The Live Local Act (LLA) aims to increase the workforce housing supply in Florida by modifying local building codes and zoning regulations. In doing so, it removes some of the previous hurdles that existed when taking on local development projects and opens the door for greater housing opportunities.

For developers and landlords, understanding the potential rental income under the Act is crucial for planning and making strategic investment decisions. Here’s an overview of the rental income possibilities under the LLA.

Housing Requirements

The Live Local Act mandates that at least 40 percent of the residential units in qualifying multi-family developments must be affordable for households earning up to 120 percent of the local area median income (AMI). This ensures that a significant portion of the units are accessible to lower- and middle-income families.

The revised act, however, clarifies that only the affordable units in a qualifying development must be rental units. The development property on the whole may include a mix of for-sale and rental products.

What to Know When Setting Rent Rates

For the affordable units in the development, rental prices are typically set based on a percentage of the tenant’s income to ensure that they do not exceed 30 percent of the household’s gross income. The maximum rent for these units is often capped at a percentage of the area median income (AMI), which varies by location. The remaining 60 percent of the units can be rented at competitive market rates for the area.

Calculating Potential Rental Income

To estimate potential rental income on a new multi-family development project in South Florida, developers should:

• Determine local AMI – Understand the AMI for the specific area where the development is planned.
• Set affordable rent rates – Calculate rents for affordable units based on the percentage of AMI.
• Assess market rates – Conduct a market analysis to understand how much rent you may be able to command for the unrestricted units.

Lastly, you should also factor in incentives like the ad valorem tax exemptions and loan programs offered through the Florida Housing Finance Corporation when assessing overall profitability.

Contact Us at Seacoast Consulting Group with Questions

To learn more about the Live Local Act and how it affects the feasibility of development projects, get in touchwith our team at Seacoast Consulting Group.