REGIONAL REPORT: SOUTHEAST

Playing Catch-Up in the Southeast

AFFORDABLE HOUSING FINANCE • JULY 2007

Affordable housing developers operating in the Southeast, like other developers across the nation, are facing a host of obstacles. Adding to a landscape of increasing construction and insurance costs, labor shortages, and a lack of viable sites, developers still are reeling from the effects of the destructive 2004-05 hurricanes. NIMBYism continues to plague developers and housing agencies struggle to get affordable housing built, arguably nowhere more so than in Gulfport, Miss.

The battle to build

“We’ve got market-rate developments going up left and right,” said Jessie Billups, public relations officer for Mississippi Housing Authority VIII, which serves 14 counties in southern Mississippi. “We’ve not had one new affordable housing unit built yet in Gulfport, and we are what, 21 months since Katrina? It’s amazing how much the city is fighting [tax credit projects]. They talk about traffic and drainage issues. You are always going to have traffic and drainage issues in any project on the coast. They don’t want ‘these projects’ next to them.” (For more of Mississippi’s successes and challenges in affordable housing, see NIMBYism Strikes in Mississippi.)

Smaller deal sizes in Florida

This year in Florida, more developers are competing for low-income housing tax credits, said Stephen Auger, executive director for the Florida Housing Finance Corp.

“We are also seeing more deals with fewer units,” said Auger. “That’s a result of dramatically increased insurance costs, property taxes, construction costs.”

Four years ago, Florida Housing allocated funds for between 15,000 and 16,000 units, said Auger. Last year, fewer than 8,000 units received fund reservations. Auger said he thinks 2007 will be a better year, thanks to a $60 million boost the Florida legislature made this year to the State Apartment Incentive Loan (SAIL) program, which provides lowinterest loans to affordable housing developers on a competitive basis.

“For the last several years, we’ve had around $45 million to $50 million for the SAIL program. So that brings the total to $115 million and $120 million,” said Auger. “Combined with that, we have more flexibility with the program to pair it with tax-exempt bonds and 4 percent credits. I think all this will help us get more units.”

In 2006, state lawmakers tweaked the SAIL program to allow for more flexibility and improved interest rates. This year, the legislature allocated $15 million to Florida Housing for developments specifically targeting households earning 30 percent of the area medium income or below, said Auger. That’s only half the amount Florida Housing received last year to serve households with extremely low incomes.

More low-income families in Florida would be living in comfortable, affordable homes if the Miami-Dade Housing Agency had not paid developers more than $12 million for affordable homes that were never built. In some cases, the agency allowed developers to take money without signing loan documents or offering up collateral. Although affordable developers were not involved in the scandal, several teamed up to fight the fallout that affected their projects (see Three's a Charm).

Strong demand for LIHTCs in GO Zone

Strong demand exists for low-income housing tax credits in Tennessee, said Ed Yandell, director of multifamily development for the Tennessee Housing Development Agency (THDA). Sometime in July, THDA will post on its Web site applicants who likely will receive reservation notices. The notices will go out in August, Yandell said.

Alabama Housing Finance Agency (AHFA) has received more applications for funding in its 11-county Gulf Opportunity Zone (GO Zone) than in other regions of the state, said Haywood Sport, multifamily administrator for AHFA.

“Transportation costs are tremendously high, and developers have a huge demand for labor. That’s something I see all across Alabama, Mississippi, Louisiana, and Florida,” said Sport. “This year, we have a good number of affordable developers who are rehabbing projects.”

One of the most important decisions for not only affordable housing in Alabama, but also the entire GO Zone, is the one Congress made in May to extend the GO Zone placed-in-service deadlines to 2009 and 2010, said Sport.