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Opinion
Source for subsidy is needed
By Louis Wolfson III,
Michael D. Wohl, Mitchell M. Friedman and David O. Deutch
Broward County is in the midst of an affordable housing crisis in which average salaries are being dwarfed by skyrocketing housing costs. Only with a concerted effort by all involved, led by county and municipal government, can we hope to relieve this problem.
This was clearly illustrated by the efforts of Pinnacle Housing Group to build an affordable rental community in Pembroke Park.
Pinnacle's attempt to build 168 affordable rental housing units along with retail space near Pembroke Park Town Hall provides a perfect example of the complexity and lack of adequate funding available for these needed projects.
Three years ago, Pinnacle proposed a town-owned parcel be transformed into affordable housing. The original 5.7 acres had been on the market as commercially zoned property for the previous three years at $1.5 million. Pinnacle paid $1.8 million, which matched the town's appraised value of the land.
The company purchased additional land for a total of seven acres, and paid the town maintenance fees, plan review costs and professional fees. The company eventually invested $3.5 million of its own funds in the project. No tax dollars were used. Pinnacle also invested the "sweat equity" of hundreds of uncompensated hours by its own staff.
During the planning process, construction costs escalated by over 50 percent, leaving a funding gap of over $3 million. Pinnacle did everything possible to close that gap, but could not get the additional funds from Pembroke Park, Broward County, the Florida Housing Finance Corp. or any other source. A $900,000 commitment from the town of Southwest Ranches never materialized. Pinnacle was forced to abandon its plans and sell the full seven acres.
Pinnacle has developed more than 4,000 units of affordable rental housing in South Florida and throughout the state. In Broward County, Pinnacle is developing the Pinnacle Village community in Pompano Beach, and the Crystal Lakes community in Hollywood in conjunction with the Broward County Housing Authority.
But market conditions and the low availability of local subsidies are pushing developers out of the industry. This coincides with the price for an average home in Broward County rising to $330,000, far beyond the reach of the median worker's salary of $60,000. The average person Pinnacle serves is at only 60 percent of that salary benchmark.
Broward County commissioners made a well-intentioned effort during the past legislative session to obtain more funding. However, only a reliable source of subsidy funds will ensure real progress -- such as a surtax on deed transfers, as is in effect in Miami-Dade County.
We urge developers, cities, Broward County, Florida Housing Finance Corp., financial institutions and other groups to work together for a viable and lasting solution, without which future developments will not be financially feasible.
The authors are partners in the Pinnacle Housing Group.