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Florida Lawmakers Take Aim At Historic Buildings, Affordable Housing, Short-Term Rentals

The 60-day flurry of debate and voting that defines the Florida Legislature’s annual session came to a close last month, and as the dust settles, the impact of an array of bills on the state’s real estate sector is coming into focus. 

A major theme this session was the state’s effort to claw back control of development and housing. From historic properties to affordable housing, short-term rentals to condo associations, lawmakers set statewide standards that are headed to the governor’s desk with far-reaching implications for developers and property owners.

“This is all a balancing act between federal power, which our state legislature hates, and local power, which our legislature hates,” said Andrea Heuson, a professor of finance and the academic director of real estate programs at the University of Miami

Bisnow spoke with legal and governmental experts to explore what the bills' impact will be on South Florida's commercial real estate industry. 

The Faena Hotel Miami Beach is the type of art deco property that will lose historic protections under a new law.

Historic Properties Lose Protections

Gov. Ron DeSantis signed Senate Bill 1526 and its companion, House Bill 1647, into law on March 22. Dubbed the Resiliency and Safe Structures Act, the new law restricts local historic preservation boards' ability to prevent the demolition and redevelopment of many properties that sit beyond the state’s coastal construction control line, a boundary that hugs the Florida coast.

The legislation, which applies to buildings that aren’t part of the National Register of Historic Places, prevents municipalities from blocking the demolition of a building if it doesn’t meet Federal Emergency Management Agency flood codes, is deemed unsafe by a building official or is ordered demolished by a local government. 

The new laws are the legislature's second effort in as many years to set rules around historic properties along the coast. Several areas are exempt from the law, including St. Augustine, Key West, the town of Palm Beach and some buildings along Ocean Drive in Miami Beach. But many other Miami Beach properties that the city’s Historic Preservation Board has maintained dominion over fall within the law’s purview. 

Heuson said the legislature carved out areas that are nationally recognized as significant, including in Miami Beach, to avoid public pushback. 

“Those northern areas on the beach don't have that same support as historic designations,” Heuson said. “When I looked at the list of exempt areas, those were really more the sort of tourist destination areas that people would come to see.”  

The Miami Beach Historic Preservation Board has until now had nearly total decision-making power on the development of parcels that the city deemed historic. It could mandate that a building only be renovated instead of replaced or require that a building's facade be preserved or rebuilt for a development to move forward.

For parcels affected by the law, the board’s role will become more akin to a design review that can help to ensure a new structure maintains the character of a neighborhood, said Alfredo Gonzalez, a real estate attorney at Greenberg Traurig who works on projects in Miami Beach.

“The [HPB] still has a say on the design of that new building, but they can't say, ‘You can't demolish this older building,’ or they can't require replication,” he said. “There are things that they can't do any longer, but I look at it more as what the design review board does.”

The changes could lead to the redevelopment of several parcels where investors previously saw the red tape of historic preservation as too burdensome, said Joseph Hernandez, a partner at Bilzin Sumberg focused on real estate.

“I can tell you tons of stories where the attempt to preserve historical buildings has created a real mess, really killed deals and really caused properties that badly need renovations to not get them because it's just too hard,” he said.

The plan to leverage the Live Local Act to add 600 residences to the Bal Harbour Shops has faced opposition from the municipality.

Expanding The Live Local Act

The Florida Legislature also passed SB 328, which made sweeping changes to the Live Local Act, the law that first went into effect in July 2023 and was meant to spur the development of affordable and workforce housing.

The latest amendments addressed what attorneys described as ambiguities in the law, adjusted some of its terms related to project density, and expanded its reach into transit corridors. 

Among the significant changes was the addition of language to include floor-area ratios, a measure of a development’s density, to the rules governing which projects are required to be administratively approved by municipalities. 

The original language in the bill allowed projects to be built taller if developers capped rents for at least 40% of units at state-determined rates for residents making no more than 120% of the area median income. But the exclusion of floor-area ratios in the bill had given municipalities a tool to push back against a project’s approval, a loophole that state lawmakers have now closed. 

