For the third year in a row, Florida’s legislature rewrote provisions of the landmark Live Local Act to make it easier for apartment developers and owners to claim lucrative property tax exemptions for affordable housing, thwarting the efforts of cities and counties to protect their tax revenue.
This year’s legislation also allows for affordable housing developments on land owned by religious institutions without rezoning. And although the new rules don’t take effect immediately, both changes come as existing law will force Central Florida municipalities to hand out more of the coveted tax exemptions in 2026, with developers lining up in Orange, Osceola, Lake and Seminole Counties to push their projects.
The cost to local cities and counties could be millions of dollars.
On the last day of the regular session, both houses overwhelmingly passed HB 1389 to codify some of the changes in the Live Local Act that were left out of last year’s bill. Their handiwork now awaits a signature from Gov. Ron DeSantis.
Adopted in 2023, the Live Local Act loosened zoning regulations by requiring cities and counties to approve multifamily development projects in areas already zoned for commercial, industrial, or mixed-use if at least 40% of the units are affordable for households making up to 120% of the Area Median Income. This year’s “YIGBY” legislation (Yes In God’s Backyard) adds the same flexibility to church-owned land, as long as the property is at least 3 acres and has housed a religious institution for 10 years.
The latest update also changes the eligibility for cities and counties to opt out of a 75% property tax exemption for providers of “Missing Middle” housing — a provision that was added during the 2024 session at the urging of municipalities. Beginning in 2027, the opt-out would only be available if the county has had a surplus of available rental units for three previous years to block the exemption, rather than just for the most recent year.
The Orlando-Kissimmee-Sanford MSA had a surplus of missing middle units in 2023 and 2024, according to the Shimberg Center for Housing Studies, which tracks housing affordability across the state. That opened the door for all four counties (Lake, Orange, Osceola and Seminole) and cities within their boundaries to opt out of the tax exemption. But the 2025 Shimberg report moved the Orlando MSA into the negative column with a deficit of 1,945 available rental homes for people earning up to 120% of the AMI. Orlando also has the most severe shortage of affordable homes for low-income renters in the nation, according to the National Low Income Housing Coalition.
Lowndes property tax attorney S. Brendan Lynch told GrowthSpotter that any opt-out resolutions local taxing authorities have already approved for 2026 should no longer be valid because of the rental home deficit.
“The data they need to use is the 2025 study for 2026, and they adopted the resolution too early,” he said. “So I think there is a clear argument that those resolutions at some point need to be voided, whether that’s on their own accord or because they were requested to do so by someone that is impacted.”
Dozens of new apartment complexes that were built in a post-pandemic boom are once again eligible to claim lucrative tax exemptions that could shave millions off the tax rolls in the four-county region. The owners were required to file their paperwork, including their rent rolls and tenant income data, to their respective property appraiser’s office by March 2. The appraisers have until July to approve or deny the exemptions.
Orange County will be the most impacted. This year, 34 apartment complexes were certified for missing middle tax exemptions, including 12 that were first-time applicants, according to the Florida Housing Finance Corp.
Many of the first-time applicants are considered Class-A, luxury apartment communities, like The Julian in Creative Village and Bainbridge World Center near Disney. But they must provide rent rolls showing that their rents are at least 10% below market rate, as defined by HUD, and income data for each tenant to qualify for the exemption.
Bobby Anderson is managing director of Alliance Residential, which developed its Prose-branded communities specifically to address the shortage of rental homes for the “missing middle” income earners. The company has qualified for the 75% tax exemption for several communities across the state, including two in the Orlando market.
Anderson said he added a third project, Prose Horizons Village in Orange County, to the missing middle program and increased the number of exempt units at Prose Stevens Pointe in St. Cloud from 118 to 218. He said the projects should qualify for the exemption even if the local elected officials had already voted to opt out of the program for 2026.
“I’m sure we will have that discussion with them,” Anderson said. “I believe Osceola County opted out prior to the Shimberg report coming out. But because the Shimberg report came out the way it did, they can’t — even though they voted to. State statute governs at that point.”
Osceola County Property Appraiser Katrina Scarborough told GrowthSpotter that six apartment complexes have applied for the exemption, on top of the five that were approved in 2024. Those include two recently completed Class-A communities near the Tupperware SunRail station (19South and Altís Grand Twin Lakes).
Scarborough said the six new properties have a combined market value of nearly $274 million. The hit to Osceola’s tax roll, if the opt-out resolutions are voided, would be a huge blow.
“It would be several million, for sure, if every single one of them qualifies,” she said. “My guess is that they’re all going to qualify. We might have one or two that don’t meet all of the criteria, but it would be millions easily.”
Seminole County currently has three apartment communities grandfathered in, and received a fourth application this year from Cypress Longwood.
In Lake County, there are three first-time applications from Bristol Park and Tesora apartments, both located in the Four Corners submarket, and Saunders Lakefront Living, a 55+ community in Mount Dora.
Eric Bjorn, operations director for the Lake Property Appraiser’s office, said that several other projects in the county received the exemption last year from the City of Clermont or just from the St. Johns River Water Management District, but they could be in line for significantly higher discounts if the county’s opt-out resolution is now considered invalid.
Amanda White, vice president of the Florida Apartment Association, said that if more apartment owners are getting tax exemptions, it means the Live Local Act is working. The whole point of the law was to incentivize developers to build workforce housing and protect tenants from rent hikes, she said.
“The success of the Live Local Act is undeniable,” White said. “Since the Live Local Act was first signed into law, over 180 developments, totaling 55,000 new apartment homes, have entered the development pipeline.”
Another key provision in HB 1389 will clear the way for even more multifamily developers to benefit from the Live Local Act. It allows developers to apply for missing middle tax exemptions when they receive building permits rather than waiting until the property is completed and leased. That, combined with the new three-year rule for opt-outs, should make it easier for developers to get financing for new projects, helping to solve what Anderson calls the “lender problem.”
“In order for this to be the bill they really want it to be, and make a meaningful difference in providing workforce housing and affordable housing for that matter, we’ve got to be able to get a lender to give us credit for that income,” Anderson said.
The apartment association has been lobbying for the changes since the opt-out provision was added in 2024. White said HB 1389 “provides much-needed protections for Live Local Act projects in the development pipeline and raises the bar jurisdictions must meet before they are eligible to opt out of the Missing Middle Property Tax Exemption.”
Have a tip about Central Florida development? Contact me at lkinsler@GrowthSpotter.com or (407) 420-6261. Follow GrowthSpotter on Facebook and LinkedIn.
