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Table of Contents Table of Contents........................................................................1Executive Summary.....................................................................5Overview of Okeechobee County Housing, Population, and Economy......................................................................................8

Introduction........................................................................................8Housing Market Area.........................................................................9Characteristics of the Okeechobee/Coastal Ownership Housing Market..............................................................................................11Population and Household Trends...................................................13

BEBR Projections: Number of Households Projected to Grow More Slowly............................................................................................13Squaring BEBR Projections with the Reality of Okeechobee’s Housing Market.............................................................................14

Age Distribution...............................................................................15Employment, Income, and Cost of Living.........................................16

Job Growth.....................................................................................16Unemployment..............................................................................16

Okeechobee Employment Categories and Wages............................16Federal Cast Stone Chooses Okeechobee........................................18Comparative Wages, Okeechobee and Counties East......................18Cost of Living....................................................................................21

Resale Home Market.................................................................22Tax-Appraised Values Show Modest Housing Stock........................22Existing Home Values Rising Strongly.............................................22

Median Prices Up in Recent Years................................................22Individual Home Sales Show 7.8% Annual Appreciation..............23

Huge Price Increases in Treasure Coast..........................................23Okeechobee Real Estate Manufactured Home Values are Rising Too..........................................................................................................23

Manufactured Housing’s Impact..............................................25Introduction......................................................................................25Okeechobee Restrictions on MH Placements...................................26How Manufactured Housing Became So Popular in the County......27MH Isolation.....................................................................................28MH Opportunity Cost.......................................................................28

Equity-Building Opportunity.........................................................29Low-Cost Financing Opportunity..................................................30Summary: Reducing MH Opportunity Cost to Zero......................30

Demographics of Okeechobee MH Residents..................................31MH Parks..........................................................................................32Cost Comparison..............................................................................33

Housing Needs Assessment for Okeechobee County - Richard Genz - Housing & Community Insight - Page

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New Construction.....................................................................34Residential Construction is Accelerating.........................................34Unit Size Is Increasing.....................................................................36Builders............................................................................................37Residential Land Market..................................................................37

Housing Finance.......................................................................41National Mortgage Market Serves Okeechobee..............................41Controlling Default Risk: Cash Downpayment vs. Credit Quality....42Financing Manufactured Housing....................................................43Home Improvement Financing.........................................................44Subsidized Finance Programs..........................................................45Reverse Mortgages...........................................................................46

Rental Housing.........................................................................47Income and Demographics...............................................................47Rental Housing Construction...........................................................47Subsidized Rental Housing...............................................................47Manufactured Home Rentals............................................................50Market Rents....................................................................................51Occupancy Rate................................................................................52Rental Housing Needs......................................................................52

Renter Incomes.............................................................................52Renter Cost Burden and Crowding...............................................53

Targets: Fully Meeting the Need for Affordable Rental Housing....55Tax Credit Rental Housing...............................................................56What Happened with Okeechobee II?..............................................58

Description and Condition of Housing Stock...........................59Single-Family Site-Built and HUD-Code Manufactured Homes Dominate..........................................................................................59Vacant and Seasonal Units...............................................................59Overall Condition of the Housing Stock...........................................59

How the county evaluates condition.............................................59Single-family units: site-built and manufactured..........................60Quality of Okeechobee Single-Family Construction is Trending Higher............................................................................................61Condition of Multi-family Housing................................................62

Manufactured Housing Quality and Condition.................................62Vintages of Manufactured Housing...............................................62Septic Systems on Small MH Lots................................................65

Code Enforcement............................................................................65Minimum Housing Code................................................................65Licensing Farmworker Housing....................................................66Additions to MH: Gray Area of Code Enforcement.......................66

County’s Housing in Racial/Ethnic Perspective........................68Ownership Rate................................................................................68Housing without Plumbing or Kitchen.............................................68Crowding..........................................................................................68


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Housing Problems in Block Groups with High Proportion of Minority Population.........................................................................................70

Defining Block Groups with High Proportion of Minority Population......................................................................................70

Farmworker Housing................................................................73Housing Programs in Okeechobee County...............................76

Overview...........................................................................................76Okeechobee Nonprofit Housing.......................................................76Okeechobee Community Improvement Association.........................77Affordable Housing Advisory Committee.........................................77Continuum of Care/Mission Outreach..............................................78Okeechobee Senior Services............................................................78Indiantown Non-Profit Housing and Community Development Corporation.......................................................................................79

How County Policies and Regulations Affect Housing.............80Land Use Regulation........................................................................80

Background...................................................................................80Manufactured Housing is Tightly Regulated................................80County Has No Sites for Multifamily Housing..............................80City of Okeechobee.......................................................................81Subdivision Regulations................................................................81

Infrastructure...................................................................................81Sewer and Water...........................................................................81Transportation...............................................................................82

Timely, Predictable Permitting.........................................................82Property Taxes and Fees..................................................................82Okeechobee’s Housing Plan.............................................................82

Recommended Strategies.........................................................83Strategy: Promote Development of Affordable Rental Housing.......83

Action: Re-zone land for multifamily housing...............................83Action: Compete for limited Section 8 Vouchers for people with disabilities.....................................................................................83Action: Seek Rural Housing Service rental assistance.................84Action: Compete for rental-related HOME funds..........................85Action: Partner with nonprofits to develop Section 202 supportive housing for the elderly..................................................................85Action: Revive Okeechobee II.......................................................86

Strategy: Improve Farmworker Housing.........................................87Strategy: Education..........................................................................88

Action: Take steps to pre-empt NIMBY.........................................88Action: To prevent NIMBY (not-in-my-back-yard) disputes from polarizing, consider using mediation............................................89Action: Provide an ongoing buyer education and counseling program.........................................................................................89

Strategy: Ownership Housing Production........................................90


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Action: Increase use of FHA 203(b) financing for manufactured housing..........................................................................................90Action: Activate the USDA Rural Housing Service 502 Guaranteed Loan Program................................................................................90Action: Provide information and financial support for owners of pre-1976 manufactured homes to enable them to upgrade to late-model units....................................................................................91

Strategy: Improve the Condition of the Housing Stock...................91Action: Offer rehab loan financing to address limited “aesthetic” improvements as well as code problems in owner-occupied and rental properties............................................................................91Action: Apply for MH rehab, replacement, or park re-development funding from Corporation for Enterprise Development................91Action: Work with local lenders to design a rehab program for HUD-code manufactured homes...................................................91Action: Promote use of home equity conversion mortgages for seniors...........................................................................................92Action: Inspect and certify rental units.........................................92Action: Consider a rehab sub-code................................................92Action: Promote favorable personal property financing for replacement of MH units in parks and on private land................92Action: Eliminate the existing “gray area” of code enforcement for additions to HUD-code manufactured homes...............................93Action: Develop county incentives to encourage buyers to purchase Wind Zone 3 HUD-code homes for placement in Okeechobee...................................................................................93Action: Apply for state assistance to retrofit and upgrade pre-1999 MH installations in MH parks.......................................................93Action: Investigate special assessments for code repairs.............93Action: Increase staffing for pro-active code enforcement...........93Action: Activate HUD’s Section 203(k) purchase/rehab program 94Action: Maintain strict regulation of installation of HUD-code and modular units................................................................................94

Strategy: Modify Regulations, Programs, and Policies....................94Action: Use multifamily zoning to promote homeownership........94Action: Provide affordable housing density bonus........................94Action: Reduce utility hookup fees for affordable housing units. .95Action: Identify county-owned land for affordable housing development..................................................................................95Action: Review 30-acre minimum for MH subdivisions meeting design standards...........................................................................95Action: Consider inclusionary zoning............................................95Action: Organize an ongoing county housing initiative................97


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Executive SummaryOkeechobee County’s housing market is hot. After decades of moderate rises in land prices and home prices, and stable levels of residential construction, there has been a remarkable spike in all three indicators during the past three years. Home prices are appreciating strongly and lot values are rising faster still. Residential construction is accelerating.

Driving the boom are the affluence and steep increases in housing values in coastal counties to the east. Okeechobee County’s economy is far from being completely integrated with that of the Treasure Coast. In fact, the county remains a world apart, and that is its appeal. Okeechobee’s rural character and neighborly environment appeal to a segment of coastal residents. They have more buying power than traditional Okeechobee residents.

In the context of the greater Treasure Coast housing market, Okeechobee is an “alternative” location. It offers good highway connections to urban coastal jobs. Coastal county homeowners can choose a new lifestyle, sell their homes, and substantially upgrade their housing and/or increase their savings by moving to Okeechobee. Former coastal county households already account for up to 10 percent of Okeechobee’s total.

Predicting the duration of the current boom is tricky, because home prices and construction increases are not being driven by the county’s economy, but by the economic calculations and lifestyle preferences of in-migrants. Another driver is the group of people buying land with a plan to move to Okeechobee in the medium-term future. Speculation is part of the boom, but big increases in residential construction indicate that speculation explains only some of the increase in land values. Aside from the special case of the Viking area, it appears that the market’s momentum is powered mainly by people who want to live in the county, now or later.

Okeechobee is on its way to becoming more of a bedroom community, with many more working households commuting than the 20 percent who do now. In-migrants will continue to bid up the prices of ownership housing and residential lots. They will build larger, higher-quality homes than Okeechobee’s existing stock offers, and they will attract homebuilders away from the entry-level market and its smaller margins. The increasing number of commuters will make ownership housing less affordable for traditional Okeechobee residents who do


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not commute, but rely on the local economy. Unless countermeasures are taken, market forces could perpetuate the county’s heavy reliance on HUD-code manufactured housing to meet entry-level and retiree needs for low-cost housing. Site-built home price increases will force some renters to delay purchasing their first homes, increasing demand for the county’s limited rental stock.

The Okeechobee market has traditionally been served by small-scale local builders. That is about to change, as several large projects are being planned by out-of-town developers. HUD-code units continue to supply the lower-priced end of the market, and for decades they have comprised 30-40 percent of the new home market. The absence of land zoned for multifamily housing, except in the City of Okeechobee, prevents site-builders from delivering larger-scale developments of low-cost attached housing that could compete effectively with HUD-code units.

HUD-code manufactured housing (MH) is home to 45 percent of the county’s year-round households, making the county number five in Florida on this measure. Most MH are owner-occupied. In the current strong housing market, real estate manufactured homes with land are appreciating at almost 5 percent annually.

HUD-code homes have evolved so much over three decades that it is impossible to generalize about them. Many manufactured homes pose serious housing problems and safety risks. Others are fully comparable to high-quality site-built homes. The county has done a good job of establishing controls and design standards for new and used units now being placed. The big challenge is to come to grips with the large, existing MH stock. The vast majority of Okeechobee MH, both real estate and personal property, meets neither HUD wind standards nor Florida’s strict installation standards. Rehabilitation, replacement, installation retrofit, and code enforcement for additions are important needs for the county’s MH stock.

