More than three years into the Live Local Act, industry professionals are still ironing out the kinks.

The legislation has received high praise for its intention to spark affordable and workforce housing development. But skepticism from Fannie Mae, Freddie Mac and the Department of Housing and Urban Development is a major constraint, developers said Thursday at the Leading Live Local 2026 event, hosted by Leverage Live Local in Brickell.

Even with a requirement that at least 50% of Fannie Mae and Freddie Mac's multifamily business be mission-driven affordable housing, the enterprises remain hesitant.

“You hear those two things, and you think, of course, they're going to underwrite it, and they will, I promise you, but they're not there today,” White Oak Development Chief Investment Officer Tim Peterson said onstage at the Four Seasons.

“It's difficult.”

The Live Local Act, enacted in 2023, allows developers to tap into tax exemptions and density bonuses with little to no pushback from local governments as long as at least 40% of their project is dedicated toward households making between 80% and 120% of the area median income.

Of the 55,000 units spanning the 182 proposed Live Local Act projects, only about 6,000 units are under construction, according to Florida Housing Coalition data displayed at the event.

One major hang-up for the nearly 50,000 units that are stalled is the lack of clarity surrounding the law's tax exemptions, which grant a 75% tax abatement for units built for residents making 120% of the area's median income and a 100% tax abatement for units at 80% AMI or less.

Concerns first arose over the tax abatement's vesting schedule. Lenders were uncomfortable underwriting construction loans or property mortgages because the exemptions were not guaranteed at the time of project completion.

While legislators passed a glitch bill that locked in abatement upon receiving a building permit, the agencies are still wary after experience with affordable housing bills with tax breaks in other states that got abused.

Most notably, the Public Facility Corporation program that Texas passed in 2015 allowed apartment owners to receive a 100% property and sales tax exemption if half of the units were set aside for residents who made below 80% AMI.

Weak accountability measures and reporting requirements allowed owners to steer away from low-income households and target higher-income renters to increase their bottom line while avoiding taxes.

“That's the sticking point for Fannie and Freddie right now, because they have gotten burned over the last few years in tax programs in other states that were used to sort of take advantage of loopholes instead of actually providing affordable housing,” PGIM Senior Managing Director Richard Kourbage said.

To combat that, some in the industry have proposed that Fannie and Freddie begin considering land use restriction agreements, which would lock owners into committing to exactly how much rent they are going to charge and what they are doing with the property for an agreed-upon period of time.

A standardized LURA could make Fannie and Freddie more certain about the property's use and treat tax savings through the Live Local Act as cash flow rather than a liability, Leverage Live Local founder Daniel Lopez told Bisnow on Friday.

But that would mean owners could be locked into agreements for long periods of time, sometimes up to 30 years, with no flexibility.

Not only could it keep the owner from pivoting on the property in the future, but it could also hit Fannie and Freddie if market economics change, Peterson said.

If there is a chance to leave the Live Local Act and charge market rents for a better return, it would be beneficial for all parties in the end.

“Coming at this from a market-rate perspective, the law allowed for optionality, and we want to keep the optionality,” Peterson said.

“I'm sitting here scratching my head, saying, ‘Why do you want me to put a LURA on here that limits my optionality and potentially hurts your bottom goals,’” he added.

But LURAs don't have to be decades long. They can be made under five- or 10-year terms as well, Lopez said.

Either way, the introduction of the conversation is a sign the agencies are getting more comfortable with the idea of lending on more Live Local Act projects, which could open the floodgates for the state, Lopez and other panelists said.

“I think that really was the initial knee-jerk reaction and the overarching theme,” Lopez said. “At this point, I think it's starting to get more technical, which is a good sign.

“Now we're talking about, ‘Well, if we are going to underwrite this, what does compliance look like?’