January 15, 2021

By: Robert Angus Williams

As Florida continues to experience an ongoing need for affordable housing, local governments throughout the state struggle to find ways to meet this need. In 2019, the Florida Legislature amended F.S. §166.04151 to address exactions imposed by municipalities relating to affordable housing. Municipalities may now, under certain circumstances, require developers to provide a specified number or percentage of housing units as affordable housing. The practice is commonly known as inclusionary zoning.

Section 166.04151 subsections (2) and (4) provide as follows:

(2) An inclusionary housing ordinance may require a developer to provide a specified number or percentage of affordable housing units to be included in a development or allow a developer to contribute to a housing fund or other alternatives in lieu of building the affordable housing units.

(4) In exchange for a developer fulfilling the requirements of subsection (2) . . . a municipality must provide incentives to fully offset all costs to the developer of its affordable housing contribution . . .

It is important to note that the requirement for a municipality to fully offset the developer’s cost of providing affordable housing is a product of HB 7103 from the 2019 Legislative Session. A prior version of the bill strictly prohibited “inclusionary zoning” requirements. The bill was amended to allow municipalities to require “inclusionary zoning” only if the developer was made whole. The statute was further amended in the 2020 Legislative Session to allow a municipality to impose an affordable housing linkage fee[1], but the municipality’s obligation to provide incentives to fully offset developer costs was not changed. Counties are bound to nearly identical requirements by virtue of F.S. §125.01055.

It is clear that the intent of the Florida Legislature is to provide cities and counties the ability to increase the amount of affordable housing in their communities through inclusionary zoning. However, it also requires local governments to fully offset affordable housing exactions connected with a development or permit approval. To secure more affordable housing, a local government can provide developer incentives such as bonus density/intensity requirements that exceed the existing zoning or land use designation, a reduction of fees and charges, or other incentives.

Local governments should be careful not to see the Legislature’s grant of the authority to enact inclusionary zoning as a starting point to negotiate with developers as to what kind of affordable housing the developer is willing to provide and what is expected in return.  A developer’s obligations under §166.04151 are in no way voluntary, and any attempts to compel the developer to provide affordable housing without complying with the relevant legal requirements is inconsistent with Florida law and the protections under the Fifth Amendment of the United States Constitution with respect to unlawful exactions.

In St. Johns River Water Mgmt. Dist. v. Koontz, the Fifth District Court of Appeal provided a great explanation of what constitutes a lawful exaction:

In the most general sense, an “exaction” is a condition sought by a governmental entity in exchange for its authorization to allow some use of the land that the government has otherwise restricted. Even though the government may have the authority to deny a proposed use outright, under the exactions theory of takings jurisprudence, it may not attach arbitrary conditions to issuance of a permit.[2]

An exaction must further a legitimate public purpose and the government must show an “essential nexus” between the exaction and the legitimate public purpose.[3] Arguably, the creation of affordable housing is a legitimate public purpose. Likewise, requiring a developer to provide affordable housing as part of its project has an “essential nexus” to furthering that legitimate public purpose. However, exactions cannot be arbitrary and capricious and must be roughly proportional to the impact.[4] Stated another way, the payment of money or allocation of land for affordable housing must bear an approximate relationship to the increased need caused by the development. Individual rezoning requests are considered to be quasi-judicial in nature and the imposition of an exaction, even when required by ordinance, should be subject to an adjudicatory process.[5]

Both cities and counties should avoid forcing a developer to voluntarily enter into negotiations regarding affordable housing. F.S. §166.04151 and §125.01055 require local governments to quantify the costs associated with affordable housing and then offset the obligation imposed upon the developer. The analysis requires a quantitative review regarding the number of affordable housing units caused by the development. Without this analysis, it is impossible to determine whether the burden imposed by the local government is roughly proportional to the impact caused by the development. The uncertainty of the actual requirement or a simple estimate of the development’s impact may result in an arbitrary exaction. Even if the developer were to make a “voluntary” proposal to include affordable housing within the development, the local government lacks a standard to evaluate or measure the proposal without sufficient analysis. The lack of an analysis would make it impossible to estimate the impact and thus any conclusion may be arbitrary. Conditions to an approval cannot be arbitrary. A local government must articulate the relationship of the exaction to the remediation of the need for affordable housing. Otherwise, the local government runs the risk of imposing an arbitrary exaction that could amount to an unconstitutional taking.

Similarly, developers should evaluate a local government’s affordable housing requirement the same as any other condition of approval. Local governments have the authority to offset the impacts of development through conditions, impact fees, or other requirements. However, a local government’s authority is limited, and any requirements imposed to offset these impacts must comply with the relevant statutes and other legal requirements.  For more information, please do not hesitate to contact Robert Angus Williams at rwilliams@llw-law.com.

 

[1] Linkage fees are fees collected from nonresidential or market-rate residential development that are placed in a trust fund for others to use for building affordable housing.

[2] 5 So. 3d 8, 9 (Fla. 5th DCA 2009).

[3] Nollan v. California Coastal Com’n, 483 U.S. 825, 827 (1987).

[4] Dolan v. City of Tigard, 512 U.S. 374, 390-1 (1994).

[5] Board  of County Commissioners of Brevard County v. Snyder, 627 So.2d 469, 474 (Fla.1993); Highlands in the Woods, L.L.C. v. Polk County, 217 So. 3d 1175, n. 3, (Fla. 2d DCA 2017) (“Even though the County’s exactions . . . are authorized in part by a[n] . . . ordinance, they are also adjudicatory in nature in that they were in response to [a developer’s] request for a permit and they required [the developer] to dedicate a portion of its land”).