Miami is taking a hard look at tackling one of the biggest issues plaguing the city — high housing costs — by setting a goal of 12,000 affordable units by 2024.

This number includes construction of new units and preservation of existing homes from the ever-looming threat of redevelopment into luxury projects.

“The plan is to stem gentrification,” Mayor Francis Suarez said Monday as he unveiled the Connect Capital Miami report. “Making sure that the people who are living in affordable housing projects could remain there.”

The city didn't say how many of the 12,000 would be new and how many would be preserved units, although Suarez said he hopes for an even split.

The city has more than 30,000 affordable apartments in Miami with 14,830 supported by government subsidies and the others offering below-market rents, according to affordable apartments listing website affordablehousingonline.com.

The new report, which outlines how the city can achieve its goal, was released after input by staff, residents, developers, lenders, a nonprofit homeless group and other stakeholders.

The city was one of six that received research funding and support from the Center for Community Investment, part of the Lincoln Institute of Land Policy nonprofit think tank in Cambridge, Massachusetts.

Miami's latest development boom has focused on high-end projects targeting well-heeled buyers and renters while locals struggle with increasing housing costs and stagnant incomes.

“We are a tale of two cities where we have this very high-end, luxury product,” said Suarez, who spoke to the Daily Business Review after presenting the report. But “even the stuff on the bottom is just very expensive as a percentage of income.”

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Land and Money 

Miami was ranked as the second least affordable place to own a home behind New York in April. It's expensive to rent, too, as 61% of renters are cost-burdened, paying more than 30% of their income for housing.

“There's two finite assets here: money and land,” Suarez said.

Connect Capital Miami strives to find ways around both obstacles.

The biggest barrier to building affordable housing is the cost of land. Yet there is about 11,500 acres of vacant public land in Miami-Dade County. The report calls for the city to work with the county and school district to offer some of their land for free to builders who agree to build affordable housing.

The city might reduce property taxes for owners of affordable housing as an incentive to develop and build this type of product. Nonprofit owners of affordable housing already get a tax break, but the city wants to extend it to all affordable homeowners.

“The key is that this policy should be systematized and predictable so that developers and their lenders can anticipate operating expenses and secure financing based on those terms,” the report said.

The voter-approved Miami Forever Bond program includes up to $100 million for affordable housing, and the city can take advantage of other programs such as the State Housing Initiatives Partnership.

One goal would be for Miami, either on its own or with nonprofit or private partners, to leverage funds to buy existing housing that's still affordably priced to prevent gentrification.

“We want to acquire existing affordable housing so we can preserve it. The city could own it or provide some of the capital for someone else to own it,” said Annie Lord, executive director of the nonprofit Miami Homes for All Inc., a Connect Capital Miami partner.

In Miami, older, low-rise apartments in neighborhoods such as Edgewater, Little Havana and Little Haiti offer cheaper rents than newer housing. But they increasingly are being bought out by developers that demolish them to make way for their new projects.

“We need to compete with the market for that, so we need it to be fast-acting,” Lord said.

As alternative revenue sources, the city could tax the owners of vacant homes to generate more funds for affordable housing.

The city would generate $98 million a year if it imposed a 1% property tax on owners of vacant homes, but the plan might require new state legislation, the report said. Alternatively, the city could generate less with new fees.

The city also could make zoning code changes to allow developers to build more units per acre if some are affordable, although provisions like this already exist.

It also is considering deeming older apartment buildings to be in code-compliance even if they offer more units per acre than currently allowed. As long as these units are listed as noncompliant, obtaining financing to purchase and preserve them remains “nearly impossible,” the report said.

The affordable housing strategy will focus on both unit ownership and rental, although apartments will be prioritized because the majority of Miami's residents are renters.

A resident who gets the city's median salary and buys a median-priced home would end up spending 86% of household income on mortgage and property taxes, according to a report by home listing website RealtyHop. Using that math, homeownership is out of reach.

The city's affordable housing plan calls for 3,500 units to be priced from zero and 30% of the area median income, 4,500 units from 31% to 60%, 2,500 units from 61% to 80% and 1,500 units from 81% to 100%, according to the Connect Capital report.

The report was issued two days after state lawmakers passed a bill that could curtail affordable housing efforts at the local level. The bill would allow affordable housing requirements but require local governments to offset the related costs to developers, the Miami Herald reported.

The Miami City Commission is scheduled to vote on the Connect Capital report in June. It would largely be a symbolic vote to accept the recommendations. Suarez said the next step would be to begin using Miami Forever bond funds to launch some of the strategies.

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