Seminole County is poised to become the latest local government to deny large tax cuts to apartment owners who designate a certain number of units as affordable housing to lessen their tax burden under a new Florida housing law.
“It’s helping developers and apartment owners make more money. But it’s not doing anything for the renters and those struggling to pay their rent,” Commissioner Lee Constantine said regarding the property tax exemptions — as high as 75% — under the state’s so-called Live Local Act.
“When they [apartment owners] don’t pay 75% of their taxes, then who ends up paying for those? We do,” Constantine said.
Commissioners on Tuesday will consider a resolution to opt out of granting the exemptions offered under the law. If approved, it will save the county an estimated hundreds of thousands of dollars in tax revenue for the next fiscal year’s budget. The fiscal year starts Oct. 1.
The 2023 law was meant to encourage construction of more affordable housing. In turn, that’s supposed to lower rents because of an increase in supply.
In approving the resolution, Seminole would join a growing number of municipalities agreeing to opt out of exemptions — including Lake County and Winter Park, where commissioners voted unanimously this month to deny them. Maitland is expected to do the same at an upcoming budget meeting.
In Seminole, three apartment complexes were approved for the exemption this year: Integra Crossing, Vue on Lake Monroe and Watervue apartments, according to the Seminole Property Appraiser’s Office.
Those developments received a total tax deduction of $371,367 after listing 366 units as affordable housing. The tax savings will be grandfathered in and unaffected by the resolution if adopted.
Representatives for companies that own the three complexes could not be reached for comment.
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But Bobby Anderson, a managing director of Alliance Residential which developed apartment communities for lower- to middle-income renters in Orlando, said governments opting out of the tax incentives will see less future development in those areas, according to a recent GrowthSpotter report.
“What they’re saying … is they don’t want that type of housing in their community,” Anderson told GrowthSpotter.
Under the Live Local Act, any apartment project is eligible for a 75% savings on its property tax bill if it’s less than five years old, has at least 70 units and offers rents deemed affordable for renters making up to 120% of the region’s median income — about $90,000 for a two-member household.
However, governments can deny the savings with a two-thirds majority vote of their governing boards, according to a provision added this year to the law. But the opt-out provision must be voted on annually.
Seminole meets requirements to opt out: the county is located in a region where there’s a surplus of affordable rentals for people within the income requirement.
According to the Shimberg Center for Housing Studies, which keeps tabs on the number of affordable housing units in Florida, the Central Florida counties — Lake, Orange, Osceola and Seminole — currently have a surplus of 799 units considered affordable.
Seminole Property Appraiser David Johnson said the law’s tax incentives fall short because workers making the required salary range — young teachers, police officers and firefighters — can likely afford the rental units. But workers in the low-income or very-low-income ranges would not.
“There’s nothing in the law that says you have to pass this [tax savings] down to the renter,” Johnson said. “If you want to really button this up and make sure that it’s going down to the renter, you have to pass that into the law.”
He said developers decided to build apartment complexes within the middle-income price levels long before the law’s tax incentives were in place. Therefore, they’re not deciding to build complexes for the tax breaks.
For example, 3,459 apartment units within 10 complexes across Seminole started construction within the year before the law took effect. Within the past five years, 3,760 new apartments in 14 complexes were built in Seminole, county records show.
“You can see they didn’t need this incentive,” Johnson said.
Commission Chair Jay Zembower said he doesn’t favor the tax exemptions, either.
“It places an additional tax burden on the taxpayers, to you and me,” Zembower said. “I don’t know how any straight-faced Republican would want to put in a tax incentive that puts a tax burden on the rest of the taxpayers.”
He said Seminole already offers incentives and programs for affordable housing — waiving impact fees, down-payment assistance to new homebuyers, making it easier for a homeowner to build an addition for rent and allowing greater density in certain areas under land-development regulations.
Zembower joined Constantine in saying the tax incentives are open to fraud: Apartment owners, for example, could underestimate renters’ incomes to qualify for exemptions.
“A savings of $370,000 or so may not seem like a big difference,” he said in support of opting out. “But that’s going to eventually pay for services that our residents use — such as libraries, parks, sidewalks.”
mcomas@orlandosentinel.com
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