The national mortgage market is serving Okeechobee with a wide array of financing products, but good opportunities exist to improve homebuyer financing options. FHA loans should be used to finance manufactured homes on land. USDA Rural Housing Service 502 guaranteed mortgages are a valuable, under-utilized financing source for middle-income home buyers. Expanded access to equity-line financing would help MH owners upgrade their homes, and rising MH values should make such credit viable for banks. Buyer education and credit counseling programs are needed, and should definitely include specialized training for the MH market.


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The county has a well-recognized shortage of quality, affordable rental housing. Housing problems are common among the county’s renters, 28 percent of whom have incomes below the poverty line. Attracting funding for rental subsidies should be a priority for the county. The proportion of low-income Okeechobee renters who receive rent subsidies is much lower than in coastal counties or statewide. Almost half of renters live in pre-1980 manufactured and mobile homes. Ten percent of renter households are severely overcrowded. To address the housing needs of cost-burdened renter households, 900 rental vouchers and/or subsidized rental units are needed.

Multi-family construction has been negligible. The county should identify and zone suitable parcels for multifamily construction and invite developers to design high-quality units with good management. The already-approved Okeechobee II tax credit rental project can be revived and built.

Over-reliance on low-quality HUD-code housing has caused a sizeable problem of substandard housing. About 3,000 single-family units are substandard (23.4%), including 2,273 mobile and manufactured homes classified as real estate.

Special housing problems of Okeechobee’s African American and Hispanic households include much lower homeownership rates, higher incidence of extremely substandard housing, and overcrowding (particularly for Hispanic households). At least 2,300 migrant and seasonal farmworkers live in the county, about 15 percent of the workforce. Some farmworkers accompanied by spouses are becoming homeowners with support from Okeechobee Nonprofit Housing. Unaccompanied workers typically live in squalid conditions as they work to establish themselves. Their unconventional living arrangements and sporadic incomes don’t match well with existing housing options and regulations.

The county has begun to develop an organizational capacity for tackling affordable housing challenges. The Affordable Housing Advisory Committee oversees SHIP and provides policy leadership. Okeechobee Nonprofit Housing has focused on housing needs in the Hispanic community. Indiantown Nonprofit Housing is well-respected and willing to bring its expertise to the county.

The county should pursue three basic housing strategies: 1) promote high-density and multifamily site-built housing development for both renters and owners; 2) use information, public relations, and design controls to pre-empt NIMBYism and build acceptance of quality,


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affordable housing, especially rental housing; 3) create incentives for owners to rehabilitate or replace existing housing, especially HUD-code homes. In view of the rapid changes now underway in the price structure of Okeechobee housing, the county should consider launching a comprehensive, ongoing housing initiative.


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Overview of Okeechobee County Housing, Population, and Economy

Introduction

Okeechobee is a rural county on the northern shore of Lake Okeechobee, and its real estate market is now being strongly influenced by the burgeoning Treasure Coast counties of St. Lucie, Martin, and Palm Beach to the east. Beginning with a population of about 11,000 in 1970, the county grew rapidly in the seventies and eighties, and more slowly during the nineties to its 2004 population of about 37,500 year-round residents.1 The county has long been a popular winter destination, and thousands of seasonal residents appear in November-December every year.

The county’s job base is concentrated in the service-providing industries of education and health care, retail trade, tourism, and government, including a large number of workers at correctional institutions. Agriculture, mainly beef cattle and dairy, accounts for about 15 percent of the county’s jobs. Per capita income is lower in Okeechobee than in counties to the east and lower than in Florida statewide. So is the cost of living.

A steadily increasing share of Okeechobee residents commutes to jobs outside the county, primarily to the counties east. Good highway connections put many more jobs within reach for those willing to commute 30-60 minutes.

Prices for Okeechobee land and homes have risen sharply in the past three years. Demand from former residents of counties to the east is driving the trend. Single-family construction activity has spiked during the same period. Some buyers are purchasing lots for retirement, while others are choosing to enjoy Okeechobee’s small-town atmosphere and commute to their present jobs in coastal counties.

Most of Okeechobee’s population is clustered in the southern part of the county, in the City of Okeechobee and surrounding area. The county’s 1974 zoning ordinance has preserved large areas as agricultural land and has prevented sprawl. A large majority of households chose to buy HUD-code manufactured homes during the county’s rapid growth in the 1980’s, when mobile homes accounted


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for an estimated 70 percent of all new homes.2 As a result, HUD-code manufactured homes account for an unusually high proportion of year-round occupied homes, 45 percent as of 2000.

Almost three Okeechobee households out of four are homeowners. There is very little multifamily housing, and about half of the county’s rental stock is HUD-code manufactured housing.

Hurricanes Frances and Jeanne both hit the county in 2004 with 100 mph winds. The storms caused major devastation in the counties to the east and destroyed some 300 homes in Okeechobee County.

Little housing subsidy has flowed to the county. Okeechobee receives an annual SHIP grant of $350,000 and has two subsidized rental complexes. State HOME funds have recently supported development of single-family rentals by a local nonprofit organization. The Rural Housing Service makes a small number of subsidized loans and repair grants. The county has no Section 8 rental assistance vouchers or public housing units.

Official statistics say one out of five county residents is Hispanic, but Census officials informally estimated that 5,000 Hispanic residents were probably uncounted in 2000, making the true Hispanic proportion closer to 25 percent. Eight percent of county residents are African American.

The county is home to about 2,300 migrant farm workers, many of whom work in the counties to the east.

Housing Market Area

Housing markets often do not follow jurisdictional boundaries. Commuting patterns that define a labor market create a more accurate housing market boundary. Because about 20 percent of the county’s workers hold jobs in Martin, St. Lucie, or Palm Beach counties,3 and because market participants interviewed unanimously agreed that the county is experiencing substantial in-migration and land purchases by people from those counties, it appears clear that the housing markets of Okeechobee and the counties east are merging into one. Confirmation comes from the fact that the state Agency for Workforce Innovation includes Okeechobee in the Treasure Coast Workforce Development Region.

Within the regional market, Okeechobee is a niche market with different housing options, much lower housing costs, and a different lifestyle from its neighbors to the east. According to the Treasure


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Island Regional Planning Council, many coastal county residents already have north-south commutes of 45 minutes to one hour, making Okeechobee a reasonable alternative location that requires about the same commute time. Much of the new housing stock in those counties is of highly uniform design. Along the coast there is even greater vulnerability to hurricane winds than Okeechobee’s location 50 miles inland. Finally, the very rapid rise in home values in coastal counties has positioned many homeowners favorably for selling their home and buying more house, and more land, in Okeechobee County. Others may choose to refinance their homes and use some of their equity to purchase an Okeechobee lot for a future home, or as an investment.

Although home prices and commute times to jobs support the ongoing merger of housing markets between Okeechobee and the coast, Okeechobee’s limited shopping opportunities will act to slow down the process. The county has no shopping mall and the only big-box retailer is Wal-Mart. Medical services used to be another limiting factor, but now Okeechobee residents must travel to the coastal counties only for specialized services like oncology or cardiology.

Okeechobee’s assimilation into the coastal housing market has been happening for some time. Those who moved into the county from coastal counties in the late 1990’s got the full benefit of Okeechobee’s “local” prices. During the past two-three years, the bidding has intensified and the market has experienced substantial price increases.

Some 1,367 households moved to Okeechobee County from Palm Beach, Martin, and St. Lucie counties between 1996 and 2002. If all of these households continued to live in Okeechobee, then migrants from these counties accounted for 10 percent of all Okeechobee households as of 2002. The breakdown by county of origin and year was as follows:

Estimated Number of Households Moving To Okeechobee County from Coastal Counties, 1996-2002County of

Origin199

61997

1998

1999

2000

2001

2002

Total96-02

Martin 48 56 55 64 56 60 33 372Palm Beach 97 93 91 92 103 98 56 630St. Lucie 50 51 40 53 45 55 71 365Total 195 200 186 209 204 213 160 1,367

Source: Unpublished IRS data comparing address changes from year to year on federal tax returns. Each tax return is assumed to represent one household.


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Because some households file more than one return, the estimate of number of households is high.

Although significant numbers of coastal residents chose to move to the county, overall during the 1990’s, the county experienced net in-migration of just 339 people. The current land and housing boom will likely show up as higher net in-migration during the first five years of

this decade.Characteristics of the Okeechobee/Coastal Ownership Housing Market

Home prices have grown substantially during the past two and one-half years in the counties east of Okeechobee. Prices of individual homes rose by an average of 6.7 percent annually in Palm Beach County and 11.2 percent annually in the Fort Pierce MSA.4 These strong increases followed a decade of slower but solid price appreciation. Individual home prices rose at an average of about 4.5 percent annually in Martin, St. Lucie, and Palm Beach counties during the 14-year period ending in March 2004. These figures are based on federal repeat sales data, which is the most accurate measure of home


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Estimated Households Moved to Okeechobee County from St. Lucie, Martin, and Palm Beach Counties, 1996-2002

195200

186

209204

213

160

0

50

100

150

200

250

1996 1997 1998 1999 2000 2001 2002

Year

Num

ber o

f Hou

seho

lds

Source: Upublished IRS data comparing address changes from year to year on federal tax returns. Each tax return is assumed to represent one household. Because some households file more than one return, the number of households is likely to be somewhat overstated.

value trends because it captures the change in values for individual homes as they re-sell or are appraised for refinancing.

Many coastal county homeowners do have an opportunity to “cash out” their home equity and relocate to Okeechobee where more square footage and land can be had for the same price, in a small-town setting very different from the hectic I-95 corridor. Although Okeechobee home prices have risen strongly since 2002, the county’s median is still only a fraction of the mid-price in coastal counties. The quality of the average site-built Okeechobee home is likely to be lower, but it remains true that many Okeechobee homes are bargains compared to similar units in counties east.

Median Home Sale Prices, Okeechobee and Counties East

County 2002 2003As of

August 2004

Percent Change,

2002-August 2004

Okeechobee $82,500 $99,000$110,000

(June-August)

+33%

Martin and St. Lucie

$128,300

$153,900

$199,700 (August

only)+56%

Palm Beach $194,600

$241,300

$324,700 (August

only)+67%

Source: Florida Board of Realtors and qualified sales, Okeechobee County tax records. Okeechobee data excludes manufactured homes.


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Housing affordability is always a relative thing, a ratio of local incomes to home prices. Although wages are higher in coastal counties, they aren’t high enough to offset the much higher prices of homes, so affordability is worse in coastal counties than in Okeechobee. As of 2004, the Shimberg Center’s affordability index ranks Okeechobee as the state’s 16th most affordable county for ownership housing. St. Lucie is 23rd, and Palm Beach and Martin are 52nd and 53rd respectively. Okeechobee County’s affordability advantage grows even larger for commuters who combine its lower home prices with higher coastal incomes.

