Livin’ La Vida Loca: Florida’s Radical Overhaul of Commercial Zoning Incentivizes Developers

 |  Share

The “Live Local Act,” recently signed into law by Florida Gov. Ron DeSantis, provides unprecedented incentives for developers to build affordable housing. With access to low-interest loans and tax credits, the ability to bypass local zoning restrictions, and prevention of county-imposed rent control, developers are now incentivized to create a lasting impact in their communities while enhancing their bottom line.

Florida’s housing market has become one of the least affordable in the nation over the last three years, with Miami remaining the least affordable U.S. city for two consecutive years. With the rising costs of building materials and labor, and banks tightening lending amid inflation rates, developers have been disincentivized to build or enter into commercial real estate transactions, resulting in a substantial affordable housing crisis in the state.

This Act is the largest investment for affordable housing efforts in Florida’s history and provides a comprehensive measure designed to address the state’s affordable housing crisis by appropriating $711 million for the current and upcoming fiscal year, and $1.5 billion over the next 10 years in various affordable housing programs.

1. Multifamily and Mixed-Use Projects Now Permitted in Otherwise Restricted Areas

For the next 10 years, local municipalities are to permit multifamily and mixed-use residential developments in areas zoned for commercial, industrial, or mixed-use, as long as at least 40% of the units are affordable for at least 30 years and serve incomes up to 120% of the area median income (AMI). Note: There is now no requirement to blend the AMI limits. For mixed-use residential projects, at least 65% of the total square footage must be used for residential purposes. [1]

a. For developments that meet the above criteria, a county may not:

  • Restrict the height of a proposed development below the highest currently allowed height for a commercial or residential development located in its jurisdiction within one mile of the proposed development or three stories, whichever is higher. [2]
  • Restrict the density of a proposed development below the highest allowed density on any unincorporated land in the county where residential development is permitted. [3]

b. A proposed development that meets the above criteria must be administratively approved and no further action by the board of county commissioners is required if the development satisfies the county’s land development regulations (i.e., setbacks and parking requirements) for multifamily developments in areas zoned for such use and is otherwise consistent with the comprehensive plan, except for provisions establishing allowable densities, height, and land use. [4]

c. Additional Incentives for Developers

      • Density Incentives:
        1. Counties may allow for increased density near major transit stops and certain employment centers, allowing up to two times the density otherwise permitted. [5] The Act defines an “employment center” as an area zoned for commercial or industrial use and that has a concentration of businesses that employ a significant number of people. [6]
        2. Local governments may reduce or eliminate parking requirements in certain types of affordable housing developments. To be eligible for reduced or eliminated parking, the development must meet the following criteria [7]:

        • Located in a walkable area;
        • Must be affordable to households earning 50% or less of the AMI; and
        • Must provide alternative transportation options, such as bike lanes or public transit.The local government will review the application and determine if the development is eligible for a reduced or eliminated parking requirement. If the development is eligible, the local government will issue a parking variance. [8]
      • Unincorporated Areas: A county must authorize proposed mixed-use residential developments if the development is in an unincorporated area zoned for commercial or industrial use which is within the boundaries of a multicounty independent special district that was created to provide municipal services and is not authorized to levy ad valorem taxes, and less than 20 percent of the land area within such district is designated for commercial or industrial use.
      • Smaller Developments: For smaller developments, with a minimum of 10% affordable housing and meeting other criteria, local municipalities may authorize development in a zoning district that permits commercial or industrial use without requiring a code amendment, zoning or land use change, special exception, conditional use approval, variance, or certain comprehensive plan amendments.

2. Developer Access to No-to-Low Interest Loans

a. SAIL Funding — Restriction Removed: In order to encourage development of affordable housing, the Act removed the restriction on developers who applied for or received State Apartment Incentive Loan (SAIL) funding. SAIL funding is a state program, administered by the Florida Housing Finance Corporation (FHFC), and provides low-interest loans to developers who build certain affordable housing. SAIL funding can be used to finance construction, rehabilitation, or acquisition of affordable housing units. [9]

The Act now permits developers who applied for or received SAIL funding to build multifamily developments. Eligible projects must (a) be in Florida; (b) be affordable to householdings earning 50% or less of the AMI; and (c) developed by a qualified developer. A qualified developer is defined as a person who has experience developing affordable housing, has the financial resources to develop the project, has a good reputation in the community, and is licensed by the Department of Economic Opportunity (DEO). [10]

b. Additional Low-Interest Loans: [11] Developers who build affordable and workforce housing now have access to several additional low-interest loans. These loans can be used to finance the construction, rehabilitation, or acquisition of affordable housing units.

  • Housing Development Loan Program: provides an interest-free loan for the first five years to certain developers who build affordable housing. After the fifth year, the loan has a fixed interest rate of 3% for the remaining 25 years. [12]
  • Infrastructure Loan Program: provides an interest free loan for the first five years to certain developers who build infrastructure located in a qualified census tract for households earning between 50% and 120% AMI. After the fifth year, the loan has a fixed interest rate of 2% for the remaining 25 years. [13]
  • Energy Efficiency Loan Program: provides an interest free loan for the first five years to developers who build certain energy efficient housing. After the fifth year, the loan has a fixed interest rate of 1% for the remaining 25 years. [14]

In addition to these low interest loans, the Act provides several other incentives.

