Seven self-proclaimed “luxury” student apartment complexes are getting a municipal tax break because of Florida’s Live Local Act, meant for accommodations that house low-income residents.
Cost to the city of Gainesville taxpayers: More than $4 million.
“That’s a significant hit to our governments to miss that,” said Bryan Eastman, Gainesville District 4 city commissioner.
Haim Sadovnic, 20, a junior economics student at the University of Florida, is a good example of the dilemma facing the city. He pays about $1,000 per month to live at Theory Gainesville, a luxury student apartment complex on the corner of NW Fifth Avenue and NW 12th Street. But he’s not the one who pays for it.
“Sometimes, I’ve paid it with my financial aid money,” he said. “Other times, it’s my parents.”
Because Sadovnic makes little to no income annually, in the eyes of the state of Florida he is considered low-income, at least according to Florida’s Live Local Act, a bill signed into law in March 2023.
As part of this law, cities are required to give tax exemptions to newly built apartment complexes and housing units serving low-income residents, incentivizing them to keep prices affordable. This can become a problem for a college town like Gainesville.
“The issue with Gainesville is that students on paper look like they have zero income,” said Bryan Eastman, Gainesville District 4 city commissioner. Eastman has been outspoken about the law and the concerns the city is facing.
He said most students get rent paid for by their parents, scholarships, financial aid or student loans. None of these are reported as income, and it allows for what Eastman calls the “student loophole.” Luxury student apartment complexes can qualify for the same low-income tax exemptions made for those that house truly low-income residents.
So far, seven self-described luxury student apartments have been accepted for this tax exemption: Alsander GNV, Aero on 24th, Anthem House, Campus Circle, Residences at Markets West, Thirty-Fourth and Theory Gainesville.
These apartments charge between an estimated $1,400 to $1,700 for a one-bedroom apartment, according to the apartments’ websites. The rent limit under the Live Local Act is $1,951 for a one-bedroom apartment.
Apartments are not required to give any rent breaks, according to the law.
According to management, Thirty-Fourth and Anthem House offer fair housing, meaning they are required to offer housing to all those who meet the buildings’ requirements to live in the complex, whether they are a student or not. But students are still in the majority.
“We cater to young professionals and graduate students,” said Didier Louis, the property manager for both Thirty-Fourth and Anthem House. “That happens to be our majority of our clientele.” The two apartment complexes are owned by the Rise real estate company.
“I can’t necessarily say that a property is low-income or not,” Louis said, “because with fair housing, everybody is welcome to apply and qualify.”
Attempts by WUFT to reach management of the other apartment complexes were unsuccessful.
According to Eastman, the seven apartment complexes accepted for the tax cut paid more than $4.7 million in taxes last year to the city. But because of the Live Local Act, they are getting a 75% tax reduction.
And with the city’s financial backing of Gainesville Regional Utilities in limbo, Eastman said the apartment tax breaks put the city in a bad spot.
“It is absolutely exacerbated by the major budget cuts we’ve made last year and all of the chaos and financial issues that we are possibly looking at,” he said, “as this [GRU] board has made quick actions to hurt our budget this year and potentially more next year.”
All four members of the GRU board submitted letters of resignation over a lawsuit by Gainesville Residents United. The lawsuit challenges the eligibility of the members on the board and Gov. Ron DeSantis’ availability to appoint those who do not live in the Gainesville city limits.
Other cities across the state are expected to lose tax revenue from tax breaks, but its effect on larger cities will not be as significant.
For instance, the city of Tampa is home to the University of South Florida, with many luxury student apartment buildings also calling the city home. But Lynn Hurtak, a Tampa city council member, said she does not anticipate these tax breaks to be a big blow to the city.
A Florida Senate bill approved in this year’s legislative session, SB328, creates changes to the Live Local Act. Introduced by Miami-Dade Republican Sen. Alexis Calatayud, the bill creates additions like parking requirements and height restrictions.
In an interview with Florida Politics, she said “We’ve received feedback from many stakeholders.”
The bill was approved by both chambers Feb 28. It is awaiting Gov. Ron DeSantis’ signature. But the bill does not address the “student loophole.”
“I let the Senate committee know,” Eastman said. “I’ve spoken to various legislators and staffers up in the Capital to try to make a change here.”
Some, like Sam Leschins, 20, a sophomore public relations student at UF and Theory Gainesville resident, argue the loophole is unnecessary, as it does not benefit the students in any way while simultaneously hurting the city.
“If the city is going to lose four million in tax dollars,” he said, “I would absolutely not support the bill."