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3/14/04 - Palm Beach Post (Florida)

Few Builders Take Up Affordability Incentives

Linda Rawls

Palm Beach County's incentives to persuade developers to include affordable housing in their projects have failed miserably in the past 10 years, builders and county officials agree.

"To do an affordable-housing project takes about six months longer to approve," said Ron Hyman, vice president of Sunland Homes in West Palm Beach. "In the development business, time is really money.

"I'm doing a project right now," Hyman said, "and it costs me $40,000 a month in interest. If it takes six more months to get approved, that's another $240,000 you've got to get returned to you from the customer at the end of the day."

The county has two incentive programs - one, started in 1993, lets a developer build more units if affordable housing is included in a project; the other, begun in 1994, exempts a development from traffic standards if it includes affordable housing.

"Neither is being used a lot," said Michael Howe, senior planner for the county's planning division.

Only 10 for-sale units have been built under the density program, and only 90 for-sale units have been built using the traffic-standards exemption.

Yet the need for affordable housing is great in a county where used-home prices have increased 80 percent in the past five years and new-home prices have soared more than 70 percent, but income has grown only 19 percent.

Nearly 60,000 households in Palm Beach County spend more than half of their income on housing, making them "severely cost-burdened," the Florida Housing Coalition says. That's because county and federal guidelines say housing is affordable only if a family spends 30 percent or less on the mortgage payment, property taxes, insurance and utilities.

Local developers say land costs, a lengthy permitting process, the cost of meeting traffic concurrency regulations and heavy impact fees all are barriers to affordable housing in Palm Beach County.

"The current incentives don't go far enough to make the numbers work," said Matt Horan, director of future planning for giant builder Centex Homes.

So last year the county formed the Workforce Housing Taskforce to come up with a better plan.

"The things that we think will work are obviously looser traffic standards," said Bruce Malasky of Malasky Homes, president of the Gold Coast Builders Association.

"We also need to see projects get through permitting as quickly as possible," he said. "And we need to get greater density on the land. The primary cost that is driving home prices is your land cost, so if you can put more units to the acre, the costs-per-door go down."

County impact fees also add considerably to the cost of housing.

"We just sponsored, with Gold Coast Builders, a Habitat for Humanity house in Jupiter," Centex's Horan said. "Ten percent of the $150,000 house was impact fees."

County Commissioner Warren Newell said the county can't legally waive impact fees. He's hopeful, however, that state and federal grants can be used to reimburse developers for impact fees on the affordable-housing units in a project.

Looking ahead, the state's senior building official says affordable housing is a must if Palm Beach County wants stable communities.

"Where do our children go?" said Mike Hickman, president of the Florida Association of Home Builders. "Palm Beach is a classic example. We've got our homes, but how do our children afford to live in the same community they grew up in?