Nearly 1,000 people are moving to Florida every single day. This mass migration is partially due to Coronavirus but is also a result of the favorable tax climate we enjoy in Florida compared to some of the northern states, such as New York and New Jersey.

With the addition of beautiful beaches and being home to the most vibrant downtown in the state, it’s no surprise why Pinellas County, and especially St. Petersburg, is a popular place for out-of-state transplants.

However, one of the major byproducts of an influx of new residents is a dwindling supply of housing. And as a result, we’ve seen home values and rental rates rise quite significantly.

One Tampa-based affordable housing developer is trying to tackle the housing affordability issue in Florida. “Our mission is to help local governments and non-profits meet their affordable housing goals,” says Scott Macdonald, Executive Vice President and CFO of Blue Sky Communities.

Blue Sky develops affordable housing all over the state, with their most recent projects in Sarasota, Clermont, Seffner, and Tampa.  And while they’ve done three major renovations in St. Pete, Blue Sky is breaking ground on their first ground-up development in the Sunshine City this Wednesday.

Skyway Lofts will be a 65-unit affordable housing community located at 3900 34th Street South and 3319 39th Avenue South in the Skyway Marina District. There will be 17 one-bedroom units at 650 square feet each and 48 two-bedroom units at 960 square feet each. The total project cost is $16.1 million.

This is just the latest in a slew of new developments for the Skyway Marina District, which has seen increased interest lately due to its proximity to the beaches as well as downtown St. Pete. In fact, there are more residential units being constructed in the Skyway Marina District right now than any other neighborhood in St. Pete, including downtown. 

Rental rates at Skyway Lofts will be determined based on the resident’s percent of Area Median Income (AMI) and all residents will need to make between 30-80% AMI to be eligible to live at Skyway Lofts.

The community will consist of two four-story buildings on the site of the former Bay Breeze Motel. Blue Sky acquired the two-parcel, 1-acre development site for $925,000 from a private investor in July.

Amenities include a swimming pool, clubhouse, laundry, playground, and free parking.

The community will include 76 parking spaces, one for each residential unit and a few guest spaces. Recently, St. Petersburg reduced parking minimums across the city with further reductions for developments that include affordable housing units. 

Additionally the property will have no surface parking lots. In order to use the land as efficiently as possible, all parking is located under each building, which is a better use of the land and protects the cars from the elements.

Blue Sky is also committed to supporting local artists and is working with the Executive Director of the St. Pete Arts Alliance, John Collins, to select an artist to paint a mural on the side of the building.

Skyway Lofts are expected to complete construction by Fall 2021. Application and rental information will be available a few months prior to move-ins in Summer 2021.

We are thrilled to see projects like this being built in St. Pete, but it’s not nearly enough. How do we ensure that St. Pete doesn’t become unaffordable for the middle and lower class? Part of the solution is to introduce new stock to the market. But therein lies another issue. From a developer’s point of view, when you consider the cost of land and construction, affordable housing just isn't economical.

If we want new affordable housing to be built in the city, we need the government to incentivize developers to make these projects feasible. In July of last year, the City of St. Pete published a ten-year comprehensive plan to tackle the housing affordability issue by leveraging $60 million of city funding for the construction and preservation of 2,400 affordable multi-family units.  The city also encourages affordable housing through parking reductions, multi-modal impact fee reductions, expedited permit review, and floor area ratio (FAR) bonuses.

At the federal level, the US Department of Housing and Urban Development’s (HUD) Low-Income Housing Tax Credit (LIHTC) program gives state and local agencies, or the Florida Housing Finance Corporation in our case, the ability to issue tax credits for the acquisition, rehabilitation, or new construction of rental housing targeted to lower-income households. In exchange for the tax credits, developers like Blue Sky agree to keep rents low.

Unfortunately, there just isn’t enough funding to go around. “For every twelve sites we find around the state, usually only one of those get funded,” says Macdonald. Typically, Pinellas County only gets an allocation of one deal a year through the LIHTC program.

“We love St. Pete, but where we get funded doesn’t have a lot to do with us or necessarily how much we want that project to get funded,” says Macdonald. “It’s a lot of luck unfortunately.”

Luckily, Blue Sky Communities has another affordable housing community in the works at the site of Grace Connection Church located at 635 64th Street South. The 55-plus 85-unit project received staunch opposition from nearby residents, who cited an increase in crime and traffic in their largely single family home neighborhood. Ultimately, the St. Pete City Council approved a zoning change for the church, allowing Blue Sky’s project to move forward.

“There’s a lot of misinformation about affordable housing,” says Macdonald. “People confuse it with public housing. However, the rents are not subsidized by the government. It would be impossible for someone without a job to rent in one of our communities.” 

Macdonald also credits Carteret Management, the company that manages all of Blue Sky’s properties. “Carteret is single biggest contributing factor to the long-term success of our projects,” says Macdonald. “They are first-class and do a great job to make sure that things residents are nervous about don’t come to fruition.”

Skyway Lofts joins a number of other affordable housing communities either under construction or proposed in St. Pete, including Delmar 745, Butterfly Apartments, The Shores Apartments, and The Preserves at Clam Bayou Phase III.

Be sure to stay tuned to the Skyway Lofts website for construction progress updates and rental information and applications.