The Florida Senate
BILL ANALYSIS AND FISCAL IMPACT STATEMENT
(This document is based on the provisions contained in the legislation as of the latest date listed below.)
Prepared By: The Professional Staff of the Committee on Community Affairs
BILL: SB 1150
INTRODUCER: Senator Rodriguez
SUBJECT: Tax Exemption for Affordable Housing
DATE: January 14, 2022
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Hackett Ryon CA Pre-meeting
2. FT
3. AP
I. Summary:
SB 1150 provides that a county or municipality may adopt an ordinance to grant an ad valorem
tax exemption to any property owner whose property is used to provide affordable housing in a
multifamily project with at least 50 dwelling units.
The bill defines affordable housing, and states that this exemption is given for achieving a
governmental purpose. The bill further limits the exemptions to those properties with a land use
restrictive agreement to provide affordable housing, and limits the value of the exemption for
those multifamily projects providing less than 100 percent affordable housing.
The provisions of the bill first apply to taxable years beginning on or after January 1, 2023.
The bill takes effect July 1, 2022.
II. Present Situation:
General Overview of Property Taxation
The ad valorem tax or “property tax” is an annual tax levied by counties, municipalities, school
districts, and some special districts. The tax is based on the taxable value of property as of
January 1 of each year.
1
The property appraiser annually determines the “just value”
2
of property
1
Both real property and tangible personal property are subject to tax. Section 192.001(12), F.S., defines “real property” as
land, buildings, fixtures, and all other improvements to land. Section 192.001(11)(d), F.S., defines “tangible personal
property” as all goods, chattels, and other articles of value capable of manual possession and whose chief value is intrinsic to
the article itself.
2
Property must be valued at “just value” for purposes of property taxation, unless the Florida Constitution provides
otherwise. FLA. CONST. art VII, s. 4. Just value has been interpreted by the courts to mean the fair market value that a willing
buyer would pay a willing seller for the property in an arm’s-length transaction. See Walter v. Shuler, 176 So. 2d 81 (Fla.
REVISED: BILL: SB 1150 Page 2
within the taxing authority and then applies relevant exclusions, assessment limitations, and
exemptions to determine the property’s “taxable value.”
3
Tax bills are mailed in November of
each year based on the previous January 1 valuation, and payment is due by March 31 of the
following year.
The Florida Constitution prohibits the state from levying ad valorem taxes,
4
and it limits the
Legislature’s authority to provide for property valuations at less than just value, unless expressly
authorized.
5
The just valuation standard generally requires the property appraiser to consider the highest and
best use of property;
6
however, the Florida Constitution authorizes certain types of property to be
valued based on their current use (classified use assessments), which often result in lower
assessments. Properties that receive classified use treatment in Florida include agricultural land,
land producing high water recharge to Florida’s aquifers, and land used exclusively for
noncommercial recreational purposes;
7
land used for conservation purposes;
8
historic properties
when authorized by the county or municipality;
9
and certain working waterfront property.
10
Ad Valorem Exemption for Literary, Scientific, Religious, or Charitable Organizations
The State Constitution allows the Legislature to exempt from ad valorem taxation “such portions
of property as are used predominantly for educational, literary, scientific, religious or charitable
purposes.”
11
The Legislature implements these exemptions and sets forth the criteria to
determine whether property is entitled to an exemption.
12
To determine whether a property’s use qualifies for an education, literary, scientific, religious, or
charitable exemption, the property appraiser must consider the nature and extent of the
qualifying activity compared to other activities or other uses of the property.
13
The portions of
the property used predominantly for qualified purposes are exempt.
14
1965); Deltona Corp. v. Bailey, 336 So. 2d 1163 (Fla. 1976); Southern Bell Tel. & Tel. Co. v. Dade County, 275 So. 2d 4
(Fla. 1973).
3
See s. 192.001(2) and (16), F.S.
4
FLA. CONST. art. VII, s. 1(a).
5
See FLA. CONST. art. VII, s. 4.
6
Section 193.011(2), F.S.
7
FLA. CONST. art. VII, s. 4(a).
8
FLA. CONST. art. VII, s. 4(b).
9
FLA. CONST. art. VII, s. 4(e).
10
FLA. CONST. art. VII, s. 4(j).
11
FLA. CONST. art. VII, s. 3(a).
12
Section 196.196, F.S.
13
Section 196.196(1), F.S.
14
Section 196.196(2), F.S. BILL: SB 1150 Page 3
Incidental use of property for an exempt purpose will not qualify the property for an exemption
nor will the incidental use of the property for a non-exempt purpose impair an exemption.
15, 16, 17
Portions of property used for profitmaking purposes are not exempt and is subject to ad valorem
taxation; however, the Legislature has allowed property to remain exempt even when used for
profitmaking purposes when the use of the property does not require a business or occupational
license and the revenue derived from the profitmaking activity is used wholly for exempt
purposes.
18
Exemption of Property Tax for Charitable Purposes and Affordable Housing
In 1999, the Legislature authorized a property tax exemption for property owned by certain
exempt entities which provide affordable housing under the charitable purposes exemption.
