Orlando, Florida’s already-thin supply of affordable apartments could start disappearing soon, an expert warns, in a region suffering from a housing shortage and skyrocketing rents.
Contracts for rental assistance and other subsidies for low-income tenants on thousands of apartments are set to expire in the next 10 years, after which landlords could start asking market-rate rents.
“I don’t think it’s too late, but it’s definitely urgent,” said Anne Ray, a data manager with the Shimberg Center for Housing Studies at University of Florida.
Statewide, hundreds of buildings are reaching the end of their affordability periods, largely because of investments in the 1990s with 30-year terms, she said. Between 2019 and 2022, 40 developments totaling 3,999 units had their contracts expire, according to research from Shimberg.
Over the next 10 years, another 250 developments, representing more than 25,000 assisted units will expire. The largest concentration is in Orange, Osceola, Seminole and Lake counties, with 7,299 units on the chopping block.
In the city of Orlando, 38 buildings that have some affordable rents for more than 6,200 units will lose at least some of those restrictions over the next decade.
While some may choose to renew, many owners will see the end of restrictions as a chance to get in on the city’s skyrocketing rents, Ray said.
“When these (apartments) were being built, the tax-credit rents weren’t so different than market rents,” Ray said. “In a hot market … where the owner might be able to get higher rents, that property is at an inflection point.”
Tax-credit-based rents can take several forms, but most charge based on income, assisting people who make below 60% of the Area Median Income (AMI). Rent on a two-bedroom apartment for someone making 60% AMI is $1,120, utilities included.
Compare that to a current average of $1,984 for a market-rate two-bedroom, according to rent tracker Zumper, a massive 44% increase from February 2020 before the start of the pandemic.
A 2018 study by the Shimberg Center found that out of 61 properties whose affordability periods had ended, 49 had gone to rents that were unaffordable at the 60% AMI limit.
It’s a “nerve-wracking” possibility, said Julie Stewart, 82, a resident of Kinneret Apartments in downtown Orlando. Built in the 1960s and ‘70s with mortgages from the Department of Housing and Urban Development, Kinneret has 280 units for low-income seniors.
While the mortgages that required affordability restrictions have already been paid off, the Kinneret Council on Aging, which owns the building, has kept the same restrictions voluntarily and began a separate program for rental assistance on 112 units, an agreement which will last until 2031.
In April last year, the owners began looking for a new buyer, stressing they want to find another organization that will keep the apartments affordable.
But Stewart understands the value of the real estate her one-bedroom apartment occupies, in the heart of one of Orlando most expensive neighborhoods.
“We’re on a rich-people street in a poor-people building,” she said.
Less than a mile away, the market-rate Lake Lucerne Towers features one-bedrooms starting at $1,625 per month. Stewart declined to say what she’s paying at Kinneret, but as a retired secretary for a hospital in New York, she said her fixed income couldn’t keep up with the market.
“You drive down the road and you see elderly people – gray hair, canes and walkers – and they’re homeless,” Stewart said. “There is not enough of these apartments for the people who need them.”
Kinneret isn’t listing a price for the building, but the Orange County Property Appraiser values the development at $6 million.
Still, Rhonda Pearlman, board president for Kinneret, says there is no risk that the eventual sale will push out any residents. “We would not sell to any buyer that would not maintain the legal agreement for affordability,” she said. “That is the core mission of who we are.”
Oren Henry, Orlando’s director of Housing and Community Development, says the city is always looking for ways to preserve affordable properties. The city uses tax credits and other funds to cover gaps for nonprofits seeking to take over properties, or offers tax credits with affordability restrictions to owners looking to revamp affordable buildings.
But the city’s resources are limited. With funding from special tax designations, the state and HUD, Orlando’s budget for housing projects this year was just less than $12 million.
The city provided $1 million this year just to cover a gap in funding by the Orlando Neighborhood Improvement Corporation for a single project, so that money doesn’t stretch very far.
“We typically don’t have enough money to [construct] a whole new project on our own,” Henry said. “We want to preserve what we have.”
Henry says it’s “overwhelming” looking at the number of units that will be expiring. But some are already on the city’s radar to find new agreements. “We’re always looking to preserve or add to the affordable housing stock,” he said.
Ray says that preserving affordability on existing buildings is typically the smarter way for cities to operate, given all the costs associated with new construction.
“It’s already gone through all the approvals, and you’re not going to have NIMBY issues since it’s already there,” she said.
Ray said there is still time to work out new agreements with many of the developments whose terms are expiring, but action needs to be taken soon.
“It’s certainly not too early to start thinking about these properties,” she said. “Something has to bring in new rent restrictions.”
