Affordable housing is a critical issue in the United States.
The Department of Housing and Urban Development (HUD) has noted an increase in the need for affordable housing over the last two decades. The working definition of affordable housing is housing which costs 30% or less of a family’s annual income.When housing costs exceed that level, other basic living needs including food, medical care, clothing, and transportation become unaffordable compounding a family’s financial difficulties. HUD estimates that 12 million American households pay in excess of 50% of annual income for housing.
All communities are faced with the challenge of providing affordable housing to residents in their communities, both renters and home owners alike. Each community has affordable housing challenges for differing reasons, and each community must develop unique approaches to solving their affordable housing challenges.The purpose of this paper is to research and analyze affordable housing issues in Broward County, Florida, to recommend initiatives and solutions, and to outline a platform for implementation of those initiatives. The first section of the paper outlines the affordable housing problem in Broward County.The second section outlines the recommendations for solutions to the problem.
The third section discusses the implementation plan focusing on resources and timing required. The fourth section examines the strengths, weaknesses, challenges, and opportunities in the implementation plan and discusses the likelihood of success. The final section provides a list of best practices to accompany the implementation plan.Survey of Broward County Housing SituationDuring the six year period from 2000 to 2006 housing prices in Broward County rose by 148% while median household income only increased by 27% according to a January 2008 report by the Broward County Urban Planning Services Division.An increasing number of Broward County households are spending more than 30% of their annual income on housing. According to the report 46% of home owners and 57% of renters spent more than 30% on housing in 2006.
Even more alarming is that 21.5% of Broward residents spent in excess of 50% of their annual income on housing costs in 2007.Housing Costs. It is important to understand total housing costs and to examine the elements that affect each component of housing costs. Total housing costs includes the base price or selling cost, annual real estate tax, and annual insurance costs.For home owners these costs are reflected in the monthly PITI, or principal, interest, tax and insurance payment made to the mortgage servicer.
For renters these costs are combined and factored in to determine the base monthly rent.Vacant land for new construction in Broward County is limited therefore the prices of existing housing stock has increased. The increase in value has led to an increase in property taxes which are determined by value and prices. Insurance costs are value driven, however, Broward has experienced an increase in hurricane activity in the region in 2004 and 2005 have had a greater impact on insurance costs.
Housing Demand. According to information compiled by the Urban Planning Services Division, which was taken from reports from the Broward Housing Partnership Needs Assessment and the Ten Year Plan to End Homelessness, affordable housing demand is estimated at 9,908 units per year for years of 2008 to 2012.This demand is further broken down by income level. Moderate income demand, 80% to 150% of median income, is 3,375 units per year. Low income demand, below 80% of median income, is 6,413 units per year.
Demand for permanent supportive housing, which focuses on those at or below the poverty level and those affected by homelessness, is 120 units per year.Funding and Investment. In 2007 Broward County created 3,057 affordable units through allocation of $153.2 million in funding.
For 2008 Broward county committed to 4,929 units and to allocate funds from a variety of sources including county initiatives, the state Housing Finance Authority, and through federally funded CDGB, HOME, and SHIP grants.The current funding and investment structure represents only 31% to 49% of the projected affordable housing demand.The affordable housing situation is Broward County, Florida is characterized by an increase in housing costs compared to income, housing costs impacted by insurance and tax increases, and limited investment in housing relative to need and demand. Housing initiatives must focus on these characteristics and include objectives to mitigate these circumstances.Recommendations for Broward CountyThe affordable housing problem in Broward County, Florida is not simply a lack of available or affordable housing. Solutions to the affordable housing problem must focus on solving the causes that affect housing prices and availability.
Some problems are outside of the scope of an affordable housing initiative, but must be considered a cooperative and collaborative effort.Income. An affordable housing initiative cannot change the income levels in Broward County. However, it is the responsibility of affordable housing initiatives to research and report on the effects of income on housing affordability.
In addition, affordable housing initiatives should include advocacy for economic development and business investment that will facilitate job creation, and for education that provides skills that help residents earn higher incomes.Insurance and taxes. Affordable housing initiatives should create partnerships and collaborative efforts with the insurance industry and state insurance regulators to help subsidize and reduce insurance costs in Broward County. These initiatives should focus on providing affordable alternatives to traditional insurance including county investment in subsidy to state based FAIR Plan insurance programs.Investment.
Investment in the affordable housing initiative must include a financial capital and human capital investment. The Broward County Housing Finance and Community Development department maintains records of grants, allocations, and funding source information for federal and state investment in affordable housing initiatives. It is not necessary to duplicate that information in the report. Existing programs that receive funds and the funding sources maintain records of grants and results achieved. These records may also provide information on employment and labor hours to complete funded projects.
Affordable housing initiatives should focus on directing funding and managing human capital to reduce duplication of efforts and to prevent gaps in services.