19
The property must be owned entirely by a not-for-profit corporation, used to provide affordable
housing through any state housing program under ch. 420, F.S., and serving low-income and
very-low-income persons.
20
In order to qualify for the exemption, the property must comply with
s. 196.195, F.S., for determining non-profit status of the property owner and s. 196.196, F.S., for
determining exempt status of the use of the property.
In 2017, the Legislature created s. 196.1978(2), F.S., to provide that property used as affordable
housing will be considered a charitable purpose and qualify for a 50 percent property tax
discount if the property:
Provides affordable housing to natural persons or families meeting the extremely-low, very-
low, or low-income limits specified in s. 420.0004, F.S.;
Provides housing in a multifamily project in which at least 70 units are provided to the above
group; and
Is subject to an agreement with Florida Housing to provide affordable housing to the above
group, recorded in the official records of the county in which the property is located.
21
The discount begins on January 1 of the year following the 15th year of the term of the
agreement on those portions of the affordable housing property that provide the housing as
described above. The discount terminates when the property is no longer serving extremely-low,
very-low, or low-income persons pursuant to the recorded agreement. The discount is applied to
15
Section 196.196(2), F.S.
16
Underhill v. Edwards, 400 So.2d 129, 132 (Fla. 5th DCA 1981). The district court found that trustees of a private not-for
profit hospital were not entitled to an exemption on the new wing's first floor, which was used for a private purpose and not
for a charitable purpose or other exempt purpose, despite the fact that the portion of the hospital used for a non-exempt
purpose represented only a very small percentage of the otherwise exempt property.
17
Central Baptist Church of Miami, Florida Incorporated v. Dade County, Florida, et. al., 216 So.2d 4, 6 (Fla 1968). The
Supreme Court found that “limited part time rental of a portion of the church lot for commercial parking on weekday
business hours is reasonably incidental to the primary use of the church property as a whole for church or religious purposes
and is not a sufficiently divergent commercial use that eliminates the exemption as to the commercial parking lot portion of
the property.” at 6.
18
Section 196.196(4), F.S.
19
Chapter 99-378, s. 15, Laws of Fla. (creating s. 196.1978, F.S, effective July 1, 1999).
20
The not-for-profit corporation must qualify as charitable under s. 501(c)(3) of the Internal Revenue Code and other federal
regulations. See 26 U.S.C. § 501(c)(3) (“charitable purposes” include relief of the poor, the distressed or the underprivileged,
the advancement of religion, and lessening the burdens of government).
21
Section 196.1978(2)(a), F.S. and ch. 2017-36, s. 6, Laws of Fla. BILL: SB 1150 Page 4
taxable value prior to tax rolls being reported to taxing authorities and tax rates being set in the
annual local government budgeting process.
Affordable Housing
One major goal at all levels of government is to ensure that citizens have access to affordable
housing. Housing is considered affordable when it costs less than 30 percent of a family’s gross
income. A family paying more than 30 percent of its income for housing is considered “cost
burdened,” while those paying more than 50 percent are considered “extremely cost burdened.”
Severely cost burdened households are more likely to sacrifice other necessities like healthy food
and healthcare to pay for housing, and to experience unstable housing situations like evictions.
Affordable housing is defined in terms of household income. Resident eligibility for Florida’s
state and federally funded housing programs is typically governed by area median income (AMI)
levels, published annually by the U.S. Department of Housing and Urban Development (HUD)
for every county and metropolitan area. The following are standard household income level
definitions and their relationship to the 2021 Florida state median of $70,000 for a family of four
(as family size increases or decreases, the income range also increases or decreases):
22
Extremely low income – earning up to 30 percent AMI (at or below $21,000);
23
Very low income – earning from 30.01 to 50 percent AMI ($21,001 to $35,000);
24
Low income – earning from 50.01 to 80 percent AMI ($35,001 to $56,000);
25
and
Moderate income – earning from 80.01 to 120 percent of AMI ($56,001 to $84,000).
26
Housing costs reflect what people are willing to pay to live in an area, which in some instances,
due to low supply and high demand, makes it difficult for the workforce, elders, and people with
disabilities to find affordable homes and apartments. The government helps make housing
affordable through decreased monthly rent or mortgage payments, so that income eligible
families are able to pay less for the housing than it would otherwise cost at “market rate.” Lower
monthly payments or down payment assistance is a result of affordable housing financing.
Florida Housing Finance Corporation
The 1997 Legislature created the Florida Housing Finance Corporation (FHFC) as a public-
private entity to assist in providing a range of affordable housing opportunities for Floridians.
27
,
The FHFC is a corporation held by the state and housed within the Department of Economic
Opportunity (DEO). The FHFC is a separate budget entity and its operations, including those
relating to personnel, purchasing, transactions involving real or personal property, and budgetary
matters, are not subject to control, supervision, or direction by DEO.
28
22
U.S. Department of Housing and Urban Development, Income Limits, Access Individual Income Limits Areas – Click Here
for FY 2021 IL Documentation, available at https://www.huduser.gov/portal/datasets/il.html#2021 (last visited December 3,
2021).