3. Developer Tax Credits

To further incentivize developers, several tax credits are available under the Act:

a. Community Contribution Tax Credit Program: provides tax credits to developers who donate money to organizations that build or preserve affordable housing. The amount of the credit is equal to 50% of the donation, up to $25 million per year.

b. Workforce Housing Tax Credit Program: provides tax credits to developers who build or preserve workforce housing. Workforce housing is housing that is affordable to households earning between 80% and 120% of the AMI. The amount of the credit is equal to 40% of the development costs, up to $20 million per year. [15]

c. Live Local CreditThis credit is available to corporations that make contributions of at least $10,000 to the FHFC to be used under the SAIL program. The amount of the credit is equal to 100% of the contribution, up to $25 million per year. [16]

4. Sales Tax Refunds

Certain sales tax refunds are now available to developers who build affordable housing, including for building materials (defined as “tangible personal property that becomes a component part of eligible residential units in an affordable housing development” and while appliances are included in the definition, the Act excludes plants, landscaping, fencing, and hardscaping).

For building material purchases that occur on or after July 1, 2023, certain developers will receive a refund up to the lesser of $5,000 or 97.5% of the Florida sales or use tax paid on the cost of the building materials per unit.

a. To be eligible for the refund, the developer must meet the following criteria:

  • The project must be located in Florida.
  • The project must be affordable to households earning 50% or less of the AMI in accordance with the FHFC Chp. 420.
  • The developer must file a refund application with the Florida Department of Revenue (DOR) within 120 days of the completion of construction or by November 1 after the property is first subject to assessment.

b. The DOR will review the application and determine if the developer is eligible for the refund. If the developer is eligible, the DOR will issue a refund check within 30 days after the refund application is approved.

5. Grants

The DEO may award grants to local governments and nonprofit organizations that develop or preserve affordable housing. These grants can be used to cover a variety of costs, such as planning, development, and construction. [17] If a development meets the criteria, it may be eligible for a grant. The developer can apply for a grant through the DEO. [18]

a. Grants Available: Various grants are available for affordable housing projects, including grants that may be used for planning costs, development costs, construction, and/or operating costs.

b. To be eligible for a grant, the development must be:

  • located in Florida;
  • affordable to households earning 50% or less of the AMI; and
  • developed or preserved by a qualified developer.

6. Local Municipalities’ Inventory Must be Made Publicly Available

The Act now requires each municipality to inventory properties owned or controlled by the local government appropriate for affordable housing. Municipalities must make the inventory publicly available on its website. The inventory must be updated annually and include the address, size, zoning, current use, estimated marketed value, and cost to rehabilitate. [19]

The inventory is intended to help municipalities identify properties that could be used for affordable housing and to help developers and others with an interest to identify potential affordable housing development projects.

7. Additional Incentives

a. The Act requires local government to implement a system to expedite the processing of affordable housing building permits.

b. The Act prohibits local municipalities from enacting rent control.

c. The Act appropriates $252 million for the State Housing Initiatives Partnership, incentivizing local governments to partner with developers to preserve or build new housing.

d. The Act appropriates $100 million for the Florida Hometown Heroes Housing Program, providing certain first-time homebuyers with a no-interest loan to purchase a home. First-time homebuyers who fall into one of 12 occupations may be eligible for the Hometown Heroes Housing Program, including law enforcement officers, teachers, registered nurses, firefighters, social workers, military members, or veterans.

8. Conclusion

Developers now have significant incentives at their fingertips to restructure commercial properties into mixed-use or multifamily developments or to build new projects. By providing low interest loans and tax credits, removing governmental red tape and lowering several other hurdles developers face, we can expect to see CRE transactions on the rise while significantly alleviating Florida’s affordable housing crisis.


This DarrowEverett Insight should not be construed as legal advice or a legal opinion on any specific facts or circumstances. This Insight is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. The contents are intended for general informational purposes only, and you are urged to consult your attorney concerning any particular situation and any specific legal question you may have. We are working diligently to remain well informed and up to date on information and advisements as they become available. As such, please reach out to us if you need help addressing any of the issues discussed in this Insight, or any other issues or concerns you may have relating to your business. We are ready to help guide you through these challenging times.

Unless expressly provided, this Insight does not constitute written tax advice as described in 31 C.F.R. §10, et seq. and is not intended or written by us to be used and/or relied on as written tax advice for any purpose including, without limitation, the marketing of any transaction addressed herein. Any U.S. federal tax advice rendered by DarrowEverett LLP shall be conspicuously labeled as such, shall include a discussion of all relevant facts and circumstances, as well as of any representations, statements, findings, or agreements (including projections, financial forecasts, or appraisals) upon which we rely, applicable to transactions discussed therein in compliance with 31 C.F.R. §10.37, shall relate the applicable law and authorities to the facts, and shall set forth any applicable limits on the use of such advice.

[1] Florida Live Local Act

[2] Id. at 125.01055(7)(c)

[3] Id. at 125.01055(7)(b)

[4] Id. at 125.01055(7)(d)

[5] Id. at 125.01055(7)(e)

[6] Id. at 125.01055(7)(e)

[7] Id.

[8] Fl. Stat. Chp. 163.052(3)

[9] Fl. Stat. Chp. 163.052(4)

[10] Fl. Stat. Chp. 163.052(4)

[11] Fl. Stat. Chp. 163.052(5)

[12] Fl. Stat. Chp. 163.052(7)(a)



[15] Fl. Stat. Chp. 163.052(7)(b)

[16] Fl. Stat. Chp. 163.052(21); Fl. Stat. Chp. 163.052(34)

[17] Fl. Stat. Chp. 163.052(7)

[18] Fl. Stat. Chp. 163.052(4)

[19] Fl. Stat. Chp. 163.052(4)(a)