Impact of the Live Local Act on Florida’s Multifamily Market

It’s been over a year since Florida Governor Ron DeSantis signed Senate Bill 102, or as residents know it, the Live Local Act (“the Act”). Since then, the multifamily market in Florida has undergone significant transformations due to the implementation of the Live Local Act and its subsequent amendment, the Enhancement Bill. The legislative measure was designed to address the state’s ongoing affordable housing crisis by encouraging the development of more affordable housing units.

But what does the Act’s future mean for Florida real estate owners? So far, it’s apparent that the Act’s implications affect not only multifamily owners but renters, developers, and commercial land and industrial owners across the Southeast state. Here’s a comprehensive look at the Live Local Act’s history, impact on local communities, and future implications.

History of the Live Local Act

The Live Local Act, enacted in March 2023, mandates that developers designate at least 40% of new multifamily units for households earning no more than 120% of the area median income (AMI) for a minimum of 30 years. For mixed-use projects to qualify, at least 65% of the total square footage must be residential. The Act initially aimed to speed up the development process and reduce regulatory barriers, making way for the construction of more affordable housing. But not even a year later, the Act faced several changes amid confusion about its provisions.

In February 2024, the Florida state legislature introduced Senate Bill 328—commonly known as the Enhancement Bill—to clarify and strengthen the Live Local Act. The bill was overwhelmingly supported, with only one vote against it. Specifically, the Enhancement Bill addressed uncertainties and disagreements that arose during the Act’s first pass, particularly about the preemption of local government land use powers.

Florida’s Housing Finance Corporation has also released updated income and rent limits for 2024, showcasing increases of up to 10% in rent limits for qualified Live Local Act projects across the state. These new limits, combined with recent legislative changes to the Live Local Act, create strong incentives for the development of attainable workforce housing throughout Florida. The updated rent limits for major Florida cities at the 120% AMI level are below.

2024 Rent Limits | Florida Housing Finance Corporation

Source: Bilzin Sumberg

Florida’s Affordable Housing Crisis

It’s no secret that the U.S. faces a massive housing crisis. In 2024, a staggering 22.4 million households—more than half of the nation’s renter households—are cost-burdened, according to a report by the Joint Center for Housing Studies of Harvard University.

Florida’s affordable housing crisis is particularly serious, with more than 55% of the state’s renter households classified as cost-burdened, meaning they spend over 30% of their income on rent and utilities.

The crisis, more evident in South Florida, intensified in late 2020 due to an influx of out-of-state residents and unusually steep rent hikes. While the need for the Live Local Act and the revisions made by the Enhancement Bill may be clear, its reception has been somewhat mixed.

Mixed Reactions to the Live Local Act

The reception of the Live Local Act and the Enhancement Bill has been mixed. Critics argue that the Act could lead to the development of “outscaled” affordable housing projects in unsuitable locations, potentially disrupting existing Florida communities. To this group, it’s no coincidence that the Act was back on the ballot less than a year later—it was flawed in the first place. On the other hand, proponents view the measure as overdue and much-needed solutions to the ongoing housing crisis—and the Enhancement Bill only solidified the Act’s effectiveness.

Still, developers and municipalities often find themselves at odds while trying to balance the very clear need for more affordable housing with the very real concerns of Florida’s communities. The struggle isn’t unique to the Southeast, either. Lawmakers across the country struggle to combat housing shortages and deep-rooted, NIMBY-like mindsets with various rent control measures. Florida, however, has taken the opposite approach with the Act, banning rent control statewide and making it easier for developers to build more housing.

Despite its intentions, the Live Local Act faced challenges that necessitated legislative clarifications.

One major issue was whether communities could demand changes to developers’ plans or reject proposals, which the Enhancement Bill aimed to resolve. However, the original law did not address project size restrictions related to floor area ratio (FAR) and parking requirements, rendering some provisions ineffective. These omissions have led to ongoing disputes, particularly in areas like Bal Harbour in South Florida.

The Live Local Act’s Future Implications

This isn’t Florida’s first attempt at addressing affordable housing. Over 20 years ago, the state adopted an “Affordable Housing” statute allowing local governments to implement inclusionary zoning ordinances to increase the supply of affordable housing. Further amendments in 2020 permitted local governments to approve multifamily projects in commercial or industrial areas, provided that 10% of the units were affordable. With nearly 500 counties and municipalities in Florida, the Act’s implementation can vary widely.

Despite its large GDP, which exceeds that of Spain, Florida faces a severe shortage of affordable housing that fails to keep pace with its growing economy.

The Live Local Act also presents some hurdles for renters and owners. An influx of new affordable housing units through the Act could place downward pressure on rents, specifically affecting older buildings with fewer or no amenities. As a result, real estate owners must seriously consider which value-add opportunities exist with their current holdings. This will help them compete with newly built, fully amenitized Live Local properties offered at competitive rents.

Florida’s Evolving Multifamily Space

The Live Local Act represents significant strides toward addressing Florida’s need for new multifamily development. As with any new legislation, the measure presents a mix of challenges and opportunities for real estate owners in Florida. Developers may benefit from the ease of regulatory barriers, such as zoning requirements, while communities and local governments adapt to the long-term implications of the Act. As Florida continues to grow and attract new residents, understanding how the Live Local Act affects commercial real estate will be essential to renters, developers, and investors.