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State's Affordable Housing Trust Fund Has Become More Theory Than Practice

Dec 16, 2018

Like everywhere in Florida, Hillsborough County has a lack of affordable housing.

The issue has grown more acute due to a growing population, deep federal cuts to subsidized housing programs, and stagnant wages.

According to the University of Florida’s Shimberg Center for Housing Studies, rents outpace wages for many occupations in the Tampa Bay area. Since the housing market is largely a private function, rents and home prices will rise to what the market can bear.

But there’s seemingly good news.

Florida has its own dedicated resource for affordable housing, but advocates say the program isn't working as intended.

In 1992, the Florida legislature passed the William E. Sadowski Affordable Housing Act. The bipartisan effort placed a small surcharge on every real estate transaction in the state. The money generated supports two housing trust funds and the largest is the State Housing Initiatives Partnership Program, known as SHIP.

"Each county and the larger cities in Florida has a share of the state's housing trust fund that it can use to fund any number of local housing programs,” said Anne Ray, manager of the Florida Housing Data Clearinghouse at the Shimberg Center.

“A certain percentage of it has to go to home ownership programs, a certain percentage has to go to new construction but other than that, they have a lot of flexibility."

Last year alone, the Sadowski Trust Fund generated about $182 million for SHIP.  Florida actually has the largest state housing trust fund in the nation.

"And it works the way it's supposed to,” Ray said. “When real estate markets really heat up, there's more transactions, more money goes into the fund. But it doesn't work if the money doesn't stay being used for housing." 

And therein lies the catch. In reality, the state's housing trust fund has been more theory and less practice. That's because lawmakers have routinely diverted money from the trust fund to offset tax cuts or to fill gaps in the state's budget.

And there is no language in the Sadowski Act that prohibits the legislature from doing so.

Credit Steve Madden for WUSF Public Media

Money Being ‘Swept’ For Other Uses

In the past fiscal year, just $44 million of the $182 million collected for the trust fund was directed to the State Housing Initiatives Partnership Program. Hillsborough County’s share was $1,871,519.

Jaimie Ross, chief executive officer of the Florida Housing Coalition, said that over the past 15 years, the legislature has swept nearly $2.2 billion from the affordable housing trust fund.

"It is a staggering amount of money,” she said. “I don't think that even the legislators who have been signing off on the budget that's sweeping the trust funds realize what they've been doing to their districts."

The state and local housing trust funds exist partly because industry groups, including the Florida Realtors and the Florida Home Builders Association, lobbied for, and agreed to, a legislative increase of the real estate documentary stamp tax. The purpose: to leverage the building of more affordable and workforce housing.

“We're a growth state and we are continuing to grow,” said Ross. “You see more and more development in Florida. Well every time there is development, there comes the need for support services. So as Florida grows, we are going to need to create more workforce housing. That's just the nature of growth.”

Credit Florida Policy Institute

But, she adds, directing money out of the affordable housing trust fund has become the new normal in Tallahassee. Part of the reason why, she says, is that there isn’t anybody left in state government who remembers a time when the trust fund worked the way it was supposed to. Or, even who former Republican lawmaker William E. Sadowski was.

"When you go in and you meet with a House member and they ask you, how much money are you looking for? Well that question shows that they don't even get the concept that whatever amount of money is in the trust fund, is the amount of money that you expected to be appropriated,” she said.

Jaimie Ross, CEO of the Florida Housing Coalition
Credit Florida Housing Coalition

But there is a thing lawmakers know for sure. The state constitution requires them to pass a balanced budget. That has been one consistent explanation for taking money from the Sadowski trust.

“This is an extreme problem and it’s just getting worse,” said Ross. “There has been a regular using of the affordable housing trust fund as a piggy bank.”

But lately, there have been signs that at least some members of the Legislature understand the importance of fully funding the trust. 

'There has been a regular using of the affordable housing trust fund as a piggy bank.' - Jaimie Ross

Last session, Republican Sen. Kathleen Passidomo of Naples introduced a bill that would prohibit lawmakers from shifting the state's affordable housing trust fund to other sources.

"And I'm very proud to say that in the initial Senate budget, we did not sweep any of the Sadowski funds,” she said.

But, she added, things changed after the mass school shooting at Marjory Stoneman Douglas High School in Parkland. In the end, money from the housing trust fund was again diverted, this time to help pay for statewide school safety programs.

"Where else are you going to take these dollars from?” asked Passidomo. “Are you going to take it from health care, or from education? It's a balancing act and everything is important. We just need to make the best decision we can. Some people may not agree with it, but you just have to deal with the cards you're given."

Before the Parkland tragedy, Passidomo's bill did have one hearing in a Senate subcommittee. But its House companion bill filed by former Tampa Democratic Rep. Sean Shaw wasn't heard at all.

"I have constituents all the time who say this is a good idea for a bill, go pass it,” said Passidomo. “I try to explain that well, we need to have a House sponsor and they have to pass identically, and then the Governor has to sign it. The reality is, it's harder to pass a bill then it is to kill a bill."

Even so, Passidomo will try again to prohibit lawmakers from using the money in the trust fund for anything but affordable housing.

Passidomo, the incoming State Senate Majority leader, has already filed a bill ahead of the new legislative session which begins in March.

“I'm a real estate lawyer and when I receive client’s funds in my trust account I cannot use them for any other purpose but what they're intended,” said Passidomo. “It's the same thing with the affordable housing trust funds.”

For the coming fiscal year, the most recent revenue estimates approximate some $328 million to come into the Sadowski Trust Fund. If used as intended, the Florida Housing Coalition projects that could generate $4 billion in economic impact for the state.