The amendments, which await DeSantis’ signature, also expanded the law’s reach into developments near transit stops, compelling local governments to reduce minimum parking requirements by 20% for Live Local-eligible projects within a half-mile of a transit hub. For mixed-use projects in transit-oriented development zones, the law eliminates parking requirements entirely.

The amendments to the law changed significantly as they made their way through the Senate. The first changes proposed tying maximum project heights to buildings within a quarter-mile radius, as opposed to the existing 1-mile radius, but the radius was reverted to a mile in the second round of amendments.

The shifting language during the amendments’ debate reflected the “struggle between the local municipalities that are trying to not lose control and the state that's trying to promote the development of more affordable housing,” Hernandez said.  

“You could see the municipalities and their lobbyists versus developers and their lobbyists, and it seems, at least in this round, the municipalities were not victorious,” he said. 

The amendments passed this year have been described as a glitch bill meant to clarify vagueness in the law, but few in the legal community expect the changes to represent the final version of the law. 

Attorneys expect municipalities to continue to look for ways to claw back control over what projects are approved and how. The amendments passed this session are unlikely to stop Bal Harbour officials from passing legislation aimed at keeping Whitman Family Development from adding 600 residences and 70 hotel rooms to the Bal Harbour Shops, a back-and-forth that has led the developer to sue the village

Bal Harbour is far from alone, with Dania Beach, Doral, South Miami and other municipalities all passing ordinances that look to add restrictions to projects proposed under Live Local. There is an expectation that the tit for tat will continue and the state legislature will be back with more amendments during future sessions.

“I wouldn't be surprised if there's another two or three adjustments to Live Local through the next couple of years,” Heuson said. 

A new law would create a statewide database of short-term rental properties. The under-construction Nomad Residences Wynwood.

State Claims Dominion Over Short-Term Rentals

State lawmakers also looked to define how and to what extent local governments can regulate short-term rentals through SB 280, which passed both chambers by a relatively slim margin and awaits the governor’s signature. 

The law would establish a local registration program for short-term rental properties and cap the number of guests that can stay in each unit while putting in place penalties for rentals that violate the rules. 

It would effectively create a database of short-term rental properties that local governments could use to monitor the properties but would also strengthen a state prohibition on local ordinances that regulate vacation rentals that has been in place since 2011.

The law would define the maximum occupancy of a vacation rental at two people per bedroom, plus an additional two people in one common area. In larger properties, occupancy will be capped at one person for every 50 SF in a bedroom.

Owners who fail to register their property or follow the law’s guidelines could be fined up to $500, but only if the unit owner fails to fix its violation within 15 days of notification, a window that critics say is too wide given that few vacation stays last for two weeks.  

The law would only allow local governments to suspend a short-term rental unit’s registration for up to 90 days, and penalties beginning at a 30-day suspension can only be issued if the property has been cited for violations on five separate days within a 60-day window. 

Whether DeSantis will sign the bill is uncertain, as it faces pushback from the Florida Realtors industry group and objections from municipalities that rely on tourism.  

The groups are urging DeSantis to veto the bill for disparate reasons, with local governments and residents worried its penalties aren’t strong enough to crack down on problematic properties and the industry trade group saying the law will erode the rights of property owners, the Florida Phoenix reported

Condo associations with more that 25 units could be required to post their records online. Current law only applies to properties with 150 or more units.

Condo Associations Under Scrutiny

The legislature also took aim at condo associations, passing laws that aim to crack down on corruption on their boards and increase transparency around association costs and rules. 

HB 1203 covers homeowners associations, while HB 1021 addresses their condo counterparts, but the two bills cover much of the same ground. 

If signed by DeSantis, the laws would criminalize various types of malfeasance from board members, creating misdemeanor penalties for record-related offenses like the failure to properly maintain documentation or the refusal to provide access to records or their deliberate destruction.

Association members and managers could face felony charges if they accept financial kickbacks or “willfully and knowingly [refuse] to release or otherwise produce” records in an attempt to avoid the detection of criminal wrongdoing. The law would add protections against retaliation for condo owners who publicly speak out against their board. 

