Daytona Beach considering new fees on development to fund affordable housing

By Eileen Zaffiro-Kean, Daytona Beach News-Journal

For years, city officials have debated how they could provide more affordable housing, and how that could be financed.

On Wednesday night, city commissioners moved toward establishing what are known as linkage fees. The fees could be assessed on new construction and then poured into the affordable housing trust fund commissioners set up last year, which still doesn’t have a funding mechanism.

Commissioners will vote and make a final decision at their next meeting March 5. It appears a 7-0 yes vote is coming.

“Tonight we took a giant step toward something we’ve all wanted for a long time, and that’s linkage fees,” said Mayor Derrick Henry. “We continue to be a community that aspires to be responsible and compassionate.”

Studies have shown Volusia County needs thousands more affordable housing units.

The average median income for Daytona Beach is $65,631. That’s tolerable for someone living alone in Daytona Beach, or a person who has a roommate contributing to the rent or mortgage.

But for households of two or more people that earn a total of $65,631, covering housing costs and paying other bills is a major challenge.

Commissioners hope the linkage fees will help, but if the fees are established, it will take time to collect an ample amount of revenue and create new affordable housing. The money could also be used for rental assistance.

The suggested linkage fee amounts

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 U.S. Department of Housing and Urban Development considers housing affordable when it requires 30% or less of a household’s income to cover rent or a mortgage, and utilities. The last Census estimated 40% of Daytona Beach homeowners with a mortgage were spending more than 30% of their income on housing, while 33% were spending 35% or more.

The linkage fee nexus study done for Daytona Beach not only found that a reasonable nexus exists, but also recommended specific fee amounts based on the type of new development.

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, however, is recommending 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.

Other cities already have linkage fees. Jupiter charges $1 per square foot; Winter Park charges $2 per square foot for restaurants and $1 per square foot for all other commercial or office uses; and Coconut Creek charges 37 cents per square foot for industrial uses, $1.36 for commercial uses, 15 cents for office uses, $2.42 for hotel uses and 70 cents for limited-service hotel uses.

New hope for affordable housing

The city has put $250,000 of general fund revenue into what it calls the Essential Housing Opportunity Trust Fund. The city could shift more general fund money there, use community redevelopment area revenue, or accept private donations.

Linkage fees provide an ongoing source of revenue, but the amounts vary as the economy and new development go up and down.

Daytona Beach has added some affordable housing in recent years and already has plans in place for more. There are the Clyde Morris Landings apartments near LPGA Boulevard with affordable rent.

A developer is planning to construct mixed-income townhomes near the corner of Orange Avenue and Martin Luther King Jr. Boulevard.

Also, a new apartment complex planned to be built off of International Speedway Boulevard just east of Ridgewood Avenue will designate about 50 of its 304 apartments for tenants with income at 120% or less of the area median income.

The FAITH group, made up of multiple Volusia County houses of worship, has pushed for linkage fees for several years. Two of its members were at Wednesday night’s meeting, and they thanked city commissioners during public comments.

“We hope you take bold actions on affordable housing,” said FAITH member Patty Santopadre. “A lot of elders are being priced out of housing.”

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