SB 1594, HB 923, and Housing Affordability
SB 1594 and HB 923 were introduced in late February 2025. The bills would amend taxation and tax exemption laws related to qualified affordable housing projects that are aimed at Extremely Low-Income (ELI); Very Low-Income (VLI); and Low-Income (LI) units in multifamily projects. These income levels are the most cost-burdened and severely cost-burdened in the state. (See Table 1.) “Cost-Burdened” households spend over 30 percent of household income on housing and “Severely Cost-Burdened” spend over 50 percent of household income on housing. Florida Policy Institute recently reported about how even the professions who were targeted for housing built under Live Local Act provisions often do not meet the 80 percent floor that is the aim for much of the Live Local construction and instead fall into these lower Area Median Incomes (AMIs). SB 1594 and HB 923 would provide an opportunity for housing to be created that could have also addressed these community service workers and their families.
The affordable housing tax exemptions are important because ELI and VLI units are often avoided by developers. This is due to a host of reasons; however, the primary one is that with the cost of property, construction, and property insurance — mainly the insurance — of building ELI and VLI units becomes financially untenable. Lower AMIs tend to be focused on by nonprofits and governments because they have diverse funding sources, and the return on investment is not limited to monetary gain. For example, improvements in the lives of participants, their families, and the wider community are seen as justifiable returns. Providing various tax exemptions for developers to build ELI and VLI units would be timely, given the newly enacted encampment ban. In 2024, Florida passed a law that prohibited municipalities from permitting people to sleep in public spaces. This law affects the over 31,000 Floridians who are currently homeless — over 16,000 of whom are unsheltered. Having more housing priced for ELI and VLI could have provided some relief for those who are now under threat of criminalization that stems from the law.
While SB 1594 and HB 923 each propose several changes, the most important provisions are detailed below.
Streamlines Tax Exemption Process for Multifamily Affordable Housing Projects
The legislation proposed changes that would streamline the process that multifamily affordable housing projects use to receive tax exemptions. The bills also propose extending these tax exemptions to government entities. These would be good incentives for affordable housing, because streamlined applications would help reduce barriers to entry to affordable housing development. Under the new amendments, qualifying entities could submit for tax exemption for multiple, differing units and parcels in the same application as long as they were either geographically situated in a qualifying way or if the parcels are “part of a common or related scheme of development.”
Extends Tax Exemptions Towards Adaptive Reuse and Rehabilitation Costs
It is typically cheaper to rehabilitate a unit or building than to construct one from scratch. Including rehabilitation and improvement costs in the tax exemptions would increase and maintain the supply of affordable housing, and support climate resilience, respectively. SB 1594 and HB 923 would extend the tax exemptions to such projects. Adaptive reuse projects utilize buildings that have been abandoned and repurpose them into housing units. Floridians have already seen housing units being built in former schools and factories. Like rehabilitation, adaptive reuse is an effective, more affordable way to build affordable housing units, which increases the chances that the units will be built for those lower AMIs often ignored for how cost-prohibitive they can be. Under the new provisions, adaptive reuse projects would be included under the qualifying exception status if at least 20 percent of the project was used for ELI, VLI, or LI units.
Reduces Unit Requirements for Tax Exemptions
The definition of “multifamily project” under the tax exemption law would be amended from requiring “more than 70 units” dedicated to ELI, VLI, and LI households, to requiring “at least one” unit dedicated to those households instead. The minimum number of units should be increased to avoid land being underutilized. Under SB 1594 and HB 923, as long as a qualifying entity had two units that were clearly related through ownership, name, or location, the tax exemption could be obtained. If the goal is for more affordable housing to be developed, then volume has to be considered in the process. Over 57 percent of Florida’s nearly 3.1 million renters are ELI, VLI, and LI households, and as they are the majority of the most cost-burdened and severely cost-burdened, density is an important piece of the solution. Historically, for Areas of Critical State Concern (ACSCs) like the Florida Keys, there has been precedent by the Florida Legislature to lower minimum unit requirements because of concerns over loss of investment and housing during hurricane season. Under SB 1594 and HB 923, however, the ACSC unit requirement is maintained at the minimum of 10 units. If the ACSC requirement remained the same, then the minimum units for other, less risky areas of the state should also be at least 10 units.
Reopens Loophole Regarding Qualified Contracts
SB 1594 and HB 923 would reopen a loophole that was closed in 2023 as part of the Live Local Act. Prior to 2023, this loophole made obtaining qualified contracts more difficult — leading to a loss of affordable units. Qualified contracts are used when an original owner of a parcel under an affordability agreement wants to sell the parcel. The basic rule is that the government financing agency involved in the affordability agreement is tasked with finding a subsequent owner to purchase the parcel subject to the affordability term and set-asides. In Florida, that government financing agency has been the Florida Housing Finance Corporation; however, it would also include local housing finance authorities under SB 1594 and HB 923. However, if the FHFC or Housing Finance Authority cannot find someone to enter into this qualified contract, the developer can then revert the parcel back to market-level rates, terminating the affordability agreement. This process has been exploited by developers - in Florida and nationally – who wish to terminate the contracts they entered into so they can yield profits by selling at market price. Live Local made obtaining a qualified contract easier by requiring that buyers were only to make one deposit along with the presentment of their good-faith contract, presented to the relevant government financing agency to take to the owner of the parcel. Under SB 1594 and HB 923, this would be made more difficult again by going back to the requirement of two deposit payments and a presentment of the contract. SB 1594’s reversal back to requiring a second sum of money within the same timeline would create a greater chance that more qualified contracts would fall through, converting the affordable housing to market-rate and removing it from the Floridians who need it most.
Highlights and Opportunities for Improvement
While streamlining the tax exemption process and adding in ways to maintain and create new units through innovative and sustainable development are positive components of HB 923 and SB 1594, the massive reduction in unit requirements and the return to the qualified contract loophole are both very concerning. If future bills have the same goal of increasing ELI, VLI, and LI units, then the minimum units should be kept at a higher number. A recommended minimum requirement should be at least 10 units since the ACSC reduced minimum was left at 10. Additionally, in similar future bills, affordability agreements should remain protected from unnecessary termination by developers looking to make a larger return on their initially-charitable investments.
While streamlining the tax exemption process and adding in ways to maintain and create new units through innovative and sustainable development are positive components of HB 923 and SB 1594, the massive reduction in unit requirements and the return to the qualified contract loophole are both very concerning.
In the future, special emphasis should be put on building ELI and VLI rental units. These units provide housing for the most cost-burdened Floridians, comprising over 1 million households – nearly 35 percent of Florida’s renter households. Florida has one of the nation's worst affordability crises, and projects that focus on building more units focused on ELI, VLI, and LI households are greatly needed. ELI and VLI will especially be important to develop and maintain as the effects of the encampment ban start becoming more stark over time.