The bills are at least in part a response to a sprawling case that unfolded this year where five board members of an 18,000-member homeowners association in The Hammocks have been accused of perpetrating a scheme to divert at least $4M in funds to themselves or companies they controlled or were associated with.

HB 1021 also sets minimum standards for the number of condo association meetings and their level of transparency while requiring board members to complete educational courses annually that outline changes to condo laws. 

It would also compel condo boards at properties with more than 25 units to post association records on a public website, a rule that currently only applies to properties with at least 150 units. 

Suzanne Hollander, a real estate attorney who teaches real estate law at Florida International University, said the changes to the public disclosure rules would provide added transparency for potential condo buyers. 

“By law, the buyer of a condo has to be given the documents [before closing], but this is making it even more transparent so that they can look at the documents even before they make the purchase,” she said.  

A law that would have allowed casino gaming to come to the Fontainebleau Miami Beach was abruptly pulled after local business leaders vowed to oppose it.

What The Legislature Didn’t Do

While state lawmakers passed a bevy of legislation that will impact the commercial real estate sector, they also left some issues unaddressed and avoided wading into politically murky waters. 

The condo and homeowners association laws didn't take aim at the calls from some South Florida municipalities to address the wave of one-time assessments and increased fees that are expected to hit condo owners beginning in 2025.

Those bills are coming due because of 2022 legislation, passed in the wake of the Champlain Towers South collapse in Surfside that killed 98 people, that requires condo associations to provide a certain level of reserve funding for repairs and adds new requirements for older properties to be certified as structurally sound every 10 years. 

Lawmakers expect many condo owners to be hit with unaffordable repair bills, leading some South Florida municipalities to call on the state to create grants or low-interest loans to fund the repairs as developers circle aging properties for potential buyouts. 

Bilzin Sumberg's Hernandez, who was part of a group that advised lawmakers on the law, said he wasn’t surprised the legislature didn’t address the coming assessments during the most recent session. 

“The legislature does not want to change it,” he said. “The changes should have been instituted many years ago. We probably should have never had condos that weren't required to have reserves for replacement.” 

Florida lawmakers also opted not to make any changes to a law passed in the previous session banning foreign ownership of certain types of property. The law applies to citizens from China, Russia, Iran, North Korea, Cuba, Venezuela and Syria. 

The law particularly targets Chinese people who are not permanent U.S. residents. It faces significant legal hurdles, including a federal appeal in which a panel of judges signaled the law is unlikely to survive challenges to its constitutionality.

Blackstone, Starwood Capital Group, Related Cos. and other real estate heavyweights have lobbied the state to roll back the law, but the DeSantis administration has said it is crucial to fighting “foreign malign influence in Florida.”

Hernandez said the law is beginning to impact investment in the state, with institutional investment firms that count Chinese citizens among their clients becoming wary of making acquisitions that could run afoul of the rules. 

“I could see pension funds and institutional investors, the kind of clients I've been talking to, postponing or not doing deals in Florida because of it,” he said. 

The Florida Legislature also backed off two bills, SB 1054 and HB 1127, that could have brought a casino to Miami Beach after several high-profile business leaders in the region balked at the legislation

The bill would have overridden any local gambling restrictions and allowed gaming permit holders to move their licenses to a different location within 30 miles. The legislation, proposed in the House by two representatives for Miami-Dade County districts, seemed tailor-made to allow billionaire Jeffrey Soffer to move his casino license from The Big Easy Casino in Hallandale Beach to the Fontainebleau in Miami Beach. 

Soffer has been trying for years to open a casino at the hotel, but the bill was pulled from consideration almost as quickly as it was introduced after Miami Beach officials, the developer Armando Codina and the billionaire hedge fund magnate Ken Griffin were counted among the high-profile voices that vowed to fight its passage. 

Griffin penned a letter to the editor in the Miami Herald slamming the proposal, while Codina offered to help pay for a charter flight to Tallahassee to send more than 100 Miami Beach officials and residents to a hearing at the statehouse to oppose the bill. 

After the legislation was pulled from a Senate Regulated Industries Committee agenda, Chairman Joe Gruters told the Herald there was “no need” to have a vote on the bill given the lack of support. But, he added, “maybe next year.”