A serious housing crunch is underway in the Treasure Coast. At an August 2004 Palm Beach County Commission meeting, Commissioner Tony Masilotti said police officers, nurses, mail carriers, and teachers are being priced out. “We have sheriff’s officers living in St. Lucie County,” he said. “It’s very difficult to get a nurse to work at Palms


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West or West Boca. It’s really, in my opinion, a direct result of the housing.”5 The current crisis has been building for years. A 1995 Treasure Coast regional plan stated, “The cost of housing in much of the Region is much higher than the ability of persons employed in the region to pay. Speculation and regulations have driven the price of land up and much of the new housing supply caters to wealthy retirees moving from other areas of the US and other nations.”6

With its excellent highway connections, small-town appeal, and lower prices, Okeechobee is a housing relief valve for a segment of the coastal workforce.

Population and Household Trends

BEBR Projections: Number of Households Projected to Grow More Slowly

The best available projections from the University of Florida’s Bureau of Economic and Business Research indicate that for the next decade, Okeechobee will remain a small, slowly-growing county with much faster-growing metropolitan counties to the east. School district projections tell the same story. BEBR projects that demand for new single-family site-built housing will be stable in the range of 115 to 130 per year through the year 2015. As will be seen, these figures are far below actual unit production during the past three years.

Household growth drives housing demand. The number of Okeechobee households is projected to grow by about 14 percent during the present decade, and is forecast to continue at the same rate of growth through 2015. This projected household growth rate is 42 percent slower than what the county experienced during the 1990’s.7 The average size of Okeechobee households has been falling since 1990, and is forecast to continue declining. Okeechobee County’s population is forecast to grow modestly through 2015.

In the counties east, the number of households is projected to grow at about twice Okeechobee’s rate.

Number of Households, 1990-2015, Okeechobee and Counties East

County 1990 2000

% Change, 1990

to 2000 2010

Forecast %

Change, 2000

to 2010 2015

Forecast %

Change, 2010

to 2015


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Okeechobee 10,819 13,396 23.8% 15,252 13.9% 16,331 7.1%

Martin 41,788 53,699 28.5% 66,323 23.5% 74,534 12.4%

St. Lucie 62,308 81,892 31.4% 103,799 26.7% 115,546 11.3%Palm Beach 374,994 484,863 29.3% 617,173 27.3% 684,711 10.9%

Source: Bureau of Economic and Business Research, Univ. of Florida

Population Growth, 1990-2015, Okeechobee and Counties East

County 1990

% Chang

e, 1980

to 1990 2000

% Chang

e, 1990

to 2000

2010Foreca

st

Forecast %

Change,

2000 to

2010

2015 Foreca

st

Forecast %

Change,

2010 to

2015Okeechob

ee 29,753 44.5% 35,969 20.9% 40,251 11.9% 42,412 5.4%

Martin 101,587 56.4% 127,267 25.3% 152,07

8 19.5% 165,540 8.9%

St. Lucie 151,470 70.5% 194,085 28.1% 238,01

0 22.6% 256,628 7.8%

Palm Beach 869,612 48.5% 1,137,0

04 30.7% 1,383,085 21.6% 1,510,4

73 9.2%Source: Bureau of Economic and Business Research, Univ. of Florida

Squaring BEBR Projections with the Reality of Okeechobee’s Housing Market

The increases in land and home prices over the past three years do not correlate with Bureau of Economic and Business Research projections for slow growth in the number of Okeechobee jobs and households. Okeechobee’s current real estate boom appears to signal an unforeseen market dynamic. The county’s lifestyle and real estate price structure have become attractive to coastal residents, and probably to in-migrants from other strong real estate markets as well. The Treasure Coast’s homogenous suburban developments and its busy metro environment are not everyone’s preference. Traffic congestion in much of the Treasure Coast means many working residents have already adjusted to commutes that are as long as a


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move to Okeechobee would require. A segment of affluent households is willing to trade off Okeechobee’s limited shopping and entertainment options for its small-town assets. If even a very small percentage of the Treasure Coast’s 669,000 households (Martin, St. Lucie, Palm Beach counties) fits this profile, they will have a substantial, ongoing impact on Okeechobee’s real estate market.

The most likely scenario is for in-migrants to continue to bid up the prices of ownership housing and residential lots. They will build larger, higher-quality homes than Okeechobee’s existing stock offers, and they will attract homebuilders away from the entry-level market and its smaller margins. This could reinforce the county’s heavy reliance on HUD-code manufactured housing to meet entry-level and retiree needs for low-cost housing.

Affordability and desirability of Okeechobee’s homes and land, not a shortage of coastal county land, is driving demand for the county’s real estate. Ample land remains for residential development in the coastal counties. A recent study compares available Treasure Coast land with projected housing demand through this decade. It shows that there is still more than five times as much vacant land in the four Treasure Coast counties as will be needed to house projected new residents.8

Age Distribution

For housing planning, key features of the age distribution are the number of people in the first-time buyer age group 18-34, and the number of seniors who may need specialized housing. The county’s age distribution currently shows about one-fourth of the population in the first-time buyer age group, and about 16 percent who are 65 and older. Projections through 2015 forecast a small increase in the senior population, to 18 percent, while the first-time buyer age group will remain at just under one-fourth.

Okeechobee County Household Age Distribution, 2005 and 2015 Estimated Yea

rAge

Category Household Count

2005

15-24 63325-34 1,64235-54 4,76155-64 2,33965-74 2,26775+ 1,842


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2015

15-24 63025-34 1,76935-54 4,53855-64 3,23265-74 3,06575+ 2,301

Source: Florida Housing Data Clearinghouse, Shimberg Center, U of F.

Okeechobee Population Age Distribution, 2003% of total population

37,236 Total2,370 0-4 6.4%6,668 5-17 17.9%8,428 18-34 22.6%9,570 35-54 25.7%4,103 55-64 11.0%4,656 65-79 12.5%1,441 80+ 3.9%6,097 Total 65+ 16.4%

Source: BEBR, University of Florida

The Okeechobee School District reports that the county’s school-age population declined for about eight years during the nineties, but has begun to rise in recent years. Slow growth, fewer than 100 new students per year, is projected for the period 2004-09.

Employment, Income, and Cost of Living

Job Growth

Job growth is a key predictor of housing demand, and moderate job growth is projected for Okeechobee through 2015. The number of Okeechobee non-farm, full-time, year-round jobs rose by a strong 3 percent annually from 1990 to 2000. Job growth is projected to slow to 1.8 percent annually during the present decade.

Job growth in Okeechobee is projected to be somewhat slower than in Martin and Palm Beach counties, but faster than in St. Lucie. Long-term forecasts for Okeechobee call for job growth of 1.2 percent annually from 2010 through 2015, about the same as for counties east.9


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Okeechobee’s housing market will feel the impact of a major new research facility in Palm Beach County. Scripps Research Institute, the world’s largest, private non-profit biomedical research organization, intends to build the facility on highway 710 within a 45-60 minute commute for residents of eastern Okeechobee. Up to 500 jobs are expected to be created there, and a state economist estimates that spin-off jobs could grow to 6,500 over the next 15 years. If the facility becomes a magnet for other research businesses, thousands more jobs could result.10 However, in September 2004 the proposed site was drawing opposition on grounds of urban sprawl and environmental impact, and county commissioners discussed a possible change to another unspecified location in Palm Beach County.11 A county planner said alternate sites are located in the Jupiter area, which would also be accessible to Okeechobee commuters. Major support by the state of Florida and Palm Beach County makes it highly unlikely that Scripps will not build a facility in one of the possible sites.

Unemployment

Okeechobee’s unemployment rate was 9 percent in August 2004, compared to 5.4 percent statewide. The county’s unemployment rate averaged 7 percent for the year 2003. Even during the national economic boom in 1999, the county’s unemployment rate was 7.5 percent in a year when only 3.9 percent of all Floridians were unemployed.12 Unemployment is projected to remain at about 8 percent for Okeechobee during this decade.13

Okeechobee Employment Categories and Wages

The average Okeechobee full-time worker earned $26,408 per year as of December 2003. That wage allows for a housing budget of $660 per month, including utilities for renters and taxes and insurance for homeowners.14

The amount a household can pay for housing depends on wage levels and the number of earners in the household. In Okeechobee, two or more people are employed in two-thirds of all married-couple families (excluding those with no workers).15 1,154 single-parent households with children live in the county.16

For all county households with earnings, the average amount earned was $41,101 in 1999.17


19

More than three out of four Okeechobee workers deliver services of one kind or another. Another 15 percent work in agriculture. The county’s manufacturing sector is small.

The word “services” encompasses a broad range of occupations, from retail to education to government. Education, health care, and government jobs pay relatively well, over $31,000 per year, while leisure/hospitality, food service, and retail trade pay from $12,688 to $20,088. A mid-level police officer for the city of Okeechobee earns $32,000, a firefighter somewhat less. City clerical staff earn about $25,000, and “city jobs are some of the best jobs in town” says Okeechobee City Manager Bill Veach, who says young people are leaving the county in numbers for better-paying opportunities.

Interviews with Okeechobee residents provided an informal view of local job opportunities and wages. A first-year teacher in Okeechobee schools earns $30,000; the top of the scale is $48,000. About half of the school district’s employees are non-teachers, and most of them earn much less. For example, teacher aides and school bus drivers earn about one-half of teacher salaries.

Starting bank tellers earn $7.00 per hour; a loan officer earns about $30,000 per year. Workers at one of the county’s five corrections and juvenile justice facilities earn about $10 per hour ($21,800/year), with a good benefits package.


20

Federal Cast Stone Chooses Okeechobee

Federal Cast Stone, a maker of custom building facades, will be moving west from Martin County to become the Okeechobee industrial park’s first tenant in early 2005. To start, the 73,000 square foot facility will employ 65 people, and owner Robert Myer expects most of them will be moving to the county. He evaluated ownership housing opportunities before he decided to make the move. Although Myer found much to like in the Okeechobee community and will be building a house in the county himself, he found a real shortage of both entry- and mid-level ownership housing available for his employees. He found relatively few site-built homes listed with real estate agents in the current strong market, and an oversupply of HUD-code manufactured homes.

Comparative Wages, Okeechobee and Counties East

Workers earn more in counties to the east than in Okeechobee. But prices in the Treasure Coast’s housing market are outpacing wage growth by a large margin, increasing Okeechobee’s attractiveness to


21

Where Okeechobee Works: Average Wages and Jobs in Major Industries, December 2003

0

500

1,000

1,500

2,000

2,500

3,000

Education andHealth

Retail Trade Agriculture, Forestry,Fishing

Leisure andHospitality

Public Administration Construction

Industry

Num

ber o

f Job

s

Source: Quarterly Census of Employment & Wages, FL Agency for Workforce Innovation

$31,472

$20,088 $22,380

$14,452 $33,120

$27,320

overstretched Treasure Coast workers. Although average wages in counties east are significantly higher than Okeechobee’s, median home prices have risen in Martin and St. Lucie counties by 73 percent, and by 80 percent in Palm Beach county, while family income has risen just 19 percent in the Treasure Coast in the past five years.18

The affordable housing crunch in the Treasure Coast is exacerbated by a mismatch between the housing buying power that comes with the area’s main industry, retirement, and the low wages paid to the workers on whom retirees depend. If mortgage interest rates rise as expected during the next few years, affordability will worsen and the crunch will intensify. Recognizing the problem, St. Lucie County voters last year approved a referendum measure authorizing the county to grant incentives to attract higher-paying employers to the area.

