Sunday, May 11, 2008

Construction of affordable housing in Palm Beach

No affordable housing built 2 years after Palm Beach County's new rules - By Andy Reid - South Florida Sun-Sentinel - May 11, 2008

Two years after Palm Beach County started requiring more affordable housing in one of Florida's most expensive real estate markets, none of the reduced-price homes has been built.More than 500 of the homes envisioned as "work force housing" for teachers, young professionals and others are on the drawing board.County officials blame a drop in the housing market nationwide for curbing new home construction and stalling affordable housing efforts.

Developers and home builders who fought the county's affordable housing push two years ago are now trying to get the building requirements repealed. They argue that the decline in the real estate market lowered the prices of existing homes, making restrictions on new construction unnecessary. For two years, they have maintained that forced price limits on some new homes only drive up the costs for others.

County commissioners on Tuesday are scheduled to discuss the 2-year-old affordable housing effort and consider requests to scale back or drop the price limits.Despite a slumping housing market, the median price of a home in
Palm Beach County - $320,200 in March - remains out of reach for many middle class buyers, said Deputy County Administrator Verdenia Baker, who spearheaded the affordable housing rules. She contends that the county needs to keep requiring that a percentage of new homes remain in the targeted price range of $164,000 to $304,000."We have limited build-able land left," said Baker, who helped craft the housing rules after months of sometimes contentious negotiations with the building industry. "If we don't restrict this, we are going to be back where we were during the [housing] boom Palm Beach County in April 2006 started mandating limits on the prices of a percentage of new homes. The rules, finalized in November 2006, came after years of skyrocketing South Florida home prices. Schools, hospitals and local businesses complained that more and more of their workers couldn't afford to live in Pal m Beach County. At the time, the median price of Palm Beach County home hovered near $400,000. Under the rules, most developments with 10 or more homes are required to keep 16.5 percent of the homes priced between $164,000 and $304,000. That price range targets households that make between $38,600 and $96,600. To compensate for limiting prices on the affordable homes, the county allows developers to build "bonus" homes beyond what current rules allow. Developers also can get breaks on traffic requirements and they can avoid fees for building homes on land usually reserved for fire stations, libraries or other community facilities. The price limits apply only to unincorporated areas, but the county encouraged cities to adopt similar standards. But just as Palm Beach County put affordable housing rules in place, the dip in the real estate market slowed home construction.During the first three months of 2006, construction started on 1,725 new houses — down from 2,301 during the same time period in 2005, according to the housing industry research firm Metrostudy. That slide continued to 817 during the first three months of 2007 and 357 this year. Broward County saw a similar downturn, dropping from 803 new construction starts in the first quarter of 2005 down to 248 this year.A glut of home construction fueled by rising real estate prices during South Florida's housing boom resulted in a large inventory of unsold new homes when that boom ended, said Alan Hunter, a market analyst for Metrostudy. The result is a dramatic slowdown in home construction, he said.
No affordable housing built 2 years after Palm Beach County's new rules..
Sales fell through the floor and the builders cut way back," Hunter said. "It has been a long, painful process and there is more pain to come."

Two years ago, home builders, Realtors and other real estate interest groups argued that new home prices were market driven and should not be subject to county limits. Two years later, the county's affordable housing approach hasn't delivered and the glut of existing homes up for sale gives buyers more price options, said Skeet Jernigan, president of the Community and Economic Development Council, which represents builders.
"A lot of affordable housing is out there," Jernigan said.
Osprey Oaks, a mix of houses and townhomes proposed west of Boynton Beach, was supposed to deliver affordable housing under county guidelines, but construction remains "in a holding pattern" because of the real estate market, said Jim Gielda, project manager for E.B. Developers. Osprey Oaks plans call for 37 of the 171 approved homes to be sold in the county's affordable price range.
Cutting fees and speeding permits would help accomplish affordable housing more than a "forced policy," Gielda said. "Obviously we recognize the need for affordable housing [but] you really need to look a little bit more at the incentives," Gielda said.
During the real estate boom, the county had a voluntary affordable housing program that included incentives for builders to limit home prices. It failed to lure many developers, until the county started talking about making affordable housing mandatory.
"It is still a need," Baker said.

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