ELLEN DEGNAN—The City of Miami is in the midst of an affordable housing crisis. In 2014, it had the highest rate of cost-burdened renters in the nation: 66.2 percent of Miami renters spent more than 30 percent of household income on rent and utilities. Even more astonishing, 37 percent of all renters and 83 percent of renters in the lowest income quartile paid rents more than 50 percent of household income. How did we get here?
Miami has long been a city of renters, made more so with each boom, bust, and rebound. Following the 2008 crash, mortgage foreclosures, restrictive lending, and depressed incomes funneled residents, including former homeowners, into rental units. From 2006 to 2014, the share of Miamians renting rose from 60 to 68 percent, surpassing that of every other major American city. Heightened demand, influenced by out-of-state and foreign part-time residents, exerted upward pressure on rents unmitigated by rent control or rent stabilization laws. The share of renters paying between $300 and $749 sank from 65 to 24 percent from 2000 to 2011.
Beginning in 2012, this rising rental demand fueled a housing market recovery that transformed the urban landscape. Single-family homes, once the dominant form of housing in Miami, gave way to multi-family buildings. By 2014, buildings featuring 10 or more units comprised 42 percent of occupied housing units. Annual building permits issued in the City of Miami mark this transition. From 2011 to 2015, permits issued for multi-family structures grew from 266 to 6,392, while permits for single-family structures barely budged from 21 to 98. Despite the trend toward density, which is typically understood to favor affordability, Miami has not seen parallel growth in affordable housing.
To compound the problem, over the next five to ten years existing affordable units will rapidly disappear as affordability restrictions imposing rent and income ceilings begin to expire. Take, for instance, properties subsidized by the Low Income Housing Tax Credit, the largest source of government funding for low-income and extremely low-income renters. LIHTC provides a one-to-one federal income tax credit to developers constructing or rehabilitating homes. Properties that receive LIHTC are subject to 30-year use restrictions, but once those begin to expire in 2020, the law permits developers to raise rents to market rate. Professor of law Brandon Weiss has argued that this “backend” windfall forfeits billions of dollars of government investment to developers and is unnecessary to incent their participation in the LIHTC program. Whatever the wisdom of time-limited restrictions moving forward, their expiration in coming years will displace tens of thousands of households nationwide.
To estimate the local impact, I mapped all LIHTC-assisted properties in Miami-Dade County whose rent and income caps will expire within 15 years. You can toggle and layer map filters to see, for example, the progression of expirations over time for properties containing over 50 low-income units. Countywide, more than 5,600 units will be eligible for conversion to market rate rent within ten years and 10,000 units within fifteen years. In Miami, where by one inventory over half of government-assisted housing has received LIHTC, the approximate counts are 1,000 and 3,000.
While some LIHTC properties will recapitalize with new tax credits, many will transition to market-rate units. The properties most vulnerable to conversion will be those located in strong real estate markets or in nearby distressed markets with high vacancy levels, identified by HUD as “large-scale development opportunities.” Overtown, a low-income and historic black neighborhood already weathering gentrification and displacement of long-time residents, is one such “development opportunity” for owners of expiring LIHTC units.
Last week’s election of a Republican-controlled Congress and Donald Trump, a luxury real estate tycoon sued by the Justice Department for housing discrimination against blacks (and who sued New York City to demand public subsidy for 1.5 million dollar apartments) renders chimerical any hope of federal preservation efforts. We must therefore urge the state, county, and city to act. Policies to consider include allocating redevelopment funds and granting tax relief for preservation projects, improving preservation-related data collection, and adopting local right of first refusal laws and notice restrictions.
I am not content to live in (or beside) the most unequal major city in America. Preservation of affordable housing stock is one critical piece to helping all people in this city share in its revitalization.
*Note that some data is on file with the author.
