“Affordable” rent levels too high, say commissioners

BY PRU SOWERS

KONK LIFE STAFF WRITER

 

With so-called affordable housing rental rates continuing to rise in Key West without an accompanying increase in wages, city commissioners at their March 15 meeting pressed for changes in the way the city calculates those rates in order to lower bring down at least some housing costs.

Although thousands of people currently live in designated affordable housing in Key West, local officials have a limited ability to change tenants pay in annual rent. Although those rental rates are based on income, the federal Department of Housing and Urban Development (HUD) is the only authority with the power to set what is called the Adjusted Median Income (AMI). AMI is the bedrock figure local and state officials use to calculate income levels that determine who is eligible for affordable housing in their areas.

In Key West, AMI is used to determine the four different income levels the city uses to regulate affordable workforce housing eligibility. Those levels are “low,” where individuals earning 80 percent or less of AIM qualify; “median,” which is 100 percent of AMI; “moderate” is 120 percent; and “middle,” the highest income level allowed to qualify for designated affordable housing, which is a maximum of 140 percent of AMI.

In the past, Key West officials have voted to officially approve the annual AMI, even though they had no say in setting that income level. But commissioners Sam Kaufman and Richard Payne are challenging the idea that the city has limited say in how it sets affordable housing income eligibility. At the commission’s May 15 meeting, Kaufman proposed not voting on a resolution approving the 2018 AMI, which increased from $68,700 in 2017 to $84,400 this year.

“If we don’t have any discretion in setting these rates as imposed by HUD, then why are we voting on this,” he asked. “And if we don’t have to vote on this then I would prefer not to vote on this because I am 100 percent opposed to this item.”

Commissioner Payne pointed out that although the AMI jumped 23 percent this year, local affordable workforce rental rates will drop an estimated four percent. Yet, the “low” rental rate for a one-bedroom unit is $1,411 and the “moderate” rate for a two-bedroom unit is $2,400 this year; rates that seem to be closer to market rate than affordable, he said.

“Here we’ve gone up… $15,500 in AIM but our rents are going down Can you figure that out? How can that be,” Payne asked.

Key West Housing Authority Executive Director Manuel Castillo told commissioners that he has never been able to figure out how HUD sets the annual AIM but that the federal agency clearly does not check median and average income levels in individual counties. However, he said, while HUD sets AIM, city officials do have the power to control what percentage of AIM determines local income levels that qualify for affordable housing. Currently, people eligible for designated workforce affordable housing in Key West are allowed to pay up to 30 percent of their income in rent. For example, for a single individual in the “low” category, which is set at 80 percent of AIM, or $67,520, he or she could pay a maximum of $20,256 In rent. In the “moderate” level, an individual could pay no more than $30,384, 30 percent of 120 percent of AIM, in rent.

Confused? So were city commissioners. But they were also determined to try to reduce the income eligibility levels. They told Key West Planning Director Patrick Wright to bring them a resolution that would change the 30 percent rent multiplier to 25 percent.

As it turned out, Wright has been working with the Key West Planning Board for the past year to do exactly that. The planning board voted to recommend the change to 25 percent at their March 25 meeting. Wright promised to bring that recommendation to commissioners at their next meeting, June 5.

However, if commissioners approve the change, it will only apply to new deed-restricted affordable housing units in Key West. Most of the existing affordable rental units are locked into contracts that cannot change the 30 percent multiplier. Wright said some of the existing contracts may be able to be changed on a case-by-case basis but most will not.

And Payne, after asking whether the city could use a sliding multiplier scale each year ranging from 30 percent to 23 percent, acknowledged that such a move might actually hurt affordable housing developers. Those developers traditionally finance projects through bank loans, which are granted in part based on the amount of rent revenue expected annually. If those rent levels are subject to change every year, banks may balk.

“They may not want to loan money to a developer because the city can arbitrarily change [the rent multiplier]. So, they don’t know how much they may be able to derive in rent,” Payne said.

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