Sarasota officials OK plan to buy two parcels for $7.4M for affordable housing

Although the private sector is beginning to respond to the City of Sarasota's affordable housing incentives programs, even when built, the residences will make only a small dent in the growing demand for attainable workforce housing in Sarasota. 

Similar scenarios are taking place in a host of other cities and towns in the region addressing some variation of an affordable housing crisis. 

In Sarasota, however, City Manager Marlon Brown, in taking his cue from a discussion back in spring 2023, is embarking on a somewhat counterintuitive, lead-by-example strategy: Brown has spent more than a year working with Ian Black and Steve Horn of Ian Black Real Estate to assemble land to build a city-owned, privately managed apartment community in the heart of downtown. 

Brown unveiled the plan April 8. On April 15 Brown faced city commissioners from the other side of the dais as a presenter. He sought approval of 10 directives, including $7.4 million and closing and other costs, to acquire two properties directly across First Street from City Hall. The proposal for the site is to build two 10-story buildings totaling 192 affordable and workforce priced apartments on it. 

The five-member Sarasota City Commission unanimously approved the proposal at the April 15 meeting. 

Close the gap

The Barancik Foundation in Sarasota has committed $1.5 million toward acquiring the parcels, with expected additional support from the Community Foundation of Sarasota County and the Gulf Coast Community Foundation, based in Venice. The City Commission authorized funding partnership agreements with the three foundations to be drafted, and Brown was authorized to contact other government agencies and nonprofits that may be interested in becoming a funding partner with the attainable workforce housing initiative.

Any funding gap in the cost to acquire the properties will be filled by the city’s Affordable Housing Trust Fund — which is currently at more than $4 million — and, if needed, the city’s general fund balance.

Due diligence for the purchase of the two parcels — at 1544 and 1590 First Street — will begin immediately with closing anticipated by the end of July. The city already owns a parking lot on the proposed development site at 1530 First Street.

As first reported by sister publication YourObserver.com, construction cost is estimated at $70 million to $80 million, to be funded via revenue bonds, with operations and debt service covered by rents. Those rents will mirror the city’s affordable housing incentives program and will be tiered at 80% or less, 100% or less and 120% or less area median income.

Brown’s plan includes selling street level commercial space to recoup a portion of the city’s capital investment.

Brown also told commissioners some state funding may be available for the land purchase. He says State Rep. Fiona McFarland, R-Sarasota, requested $2 million from the state of Florida for assistance for this program. The funds were approved by the House and Senate and are awaiting Gov. DeSantis' signature.

Open door

Once built, the city would not manage the apartments. Brown told commissioners the plan includes contracting a management company or organization to tend to the day-to-day operations. The city would also contract an owner’s representative to oversee construction and other related development details.

“We're not in the business of managing an apartment complex, so that is why I'm asking the commission to engage a development and a project team and an owner's rep for everything that we are not capable of,” Brown said. “We are just providing that door to allow this to happen. We are providing that opportunity that, in perpetuity, this remains affordable and attainable.”

In his motion to approve, Commissioner Erik Arroyo amended the request to include a pro forma to demonstrate that construction, operating and ongoing maintenance costs can be covered by the proposed affordable and workforce housing rents. 

Photo by Andrew Warfield

The project will achieve 192 units by taking advantage of the city’s own affordable housing density bonus incentives program in the downtown area, combined with the state’s Live Local Act, which grants by right height equal to the tallest building within a one-mile radius, in this case 18 stories. Brown’s proposal is three stories of parking below seven stories of residences.

The city’s program requires 15% of the bonus density be priced in the affordable housing range, in this case rounded up to 22 units in addition to the 122 bonus units plus 48 base density units.

Brown’s timeline for the project has construction beginning in 2025 and occupancy in 2027.

“I think it's a really good start,” said Vice Mayor Jen Ahearn-Koch. “I’m cautiously optimistic about this.”

This article originally appeared on sister site YourObserver.com.