Cops, firefighters, artists and ballet dancers will share Miami Beach ‘workforce’ apartments

What do you get when you mix cops and firefighters with teachers, artists and ballet dancers?

It’s not a riddle.

In Miami Beach, that precise odd-bedfellows mix is the unusual formula behind a novel real estate project that tackles one of the biggest issues arising from Miami-Dade County’s daunting housing crunch — how to retain the essential workers and artistic types who can’t afford to live in the cities where they work.

After years of pushing, planning and refining, a developer competitively selected by Miami Beach officials just broke ground on an 80-unit apartment building in South Beach that will give first dibs on discounted rents to artists, as well as first responders and other city and public employees.

But that’s not all.

In an unusual collaboration with an arts group that was key to making the project work, the seven-story building in the historic Museum District and Collins Park neighborhood will dedicate an entire floor to dorm rooms for the neighboring Miami City Ballet’s thriving school, which brings teenage and young adult dance students to the Beach from across the country and abroad for intensive year-round and summer programs. The eight four-person dorm suites will be provided in addition to the building’s allotment of 80 workforce rental studios and one- and two-bedroom apartments.

The city and its partners say the project has been a difficult one to pull off, and was nearly derailed as interest rates and construction costs rose sharply in the wake of the COVID-19 pandemic, even as rents in Miami Beach rose sharply. The city, meanwhile, has been falling well short of meeting ambitious affordable-housing development goals set more than a decade ago.

The Collins Park project illustrates the complications in developing new housing even for moderate-income people, the expense of doing so, as well as one potential way forward.

The $41.7 million workforce development relies on an atypical combination of funding sources, including Miami-Dade economic development bonds available for nonprofit and educational buildings, and the Beach’s voter-approved $159 million bond program for arts and cultural facilities. The cultural bonds program — a fiscal advantage few other municipalities can boast of — authorizes the use of proceeds for housing for artists and performers.

The Beach city commission also needed to approve a last-minute $5.85 million loan to the project to make up a yawning financial hole caused by rising costs, a circumstance state officials say has stalled other planned affordable-housing developments across Florida.

“I understand finance and I understand the way these deals work, and it was very complicated,” said Miami Beach Commissioner David Richardson, a key backer of the project and a member of the commission’s finance committee. “We have a lot going on in this building.”

‘Missing middle’ housing quagmire

Its backers say the development is an example of the kind of work and creativity necessary to address the so-called “missing middle” dilemma, in which little housing is being built for people in the middle of the income scale.

“They make too much money for low-income housing, but not enough for the market-rate housing that’s being built,” said Angel Rivera, executive vice president at Servitas, the Texas developer doing the Beach project. “You don’t see very much of that because it’s very hard to make it work financially. But to have vibrant cities, you have to have all tiers of housing available. It can’t all be low-income and luxury housing with a big gap in the middle.”

For Servitas, which has specialized in developing dorm and residential buildings on college campuses, including Florida International University’s campus in North Miami, the project required a learning process the company hopes to build on and others can emulate, Rivera said — even if 80 units doesn’t begin to solve the need. The Beach project is generating queries from other places looking to address similar housing needs, he said.

“It may be a drop in the bucket, but this is a step in the right direction,” Rivera said. “We’re getting all kinds of interest from other municipalities.”

To qualify for the apartments, renters must have incomes at or below 120% of the county’s median income, which is set by the state right now at $74,700 for a two-person household, and at $99,120 for a four-person household. Rent amounts have not been set and will depend on the median income figures in place once the building begins leasing in 2025, when construction is scheduled to be done.

Estimates compiled by Miami Homes for All, a housing advocacy group, show the local housing shortage is most severe for households making under 80% of the county’s median income. But it’s still considerable — an estimated countywide shortage of 16,970 units — at the range targeted by the Miami Beach project.

The Collins Park project is not the only affordable-housing development under way in Miami Beach. The city’s independent housing authority is planning to build two affordable apartment complexes for seniors with a total of 119 units.

County workforce housing push

Miami-Dade, meanwhile, has made workforce housing development a big piece of an ongoing push to redevelop aging public housing projects and parking lots and excess land around Metrorail and other transit stations.

In exchange for the right to redevelop, the county is requiring for-profit developers to set aside units targeting workforce income levels in projects like CORE Link at the Douglas Road Metrorail station. City of Miami anti-poverty agencies like the Overtown community redevelopment agency have also made workforce housing set-asides a priority in new developments they help sponsor.