Meanwhile, the mismatch between coastal wages and housing prices, and the lower prices in Okeechobee, will continue to fuel demand for Okeechobee housing and land. To the following places, commute times from downtown Okeechobee are:

Stuart - 1 hour Jupiter - 1 hour 10 minutes Port St. Lucie - 1 hour Fort Pierce - 55 minutes

Sites in eastern Okeechobee offer commute times 10-15 minutes shorter.

The following graph and table make clear that in virtually every industry and job classification, workers can bring home more money from jobs in Treasure Coast counties.


22


23

Okeechobee County Employment and Wages by Industry, with Coastal County Average Wages, Fourth Quarter 2003

Industry Title

Okee-chobe

eNumb

er of

Employ-ers

Okee-chobee Average MonthlyEmploy-

ees

Okeecho-bee Avg

AnnualWage

Avg AnnualWage

(MARTIN)

Avg Annual Wage (ST

LUCIE)

Avg AnnualWage

(PALM BEACH

)

Total, All Industries 787 10,032$26,40

8 $33,724 $30,804 $40,488

Goods-Producing 188 2,236$24,80

4 $37,016 $30,032 $44,072

Natural Resources and Mining 68 1,542$22,37

6 $20,856 $22,092 $25,276 Agriculture, Forestry, Fishing & Hunting 67 1,536

$22,380 $20,880 $21,896 $25,116

Mining 1 N/A N/A $57,348 $79,756

Construction 96 524$27,32

0 $35,856 $32,164 $43,020

Manufacturing 24 170$39,07

2 $43,748 $36,852 $54,244

Durable Goods Manufacturing 14 40$27,20

4 $48,164 $35,960 $59,588 Non-Durable Goods Manufacturing 10 130

$42,728 $32,708 $38,260 $44,216

Service-Providing 599 7,796$26,86

8 $33,064 $30,984 $39,972 Trade, Transportation, and Utilities 190 2,298

$23,856 $31,976 $30,244 $37,656

Wholesale Trade 30 194$33,21

6 $53,604 $35,248 $64,496

Retail Trade 134 1,602$20,08

8 $27,472 $24,200 $26,312 Transportation and Warehousing 23 436

$31,476 $41,708 $34,816 $38,836

Utilities 3 67$37,43

6 $48,688 $55,316 N/A

Information 11 106$31,93

6 $38,372 $37,848 $50,372

Financial Activities 64 333$28,55

2 $46,488 $36,308 $59,480

Finance and Insurance 20 200$30,57

2 $54,964 $38,828 $70,024 Real Estate and Rental and Leasing 44 133

$25,512 $29,100 $29,964 $39,100

Professional and Business Services 77 418

$27,940 $40,568 $33,692 $49,324

Professional, Scientific and Tech 40 149 $25,88 $60,464 $46,680 $71,124


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Services 4 Management of Companies & Enterprises 2 N/A

$137,812

$104,048 $91,148

Admin-Support-Waste Mgnt Remediation 35 268

$28,388 $20,928 $23,368 $30,996

Education and Health Services 76 2,522$31,47

2 $36,744 $34,168 $38,880 Educational Services 3 N/A N/A $29,960 $32,788 Health Care and Social Assistance 73 1,540

$32,068 $38,912 $37,412 $42,408

Leisure and Hospitality 68 941$14,45

2 $17,020 $13,200 $19,940 Arts, Entertainment, and Recreation 12 156

$23,292 $26,056 $21,264 $27,596

Accommodation and Food Services 56 785

$12,688 $13,772 $12,336 $17,744

Other Services (Except Public Admin.) 66 276

$26,148 $25,668 $21,292 $27,176

Public Administration 45 901$33,12

0 $43,384 $38,104 $45,416Source: Quarterly Census of Employment & Wages, FL Agency for Workforce Innovation

These wage differences are evident in per capita income comparisons. The gap between real, inflation-adjusted per capita personal income in Okeechobee versus Martin and Palm Beach counties has widened steadily since 1970, and is projected to widen further by 2010, as real incomes shoot higher in the two coastal counties. Between 1970 and 2000, Okeechobee’s real per capita personal income rose 48 percent, vs. 71 percent in St Lucie and 129 percent and 126 percent respectively in Martin and Palm Beach counties. By 2010, average personal incomes in Martin and Palm Beach will be more than twice those of Okeechobee County.


25

Cost of Living

Okeechobee County’s overall cost of living is moderate, scoring 96.76 on the 2003 Florida Price Level Index, and ranking as the 22nd most costly county in the state. The index evaluates the cost of food and beverages, medical care, housing, transportation, and a sample of other goods and services. Counties to the east are higher on the cost scale. Martin: 99.66; Saint Lucie: 97.27; and especially Palm Beach at 103.68. Okeechobee’s housing cost index is substantially lower than that of some neighboring counties--Okeechobee: 88.65; Saint Lucie, 91.59; Martin, 100.38; and Palm Beach, 109.46.19

Uninsured medical problems can create instability in people’s housing situation by forcing rent or mortgage payments to be missed, and consequently reducing credit scores below threshold requirements for both homeownership and rental. An unusually high percentage of Okeechobee residents lack health insurance. Of the county’s population age 64 and under, about 28 percent have no coverage.20


26

Resale Home Market Tax-Appraised Values Show Modest Housing Stock

Of the county’s approximately 4,500 single-family site-built and modular homes located on less than 1.5 acres, 80 percent have appraised values less than $100,000.21 Another 9 percent are appraised between $100,000 and $125,000. Typical quality of construction is rated “average” for homes built before the early nineties, according to county staff appraisers. Many households live in HUD-code homes, whose median value was just $46,200 for owner-occupied units (including personal property and real estate) as of 2000.22 Construction of the Hoover Dike and channelization of the Kissimmee River eliminated some prime residential sites, contributing to a concentration of modest housing stock.

Existing Home Values Rising Strongly

Median Prices Up in Recent Years

Values are rising steadily. The median sale price for site-built and modular homes was $110,000 for homes that sold in the first eight months of 2004. The median has risen 12 percent annually since 2000.

In August 2004, MLS listed 60 site-built homes for sale in the county, with a median asking price of $199,000. Only seven homes carried an asking price of under $120,000. Hallie Davis of Century 21 has been selling homes for 12 years in Okeechobee, and has less inventory now than ever before to offer buyers.

Median Price, Existing Site-Built and Modular Homes

Year Median Sale Price

Percent Change from Previous Year Number of Sales

Through

August 2004 $110,000 11.1% 4952003 $99,000 20.0% 4372002 $82,500 7.8% 4322001 $76,500 9.3% 4412000 $70,000 7.7% 3531999 $65,000 -1.1% 379


27

1998 $65,750 3.5% 4381997 $63,500 15.5% 3531996 $55,000 2.8% 3291995 $53,500 N/A 322

*Note: 2004 sale price calculated through August; number of 04 sales extrapolated from 327 sales throughAugust.Source: Price data, qualified sales, Okeechobee County Appraiser Office. Number of sales includes unqualified sales to reflect the scale of the market.Individual Home Sales Show 7.8 Percent Annual Appreciation

Comparing median prices from year to year conveys the overall market trend by focusing on the middle of the market. A more precise measure of value appreciation is a repeat sales index, which measures price changes on individual homes from one sale to the next. A repeat sales index was developed for this assessment using county appraiser office records of qualified, arms-length sales in the first nine months of 2004. Sales of single-family residences with less than 1.5 acres of land were analyzed to keep the focus on homes, not land values. In addition, sales indicating annual value changes of 20 percent or more, plus or minus, were eliminated because of possible data problems (for example, the previous sale might have been an unimproved lot or a residence that was later replaced).

After this screening, the database contained 147 pairs of qualified sales. The average annual value change was 7.8 percent since the previous sale; median value change was 7.6 percent. Two sales showed value declines; 145 showed increases. Annual increases of this scale indicate a strong housing market. For comparison, statewide home prices increased by 2.9 percent annually during the 1990’s as measured by a federal repeat sales index.23

In Okeechobee’s current fast-paced market, a majority of home sales are happening directly between buyers and sellers. In the six months ending on August 10, a total of about 600 homes including real estate manufactured homes changed hands in the county (including some no-cost transfers), while 204 units sold via MLS.

In the attached housing market, Oak Lakes units are selling for up to $80,000, up from about $40,000 two years ago, according to Hallie Davis at Century 21. A simple CBS (concrete block structure) home in Douglas Park that sold for $48,000 six years ago has appreciated to about $68,000 today, a strong 7 percent annual gain that matches the overall market performance. SHIP administrator Linda Rucks reports that buyers in the county’s homeownership assistance program, funded by SHIP funds, are still finding site-built homes that meet the


28

$95,000 price limit. This will not be possible for more than another year or so.

Huge Price Increases in Treasure Coast

The 2004 home market is booming in the Treasure Coast counties. In St. Lucie and Martin Counties, homes that sold in the first half of 2004 averaged 20.5 percent annual increases in price since their previous sale; in Palm Beach, the figure was 17.2 percent. Statewide, home sales in 2004 reflected a 13.3 percent annual gain from time of previous sale of the same residence.24

Okeechobee Real Estate Manufactured Home Values are Rising Too

A lower price range applies to the county’s HUD-code manufactured home market, but values are ratcheting upward. In the current market, MH owners with land are building equity. The median price is now $62,900, up 9.4 percent since 2000. As of August 2004, the median asking price for a HUD-code home with land was $94,750 for the 53 homes listed. (Real estate agents handle only real estate manufactured homes, i.e., homes with land.) Some of the increase in MH value is attributable to the fast-rising values of canal-front lots in subdivisions along Taylor Creek in the southern part of the county.

Median Sale Prices of Manufactured Homes with Land, Okeechobee County 1995-2001

Year Sale Price Change from Previous Year

2001 46,000 10.8%2000 41,500 3.8%1999 40,000 11.9%1998 35,750 2.1%1997 35,000 16.7%1996 30,000 -3.2%1995 31,000 29.2%

Source: Florida Housing Data Clearinghouse

A resale price index for real estate manufactured homes in Okeechobee was developed for this assessment. Okeechobee sellers of real estate manufactured homes in 2004 realized an average 4.7 percent annual gain over the price previously paid for the same home. Median annual value change was 3.8 percent. Similar gains were realized on sales in the previous two years. The same methodology was followed as for site-built homes, using qualified sales only, and


29

eliminating data for homes with more than 1.5 acres. Sales reflecting value changes of more than 15 percent annually were also eliminated, because many of these sales probably reflect replacement of the manufactured home. Ninety-eight pairs of 2004 sales met these criteria; 7 sales showed price declines and 91 showed gains.

Annual Value Change, Real Estate Manufactured Homes Sold 2002-2004 in Okeechobee County

Year of Sale 2004(98 sales)

2003(115 sales)

2002(87 sales)

Median value change per year since previous sale

3.8% 3.9% 3.9%

Average value change per year

since previous sale4.7% 4.8% 4.6%

Source: Qualified sales from Okeechobee Appraiser Office calculated by Housing & Community Insight.

