging for lower- and middle-class households to maintain their quality of life. The confluence of rising housing costs, limited housing supply, inflation, and wage stagnation are impacting individuals and families in the fundamental areas of life including food security, health and wellness, and access to childcare and education.

Affordable (described as low- and moderate-income housing in the City Code of Ordinances) and Workforce Housing refers to income-restricted housing serving low to moderate income individuals and families employed in the local workforce. Whereas affordable housing is typically designated for households with income up to 80% AMI (area median income), both City of Miami Beach and Miami-Dade County have defined workforce housing beneficiaries as those households earning up to 140% AMI.

Area median income, and household income and rent limits for Miami-Dade County are determined by the U.S. Department of Housing and Urban Development and are published by the Florida Housing Finance Corporation on an annual basis.

The Miami Beach City Commission and the Miami-Dade County Board of County Commissioners have prioritized the promotion and enhancement of workforce housing, with the goal of improving housing solutions for residents. The City Commission has discussed and authorized a variety of incentives, with varying fiscal impact, to encourage private sector development of affordable and workforce housing units including but not limited to:

·        expedited plan review and permitting;

·        micro-unit housing restricted from short-term rentals;

·        eliminating application and review fees and restructuring impact fees; and

·        utilization of City-owned properties to develop workforce housing.

Following a Special City Commission Workshop on affordable and workforce housing on January 25, 2017, the City has pursued multiple initiatives including: (1) prioritization of workforce and affordable housing in the Comprehensive Plan; (2) relaxation of development standards for  workforce/affordable housing units (e.g., required off-street parking and minimum unit size); (3) waiving of certain City-imposed development-related fees, such as mobility fees and training and technology surcharges; and (4) repurposing City parking assets for better utilization and the promotion of inclusionary housing.

On March 9, 2022, at the request of co-sponsors Commissioner Alex Fernandez and Vice-Mayor Kristen Rosen Gonzalez, City Commission item C4H was referred to the Finance and Economic Resiliency Committee (“FERC”) to discuss waiving and/or reducing the City Sustainability Fees and any other fees, to support affordable and workforce housing. The sponsors noted the following in the City Commission Memorandum:

At the February 23, 2022, City Commission meeting, as part of the City’s approval of the lease amendments for the Collins Park Artist Workforce Housing Project – the first City public-private partnership for workforce housing in the City – it became readily apparent that the City needs to do more to incentivize affordable and workforce housing [development], including waiving the appropriate City fees to the extent possible to bring down project costs, as the rent limits associated with affordable/workforce housing make it very challenging to obtain financing for these projects, particularly in an environment of rising interest rates and inflationary pressures on construction costs.

On April 8, 2022, Miami-Dade County Mayor Daniella Levine Cava declared an affordability crisis in Miami-Dade County, and deployed the County’s resources to expedite the production of affordable and workforce housing.

On July 7, 2022, the Miami-Dade County Board of County Commissioners adopted Ordinance No. 22-80, relating to impact fee exemptions for affordable and workforce housing development in both incorporated and unincorporated areas. County Ordinance No. 22-80 expands the current impact fee exemption for affordable housing of up to 80% AMI, to now include workforce housing developments targeted for tenants up to 120% AMI. Specifically, County Ordinance 22-80 amends Chapter 33E of the County Code, known as the Road Impact Fee Ordinance, by adding an exemption for any portion of a residential development that provides workforce housing units with target income range not exceeding 120% AMI. To be eligible, Ordinance 22-80 requires workforce housing units (i) to be subject to an interlocal agreement, or (ii) to comply with an applicable municipal workforce housing ordinance (such as Chapter 58 of the City Code, for example), or (iii) be subject to a minimum 15-year restrictive covenant.

To benefit from the exemption, projects must submit an application for approval by the County Zoning Director. An applicant may either submit the application prior to issuance of a building permit with the execution of a restrictive covenant, or submit the application within one year after the issuance of a Certificate of Completion, Certificate of Occupancy, or Certificate of Use for the building, whichever is later.

In recent years, the City Commission has enacted ordinances to reduce development-related fees for affordable and workforce housing with the express purpose of increasing the city’s housing stock for working-class residents. In addition to these existing incentives, there are other fees that the City Commission could consider waiving or reducing via an amendment of the City Code.

Sustainability Fee (Green Building Ordinance)
As one of the cities impacted by the results of climate change, Miami Beach has strong sustainability goals. On February 10, 2016, via Ordinance No. 2016-3993, the City Commission established regulations intended to strengthen the environmental sustainability of Miami Beach by requiring green building by the private and public sector. Leadership in Energy and Environmental Design (LEED) is a rating system developed by the United States Green Building Council (USGBC) to evaluate the environmental performance of a building and encourage market transformation towards sustainable design. Attaining LEED certification demonstrates environmentally responsible building practices and is an important component of achieving the City’s greenhouse gas reduction goals, approved by the City Commission.