23
Section 420.0004(9), F.S.
24
Section 420.0004(17), F.S.
25
Section 420.0004(11), F.S.
26
Section 420.0004(12), F.S.
27
Chapter 97-167, Laws of Fla. Previously, from 1980 through 1997, the former Florida Housing Finance Agency, placed
within the former Department of Community Affairs, performed similar duties.
28
Section 420.504(1), F.S. BILL: SB 1150 Page 5
The goal of the FHFC is to increase the supply of safe, affordable housing for individuals and
families with very low to moderate incomes by stimulating investment of private capital and
encouraging public and private sector housing partnerships. As a financial institution, the FHFC
administers federal and state resources to finance the development and preservation of affordable
homeowner and rental housing and assist homebuyers with financing and down payment
assistance.
Land Use Restrictive Agreements
A Land Use Restrictive Agreement (LURA) subjects real property to a restriction in which the
owner gives up some of their rights in exchange for the promise of tax credits, funding, and other
benefits.
29
Typically restrictions include tenant income restrictions, unit set asides for less than
market rate rent, and other affordability restrictions.
30
Such restrictions are documented in the
LURA, which is recorded by the county clerk’s office and runs with the land. A LURA can
include a time period associated with restriction compliance enforced by the IRS, HUD, or other
housing authority.
III. Effect of Proposed Changes:
Section 1 amends section 196.196, F.S., to provide that a county or municipality may adopt an
ordinance to grant an ad valorem tax exemption to any property owner whose property is used to
provide affordable housing in a multifamily project with at least 50 dwelling units.
The bill defines “affordable housing” as a dwelling unit occupied by or restricted to the
occupancy of extremely-low-income, very-low-income, low-income, or moderate-income
persons as defined in s. 420.0004, F.S.
The bill limits the exemption value to 75 percent of the assessed value for each dwelling unit
used for affordable housing where at least 10 percent of the multifamily project’s total units are
used for providing affordable housing.
The bill allows an exemption up to 100 percent of the assessed value for each dwelling unit
where 100 percent of the multifamily project’s total units are used for providing affordable
housing.
The bill further allows an exemption of up to 100 percent of the assessed value of the
multifamily project’s common areas if at least 25 percent of the total units are used for providing
affordable housing.
The bill provides that such an exemption may not be granted for a property unless the associated
multifamily project has a recorded land use restriction agreement in favor of the FHFC or other
governmental or quasi-governmental jurisdiction which requires that units qualifying for the
exemption are used for providing affordable housing. The bill clarifies that, for the purposes of
29
Commercial Real Estate Finance Company of America, Multifamily Housing – Land Use Restrictive Agreement (LURA)
LIHTC, available at https://www.crefcoa.com/land-use-restrictive-agreement.html (last visited Jan. 12, 2022).
30
Id. BILL: SB 1150 Page 6
this bill, a governmental or public purpose is served if a person provides a service that the state
or any of its political subdivisions, or any municipality, agency, special district, authority, or
other public body corporate of the state, could properly perform or serve, and if the
governmental or public purpose would otherwise be a valid purpose for the allocation of public
funds.
Finally, the bill amends the following subsection to contemplate an individual, rather than only
organizations, improperly receiving a tax exemption under s. 196.196, F.S.
Section 2 provides that the amendments made by the bill first apply to taxable years beginning
on or after January 1, 2023.
Section 3 provides that the bill takes effect July 1, 2022.
IV. Constitutional Issues:
A. Municipality/County Mandates Restrictions:
None.
B. Public Records/Open Meetings Issues:
None.
C. Trust Funds Restrictions:
None.
D. State Tax or Fee Increases:
None.
E. Other Constitutional Issues:
The Florida Constitution provides that portions of property used predominately for
educational, literary, scientific, religious, or charitable purposes may be exempted by
general law from taxation.
31
The bill grants local governments the authority to grant such
an exemption, but categorizes the use as “governmental or public purpose,” which is not
one of the categories contemplated by the constitution.
The bill’s allowance for an exemption for common areas may not fall within the
constitutionally approved exemptions.
31
FLA. CONST. art. VII, s. 3. BILL: SB 1150 Page 7
V. Fiscal Impact Statement:
A. Tax/Fee Issues:
None.
B. Private Sector Impact:
Those property owners offering affordable housing in localities providing this exemption
would receive the benefits of lower property taxes.
C. Government Sector Impact:
Those local governments choosing to utilize this exemption would be negatively
impacted in terms of property tax revenue, but may enjoy the benefits of increased
incentives for affordable housing.
VI. Technical Deficiencies:
None.
VII. Related Issues:
None.
VIII. Statutes Affected:
This bill substantially amends section 196.196 of the Florida Statutes.
IX. Additional Information:
A. Committee Substitute – Statement of Changes:
(Summarizing differences between the Committee Substitute and the prior version of the bill.)
None.
B. Amendments:
None.
This Senate Bill Analysis does not reflect the intent or official position of the bill’s introducer or the Florida Senate.