Hospitality, tourism, and medical services remain the largest industries driving Florida’s economy; but hotel and restaurant workers, nurses, and hospital administration often struggle to find suitable housing in the state’s largest cities. Panelists at the 2018 ULI Florida Summit discussed innovative solutions to the problem.
“For every ten to 20 homes built over $400,000, a demand is created for a home to be built and sold at $150,000 and under,” says Brett Hiltbrand, the chief executive officer (CEO) of Cornerstone Tiny Homes. “In Orlando, they recorded a need for 225 homes in the $150,000-and-under price range, and only 14 were built because builders and developers will always go for what maximizes their profits.”
At a panel discussion during ULI’s Florida Summit in Naples in June, a panel of experts discussed the housing affordability crisis to determine how to improve upon the housing supply currently being offered across the state’s housing markets. Panelists included Hiltbrand and Lisa Ditts, a principal at Compspring; Jaimie Ross, the president and CEO of the Florida Housing Coalition; and Craig Collin, senior vice president at Tavistock.
Tavistock, which is widely known across Florida for its Lake Nona development in Orlando, is looking to combat Orlando’s affordability crisis head-on by offering a diverse range of housing product within its massive 17-square-mile (44 sq km) development. Because Lake Nona is filled with hospitals and schools, the community is flooded with residents searching for affordable dwellings.
“We approach it as, ‘We want you to live here, so we’ll find something that best suits you,’” says Collin. Along with micro-rentals and high-density lots, Collin says that Tavistock is “looking for innovative ways to take inflated costs built into land construction and development that are passed on to consumers by implementing trade-offs in size and price.”
Ross heads the Florida Housing Coalition, which offers training and technical assistance to nonprofit organizations working to place Florida residents in affordable housing. According to her, the primary reason that affordable housing solutions must be made is to accommodate a community’s existing workforce. “Sixteen thousand people drive from Fort Myers into Collier County because they can’t afford to live where they work,” says Ross. “Employers and local government can’t attract the employees they want to attract, and our biggest employers—hospitals and schools can’t retain the personnel they need. It really affects the health of your local economy.”
Likewise, Ross is quick to note that one cannot expect market-rate developers to go into affordable housing development. “The best way to accomplish affordable housing on a large scale is to partner with someone in the business,” she says. “It’s not just build and sell—someone has to monitor the income eligibility requirements, and you can’t expect a market-rate developer to do that.”
She also points out that oftentimes it’s the very cities in need of affordable housing that hamper the ability to develop it within their parameters. When cities are slow to approve plans, developers—who will always keep their profits top of mind—will turn elsewhere in an effort to keep their capital flowing. “If the public sector sets the stage to help affordable housing get developed by reducing fees and helping people expedite permits, that will go a long way,” she says. “Developers want certainty.”
Hiltbrand, in turn, was also correct to assert that developers will always point toward the profit—which is in part why he is building tiny homes, a much talked-about trend that is emerging as a solution for creating more affordable housing. Interestingly, the types of consumers purchasing tiny homes aren’t exactly what one might think.
“We thought our customer base would be hippies, but we were selling to young professionals, and single women in their 50s were the biggest demographic,” he laughs. “There’s no single demographic we can call a tiny-house customer.”
Likewise, Hiltbrand says he ran into regulatory snags, since his initial tiny-home models were built on wheels and therefore classified as recreational vehicles (RVs) for regulatory purposes. Under Florida law, residents cannot live in RV homes for more than 180 days a year. To get over this hurdle, Hiltbrand sought to build permanent tiny houses. “We made tiny homes code compliant, and we’ve got the only ones now in the state. Our new tiny home meets or exceeds Florida building code.”
In its next iteration, Hiltbrand hopes to build tiny homes that are permitted for backyard lots, so that homeowners can obtain additional rental income. To panelists, arming residents with more opportunities to derive income from their real estate investments is another solution to the affordable housing crisis in Florida.
“Every local government is looking at incentives and every one is supposed to be allowing accessory dwelling units in every single-family zone,” says Ross. “So, having someone like Brett Hiltbrand creating the models is a great step in the right direction.”
While the affordable housing crisis is unlikely to be resolved within Florida in the near future, developers and government officials should take note that problem solving requires a comprehensive approach. Smarter fee schedules, expedited permitting, and planning processes, and strong affordable housing partners are essential to ensure that Florida’s affordable housing crisis does not spiral out of control.