Buildings over 7,000 square feet or ground floor additions to existing structures that encompass over 10,000 square feet of additional floor area are required to achieve LEED Gold Certification, codified through Chapter 133 of the City Code, “Sustainability and Resiliency.” If the building does not achieve the certification, a Sustainability Fee is required, valued at five percent (5%) of project construction value, prior to obtaining a Temporary Certificate of Occupancy (TCO), Certificate of Occupancy (CO), or Certificate of Completion (CC) if the project does not achieve LEED Gold Certification. The Sustainability Fee Program also provides for the reimbursement of the fees commensurate with the level of green building certification achieved by the project within two (2) years from TCO, CO or CC. The 5% fee amount was originally based on research to encourage green building as opposed to simply collecting a fee. The fees collected are used to maintain the Sustainability and Resiliency Fund for projects, such as environmental restoration projects, environmental remediation projects, environmental monitoring, green infrastructure, enhanced storm water quality and quantity improvements, sustainability planning efforts, and other sustainability initiatives.

The Green Building Ordinance has successfully resulted in fifty-one (51) projects that require certification, none of which include affordable or workforce housing units. Of that number, only four (4) projects have been required to pay the fee, meaning these projects did not achieve certification. While this may imply that achieving certification is perfunctory, the fifty-one (51) projects are not likely to have the same financing and revenue challenges and limitations as do affordable and workforce housing projects.

Miami Beach’s and Resilient305 resilience strategies build “resilience,” which means the capacity for individuals, communities, institutions, businesses, and systems within a city to survive, adapt, and grow despite chronic stresses, such as rising sea levels and coastal erosion, an underdeveloped transportation system, aging infrastructure, and lack of affordable and workforce housing. The City’s goals of climate resilience and housing affordability are mutually beneficial and important for a resilient community. The City should be proud of the many buildings achieving the certification, including city-owned assets such as the Miami Beach Convention Center and the Facilities and Fleet Department building.

The Collins Park Artist Workforce Housing Project (the “Project”) provides an example, however, of how any additional expenses can impact financial viability. Despite the Project developer and the City exercising flexibility to ensure the Project’s financial viability, increasing construction costs and a fluctuating bond market continue to jeopardize Project progress. However, there may be an opportunity to reduce these obstacles to construction and increasing development costs associated with non-market rate housing, by triggering the Project’s development agreement and ground lease which provides that “the developer shall not be obligated to pay any City fees for the Project that can currently be waived under the City Code and the City may, in its sole and absolute discretion, adopt amendments to the City Code that permit the waiver or refund of all or part of City fees for the Project.” The Project already benefits from incentives for workforce housing currently in the City Code, e.g., related to parking requirements, mobility fees, and technology/training surcharges.

To promote future workforce housing financing and development, and with the practical intention of ensuring the feasibility of the Project, the Administration is recommending an amendment of Chapter 133 of the City Code to exempt all current and future workforce and affordable housing projects from complying with the requirements of the Sustainability Fee Program. Enactment of such a waiver would require an amendment to the Land Development Regulations (LDR), with review by the Planning Board and a 5/7ths vote of the City Commission at second reading. The estimated Sustainability Fee for the Project is approximately $843,007. The Administration does not recommend that this exemption apply to other development projects other than affordable and workforce housing projects.

It is worth noting that the Project will meet Florida Building Code requirements for promoting efficiency, sustainability, and resiliency. The Project is an urban infill development site that will contain several sustainable elements including water, heating, and cooling efficiency; flood mitigation; impact-resistant windows with energy efficient glazing; access to public and alternative transportation and enhanced pedestrian access (including free public transit and Citi Bike membership for new tenants); low volatile organic compounds (VOC) materials; and materials with high levels of recycled content.

Mobility Fee
On May 12, 2021, the City Commission adopted an amendment (Ordinance No. 2021-4416) to Chapter 122 of the Land Development Regulations (“LDRs”) to waive or exempt affordable housing units from the City’s Mobility Fee (which replaced the City’s previous Transportation Concurrency Fee via Ordinance No. 2019-4306). The estimated Mobility Fee for the Project is approximately $50,009. For reference, the City assesses Mobility Fees in order to be able to fund transportation and mobility improvements that are necessary to support the development of the City.

The proposed amendment will exempt both workforce and affordable housing developments from having to pay Mobility Fees. Currently only affordable housing units are exempt from Mobility Fees, while all other components of a mixed-use development are subject to the Mobility Fee.

