Miami urged to invest in condos for workers
Miami's former building boom -- nowadays beset by sluggish condo sales, panicked investors and worries that market conditions may get worse before they get better -- has become Miami's building bargain, one city commissioner says.
And Commissioner Marc Sarnoff says the best thing for government to do is just what any savvy shopper would: buy, buy, buy.
The commissioner says if prices dip as low as $175 per square foot, government should purchase condo units and partially subsidize them for teachers, police officers and the like.
Sarnoff says a wide range of condo units are currently available in the $225 to $250 per square foot range, and he expects prices to drop in coming months.
Under Sarnoff's plan, condo buyers who qualify for government incentives -- likely workers earning between roughly $28,000 and $65,000 -- could receive down payment assistance or help with paying their condo maintenance fees.
"If the marketplace presents an opportunity -- the city, the county, the state should react to that opportunity," Sarnoff said.
Sarnoff's office, citing figures provided by the city's Community Development Department, says new affordable housing units can cost up to $350 per square foot to build. Sarnoff argues it is more cost-effective to invest in high-rises that are already here.
Still, the idea faces plenty of hurdles. First, Sarnoff must win the support of fellow city commissioners, who have reacted lukewarmly to the proposal so far. Commissioners worry that the condos' maintenance fees and other costs might eventually overwhelm the "workforce" buyers Sarnoff is targeting.
"What we don't want is . . . we give them the key and they turn around in one year and say, 'Commissioner, here is your key,' " Commissioner Tomás Regalado said.
City administrators have begun to study the feasibility of Sarnoff's initiative, and a final commission vote on the subject could happen early next year.
Even if commissioners approve the idea, Sarnoff acknowledges that to have real impact he'll also need support from county and state officials.
Those governments have much more money when it comes to housing assistance. If Miami City Hall entered the condo market alone, it would have difficulty buying more than a handful of units.
Cross-government teamwork already exists when it comes to building affordable rentals -- with the federal government also regularly chipping in millions of dollars in tax-credit funding.
Matthew Greer, CEO of Coconut Grove-based Carlisle Development Group, one of the nation's largest affordable housing builders, said heavy federal support makes such projects a good deal for local governments. The city of Miami typically contributes only around 2 percent of total costs, Greer said.
"You're getting an incredible leveraging of local funds, and that doesn't exist in the condo market option that Sarnoff is proposing," Greer said.
While Sarnoff has criticized new affordable housing as expensive to build, Greer said cost-per-square-foot comparisons between his company's projects and condos aren't necessarily apples-to-apples.
The reason: Some affordable housing projects include unique support services and features that can add to costs.
One Carlisle project is geared to the homeless, Greer said, another is a joint partnership with the YMCA that includes construction of a day-care center, YMCA gym and parking for YMCA members.
If Sarnoff's condo push gains momentum, it could take money away from the rental projects Carlisle specializes in -- in effect transfering government help from the poor to the working middle class.
"The focus needs to be on the lower-income people," said community activist Max Rameau, who drew international attention to Miami's affordable housing shortage last year by moving more than 100 homeless people into shanties on a vacant public space for six months.
"The housing crisis for people making $69,000 a year is not severe," Rameau said. "It's bad, but it's not severe."
Rameau also worries that Sarnoff's proposal could become a taxpayer bailout for condo developers who overestimated demand and are now having trouble selling their units.
Sarnoff says government wouldn't be bailing out developers -- just taking advantage of a good deal. But if the idea helped stabilize the shaky real estate market a bit, Sarnoff said, that's not a bad thing.
"This is a real-estate driven economy," he said. Allow a collapse to happen and "people won't be making a living. There are title companies. There are real estate agents."
"Nobody wants to see buildings fail," chimed in Miami state Rep. Carlos Lopez-Cantera, who supports Sarnoff's proposal but says some of its details must be worked out.
A government-assisted buyer program could fill up struggling condo buildings, Lopez-Cantera said, though he added there is a risk that buyers who paid full price will resist the new, subsidized, arrivals.
Sarnoff says mixing people of different incomes is a laudable goal, something Miami should do more of.
"Instead of warehousing the working-class poor, let's put them amongst the middle class," Sarnoff said. "Not overload the building, but five or 10 here and there."
Posted on Mon, Nov. 26, 2007 - Miami Herald - By Michael Vasquez