The results disprove the stereotype that HUD-code homes must always depreciate. In Okeechobee’s strong housing market, buyers who need affordable housing are providing ongoing support for MH valuations. In other markets, research shows that well-designed and well-located HUD-code homes appreciate when the land is owned and homes blend well into the general housing stock.

Single-section manufactured homes on canals in the Taylor Creek neighborhood are selling for $85-90,000 or higher, depending on room additions, reports Jeri Patent of the Donald Renfranz real estate office. Five years ago they sold for prices in the 50s. Prices really accelerated during the past 18 months. In the Treasure Island neighborhood, prices are about $10,000 lower than Taylor Creek. In these areas there has been a steady trend toward increasing year-round occupancy.


30

Manufactured Housing’s Impact

Introduction

The fact that 45 percent of Okeechobee’s year-round households live in HUD-code manufactured housing dominates the county’s housing situation. Statewide, 10 percent of Floridians live in HUD-code units—still a substantial number, but 45 percent is an extremely high proportion of HUD-code units, even on a national scale. Okeechobee’s percentage of manufactured housing places the county fifth-highest in the state. Although HUD-code housing is very diverse in its execution and it can be a wise purchase, there have been serious problems with HUD-code construction, regulation, marketing, finance, legal protection, and land use regulation over the years. These problems are reflected in significant parts of Okeechobee’s manufactured housing stock. MH-related needs are discussed throughout this assessment.

“Manufactured housing” is the term reserved by the US Congress to describe housing built to meet the federal building code, known as the HUD code. The code was implemented in June 1976. It pre-empts state and local building codes, meaning that local officials may not override or modify any requirements that are addressed in the HUD code. All HUD-code homes have an integral steel I-beam frame that is a permanent part of the structure.

Implementation of the pre-emptive HUD code in 1976 enabled the modern manufactured housing industry to emerge, because manufacturers could achieve economies of scale by selling identical homes in every state with no complications from local and state codes. Mass-production allowed manufacturers to realize the full value engineering potential of factory-building technology.

Installation is a critical aspect of HUD-code home performance, and it is not addressed by the HUD code. Installation is comprehensively regulated by the state of Florida and by local building inspectors, as described below.

Confusion surrounds the term “manufactured housing,” because HUD-code homes are not the only homes built in a factory. Modular, panelized, and kit homes all involve factory production, so in the ordinary sense of the word, they too are manufactured homes. The simple way to keep track of the many varieties of factory-built housing


31

is to remember that in Florida, there are only two acceptable residential building codes: the Florida Building Code, and the HUD code. Except for HUD-code homes, all factory-built homes must meet the same code that site-built (stick-built) homes meet.

The most prominent category of non-HUD-code factory-built housing is the so-called “DCA home,” also known as a modular home, because it is built in modules and shipped to the site on a flatbed-truck. The modules are then removed by crane and assembled. Modular homes in Florida are called “DCA homes” because they are certified by Florida’s Department of Community Affairs to comply with same Florida Building Code standards that site-built homes meet. It is worth noting that in its evaluation of building performance in Hurricane Andrew, the Federal Emergency Management Agency (FEMA) reported that “overall, relatively minimal structural damage was noted in modular housing developments. The module-to-module combination of the units appears to have provided an inherently rigid system that performed much better than conventional residential framing.”25

In this report, the official term “manufactured home” (MH) will identify HUD-code homes, otherwise known as mobile homes, single-wides, double-wides, and trailers. Homes built before the 1976 HUD code will be called “mobile homes.”

Okeechobee Restrictions on MH Placements

In its planning, zoning, and building regulations, the county has already taken steps to reduce the county’s reliance on manufactured housing, particularly low-end manufactured housing.

Units built before 1976 may not be placed anywhere in the county, but existing pre-1976 units are grandfathered. Used units more than five years old that are moved into the county must be certified by an architect or engineer to meet HUD code requirements. This is an important control on quality, because older HUD-code units have frequently been taken out of code compliance by improperly attached additions or transit damage. The county requires used units to meet basic condition standards such as intact bottom board, tie-downs, and working heat. Requests for placement of units more than five years old must be presented to a public hearing and be approved by the Board of Adjustment.

Various design standards apply to newly-placed HUD-code homes in Okeechobee, depending mainly on placement location. New or used units placed in mobile home parks must have approved skirting, but


32

are subject to no other design standards. MH that will house farmworkers must be placed more than 200 feet from a public right-of-way and be at least 800 square feet in size. New or used units to be placed in A, RM, or RR zoning districts must be at least 1,000 square feet in floor area, which effectively requires multi-section units. In those zones, units must meet detailed appearance standards designed to blend units with the typical appearance of site-built homes. However, single-section homes are allowed to be replaced one time.

In its Residential Mobile Home (RMH) district, the county has taken measures to restrict the creation of new manufactured home parks or subdivisions. The minimum size for new parks, 15 acres, stops further proliferation of small-scale mobile home developments mixed incompatibly with site-built neighborhoods. There is a 30-acre minimum for manufactured home subdivisions.

In the City of Okeechobee, the minimum area for new mobile home parks and subdivisions is 10 acres. The city has design standards that apply uniformly to all single-family homes, both HUD-code and Florida Building Code. A minimum 800-square feet of floor area and a minimum 20-foot width are required, so in effect new units must be multi-section. This requirement serves to blend manufactured homes into the general housing stock, a worthwhile objective that benefits both MH owner and neighbors. An existing single-section home in the city may be replaced with another single-section home. Like the county, the City requires units more than five years old to be certified to meet HUD code, meet appearance and design standards like the county’s, and be approved by the Board of Adjustments.

How Manufactured Housing Became So Popular in the County

Manufactured housing has been big in Okeechobee for a long time, and it continues to play a major role in the new home market. For local residents, MH prices have been in line with local incomes, and they have also been popular as vacation and retirement units, as reflected in the fact that 26 percent of MH were counted as vacant/seasonal by the Census (versus 12 percent for all other types of units). According to the county’s comprehensive plan, “mobile homes accounted for about 70 percent of all residential development between 1979 and 1990.” From the late 1950’s through the early 1970’s, before the HUD code placed basic controls on MH quality, land use controls in the county were minimal, and many units were


33

placed haphazardly in developments and parks that could not be approved today.

Since 1994, manufactured homes have averaged 44 percent of total new single-family units built in the county every year. By contrast, manufactured homes accounted for just 14 percent of all new ownership housing statewide during the decade. A large majority of new Okeechobee MH have been multi-section, as is true statewide where 82 percent were multi-section in 2003.

New, previously unoccupied MH placed in the county totaled 892 multi-section units and 159 single-section units over the past 9 ½ years.

New Manufactured Homes Placed in Okeechobee, 1995-2004

YearTotal

Placements

Est. % Multi*

Est. % Single*

1994 101 76.8% 23.2%1995 121 81.5% 18.5%1996 91 80.3% 19.7%1997 80 80.0% 20.0%1998 64 92.5% 7.5%1999 135 89.7% 10.3%2000 91 91.5% 8.5%2001 64 82.8% 17.2%2002 116 90.1% 9.9%2003 111 92.7% 7.3%

2004 est. 82 84.9% 15.1%Total 1056 86% 14%

*Multi/single proportions estimated from Statistical Surveys Inc. data for OkeechobeeSource: Florida Housing Data Clearinghouse, Census C-40 reports.

MH Isolation

A basic issue with manufactured housing is that MH has been and continues to be isolated from the mainstream housing market, including finance, housing policy and programs, and consumer protection. In Okeechobee, a 45 percent share of occupied housing falls within this neglected domain. The isolation has contributed to a kind of benign neglect from policymakers. Manufactured housing has


34

not been taken very seriously as a housing solution; in fact, it is often stigmatized as a second-rate solution. Affordable housing professionals sometimes have the strongest bias against MH because they confront the negative manifestations so regularly. Although the reaction is understandable, engaging the MH market would be more productive than boycotting. The boycott of MH is a failed strategy. Neglecting MH on the grounds that it is an inferior choice becomes a self-fulfilling prophecy. When mainstream housing market players and housing advocates ignore manufactured housing, it enables the industry and consumers to continue doing what they’ve always done: create a few exemplary homes, and many more distinctly second-rate units that provide decent, affordable shelter but shortchange buyers and the local tax base in terms of asset-building.

MH isolation has many dimensions. MH has unique financing, taxation, legal classification, code enforcement, marketing and distribution, access to real estate agents, resale financing, and repossession or foreclosure. Not all manufactured homes are equally isolated in a world of their own. An old single-wide in a park is about as different from a standard site-built home as any form of housing can be, so it is understandable that such a home would be financed and taxed differently. However, about 72 percent of Okeechobee County’s MH are on the owner’s land, and many MH in the county match or exceed the functionality of site-built homes. A basic aim of Okeechobee policy regarding manufactured homes should be to integrate MH into the county’s housing market in as many dimensions as possible. In Okeechobee this integration is well underway, as local lenders, officials, realtors, etc. have all taken meaningful steps to come to grips with MH popularity in the county, and work with it. But it needs to go further, because the MH industry is not going away and new units will continue to be placed in the county, especially as site-built home prices shoot up.

MH Opportunity Cost

“The decision to produce or consume a product involves giving up another product. The real cost of an action is the next best alternative forgone.” So says an economics glossary in defining the economics term “opportunity cost.”26 What costs do Okeechobee manufactured housing owners incur by choosing not to purchase a site-built home?

There are two major opportunities that MH owners forgo by not owning a site-built home. First, for MH units on leased land or for old mobile homes, owners usually forfeit the opportunity for their home to hold its value or appreciate in value over time. Second, MH owners


35

on leased land give up the opportunity for lower cost conventional mortgage financing.

Equity-Building Opportunity

The opportunity to build home equity is a primary benefit of homeownership. Because most site-built homes hold their value, house payments are a kind of savings account. In markets like Okeechobee where home values are rising, owners get the additional benefit of equity appreciation. In Okeechobee the overall homeownership rate is 74.9 percent, higher than state and national rates. The homeownership rate captures everyone who owns their unit, regardless of whether they own the underlying land. Manufactured home ownership is a major contributor to the county’s overall ownership rate. If MH owners are excluded from the calculation so that it reflects only the ownership rate for occupied site-built homes, Okeechobee’s homeownership rate falls by 12.3 percentage points.

There are about 1,033 year-round owner-occupied personal property MH in the county, and about 1,166 owner-occupied pre-1976 homes, making a total of 2,199 MH households who are counted as homeowners. But in fact they should be considered as “almost homeowners,” because they do not get the full benefits normally associated with homeownership. Owners of personal property MH and obsolete pre-1976 mobile homes miss out on the opportunity to build home equity. This is easy to understand at the level of the individual owner. But it is worth considering the aggregate impact, given the large share of Okeechobee homeowners who own personal property MH or pre-1976 MH. Taken together, the county’s stock of such housing represents a large investment by people of modest means. The average value of owner-occupied manufactured homes in Okeechobee county was $46,200 in 2000.27 If we assume that the average value of owner-occupied personal property units and pre-1976 mobile homes is only $20,000, that still adds up to a total investment of almost $44,000,000. What are the owners of these homes receiving as an annual return on an investment of $44 million?

