Developers in Fort Lauderdale are increasingly adding affordable housing units to projects already under construction, influenced by the incentives provided by Florida’s Live Local Act. This trend was discussed at a recent panel during the Urban Land Institute’s Fort Lauderdale Forum.
The Arcadian, a 502-unit apartment development led by Fuse Group Investment Companies, is an example of this shift. Eyal Peretz, founder of Fuse Group, explained that The Arcadian began as a market-rate project but is now being converted to include affordable housing units under the Live Local Act. “The Arcadian started as a non-Live Local project and went through some transformation, and we are going through a process right now where we are about to submit [it as] a Live Local project,” Peretz said.
Panelists noted that rising interest rates and construction costs have slowed residential development. The incentives offered by the Live Local Act—such as property tax breaks for offering below-market rents—are helping developers improve profitability on projects that might otherwise struggle financially.
Doron Broman, founder and CEO of Moderno Development Group, shared his company’s approach: “Every project we’re looking at, we’re looking at adding a Live Local component to it. Most projects don’t pencil in today. So, with the Live Local Act that gives you additional income, that means, maybe, the project will pencil in.” Moderno completed Rivr Lofts—a 352-unit building—in 2022 before the act was passed. Now, they are considering converting some units into affordable housing. “The smaller studios seem to be a very good fit for that type of product,” Broman said.
Broman added that eligibility for these affordable units would extend to people earning up to 120 percent of area median income. “So, we’re talking about aiming units at people making around $90,000 a year,” he said. “A lot of our residents already fit that criteria, so it’s worthwhile for us to lower the rent a little bit more and get the tax benefit.”
However, Russell Galbut, managing principal of Crescent Heights, pointed out challenges in mixing market-rate and affordable apartments within one building: “It’s really a small percentage, and that’s because you have 60 percent of your building that has to pay for the other 40 percent. If it doesn’t work in paper and pencil, it will never work in brick and mortar.”
Galbut also highlighted faster municipal approvals as an advantage: “Time kills many great projects,” he said.
Despite these benefits, financing remains an obstacle for some developers pursuing mixed-income buildings under the act. Peretz commented on this issue: “We see an issue with financing. I’m hoping it’s going to change …. But I’ve been hearing from a lot of developers with issues on that side of things.” Alfonso Costa Jr., chief operating officer of Falcone Group and moderator of the discussion added: “It seems we need to get everybody on the same page and make sure … our cash flow matches with what the lenders are expecting. Working with the takeout agencies Fannie Mae and Freddie Mac on takeouts, and then HUD as well, both on the new construction and takeout side, it’s more of an educational process.”