Some cultural groups are also making plans to build affordable housing for artists, including the Bakehouse Art Complex in Wynwood. The nonprofit center, which provides studios and exhibition spaces for visual artists, helped secure city approval of a neighborhood-friendly rezoning plan for the mostly residential north half of Wynwood. Bakehouse administrators are now working with a developer on plans to build affordable housing on parking lots and open space around its building, a former commercial bakery in the heart of the neighborhood.

But the shortage of available land and sharply rising property values has made developing workforce and affordable housing especially hard in places like Miami Beach, which is undergoing an expansive wave of ultra-luxury residential projects.

Collins Park cultural hub

The Beach workforce development, officially known for now as the Collins Park Artist Workforce Housing Project, has been in the works for more than five years. Servitas won a competitive bid for the project in 2019 after another finalist pulled out. In 2021, the company signed a development agreement with the Beach and a long-term lease to build on a city-owned parking lot.

The new building helps round out a long-range city plan to expand a cultural hub around Collins Park, which already includes the City Ballet headquarters and school, the Bass museum and the Miami Beach Regional Public Library. The city arts bonds also will contribute $20 million towards a new wing and other improvements for the Bass, and $7.7 million to build an educational center for the Miami New Drama company, which performs at the Colony Theatre on Lincoln Road Mall, in space at a new city parking garage next door to the planned workforce apartments.

Servitas and the city cobbled together a plan that doesn’t rely on some of the typical sources of financing for affordable housing projects, which in many cases include state and federal tax credits and grants. Instead, they turned to the little-known Miami-Dade Industrial Development Authority, which issues bonds to promote economic development. Besides funding industrial projects, the bonds also can be used to finance facilities for nonprofit corporations, including for educational purposes.

The city formed a standalone nonprofit for the project and signed on the ballet company school, which had long been searching for better and expanded housing for students who come from outside Miami, qualifying the apartment building for $32 million in county bonds.

The city’s cultural bonds program kicked in an additional $4 million towards the project, which will also include a ground-floor space for arts or nonprofit groups, though which and for what use has yet to be decided.

Keeping rents low indefinitely

Because there is no direct state or federal funding, Servitas — which will also manage the building long term — will be able to prioritize artists and performers, city first responders and employees, veterans and members of other categories, such as Beach hospitality workers for apartment leases, Beach officials said. Typically, a building using federal funds can’t pick and choose and must be open to all applicants on a first-come, first-served basis because of anti-discrimination regulations.

Another key feature that backers say is unusual: The nonprofit ownership will allow rents to remain low for the long haul. Moreover, Miami Beach commissioner Richardson said, once the bonds are paid off, by 2059 if not sooner, the city will own the building. That means it can keep rents low for the life of the building, well beyond the typical span of 30 years for state and federally funded private affordable housing.

The new building and the dormitory will also mean a significant boost for Miami City Ballet and its school, which has been renting hotel rooms nearby and searching for an upgrade that will make it easier to recruit top students, teachers and choreographers, said company executive director Juan Jose Escalante. About half the company’s professional dancers come from its school, he said.

Ballet company dancers and staff members will also qualify for the workforce rental apartments, Escalante said.

“This project is a result of the original, pioneering and collaborative thinking by Miami Beach leadership to develop a true cultural campus,” Miami City Ballet board chair Jeff Davis said in an email. “The result will allow our dancers to focus on honing their craft instead of on where to live and how to get to rehearsals.”

Initially, the company will pay $400,000 a year to rent the dormitory floor, which will have separate entrances and amenities such as a lounge for students so they don’t mix with apartment tenants, as well as two apartments for adult resident advisors. Under the agreement with the city, the ballet company can use one additional floor in the future as well. The new building will sit across 23rd Street from the ballet company’s headquarters and school.

“That will put us in a position to attract a whole other level of candidates for the school and the company,” Escalante said. “That will be phenomenal. It will be a great little cultural community right at our doorstep.”

Once the bonds are retired, the ballet company will share in the rent revenue from the building.

So tight is the financing that it worked only because the city and developer were able to keep some typical development costs down significantly. The land was free because the city already owns it, and the developer won’t have to provide on-site parking — usually a costly proposition — because of the award-winning parking garage next door that its tenants can use.

Servitas agreed to lower its standard fees, and the county provided an exemption for impact fees usually charged to new development, the city and developer said.

Richardson said the city is not done seeking innovative workforce housing ideas. The cultural bonds program has allocated $30 million for a plan to rehab and expand North Beach’s shuttered Byron Carlyle Theater into a cultural hub, and Richardson sees another opportunity to replicate the Collins Park model there.

“It is my dream we would have a new cultural space there and workforce housing on the top of it,” Richardson said.