If we assume that this subset of Okeechobee’s owner-occupied manufactured homes is simply holding its value, but not appreciating, then these MH owners are losing the opportunity to earn a typical appreciation rate for owner-occupied real estate manufactured homes in the county. 28 Based on real estate MH values in Okeechobee, that amounts to $1.7 million per year of lost equity gains.


36

If we assume that this set of MH is losing value (depreciating) at a rate of 3 percent per year, then owners are losing $2.8 million annually, compared to the owners of appreciating real estate MH.

A similar opportunity cost analysis can be done for the owners of post-1976 real estate manufactured homes, whose recent average 3.8 percent appreciation rate is only about half the 7.8 percent appreciation experienced by owners of site-built homes.

Although the figures look precise, the purpose is to make a general point. Manufactured home ownership represents a major investment by low and moderate income people. In Okeechobee, the average income of all MH owners was $34,436 in 1999,29 and for these low-valued units the average is certain to be lower. Personal property and pre-1976 homes are unlikely even to be holding their value, let alone appreciating. Investment in manufactured housing is not returning the kinds of benefits that we usually assume for homeownership. For some senior households, building equity is of no concern. But for a sizeable portion of Okeechobee households, owner-occupied manufactured housing is draining capital from those who really need it.

Low-Cost Financing Opportunity

Over the life of a long-term home loan, a few extra percentage points on the interest rate add up to tens of thousands of dollars in extra expense. Thousands of households have accelerated their path to home ownership with MH financing that accepts “come as you are” credit scores.

How much does subprime financing cost the county’s manufactured home owners? Manufactured home loan terms vary widely. A conservative assumption is that on average, manufactured home owners are paying interest rates 250 basis points (2.5 percentage points) above home mortgage rates.

Every year, Okeechobee’s manufactured home owners pay an annual surcharge of about roughly $1.4 million on the estimated $55 million in outstanding debt on owner-occupied units in the county.30

Summary: Reducing MH Opportunity Cost to Zero

The opportunity costs suggest the scale of the financial impact of manufactured housing’s popularity in Okeechobee. The analysis is based on current realities of Okeechobee’s manufactured housing and site-built housing markets. Some MH consumers are buying basic


37

homes that stand out from the housing stock, and are installed with block-skirting setups that anyone can spot as being “different.” Most finance them with subprime loans. And many consumers place homes on leased land, isolating themselves from the benefits of increasing land values. Given these realities, it is reasonable to estimate that every year, owners of pre-1976 and personal property MH in Okeechobee lose between $1.7 million and $2.8 million in equity opportunity, and all MH mortgage borrowers pay a surcharge of some $1.4 million per year in financing costs.

These financial impacts are not inevitable consequences of choosing a house that is built to the HUD code. For example, consider a double-section manufactured home with house-like siding, steeper roof pitch, and high construction quality that is placed on a desirable site with a stucco or masonry curtain wall between home and ground. With good maintenance, the home will hold value, or increase, in line with its site-built neighbors. Why? Because the home is fully comparable in appearance, performance, and land ownership with its site-built neighbors. Such a manufactured home would qualify for conventional or FHA mortgage financing if the borrower’s credit rating and debt ratios are sufficient. With such a home, the opportunity cost would be zero. In other words, the home and its financing would be “mainstreamed” into the overall housing stock.


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Demographics of Okeechobee MH Residents

Following are basic characteristics of MH owners, renters, and their homes in Okeechobee County:

Total population in MH 14,170Percent population in MH 39.5%Occupied MH as % of all occupied units 44.9%Median value, owner-occupied MH $46,200Percent and number MH owner-occupied 73.2%, 4,141 homesPercent and number MH renter-occupied 26.8%, 1,518 homesPercent and number MH vacant or seasonal 25.8%, 1,968 homesEstimated percent and number personal property

27.1%, 2,171 homes

Average household income, MH owners $34,436Average household income, MH renters $23,828Race-ethnicity of MH occupants (% of all householders of stated race-ethnicity living in MH) African American 8.0% American Indian/AK Native 34.5% Asian 27.0% Hispanic-Latino 52.5% White, not Hispanic 46.8%MH Owners: Age of Householder 15-24 2.1% 25-34 11.0% 35-44 13.1% 45-54 13.2% 55-64 18.6% 65-74 24.6% 75+ 17.4% Total Age 65+ 42.0%MH Renters: Age of Householder 15-24 13.4% 25-34 23.9% 35-44 26.5% 45-54 19.5% 55-64 8.3% 65-74 5.7% 75+ 2.7% Total Age 65+ 8.4%


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MH Parks

The county has 1,591 rental spaces in 81 parks licensed by the Okeechobee County Health Department. Many parks are very small. The median park size is just 13 lots. There is a concentration of parks in the county’s southeast quadrant, along Taylor Creek, and lake access in many of these parks makes them prime residential land.

Rents are $200 per month in basic, conveniently-located parks like Kings Park at the intersection of Highway 70 and 98. $239 is the rent for waterfront lots in the 115-lot Riverbend park, reserved for people age 55 and over, behind Big Lake Bank on Parrot Ave. Remaining lots are $229. Occupancy is 60 percent seasonal in Riverbend, where a 1989 single-section home on a waterfront lot could be had for just $25,000—before the 2004 hurricane season.

Florida regulates land-lease communities extensively. The Federation of Manufactured Home Owners, a 100,000 member consumer organization based in Largo, has achieved an impressive record of success in the Florida legislature over a 34-year period.31 As stated in Florida’s Mobile Home Act,

The Legislature finds that there are factors unique to the relationship between a mobile home owner and a mobile home park owner. Once occupancy has commenced, unique factors can affect the bargaining position of the parties and can affect the operation of market forces. Because of those unique factors, there exist inherently real and substantial differences in the relations which distinguish it from other landlord-tenant relationships. The Legislature recognizes that mobile home owners have basic property and other rights which must be protected. The Legislature further recognizes that the mobile home park owner has a legitimate business interest....” (F.S. 2003 Ch. 723.004 (1))

George Allen, a national expert, says Florida’s protections for park tenants are the most stringent in the nation.32 A key element is the requirement that park owners formally disclose to prospective tenants how the park is managed, what amenities are promised, and on what basis rents may be changed over time. The representations are binding on park owners and are assignable to a new owner upon home resale.

Florida give tenants the right to make the first offer whenever a park is placed on the market for sale. The importance of this protection is growing. Older parks in Florida cities have been converting to uses that generate higher returns, causing mass evictions. The state now


40

has over 600 resident-owned land-lease communities, but the county health department reports there are none in Okeechobee County. In a resident-owned community, individual homeowners rent lots from a resident-owned corporation that owns the land and maintains infrastructure and common amenities. Rents are held to modest levels. Homeowners are more likely to build equity because they have guaranteed, long-term tenancy.

Some migrant farmworker mobile home parks in the county have closed under pressure from code enforcement authorities, but no one interviewed for this study had heard of a park that sold for conversion to another use.

The state Department of Business and Professional Regulation enforces the law that regulates parks, Chapter 723, the Florida Mobile Home Act. The Department investigates complaints, and can issue subpoenas and bring action in civil court to enforce the Mobile Home Act. It also helps homeowners in parks mediate proposed rent increases with park owners.

Some gaps remain in Florida’s protections, notably:

Tenants get leases for only one year Tenants have no right to purchase parks when owners receive

unsolicited offers to buy, opposed to listing a park for sale

Cost Comparison

Nationwide, the net cost savings range from about 20-25 percent to zero for an installed manufactured home that is fully comparable to a site-built home, depending largely on local costs for site-built construction labor. In view of the housing boom underway in Okeechobee County and in the counties east, construction labor costs will likely be rising over the next few years, increasing the cost advantage of HUD-code and other factory-built homes.

In the Okeechobee market, site-builders are delivering very good quality homes for a construction cost of $65 to $70 per square foot.

The Marshall & Swift Residential Cost Handbook provides a finely detailed assessment of the construction costs for various quality levels of manufactured housing. Costs for high-end manufactured homes, excluding land and setup, are stated as follows:

Excellent and Very Good Quality Manufactured Homes: Costs per Square Foot


41

Single-Section Double-Section*“Excellent” quality MH

$47.29 $44.16

“Very good” quality MH

$38.88 $36.02

*Double-section based on 32x60 dimensions.Source: Marshall & Swift Residential Cost Handbook 2003.

“Very good” quality would typically include vinyl siding, 2x6 exterior walls, insulation values of R-11 floor, R-19 walls, and R-30 ceiling, thermopane windows, and painted sheetrock walls. To achieve a more “house-like” appearance, pitched roof options are available. $3,000 buys a 5-12 roof pitch; 7-12 roof pitch costs $6,000.


42

New ConstructionResidential Construction is Accelerating

New housing construction in the county has picked up sharply in the past several years. During the four and one-half years ending in August 2004, an average of 146 new site-built single-family homes were built annually. The average was 112 for the previous six years ending in December 1999. In 2002, single-family construction hit a record of 138 units. 2003 was higher, and 2004 is on pace for another record, 189 units.

Housing Construction in Okeechobee County, 1994-2004

Year S/F Units S/F in City*

HUD-Code MH

MH % of Total S/F and MH

Multifamily Units

Total Units

2004 est. 189**

1782*** 30.3% 3 274

2003 157 19 111 41.4% 14 2822002 138 9 116 45.7% 3 2572001 119 1 64 35.0% 3 1862000 128 7 91 35.0% 3 2291999 125 1 135 51.9% 2601998 109 n/a 64 37.0% 1731997 109 n/a 80 42.3% 1891996 118 n/a 91 43.5% 2091995 90 n/a 121 57.3% 2111994 118 n/a 101 46.1% 1 219

*Included in county total.**Extrapolated from total of 125 units permitted through August 2004.***Extrapolated from Statistical Surveys Inc. data through June 2004.Source: City of Okeechobee, US Census, Statistical Surveys Inc.


43

New Manufactured Home Placements in Okeechobee County, 1995-July 2004Year Total Placements1995 1121996 1241997 1371998 1151999 1072000 1172001 712002 1162003 111

Jan-July 2004 41Total 1051

Annual average 111Sources: Florida Housing Data Clearinghouse; Statistical Surveys Inc.


44

If the pace of the first six months of 2004 holds, the year will see 188 new single-family homes, an increase of more than 50 percent over the average of the previous eight years.The surge in construction indicates that the rise in Okeechobee land values is not simply speculative.

In the City, an average of 19 units per year were built from 1999 through August 2004.As in the county, the pace of residential construction increased through the period, and in 2003, 36 units were added compared to 13 in 2000. The 2003 total included four duplexes.

