Funding to Implement Florida’s Affordable Housing Programs Funding for Sadowski Act Programs Florida recognized the need for affordable housing with the creation of the Florida Housing Finance Agency (precursor to the Florida Housing Finance Corporation) in 1980. The primary funding mechanism for the agency was federal Bond financing, with money borrowed through the sale of tax exempt bonds for loans to firsttime homebuyers and developers of affordable rentals. But Florida Housing found that down payment assistance and gap financing were needed to make these bond transactions work. To this end, the 1988 Legislature created the Homeownership Assistance Program (HAP) and the State Apartment Incentive Loan (SAIL) rental program. However, there was no reliable source of revenue to fund Florida’s housing programs. Between 1988 and 1992, the programs were funded with general revenue, with inconsistent and unreliable funding levels. The William E. Sadowski Act was enacted by the Legislature in 1992. Two trust funds were created: the local government and state housing trust funds. Today, 70 percent of specified revenues go into the local fund, and 30 percent to the state fund. The local fund is meant to provide monies for the State Housing Initiatives Partnership, or SHIP, Program, which provides funding to all 67 counties and the large, entitlement cities. The state trust fund is mainly used to provide monies for the state programs. The source of funding is the documentary stamp tax on real estate deeds. The “doc” stamp tax was chosen for two reasons. First, there is a rational nexus between real estate activity and housing. Second,
and more importantly, doc stamp revenues increase as the population grows, more real estate transactions occur and housing prices increase. This is particularly important in Florida, which generally has high population growth. From 1992 through 2002, the Legislature routinely appropriated all monies in the trust funds for housing programs. In 2003, sweeps were proposed to the trust funds for the first time, and in 2005 a cap limiting the distribution of doc stamp revenue into the trust funds was adopted. This $243 million cap came at a time when doc stamp revenues were very high – $450$600 million/year. The cap was repealed in 2011, but in that same year the State Economic Enhancement and Development (SEED) Trust Fund was created, with funding partially provided by $75 million taken off the top of the housing trust funds. The SEED trust fund is still in place today. During the Great Recession, most housing trust fund monies were swept to general revenue because of huge revenue shortfalls. After the Recession ended, the Legislature has continued to sweep monies, although appropriations for housing programs recently have increased. A total of $6.3 billion has flowed into the two housing trust funds since 1992. Of this, close to $4.3 billion has been appropriated for housing programs, and fully $2.0 billion has been swept for other purposes – approximately one-third of the distributions over 25 years.
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