Neal proposal to eliminate affordable housing in Windward community wins County Commission approval

Petition predicated on legislative changes that prompted county changes in 2050 Plan developments

In 2015, the Sarasota County Commission approved plans for a residential community — now called Windward — that was to be located within the northwest quadrant of Fruitville Road and Lorraine Road, east of Interstate 75.

Formerly called the Fruitville Road Properties, the site was owned by a Canadian company, Lindvest. It was to have 900 dwelling units and 100,000 square feet of “non-residential uses,” as a county document put it, spread out over 450 acres.

At the time, the commission’s vote included a stipulation that 135 of the homes had to be priced as “affordable,” a county staff report in the board’s agenda packet for its regular meeting on Nov. 16 pointed out.

Since then — in 2019 and 2020 — the Florida Legislature amended state law to require that any local government stipulating inclusion of affordable units in a development project must “fully offset all costs to the developer,” as the same memo explained the situation.

The commissioners subsequently approved changes in the 2050 Plan portion of the county’s Comprehensive Plan — which governs growth — to eliminate the necessity that a developer include affordable units in the design of any community on land affected by that plan. Adopted in 2002, the 2050 Plan applies to development east of I-75.

On Nov. 16, Pat Neal, chair of Neal Communities, and Kelly Klepper, a vice president and senior planner with the Kimley-Horn consulting firm in Sarasota, appeared before the commissioners to request modifications of the 2015 ordinance governing the creation of the Lindvest project. Klepper pointed out that Neal had purchased the Lindvest property and wanted to eliminate the affordable housing stipulation, based on the legislative action and the County Commission’s modification of the 2050 Plan.

(Neal Communities paid $21,550,000 for the land in March 2019, the Sarasota County Property Appraiser’s Office records show.)

“There is no expansion of the 450 acres,” Klepper stressed, and the number of lots will remain 900.

Klepper further emphasized that the proposed array of housing types that the commission heard about in 2015 would remain the same: single-family homes, villas and townhouses.

All Neal wanted, Klepper continued, was to get rid of the affordable housing stipulation.

With no members of the public having signed up to address the issue, the commissioners ended up voting unanimously to approve Neal’s application. The hearing and vote took slightly less than 19 minutes.

The plans, then and now

In its 2015 vote on the Lindvest proposal, the County Commission approved the construction of the 135 affordable dwellings as follows:

  • 10% were to be rented or sold to families with incomes at or below 80% of the Area Median Income (AMI) for a family in the county, as determined by the U.S. Department of Housing and Urban Development (HUD). (This year, HUD put the median family income at $90,400 for Sarasota County.)
  • 5% of the units were to be rented or sold to families at or below 100% of the AMI, the Neal Communities application explained.

In accord with the proposed change of plans, Neal Communities would use transfers of development rights (TDRs) to be able to keep the same total number of housing units in the development, the county staff report said.

TDRs essentially involve the purchase of an area of land away from the site of construction, leaving that land permanently protected from development. County Planning and Development Services Department staff members have put the focus for TDRs on environmentally sensitive lands.

The staff report explained that Neal Communities will have to obtain TDRs from an off-site source, but the company also will use on-site TDRs. The latter process will apply to native habitat on the property, as the 2015 commission vote on the Lindvest application adhered to the 2050 Plan’s directive that a minimum of 43% of a development site remain open space.

A section of the staff report noted that the revised plans call for the developed area of Windward to encompass approximately 230.51 acres, with about 219.5 acres — 49% — remaining open space.

The county staff report did point out that, on June 9, 2021, Neal Communities won commission approval to make affordable housing units in Windward “ market driven.” In other words, the staff report explained, that “eliminated the requirement for [the developer] to pre-qualify affordable housing purchasers, and instead base the cost of an affordable unit by the current market.”

During the June 2021 public hearing, Neal said the reason he wanted to eliminate the income verification facet of the original agreement with the county was because “we cannot thread the needle” in finding people who are rich enough to qualify for a mortgage but who also have income low enough to meet the affordable housing stipulations. His employees do not know potential buyers’ status, he continued, “until they show up and we intrusively ask them for all their data …”

Moreover, he pointed out, “Our experience is that people don’t really tell us the whole truth about their income when they want to get into affordable housing.”

Neal’s application for the new modification to the Windward plans said that the “resolution [the commissioners approved last year] contemplated that 90 of the affordable units” would be priced for families making 80% of the AMI; 23 would be for families making 100% of the AMI; and 22 units would be for families earning 120% of the AMI.