Parks Concurrency Fee
The City’s 2040 Comprehensive Plan prescribes adopted levels of services and indicates the types of park facilities needed throughout the City. The Comprehensive Plan provides that, where the levels are deficient, a concurrency fee will be assessed for new development. The estimated Parks Concurrency Fee for the Project is approximately $35,010. In addition to this City impact fee, Miami-Dade County impact fees for the Project (water & sewer, roads, school, etc.) total approximately $425,357. Therefore, Miami-Dade County’s recently enacted exemption to County impact fees for workforce housing would remove a significant obstacle to development. On May 12, 2021, the City Commission adopted Ordinance No. 2021-4416, exempting affordable housing projects (not workforce housing projects) from undergoing parks concurrency review or paying a mobility fee. The proposed ordinance would exempt workforce housing developments from parks concurrency review.

Design Review Board, Historic Preservation Board and Board of Adjustment Fees
Ordinance No. 2021-4416 modified section 118-7 of the LDRs to waive the application fee, per square foot fee, and per variance fee for the Design Review Board, Historic Preservation Board, and the Board of Adjustment for elderly and non-elderly low- and moderate-income affordable housing applications. The proposed ordinance would also exempt workforce housing developments from such fees. An applicant is still responsible for fees associated with public mail notice, public posting, advertisement, and couriers.

Art in Public Places (AIPP)
Though not captured within the City’s Land Development Regulations (LDRs), the City's Art in Public Places (“AIPP”) Program has a financial impact on affordable and workforce housing developments on City-owned land. AIPP was established pursuant to Sections 82-536 to 82-612 of the City Code, and is used for the commission or acquisition of works of public art within the City, as part of the City's efforts to develop cultural and artistic resources that enhance quality of life. As required by City Code Section 82-537, the City must allocate to the City’s AIPP fund an amount consisting of two percent (2%) of the hard construction costs in excess of $250,000, for applicable City construction projects, namely, new construction, additions, or renovations of City-owned buildings, facilities, or other property, that are not otherwise exempt by the ordinance (exemptions include certain infrastructure projects, emergency repairs, and routine maintenance). The estimated AIPP fee for the Project is $330,980.

Further, Section 82-587(c) provides that the City Commission may reduce or waive the required appropriation to the AIPP fund for any specific projects, by resolution approved by 5/7th vote, if it finds that such action is in the City's best interest. For example, at the recommendation of the General Obligation (“G.O.”) Bond Oversight Committee, via Resolution 2019-30983, the Mayor and City Commission waived the required appropriation to the AIPP fund for eleven (11) G.O. Bond projects, citing that the associated expense would threaten the viability of the projects.

Planning Board Review
The Planning Board held a public hearing on July 26, 2022 and transmitted the Ordinance to the City Commission with a favorable recommendation (6-0). The Planning Board recommendation was specific to those fees applicable to the Land Development Regulations (LDRs) including Sustainability, Mobility, Parks Concurrency, and Design Review Board, Historic Preservation Board and Board of Adjustment fees.

Summary of Existing Fees and Exemption Status

Restrictive Covenant and Mixed-Use Development
Sections 58-500 to 58-506 of the City Code address workforce housing requirements including a provision for a declaration of restrictive covenant to ensure housing affordability for at least twenty (20) years. The proposed ordinance would require a thirty (30)-year restrictive covenant, at a minimum, for private development projects. Projects developed on City-owned land through a development agreement would be governed by the covenants in the ground lease which serve as the covenant required under Chapter 58 of the City Code.

The proposed ordinance would waive fees for affordable and workforce housing units and accessory uses that are part of such developments. Additionally, the fee waivers would apply to all uses within a mixed-use development if the majority of the development’s floor area is dedicated to providing affordable or workforce housing.

Based on 2019 U.S. Census data, the most recent available, of the 58,066 jobs in Miami Beach, 48,515 or 83.6% are occupied by employees residing outside of Miami Beach. The City’s 2019 Strategic Plan: Through the Lens of Resilience cites increasing mobility and housing options as a major objective to attract and retain young families as residents, become less automobile-centric, and establish a more local full-time community. The 2019 Strategic Plan also highlights management objectives to: (1) enable growth in housing that protects seniors and encourages first-time homebuyers, and (2) support affordable, compatible workforce housing through public and private partners for key industries, including the use of development incentives.

The proposed ordinance reflects and furthers the City Commission’s legislative objective of incentivizing and facilitating the development of more affordable and workforce housing units to combat the housing crisis and meet current demand. Presently, there are only a few affordable and workforce projects are in the development pipeline, meanwhile, market rate projects will continue to be assessed fees for the anticipated impact of their new development. At a future point in time, if the supply of affordable and workforce housing stabilizes on par with consumer demand, the City Commission may amend the City Code to remove the exemption and reinstitute these fees for affordable and workforce housing.

Housing affordability is an integral component of developing and maintaining a vibrant community. Incentivizing the development of affordable and workforce housing in the City of Miami Beach will serve to enhance economic sustainability and quality of life. The City Commission unanimously approved the subject Ordinance at First Reading on September 14, 2022. The Administration recommends that the City Commission give final approval of the Ordinance at Second Reading Public Hearing on September 28, 2022.