When the housing crisis hit last year, Florida was one of the leaders in the number of home foreclosures in the country. As the bottom fell out of the state's real estate market, other industries soon followed, bringing down the rest of Florida's economy with it.
Now, there are reports that real estate in Florida is actually undervalued. For example, a study released by IHS Global Insight found that real estate in Vero Beach was undervalued by more than 40%, while real estate prices in Brevard County are 19% below market. As a result, investors and contractors are beginning to take advantage of low-priced commercial projects, offering hope that the market has hit its bottom in Florida and is now on its way to recovery.
In an effort to nurture the beginning signs of economic recovery, the Florida legislature passed Senate Bill 360, known as the Community Renewal Act. Signed into law on June 1 of this year, the Community Renewal Act attempts to relieve some of the current regulatory restraints on commercial and housing real estate development within dense urban areas in the state, in an attempt to encourage new development and prevent further urban sprawl.
Under the Act, "dense urban land areas" are defined as:
- Municipalities with an average of at least 1000 people per square mile of land and a minimum total population of 5000
- Counties with an average of at least 1000 people per square mile of land (including the population of any municipalities within the county)
- Counties with at least a population of 1 million people (including the population of any municipalities within the county)
The definition of dense urban area currently includes 8 counties and more than 200 cities in Florida, including Orange County.
Prior to passage of the new law, local governments had to demonstrate that the roads could handle the additional traffic caused by a new housing development or commercial development before the project could be approved. These transportation concurrency laws often resulted in the developer having to pay to improve the roads in the area before moving forward with their real estate project.
The new law creates exceptions to the transportation concurrency laws for new real estate developments in municipalities and counties that meet the definition of a dense urban land area. It also provides an exception for counties with a minimum population of 900,000 that qualify as a dense urban area but do not have an urban service area designated in the local comprehensive plan.
The Community Renewal Act lessens the impact of another requirement placed on those with large development projects. Previously, developers of large projects that had the potential to impact people living in more than one country were required to complete a Development for Regional Impact (DRI) review before their project could move forward. Now, so long as the new development is located within a dense urban land area, developers do not have to complete the DRI review.
The law provides local governments with the authority to exempt other areas from DRIs and concurring transportation rules by designating them as urban infill development areas, community redevelopment areas, downtown revitalization areas or redevelopment and urban services areas within their comprehensive plans.
The law also extends the expiration date of certain development permits for 2 years. State environmental permits, DRI development orders, building permits and build-out dates set to expire between September 1, 2008 and January 1, 2012 are subject to the extension.
Together, these changes may help give the Florida real estate industry the boost it needs to successfully begin recovering. While Florida's housing market may have led the nation in collapsing, it now has the opportunity to lead the country into recovery.