Funding from community foundations — and possibly the state — expected to help pay $7.4-million expense of two parcels near City Hall for two apartment buildings
On April 15, the Sarasota city commissioners voted unanimously to approve what Mayor Liz Alpert called “a bold and visionary and courageous initiative” recommended by a team led by City Manager Marlon Brown.
Thanks to a single motion put forth by Commissioner Erik Arroyo — nearly two-and-a-half hours after the agenda item began — city staff will proceed with the purchase of two parcels on First Street in downtown Sarasota at a combined price of $7.4 million. The goal, as Brown and team members explained, is to construct two 12-story buildings with approximately 192 units that would be priced as affordable to workers who have been struggling for years to find homes close to their places of work.
Moreover, Brown pointed out, the apartments would remain affordable in perpetuity. That factor contrasts with dwellings built by other developers — especially in unincorporated Sarasota County — who include attainable housing units but generally just for the first buyers.
The addresses of the parcels are 1544 First St. and 1590 First St. Directly north of City Hall, Brown noted that they will be combined with a surface parking lot that the city owns to create the new housing site.
Neither parcel was for sale, he said, but Ian Black, whose eponymous real estate firm is located in Sarasota, and Steve Horne of that firm “were able to approach the property owners to see if there was an interest in selling [them] to the city.”
Referring to the proposed initiative in general, Black told the commissioners, “For so long, we have paid lip service to the question of affordability, and you have an opportunity here.” While the board members may hear complaints about the city’s becoming involved in such a venture, Black continued, “At the end of the day, I think we are putting our money where our mouth is, and I think it will be an absolute success.”
The construction expense is estimated at $70 million to $80 million, city staff reported.
In response to a question posed by Vice Mayor Jen Ahearn-Koch, Brown said he had asked staff to research whether any other Florida municipality had attempted such an initiative. Thus far, he added, he had not heard back from staff. “I think we may be the first.”
Then Ahearn-Koch told him that she saw former Sarasota County Commissioner Jon Thaxton, senior vice president for community development with the Gulf Coast Community Foundation in Venice shaking his head to indicate that, to his knowledge, Sarasota indeed would be the first.
Thaxton has been an ardent advocate for affordable housing in the city and in unincorporated Sarasota County.
The Gulf Coast Community Foundation is one of three nonprofits based in the county that has committed to helping finance the purchase of the property for the First Street buildings, Brown noted early on during his remarks. The Barancik Foundation, he pointed out, was the first “to actually step up and commit to the $1.5 million” that the team had requested to help with the purchase of the two parcels.
The third nonprofit is the Community Foundation of Sarasota County.
He also told the commissioners that state Rep. Fiona McFarland, R-Sarasota, was able to win support from both houses of the Legislature this year to include $2 million for the undertaking as part of the 2024 Appropriations Bill. As of the deadline for this issue of the News Leader, Gov. Ron DeSantis had yet to address those appropriations; he has authority to veto anything on the list.
In response to a question from Commissioner Arroyo, Brown also pointed out that the city has more than $4 million available in its Affordable Housing Trust Fund, which could be used instead of General Fund revenue to plug any gap in the amount it needs to buy the parcels.
The General Fund, which contains the city’s annual property tax revenue, is the most flexible source of money for initiatives that have not been included in the annual budget.
Further, Brown talked of the potential of the city’s issuing what are called “revenue bonds,” which would be paid back by the rents collected from tenants. The bonds could be floated for up to 40 years, he continued. The longer the float, Brown added, “The less we have to pay.”
Together, the city’s structures would have about 15,100 square feet of commercial space on their first floors, with interior parking garages providing approximately 280 spaces that would serve both tenants and the public.
The commercial spaces could be sold, Brown said, with the money invested in the project, helping keep costs down.
Moreover, he noted that the city would be flexible in deciding how much rent to charge the tenants. The figures, he said, would be based on how much money the city ended up receiving from partners in the project — including, perhaps, other local government entities.
