Developer: Action needed to eliminate barriers to workforce housing

Sarasota and Manatee Counties, known for their stunning beaches, vibrant arts scene and growing economic opportunities, are at a crossroads. As these communities attract new businesses and residents, they face a pressing challenge: the need for workforce housing. 

Workforce housing, which refers to housing for essential workers — teachers, health care workers, service industry employees, retail employees and others — is becoming increasingly scarce. These professions are the ones who do the work vital to the community but are increasingly priced out of the housing market. 

This shortage threatens the region’s long-term sustainability, making workforce housing a critical issue demanding immediate attention. The majority of all new developments in both counties are either market-rate with some attainable housing, or affordable housing with very little workforce housing for working families. 

According to local real estate data, the median home price in Sarasota County has surpassed $450,000, while in Manatee County, it is over $400,000 — prices far out of reach for many moderate income workers. Renters are also feeling the squeeze, with rental rates increasing dramatically. This situation has forced many workers to live far from their jobs, resulting in longer commutes, higher transportation costs and a lower quality of life. 

When essential workers cannot afford to live near their places of employment, a ripple effect is created throughout the community. Schools face teacher shortages, hospitals struggle to retain staff and businesses experience higher turnover rates. Additionally, the long commutes required by many workers contribute to traffic congestion and environmental degradation, further straining local infrastructure. 

Understanding affordable vs. workforce housing 

According to Sarasota County and U.S. Census data, most working families in Sarasota County earn between $42,241 and $56,320 — 60%-80% of the Area Median Income (AMI). This group represents the true workforce. 

Affordable housing developments typically focus on families earning less than $42,240, or below 60% of the AMI, and often provide rental subsidies through programs like Section 8 or Florida Housing Vouchers. However, families within the 61%-80% income bracket earn too much to qualify for these programs but not enough to afford market rents in the area. These families are often referred to as “The Missing Middle.” 

Barriers to workforce housing

Five main challenges contribute to the shortage of workforce housing in Sarasota and Manatee counties. The list includes: 

• Increased land costs: The high cost of land makes it difficult for developers to build affordable units without significant subsidies. Municipalities have allowed for increased density to incentivize developers to set aside units for workforce housing but landowners often increase prices to match the potential for more units. This makes it challenging to develop and rent the majority of the apartments at affordable prices. 
• Construction costs: Although construction and material costs have slightly decreased, they remain significantly higher than pre-COVID levels. One Stop Housing has addressed this by bringing a full development team and licensed trades in-house, reducing construction costs by over 20% and keeping rents low on new developments. 
• Impact fees: Municipalities impose impact fees on developers to cover the cost of expanding infrastructure for new developments. In Florida, these fees average $9,564 per apartment, adding significant expense. While some municipalities offer reductions or waivers for workforce and affordable housing, developers often face complex negotiations with multiple parties (i.e. county, city, utilities, schools, etc.), each imposing various restrictions and requirements. These restrictions lower the property’s appraised value, reducing the developer’s ability to secure financing and attract outside capital. 
• Interest rates: The near doubling of interest rates has created additional challenges for developers. Lenders now require higher loan-to-cost ratios, meaning developers must invest more capital upfront. Additionally, lenders have increased credit underwriting requirements, forcing developers to raise rents to meet these new standards. 
• Operational costs: Operating costs have also increased, driven by higher property taxes, insurance rates and general expenses. Although the Live Local Act allows workforce and affordable housing communities to file for a property tax exemption, uncertainty around approval makes it difficult for developers to factor this into financial models. 

Solutions and opportunities 

Addressing the workforce housing crisis in Sarasota and Manatee Counties requires a multifaceted approach. Local governments, businesses and community organizations must collaborate to develop and implement solutions that meet the community’s needs. Potential solutions include: 

• Incentivizing development: Local governments can offer incentives to developers who build affordable housing, such as tax breaks, expedited permitting, or density bonuses. 
• Public-private partnerships: Collaborations between local governments, nonprofits and private developers can be instrumental in creating workforce housing.
• Workforce housing trust funds: As suggested by the Sarasota Affordable Housing Advisory Committee, establishing a dedicated fund to support workforce housing initiatives can provide a consistent source of funding for affordable housing projects. 
• Employer-supported housing: Employers can invest in housing for their employees, ensuring access to affordable, stable housing and improving worker retention and productivity. One example, with the help of the Bradenton Area EDC, is Eagle Rock of Manatee, which will be home to some 325 families. 

The need for workforce housing in Sarasota and Manatee counties is undeniable. Without a concerted effort to address this issue, the region risks losing the essential workers who are vital to its continued growth and prosperity. By prioritizing workforce housing for the “Missing Middle” and fostering collaboration between public and private sectors, these communities can create a sustainable future where all residents can live, work, and thrive.

Mark Vengroff is managing partner of One Stop Housing and One Stop Development & Construction. He was named one of 15 change-makers by the Business Observer in 2022. In recognition of his philanthropic efforts, the City of Sarasota proclaimed Oct. 10 Mark Vengroff Day.