Pinellas County officials review affordable-housing program funded largely by ‘Penny’ sales surtax

Pinellas County commissioners heard a briefing May 15 on the county’s affordable-housing development program and the role of the voter-approved “Penny for Pinellas” surtax in funding it.

Consultant Caitlin Johnson of SB Friedman told the commission the Penny program — an infrastructure surtax voter-approved in 2017 — allocates 8.3% of net proceeds to affordable housing and economic development; half of that portion supports the countywide affordable-housing program. "The Penny is generated by the extension of the infrastructure sales surtax…approved in 02/2017 by 83% of the voters," Johnson said.

The consultant said the county has approved 42 projects since February 2019, totaling 3,578 units, with roughly 76% of those units designated as affordable and 24% market-rate. She said about $101.9 million in county funds have been approved for the program, including nearly $85 million from Penny funds, and that Penny money now makes up about 83% of county funds approved for this program. Johnson said the program typically leverages other sources; for every $1 of program investment the county provides, it supports roughly $9 of additional investment.

Why it matters: rising housing costs and limited production. SB Friedman said housing costs in Pinellas County have outpaced household income growth: median home values, median rents, and household income growth rates showed widening gaps. The firm estimated nearly 47,000 additional housing units will be needed countywide by 2035 (roughly 31,000 of those multifamily), and that a large share of future demand is for renter-occupied units and for lower-income households. "Approximately 65% of the future demand is renter occupied and nearly half is for households earning less than a 20% AMI," Johnson said (as presented).

Commissioners pressed staff and the consultant on what the county’s production rate contributes to that demand and how the program fits with private development. Commissioners noted the county has supported roughly 2,700–3,300 housing units per year in recent years (market-rate and affordable combined), while the projected need would require a higher annual rate of production. Johnson and staff said much of the demand for households earning below the program’s targeted income levels will not be met by unsubsidized private market production and therefore requires public gap funding.

Program mechanics and tradeoffs. The briefing described how Penny funds serve as gap financing alongside federal and state sources — notably low-income housing tax credits (LIHTC) — and local municipal funds. SB Friedman presented examples (Skyway Lofts, Long Lake Preserves, Oasis at Bayside) showing Penny funds used for 9% and 4% LIHTC projects, homeownership townhomes developed by Habitat, and rental preservation through acquisition and rehab. Johnson said 77% of program funding has supported new-construction rental, while about 17% supported rental rehab projects that preserve naturally occurring affordable housing.

Affordability periods and leverage. Presenters emphasized that many projects funded with Penny money carry long affordability periods: the program guidelines require at least 15 years but many projects negotiate 30-year or 99-year affordability terms when land-acquisition or county-owned land is involved. SB Friedman said assisted units in the program have averaged substantial leveraging and long-term affordability. "The vast majority of the assisted units have affordability periods of 30 years or more and 46% of the assisted units are affordable for 99 years," Johnson said.

Cost pressure and program limits. County staff and consultants told commissioners construction-cost increases, insurance, and higher interest rates have widened the financing gap for affordable projects. Johnson noted the average county assistance per unit has risen as costs increase; the program increasingly acts as a "last dollars in" source to close financing stacks. Commissioners and staff discussed municipal contributions and incentives; larger cities such as St. Petersburg and Largo were identified as having more local resources and entitlement funds to pair with county assistance.

Follow-ups and next steps. Counsel and staff offered to return with additional analysis commissioners requested — including a clearer count of how many market-rate units are being produced countywide and an updated, regional demand projection that SB Friedman is preparing with the Tampa Bay Partnership. Commissioners also asked staff for more information on program monitoring (annual income verification and third-party monitoring for restricted units), and on the county’s down-payment-assistance and home-repair programs, which staff said were paused to reallocate funds for hurricane recovery work but historically assisted roughly 50–70 households per year for home purchases and 30–50 households per year for repairs.

Ending note: the briefing closed with staff and consultants urging continued, layered approaches that combine Penny funds with federal, state and municipal financing and zoning or regulatory changes to increase overall housing production.