The property owners already had signed the contracts for sale of the parcels, Brown told the board members. If the City Commission agreed that day to allow the project team to move forward, he added, a 90-day due diligence inspection period would ensue. Then, if no problems were discovered to thwart the undertaking, Brown estimated that it would take from six to eight months for the design of the structures to be completed, followed by perhaps three to four months for the proposal to make its way through the city permitting process.
Referring to Lucia Panica, director of the city’s Development Services Department, Brown said that staying on the latter timeline “would be awesome, Ms. Panica …”
He estimated that construction could begin as soon as mid-2025 and take up to 24 months.
Altogether, Commissioner Arroyo’s motion included 10 steps to launch the initiative, including authorizing the purchase of the two parcels. Another called for the city attorney to work with the three foundations on a funding partnership agreement, which will be brought back to the City Commission for consideration. Arroyo indicated that that agreement should be structured so it can amended easily as other partners indicate an interest in working on the project.
At one point during the discussion, Vice Mayor Ahearn-Koch asked whether the foundations contributing money to the initiative would have the ability, through that partnership agreement, to stipulate that a certain number of apartments be set aside for specific types of workers, such as firefighters.
Deputy City Attorney Michael Connolly responded that he was not certain about that yet.
Yet another part of the motion directed Brown to draft “a Request for Proposals for a development team to manage, design [and] construct [the] attainable workforce housing project.” Further, it called for the city to draft a Request for Proposals for the management/operation of the attainable workforce housing units.
Digging into the details
Seated on the opposite side of the dais, as any other petitioner would be, Brown reminded the commissioners that they conducted a workshop in January 2023 that focused on how they could provide incentives for the creation of more affordable dwelling units in the city. The commissioners agreed to engage Ian Black Real Estate to work to assemble properties that could be used for affordable housing projects, he added.
Brown stressed that many individuals who had been living in the city had been forced out of their homes by rising prices.
Although both of the First Street parcels are zoned Downtown Core, which allows for 50 units per acre, Brown noted that the affordable housing policies that the commission has been approving over the past months provide for a density bonus if at least 15% of the units are priced between 80% and 120% of the Area Median Income (AMI) set each year by the U.S. Department of Housing and Urban Development (HUD).
The number of bonus units created between the two proposed buildings would be 144, he said. Of those, 22 would have to be priced to be attainable. According to the city’s 2023 policy, Brown pointed out, eight of those 22 would have to be targeted to households making 80% AMI or less; seven would be for households making more than 80% AMI, up to 100% AMI; and seven would be priced for households making more than 100% AMI but no greater than 120% AMI.
However, the goal, he made clear, is for all of the apartments to be priced as affordable housing.
Rent, which will be based on family size and AMI, will range from approximately $1,280 for one person at 80% AMI to $1,920 for an individual at 120% AMI, a city news release pointed out. The highest rent shown on a chart Brown presented was $2,742, for four persons in a household with income at 120% AMI.
“I have no issue with us going lower on our AMI,” Vice Mayor Ahearn-Koch said during the discussion.
She also asked Brown whether the City Commission could ensure that the apartments would remain at affordable rates in perpetuity.
Deputy City Attorney Connolly replied that the commission could put a deed restriction in place to that effect.
Moreover, Brown said, the Live Local Act that the Florida Legislature approved in 2023 allows the maximum height of structures with affordable housing to be equal to that of the tallest building at least 1 mile from the location of the proposed new structure. That would mean that, technically, the new buildings could be as tall as 18 stories.
The buildings will not be exactly the same size, architect Chris Gallagher of Sarasota, another member of the team, told the commissioners. The one on the west would have slightly more square footage, he noted, so he anticipates it will have 13 apartments per floor, while the east building will have approximately 11.
The concept as it stands calls for a mix of one- and two-bedroom units, with some studios, Gallagher added. He envisioned the studios encompassing approximately 550 square feet, he said.
Gallagher did stress, “All of this could be adjusted. Nothing at all [is] cast in stone about this.”
Altogether, the two-bedroom dwellings would encompass from 900 to 1,100 square feet, while the single-bedroom units would range from 742 to 800 square feet.