The shortage of middle-income and affordable workforce housing developments in Lee County isn’t due to a lack of demand or political support.
Local employers want them to secure workers, governments are happy to add them to their tax base and they offer private developers a healthy return on investment, even if it’s not the windfall that market-rate developers look for.
But more builders than not balk at middle-income, workforce housing developments — and often, their low-income counterparts — because of the red tape involved, industry experts said.
Tom Rossi
“The demand is there — the demand is there in spades,” said Tom Rossi, managing partner of Renaissance Development Group. “But it’s really hard to do.”
That leaves a “missing middle.” Market-rate apartment rates have skyrocketed in recent years while low-income housing isn’t available for middle-income earners. Middle income is often defined as those who make 80% to 120% of an area’s median income or $73,100 in Lee County.
One of a relatively small number of residential developers who specialize in meeting that demand in the middle, Renaissance began construction this week on the area’s latest affordable and workforce housing combo development, Bloom, in Fort Myers’ Midtown.
With 336 units, Bloom and a dozen other Lee County and partner projects add up to some 3,000 units that the county is helping fund to fill the need for affordable and workforce housing over the next several years. That’s made possible by using part of a $1.1 billion Community Development Block Grant Disaster Recovery fund that the state awarded Lee County after Hurricane Ian.
But Lee had an affordable housing stock shortage of 17,923 units as of 2021, according to an estimate by the website Builders Patch, with a supply/demand ratio of 1.4%. That includes both low-income and workforce affordable housing.
Renaissance’s business model, Rossi said, is based on finding infill sites that offer more attractive investments. The corner where Bloom is being built was an unused lot and in an area that Fort Myers officials seek to revitalize.
Financing the project required a “capital stack,” each portion of which has its own set of rules and requirements. Projects, such as Bloom, typically are not eligible for a traditional bank loan, Rossi said.
Funding sources include Lee County’s $20 million portion from CDBG-DR funds, a $34.8 million construction loan from Stearns Bank, a $24 million ground lease from Montogomery Street Capital and an $8.2 million Tax Increment Financing rebate from the Fort Myers Community Redevelopment Agency.
Bloom will include 172 units (51%) reserved for people who make less than 80% of the area median income. The remaining 164 units (49%) are for middle income renters who earn 80% to 120% of the median.
In addition, Bloom met financing, density and zoning requirements that required approval from city and county government boards. That includes creating a 506-space parking garage, equating to about 1.5 parking spots per unit.
Developers are often stymied by the complex requirements, said Shannon Nazworth, president and CEO of Jacksonville-based nonprofit Ability Housing, which has long experience in building affordable and workforce housing. “They see they can make dollars, but the complexity makes it so challenging they figure they can make the same or different profit doing something else,” she said.
While each project is unique, nearly all of them require three to seven layers of funding to get off the ground, she adds, and it’s not atypical to take five years or more to get ready to build. Even after that, if for example a county decided to pull out of an agreement, the project could fall apart.
Lee County Economic Development Director John Talmage said Bloom’s “ripple effect” would include a more stable workforce, boost local spending and potentially attract new businesses and investments near the site. Renaissance will see income, too.
“They’re going to make money, there’s no doubt about that,” Talmage said after city, county officials, along with Renaissance staff posed with shovels for an official groundbreaking portrait.