The county is very much a single-family construction market. Only two multi-family buildings of more than ten units were built during the 94-04 period. Eleven small multi-family buildings were built.

New HUD-code manufactured housing averaged 96 per year, or 44 percent of the market during the 94-04 period. Manufactured housing has been maintaining its large share of the county’s occupied housing stock. Unless sites for high-density site-built units are made available,


45

MH will probably continue to fill the county’s need for affordable ownership housing as builders follow higher margins and move up-market.

Unit Size Is Increasing

Okeechobee buyers of both site-built and manufactured homes have chosen larger and larger units over the past 40 years. Manufactured home size expanded dramatically as the industry evolved from producing mobile trailers to multi-section homes permanently installed. In 2003, 90 percent of MH sales in Okeechobee were multi-

section; statewide their share was 82 percent.Builders

A small number of local firms have served the Okeechobee home buyer’s market, building up to 35 homes per year. To date, no large-scale developers have built in the county. Planning director Bill Royce reports a recent increase in small subdivision applications. Many buyers find their own land and secure their own construction loan, and then hire a builder for construction.

John Abney, who has been building homes in the county since 1973, reports that the typical new starter home is 3 bedrooms, 2 baths, 1300 square feet, and costs about $92,000 to build, without garage or


46

Average Size of Okeechobee County New Homes, 1960-2000

1315

1515

1659 1,699

672

866

1,056

1,320

600

800

1000

1200

1400

1600

1800

1960’s 1970’s 1980’s 1990’s

Decade

Site-builtMobile/ Manufactured

Sour ce: Shimber g Center . FL Housing Data Clear inghouse.

Note: Home size dur ing the 1990’s estimated by aver aging mean sq. f t. f or two fi ve-year per iods.

land—about $71 per square foot. In 1990 the same home cost about $70,000 to build, Abney says. This indicates that Okeechobee residential construction costs have risen hardly at all since 1990 in real terms, after adjusting for inflation.

The cost trend in the county mirrors national research showing that the inflation-adjusted cost of home construction rose by just 2.9 percent during the 1990’s decade.33 For HUD-code manufactured homes, inflation-adjusted costs rose even more slowly, by just 1.6 percent during the decade. (In contrast, land costs have risen much faster than inflation, in the county and nationwide.)

The lowest-cost model Abney builds is a 2BR, 2BA, 1100 sq. ft. home, garage excluded, for $80,000. Abney’s company expects to build 36 homes this year, as the market booms. His five-year average has been in the 12-18 home range.

Jerry Jolicoeur of Homes by Jolicoeur, Inc. reports that costs for his American Dream modular homes run from $48 to $100 per square foot depending on quality, and excluding land. He says his buyers divide evenly between entry-level, mid-range, and high quality. Jolicoeur sold 82 modular units in the county between 1999 and 2004 according to company records. Other builders placed some 38 modular units during the same period, giving modular units a 14 percent share of the market for the five and one-half year period.

Despite the much higher-priced new homes being built just 60 minutes east of Okeechobee, local builders do not report that local subcontractors are migrating east to earn the extra $3-$5 per hour that trades people earn there.

Owner-builders were responsible for about 140 homes between 1999 and 2004, about 17 percent of the market.34

Residential Land Market

Land values were stable during the 1990’s, according to county planning director Bill Royce. Recently they have been rising at a startling rate. Phil Berger, who has been in the appraisal, realty, and residential construction business in the county for 34 years, says today’s land market is the hottest he has seen. The real estate business is slow because properties are in such demand that sellers need not list them.

Much of the rural agricultural land in the county is already platted, making it easy for landowners to decide to place land on the market.


47

Prices for well-located agricultural land are now approaching levels that are too high for further speculation, and residential development is likely to be the next phase of the real estate cycle. The lowest-cost, serviced building lots are in the 1200-lot Basswood subdivision, where a ¼ to ½ acre lot costs about $12,000-$14,000. Dixie Ranch lots requiring well and septic are in the $15,000 range for a 125x125 lot. Only two years ago, the same lots were available for about $4,000. In Okeechobee Hammock, lots are $15,000. Near Everglades Elementary, 100x100 foot lots are selling for about $30,000. In the Taylor Creek subdivision, a 90x150 serviced lot sells for $35-50k; directly on Taylor Creek, prime lots have sold in 2004 for $100,000. Real estate agents say a high percentage of land sales are to cash buyers. Removing banks and appraisers from many transactions contributes to rapid increases in land prices, moderated only by what individual buyers consider reasonable.

Proximity to coastal jobs and shopping makes land in the eastern part of the county very desirable, and values have been rising especially fast there. In the R-bar subdivision, 1.5 to 2 acre lots began selling for $45,000 in early 2003. There were seven lots remaining in August 2004, priced from $69,500.

In a remote northwest location, the Prairie/Viking subdivision is in a class of its own. Its 12,000 thousand, 1 1/4 acre lots with no roads, water, or sewer have been rising in value at a rapid pace, with many speculative buyers paying cash and holding lots vacant. Others have retired to the area, and some have chosen to commute from Viking to jobs in Okeechobee or east. The latest verified arm-length sales for 1 ¼ acre lots have averaged $18,000, but in this volatile market, prices range from $5,000 to $35,000. As recently as the first quarter of 2002, verified sales averaged about $5,700. An experienced local Realtor described Viking as a speculative market where buyers are paying cash. The area has poor drainage and is susceptible to flooding. Legal access to many of the lots is by easement, not right-of-way. Land sale activity in Viking has fluctuated widely over the past 10 years, from just 373 sales in 1997 to a high of 4,129 sales in 2002. The pace of sales has generally trended upward.

Land Sales in Prairie/Viking, 1995 through 2004

Year 1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

Number of sales

1,261 405 373 687 1,00

2 758 2,692

4,129

2,867

2,562*

*Extrapolated from 2004 total through August.Source: Okeechobee County Property Appraiser’s Office.


48


49

In 2003, there were almost five times as many sales in Viking as in the rest of the county’s entire residential market. The frenzied pace and rapid appreciation in Viking creates an understandable “buzz” in the Okeechobee residential market, but the uniqueness and isolation of Viking mean it has limited impact on the affordable housing situation in Okeechobee County as a whole.

Back in Okeechobee’s traditional residential real estate market, there has been a significant increase in residential land sales activity in the county. Number of sales averaged 497 annually during the past four and one-half years, a 53 percent increase from the average during the previous five years. Land sale activity is rising faster than residential construction, which increased about 30 percent in recent years compared to the average level of construction during the nineties. The level of activity, and the rapid increase in land values, suggests strongly that there will be future demand for higher-cost housing construction in the $100-200,000 range, appropriate to lots purchased for $20,000 to $40,000.

Residential Land Sales in Okeechobee County, Excluding Prairie/Viking, 1995 through 2004

Year 1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

Number of

366 338 387 235 265 376 486 513 486 624*


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Annual Land Sales, Prairie/Viking and Remainder of Okeechobee County, 1995-2004

0

500

1000

1500

2000

2500

3000

3500

4000

4500

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004*

Year

Num

ber o

f Lan

d Sa

les

Prairie VikingOutside Prairie-Viking

Source: Okeechobee County Appraiser Office *Extrapolated from 2004 total through August.

sales*Extrapolated from 2004 total through August.Source: Okeechobee County Property Appraiser’s Office.

The City of Okeechobee’s residential construction market has surged even more strongly than the county has a whole during the past two years, averaging 18 site-built or modular homes per year compared to 6 per year in 2000-2002. Individual building permit data provided by the City of Okeechobee shows that new home demand has remained in the same band, in the mid-100’s including land, since 2000.35

Estimated Median Sale Price of Newly Constructed Homes,* City of Okeechobee 2000-2004

Year 2004 2003 2002 2001 2000Estimated

median sale price incl. land

$152,968 $146,250 $169,000 insufficient data $137,800

Number built 17 19 9 2 7

The average permit amount was $137,851 for 156 single-family CBS and frame-construction permits issued by Okeechobee County from January through September 2004 (excluding manufactured). The median was $129,278. Permit values exceeded $150,000 for 49 of these homes. (Permit values exclude land costs.)

It is common in hot real estate markets for builders to move upmarket and build higher-cost homes. Profit margins are larger, and buyers can readily qualify for financing. This is happening in Okeechobee now. For scattered-site development, the economic incentive to build high-end units (locally, about $100 per square foot including land) is strong. One builder said it would make economic sense for him to build 1600 square-foot townhouses in the $125,000 range, but said the lack of multifamily zoning makes that unrealistic.

Some very large developments are in early stages of planning and approval, including 121 acres near the intersection of Highways 70 and 710, owned by North Shore Village; the La Martin Acres property, 219 acres; and south of highway 441 on the east side of Okeechobee, up to 1000 housing units could be developed. The latter project is not yet on the official docket, but there is talk of a wide range of housing types including multifamily, at a range of prices beginning as low as $100,000. Another 200 units are proposed in a zone change request for a site on highway 710, southeast of Okeechobee.


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Housing FinanceNational Mortgage Market Serves Okeechobee

Twenty years ago, some areas of the country still experienced shortages of mortgage credit from time to time. Now the US mortgage market has evolved to provide a broad array of loan products in markets large and small. Real estate agents and lenders in Okeechobee report using familiar loan products available nationwide. Mortgage brokers, who now participate in more than half of loan originations nationwide, are partly responsible for expanding the availability of a wide range of loan options. Mortgage brokers specialize in staying abreast of a wide range of loan programs so they can qualify as many buyers as possible.

Two-thirds of Okeechobee homeowners were making mortgage payments as of Census 2000.

Loan products readily available in Okeechobee include FHA-insured mortgage loans, loans that conform to Fannie Mae and Freddie Mac guidelines and carry private mortgage insurance, and a dwindling share of loans that local lenders hold in their own portfolios. The county’s busy real estate market has caused a work backlog for lenders, appraisers, surveyors, and title attorneys.

Ms. Tabitha Trent at Riverside National Bank reports that most new home construction in the Okeechobee market is financed by the homebuyer. Few builders have their own credit lines with banks that would enable them to provide construction financing. New home construction loans are available with as little as 5 percent down.

One valuable loan program subsidized by the federal government is under-utilized in the county. The USDA Rural Housing Service 502 Guaranteed Housing Loan offers 100 percent loan-to-value financing and no private mortgage insurance is required. There is no price limit. Borrowers may earn up to $66,150 (family of four). Big Lake and Riverside Banks offer the program, but only six loans were originated in the county in all of FY 2004. New manufactured homes are eligible under national rules, but to date the Florida state office of RHS has boycotted MH.

FHA mortgage insurance is alive and well in the county, with modest loan volume, but surely more buyers could use its low downpayment and more flexible credit standards.


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FHA Loans in Okeechobee County, FY 2004 & 2003

FY Loan Purpose Number FHA Loans

Mortgage Amounts

2004

Purchase Existing House 56 $4,723,969

Refinance 31 $2,426,019

Purchase Existing House Not Previously Occupied 9 $984,041

Construct Home (proceeds paid out during

construction)9 $831,516

2004 Total 105 $8,965,545

2003

Purchase Existing House 63 $4,416,302

Refinance 25 $1,860,362

Purchase Existing House Not Previously Occupied 6 $525,922

Construct Home (proceeds paid out during

construction)6 410,982

2003 Total 100 $7,213,568

Source: HUD Homeownership Center, Atlanta.