Based on the 2021 AMI, the application continued, “[T]he maximum sales prices for those units … would be $261,165; $346,262; and $431,303, respectively. Maximum rents would be $1,544; $1,930; and $2,316, respectively.”

One other member of the project team last week, attorney Dan Bailey of the Williams Parker firm in Sarasota, talked about the big increases that developers have been contending with over the past couple of years.

“We had the pandemic and supply chain problems that have driven the cost of individual units up astronomically,” he pointed out.

(The Neal application noted that the price of framing lumber jumped by 180% between April and July.)

The team hopes that construction costs will come down, Bailey continued.
In the meantime, he said, “The difference between the value of [the optional affordable housing incentives that the county does provide] and the actual cost to the developer is so staggering, it comes nowhere near fully offsetting the cost to the developer.”

“The good thing [in this situation],” Bailey continued, “is that the developer … can obtain off-site TDRs, [which] has the benefit of putting environmentally sensitive lands under conservation easements.”

Board members voice support for Neal and argue against affordable housing incentives

Following the presentation — which, Chair Alan Maio noted, consumed only about 8 minutes of the 20 allowed a petitioner during a County Commission public hearing — he saw that none of his colleagues had questions.

After Maio closed the hearing, Commissioner Michael Moran made the motion to approve Neal Communities’ application to remove the affordable housing stipulation and to modify the TDR language in the development plans. Maio seconded it.

“Truly an amazing project,” Moran said of Windward. “You pull out of that community,” he added, “you can go to the north” for shopping, banking and other day-to-day activities, or a driver can head to the southwest for the same types of amenities.

As far as affordable housing incentives go, Moran continued, “I’ve made myself pretty clear on this in the past, very publicly.”

If a developer is forced to build 15 affordable units out of a total of 100, for example, he said, the developer will just make the remaining 85 dwellings more expensive to compensate for the lower prices of the other units. Then, as soon as the initial buyer decides to sell an affordable dwelling, Moran pointed out, that home will go for a market-based price.

By forcing a developer to build affordable units, Moran said, “Some would argue you’ve made the problem worse.”

Then Commissioner Christian Ziegler pointed out that making the construction of affordable homes a necessity is just a matter of “checking a box.”

The COVID-19 pandemic, Ziegler continued, “created a reputation [for the state] that we are open and we do protect and value freedom.”

Since 2018, he added, more than 1 million new residents have moved to Florida. “They all need a home. … I can’t say that supply has been able to keep up with demand.”

The Neal application pointed out that, “In December 2021, Sarasota home prices were up 23.2%,” compared to the previous year’s prices. The median cost of a new home in December 2021 was $425,000. The application added, with emphasis, “This median price calculation takes into account existing homes as well as new homes, but the median price for new homes is obviously even higher.”

The application also pointed out, “One of [Neal Communities’] primary local competitors is currently selling its entry level townhomes in Sarasota for about $449,990. Using that number as the market price of a new home in this submarket, for each of the 90 homes [that Neal] would have to sell to purchasers in the 80 percent AMI, it would have to subsidize them about $184,846, which translates to $16,604,631 for the 90 homes. For each of the 22 homes that would be sold to purchasers in the 100 percent AMI, the subsidy would be $94,498, and for 23 of them the total subsidy would be $2,173,452. Even for the 22 homes for sale to families in 120 percent AMI category, each home would require a subsidy of $9,000 or $191,97,996 for the 22 homes. The grand total of these subsidies would be a whopping $18,976,078. That is more than any single homebuilder should be required to forfeit in order to address an affordable housing shortage not of its own making.”

Ziegler also concurred with Moran that affordable housing requirements lead to higher prices for the other homes in a new community.

The solution to creating more housing stock in the county, Ziegler said, “is to go tall or go wide.”

Yet, as he has pointed out in the past, he said again on Nov. 16, no space is available west of the interstate for major new developments, and residents protest any proposals for taller buildings with more density. “So you have to look east [of I-75],” Ziegler continued, to find sufficient land for projects.

“I do get frustrated with this ongoing conversation about affordable housing,” Ziegler added. “Some ‘feel-good’ regulations are thrown towards it,” as well, he pointed out.

“Well said,” Commissioner Ziegler,” Chair Maio responded.

Referencing Ziegler’s comments about supply and demand, Maio added, “That is America. That is the capitalistic system. We don’t control that.”

Then Maio talked about the fact that the commissioners over the past several years have approved multiple measures to try to make affordable housing construction less expensive for developers. Those have ranged from reduced parking requirements to lower impact and mobility fees. Finally, he indicated, it appears that those actions are starting to produce some projects.