A key funding mechanism for Florida’s statewide affordable housing programs is the Sadowski Affordable Housing Trust Fund. Passed in 1991, the Sadowski Act created a statutory law that dedicates a portion of the documentary stamp tax paid on all real estate transactions to an affordable housing specific trust fund. However, since the early 2000s, state legislators have raided the trust fund on a yearly basis. Instead, using the monies to fill budgetary shortfalls in the general revenue fund.
Florida is one of two states with a constitutional amendment requiring a balanced budget. When the legislature fails to pass a structurally balanced budget (a budget where general revenue fully covers discretionary spending), they sweep money from the affordable housing trust fund and other trust funds to cover the difference. In total, Florida lawmakers have swept more than $2.3 billion in Sadowski Trust Fund money. This trend continued in fiscal year 2019-20, with only $85 million of the $350 million available in Sadowski funds being appropriated for their intended programs.
The housing programs supported by the Sadowski Fund include the State Housing Initiatives Partnership or SHIP program. SHIP is used by Habitat for Humanity to ensure mortgage affordability for the lowest-income families in our homeownership program. SHIP funding is also used to retrofit homes for seniors and individuals with special needs. In addition to SHIP, Sadowski funds support the State Apartment Incentives Loan or SAIL program. SAIL offers low-interest loans on a competitive basis to affordable housing developers and is crucial to stimulating private sector investments in affordable housing.
Unfortunately, the brunt of Sadowski Trust Fund sweeps is experienced by hardworking low to moderate-income families. Families that are doing everything right but cannot get ahead due to rising housing costs and stagnant wages. In FY 19/20, Lee County was scheduled to receive more than $8.5 million in SHIP funding, money that could’ve been used to make homeownership attainable for many modest income families. However, after the sweeps, the Lee county received just $1 million in SHIP funds.
Governor DeSantis has signified his support for fully appropriating the Sadowski funds and understands the connection between affordable housing and economic growth. In fact, the Governor’s proposed FY 19/20 budget included full Sadowski funding. Unfortunately, when the legislature sent a budget to his desk with Sadowski sweeps, he declined to line-item veto the sweeps. Had the Governor done this, it would have sent a strong message to Florida lawmakers that the days of passing structurally unbalanced budgets and then raiding trust funds are over.
Recently, the Governor released his proposed budget for FY 20/21. Again, he has called for appropriating all Sadowski funds for affordable housing. This is a great start, but if the Governor is unwilling to line-item veto proposed sweeps from the legislature—then it merely serves as a pander to affordable housing organizations.