Florida lawmakers will consider making it cheaper for businesses to rent offices and putting more benefits in the opportunity zone law in this legislative session.
They’ll also try to change the law on vacation rentals booked through platforms such as Airbnb. Local governments now have authority to regulate vacation rentals booked through home-sharing platforms in a state with heavy second-home ownership, but this might change.
One bill doesn’t stop municipalities and counties from making laws governing vacation rentals — just as long as the laws are applied uniformly to all homes, rented or not.
“This is a property rights issue,” said Tom Butler of Florida Realtors, which supports the initiative. “You own a property, you should be able to rent it,” said Butler, the organization’s public policy communications director based in Tallahassee.
House Bill 987 and its companion Senate Bill 824 also would prohibit local governments from setting occupancy limits and require homeowners who apply for vacation rental licenses to provide their contact information to the Florida Department of Business and Professional Regulation in case of complaints. Currently, municipalities and counties can’t outright ban vacation rentals unless they were implemented before June 1, 2011. The bills strike the date.
“Some local governments have passed ordinances that walk a thin line between regulations and bans,” said Danielle Blake, senior vice president of government affairs and housing at the Miami Association of Realtors, which also supports the bills.
The measures is expected to be hotly contested since many local ordinances are in place. For example, Miami Beach prohibits renting for six months and a day or less unless the home is in specific zones outside residential areas.
“It’s important to our residents’ quality of life that the Legislature not eliminate our opportunity to regulate what have become predatory practices,” Miami Beach Mayor Dan Gelber said without addressing the bills directly. “One size doesn’t fit all. Our residential communities have seen some real trauma from outlawed home-sharing platforms.”
The real estate world is abuzz about opportunity zones, a device created by the federal Tax Cuts and Jobs Act in 2017 to defer taxes on capital gains by investing in real estate in distressed areas. The law has been criticized for not mandating benefits for area residents, especially with some projects pushing up land values and pushing out residents through gentrification.
House Bill 481 would pave a path for developers to get more benefits for investing in opportunity zones in return for social and public benefits.
“The federal law has no accountability of what is done with the residents in the community. The state law, I think, is aimed at this problem,” said Ronald Fieldstone, a partner at Saul Ewing Arnstein & Lehr.
The Miami attorney is among those calling on local governments to give incentives in return for benefits to low-income residents.
“The proposed state law, which is very proactive, is now enabling local government and state government to provide incentives to developers if they proceed with opportunity zone projects that benefit their community,” said Fieldstone.
Some of the proposed state incentives would offer a sales tax exemption on building materials and business equipment. To get these benefits, developers would have to add jobs and collaborate with local universities.
The bill also calls for an opportunity zone development agency with eight to 13 commissioners for each zone. State Rep. Anika Tene Omphroy, a Lauderdale Lakes Democrat, filed the bill. She didn’t return a request for comment by deadline.
The sales tax paid on commercial leases could be decreased to 4.2 percent from 5.7 percent. Florida is the only state that levies this tax.
“To make up for the projected $500 million annual revenue loss if the bill passed, Senate Bill 1112 proposes a sales tax on online transactions,” said Darcie Lunsford, president of the South Florida Chapter of commercial real estate development association NAIOP, which supports the bill. “The internet tax would generate $300 million to $450 million a year.”
Businesses would get a rent break if Senate Bill 618 passed. It would exempt the first $10,000 in commercial rent from the sales tax in 2020, $20,000 in 2021, $30,000 in 2022 and so on until 2028 when the tax exemption would be capped at $90,000 in rent.
“It makes us more competitive. If we are the only state in the nation that charges a sales tax on commercial base rent and commercial operating expenses, it makes us less competitive. It drives up the cost of doing business in Florida by 5.7 percent right now,” said Lunsford, executive vice president and director of office leasing at Butters Realty & Management in Coconut Creek. “I can assure you when Amazon was looking at this place, that was one of the things that was put into their formulas.”
Lawmakers also will tackle Senate Bill 142 and companion House Bill 127 that would require local governments to make public their permit and inspection fees and how they spend the revenue.
“Another bill would make it easier to close permits that have been left open for years or even decades. Open permits become an issue at resale and stand in the way of closing transactions,” said Blake of the Miami Association of Realtors.
Senate Bill 902 and companion House Bill 447 would allow for someone else, aside from the property owner or contractor who pulled the permit, to close it. In some cases the work was finished, in others it never was started and, in many cases, permits have been open since Hurricane Andrew in 1992.
“Let’s say the owner did roofing work. They came out, they completed the work, but it’s that contractor that has to go back to the city and close out that permit,” Blake said. “The contractor was moving on to the next job instead of going back to the city and closing out the permit.”
1 thought on “On Tap in Tallahassee, Real Estate Bills on Vacation Rentals, Opportunity Zones”
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