By Eileen Zaffiro-Kean, Daytona Beach News-Journal
After years of debating whether to set up a locally controlled funding source to create affordable housing, Daytona Beach city commissioners decided Wednesday night to start assessing linkage fees on new development to raise the money.
The linkage fees, which won’t kick in until Oct. 1, will generate revenue that will be used to build badly needed affordable housing in a city with an abundance of low-wage workers who struggle to pay rent and buy homes.
And more good news for those eager to see Daytona Beach get more affordable housing: City commissioners are considering a second funding source as well that could generate even more money to help people keep a roof over their head.
That second source could come from a portion of property taxes generated by rising property values, an idea city commissioners will discuss more in the coming weeks.
“I think we need both,” said Mayor Derrick Henry.
The FAITH group, a local nonprofit made up of 30 diverse houses of worship, has lobbied Daytona’s mayor and commissioners for several years to use linkage fees to increase the city’s affordable housing stock. A few dozen FAITH members who had packed inside commission chambers Wednesday night to plead their case one more time cheered and applauded after a majority of commissioners got behind their idea.
“We’re excited to see the affordable housing trust fund get to a dedicated source,” said the Rev. Eddie Lake, pastor of Allen Chapel AME Church in Daytona Beach and a FAITH board member. “We have been waiting since 2019 for this to get funded. Our congregation and community is in desperate need for affordable housing.”
Others inside the City Hall meeting room, who had urged commissioners to opt for the property tax increment option instead, left disappointed.
But the idea to also use property tax dollars, endorsed by the Daytona Regional Chamber of Commerce, is not dead. City staff is going to study the information the chamber presented on that idea and report back to commissioners on options they could consider.
New charges waiting for developers
Many Daytona Beach households can only afford rent between $570 and $1,135 each month, but the city’s median rent is $1,400. To survive, some 40% of city residents pour more than 30% of their income into rent, leaving them scrambling to cover all of their other expenses.
Residents in other areas of Volusia County fight the same battle, and it’s been estimated the county could use nearly 55,000 more affordable housing units.
Now linkage fees will provide an ongoing source of revenue to start whittling down that affordable housing deficit in Daytona Beach.
A few years ago, the city hired Strategic Planning Group, Inc., to conduct a workforce housing linkage fee nexus study to determine if there is a reasonable connection, or linkage, between nonresidential construction and the need for housing in Daytona Beach.
Nonresidential development creates a new demand for employees, and requires more employees to construct it – all of whom require housing.
The nexus fee is the amount required to mitigate gaps between employee household income and available affordable housing.
The study recommended the following per-square-foot fees for all new construction, expansion or redevelopment projects of 1,000 square feet or more: Office $23.35; commercial $21.26; residential $18.39; hotel $12.45; industrial $7.22; extended stay hotel $1.23.
City staff recommended much lower fees to avoid discouraging development: Office $2.20; commercial $1.82; residential $1.58; hotel $1.16; industrial 62 cents; extended stay hotel 11 cents. The fees would be collected upon issuance of a building permit.
Commissioners decided to go even lower, and voted for a 25% reduction in each of those staff-suggested rates. So the per-square-foot charges they settled on are office $1.65; commercial $1.37; residential $1.18; hotel 87 cents; industrial 47 cents; extended stay hotel .027 cents.
In 2023, FAITH asked city commissioners for $10 per square foot on residential and commercial development. Last year, FAITH suggested $5 per square foot on both residential and commercial development, and this year the group dropped its request again to $4.25.
The city staff’s recommendation of $1.82 per square foot for commercial development would only produce $1.9 million a year, according to FAITH’s estimate. The $4.25 rate would generate $4.5 million per year, FAITH projects, enough they say to create 156 affordable units a year. FAITH wants to see at least 1,500 new units over the next 10 years.
Another funding alternative
City commissioners Monica Paris and Stacy Cantu cast the two lone no votes. Paris said 35% of the affordable housing in Volusia County is already in Daytona Beach, and she questioned the wisdom of bringing more affordable housing to the city.
Paris also listed several federally funded programs that help pay affordable housing costs across Volusia County. She suggested more job training may be needed to help people earn more money.
“If we don’t empower people, it will just get worse,” she said.
Cantu said she “totally” agrees with Paris, and argues that if linkage fees were already in place they could have scared off businesses like Trader Joe’s from coming to Daytona Beach. She also worries the fees could get Daytona sued.
The linkage fee funds will be used to support single-family and multifamily home developments, as well as acquisition of property for affordable housing.
The fees won’t be assessed until a building permit is about to be issued. Developers could avoid the new fees by creating affordable housing units, but city commissioners would have to approve that.
The property tax increment funds would not draw property tax dollars from the city’s five community redevelopment areas. They would also still leave the majority of new property tax revenue generated by rising value in place.
Commissioners could choose any percent of new property tax revenue to set aside for affordable housing.
Using 2024 property tax collections, the city could have used $1.89 million for affordable housing at a 30% set aside, and $3.15 million at 50%. A 10% set aside last year would have provided $630,147 for affordable housing, and left $10.2 million of new property tax revenue in the budget for other uses.
Tax increment set asides have the advantage of steadily increasing along with the taxable value of a city, said Jessica Gow, a Cobb Cole law firm attorney representing the Daytona Regional Chamber of Commerce.
The property tax revenue also allows more uses than linkage fees, including repairing existing affordable housing, helping with stormwater improvements and raising affordable homes out of the floodplain.
View the original story here.