The Florida Housing Finance Corporation’s First-Time Homebuyer’s Program may become valuable if interest rates rise as expected over the next few years. Record-low market interest rates currently make the FHFC program uncompetitive. The agency offered 30-year loans at 5.5 percent interest in October 2004. The very same financing


53

resource has periodically been made available to Okeechobee homebuyers through a county partnership with Escambia County.

Controlling Default Risk: Cash Downpayment vs. Credit Quality

Over the past 12 years, the mortgage industry has come to rely more on credit quality and less on down payment in evaluating loan approvals. Sophisticated, computer-driven credit scoring has made the shift possible. Credit scores have proven to be highly accurate predictors of mortgage default. Because credit scores are so effective in controlling mortgage risk, lenders, the secondary mortgage market, and mortgage insurance companies have all embraced mortgage programs with small downpayments that would have been almost unthinkable 12 years ago.

It is good news for homebuyers that less cash is needed to access homeownership, but a good credit score is essential. And the credit marketing industry excels at tempting consumers to overextend themselves. Some young couples have dug a hole for themselves in terms of credit score by the time they are ready to buy their first homes. For years the manufactured housing finance industry specialized in stretching further than other home lenders would in order to qualify such borrowers. Buyers who had spoiled their credit ratings became a natural fit for manufactured housing. In this way, poor credit results in “almost homeownership” that does not build net worth, which in turn drives even more borrowing, and low-wealth households remain so.

The mortgage industry’s heavy reliance on credit scores means that improving credit scores of would-be homebuyers should be a key part of a strategy to promote wealth-building homeownership. Buyer education and counseling are proven methods for improving credit scores and informing buyers about how the homebuying process works. Large-scale research studies have shown that classroom and one-to-one buyer education and counseling do improve mortgage loan repayment.36 At present these important services are not available in Okeechobee County, although Barnett Bank once offered buyer education in the past and reportedly got a strong response from consumers. The nationwide nonprofit Consumer Credit Counseling Services offers a range of financial counseling services, but they do not operate in Okeechobee. Okeechobee’s current Local Housing Assistance Plan calls for a partnership with the Cooperative Extension Service to “conduct and maintain an ongoing homebuyer education program” during the FY 04-07 cycle.


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Financing Manufactured Housing

Manufactured home financing has many more variations than site-built financing, reflecting many kinds of homes in the MH marketplace, each with its own degree of collateral risk. Consumer education and active partnerships between the county and various public and private lending programs would help to improve financing prospects for Okeechobee households owning MH. Improving resale MH financing options would improve values because better financing puts homes within reach of more buyers.

Leased-land home loans cannot be sold to Fannie Mae or Freddie Mac, and they do not qualify for private mortgage insurance, USDA, or FHA financing. Okeechobee lender portfolio programs accommodate MH on leased land. Riverside finances units built after 1982 for up to 10 years with fixed and adjustable rate loans, with rates from 12 ¼ to 15 ¼ depending on credit score. Rates much closer to standard mortgage rates are offered for high credit scores of 660 and up. Downpayments are much higher than for site-built home loans, from 20 to 30 percent depending on the age of the home—terms that suit the area’s retiree market well.

MH retailers finance many first-time buyers through their own programs, with units on leased land financed at rates from 400 to 600 basis points (100 basis points equals one percentage point) higher than home mortgage rates. They rely on a faltering nationwide industry that provides “chattel” or personal property financing, usually through home retailers who earn a commission for originating the loan. The industry suffered severe losses due to lax underwriting in the late 1990’s and several major players such as Conseco and Greenpoint folded. Retailers are hoping for a chattel financing recovery, but meanwhile they have been forced to find other financing including standard home mortgage financing.

For homes placed on the owner’s land, including single-section units, standard FHA loans are the best option for consumers. Unfortunately for local buyers, this option seems to be a secret locally. No FHA loans for manufactured homes were originated in Okeechobee County during the 03 and 04 fiscal years.37 FHA’s Atlanta office has ruled that any post-1976 MH installed which an engineer certifies to meet Florida’s 1999 standards will meet FHA’s permanent foundation requirements. Most pre-1999 homes can be retrofitted to meet the 1999 standards for a cost ranging from $750 to $2000. Once a home has been financed by FHA, future buyers can also use FHA financing, which helps to maintain MH resale value.


55

FHA, along with Rural Housing Service and private mortgage insurers, has normally required manufactured homes to have expensive masonry perimeter walls. Although they have termed this a “permanent foundation” requirement, in fact the great majority of manufactured homes are designed to be supported not at the perimeter, but beneath the steel I-beam frame. Mortgage lenders and insurers have in effect “taxed” manufactured homes with an expensive, structurally unnecessary requirement.38 The Atlanta FHA director’s acceptance of Florida’s standards cuts through the confusion. The decision frees home buyers to choose less expensive perimeter enclosures. Florida standards are silent on perimeter enclosure, and address only the stability and wind-resistance of the installation. Okeechobee, along with many other local governments in Florida, has design standards for perimeter enclosures to harmonize manufactured homes with site-built neighbors. The county attempted to implement a requirement for a concrete stemwall for manufactured homes, but the state’s nondiscrimination law mandating equal treatment of MH and site-built homes made it impossible to do so.

For multi-section homes with land, Fannie Mae and Freddie Mac loans are available. Okeechobee County’s design standards should be sufficient to satisfy the private mortgage insurers who insure most Fannie/Freddie loans. Appraisers in the Okeechobee market are familiar with the secondary market’s tough 2003 standards for valuing MH, and at least one of them does not surcharge MH appraisals as is common in other markets. Any properly installed double-section home built after 1976 can qualify for Fannie/Freddie financing, except on leased land.

Home Improvement Financing

National data on home improvement financing from the Federal Reserve shows two distinct markets and product types. The traditional home equity loan, a fixed-rate, closed-end loan, is still most popular with lower income borrowers. They use loans most often to pay other debts, secondly for home improvements. The home equity line of credit, a variable-rate, open-end “checkbook” type of financing, is the most popular form of borrowing against one’s home. Nationwide, 13 percent of homeowners have second liens against their homes, and most of these were equity-lines of credit. Home improvement is the most common purpose for equity line borrowing.

In Okeechobee, equity-line financing is a mainstream product offering as it is everywhere in the US. Equity-line financing for owners of


56

manufactured homes is available from at least one lender when the first lien is also held by that lender (Riverside).

Subsidized Finance Programs

The county receives $350,000 per year in SHIP funds from the state’s housing trust fund. Most funds are programmed to help homebuyers afford a home. Maximum price limit is currently $95,000 and administrator Linda Rucks says clients are still managing to find homes priced in this range. Loan amounts range from $8,000 to $25,000 depending on the buyer’s income. Loans carry no interest and are forgivable over a seven-year term.

Rehab funds up to $10,000 per unit are available, but there have been few takers because funds may be used for building code defects only. $80,000 per year is programmed for rehab financing.

The county allocates $2000 per year of SHIP funding for buyer education.

State statute prevents SHIP from assisting HUD-code homes, a provision that homebuilders fought hard for.

For low-income households, USDA’s Rural Housing Service offers deeply subsidized home purchase mortgages for site-built homes priced up to $111,203. Surprisingly, there is no waiting list. The program’s credit standards are high enough that they screen out many low-income households.

USDA also offers grants and subsidized loans for home repair through its Section 504 program. Grants up to $7,500 are available for elderly homeowners, and they need not be secured by a lien on the residence. Twenty-year loans carry a 1 percent interest rate for terms up to 20 years.

USDA Rural Housing Service Single-Family Assistance in Okeechobee County, FY 2002-04

FY 2004 FY 2003 FY 2002Number

Amount

Number

Amount

Number

Amount

502 Direct Subsidized Home Purchase Loans

16 $645,320

8 $350,480

8 $516,156

502 Guaranteed 6 1 2


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Rural Housing Loans (market rate)

$450,000 $93,480 $162,000

504 Home Repair Loans

3 $35,000

2 $25,000 0

504 Home Repair Grants

3 $18,500 0 0

Source: RHS State Office.

Reverse Mortgages

As real estate values continue to rise in Okeechobee, some of the county’s seniors may want to investigate a reverse mortgage to increase retirement income and help with home maintenance. A reverse mortgage allows a senior to tap their home equity without incurring any repayment obligation. The program design ensures that a borrower will never owe more than the home is worth. As long as taxes and insurance are paid, the home cannot be foreclosed either. So far, no Okeechobee lender has made the program available.

Reverse mortgages are becoming popular after years of discussion. In the first five months of FY 2004, 12,848 loans were originated nationwide, compared to 6,638 for all of 2000. The Home Equity Conversion Mortgage, the most popular form of reverse mortgage, is FHA-insured. The American Association of Retired Persons maintains a network of trained counselors nationwide to explain the complex program to consumers. In West Palm Beach, Barbara Tyson is one such counselor at Consumer Credit Counseling (561-515-2273).


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Rental HousingOne out of four households in the county rents a residence. About 1500 households rent manufactured homes; another 1000 rent site-built single-family homes; and the remaining 700 renter households rent apartments in multifamily dwellings. According to Realtor Hallie Davis, many units are owned by small-scale investors who own a few houses or mobile homes.39

Income and Demographics

Median renter household income is $25,716. As of 1999, 28 percent of renter households were below the poverty line ($13,290 for a 3-person household).40

Over two-thirds of renter householders are between 25 and 54 years of age. One renter out of eight is over 65.41

Rental Housing Construction

Only 17 multifamily structures were built in the county between 1994 and June 2004, and 15 of those had fewer than 10 units.42 Most of these were probably for ownership. A maximum of 18 units per acre is permitted inside the county’s designated development zones, subject to infrastructure capacity. Securing a zoning change from single-family to multi-family is usually difficult due to neighborhood opposition. A recent example was the August 2004 rejection of such an application for 10 large single-family lots near Everglades Elementary School. In the late 1990’s, church-sponsored attempt to rezone 10 acres for elderly rental housing was defeated by neighborhood opposition.

Aging single-family units, particularly older manufactured homes, are filtering down to the rental stock. About half of all rental units in the county (1,620) were built before 1980; 780 before 1970.

Fourteen percent of the county’s rental stock was built during the 1990’s (436 units).

Subsidized Rental Housing

The county has three subsidized rental projects, as follows:


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Subsidized Rentals in Okeechobee CountyProject Subsidy

sourceUnits and BR count

Rents and Max Income

Population served

Year built

Okeechobee Commons

RHS mortgage; FHFC tax credits; RHS rental assistance

34 1BR Rent = 30% of income.Maximum60% of median ($18,120 for one person)

Elderly 1995

Tanglewood

RHS mortgage; RHS rental assistance

10 1BR14 2BR2 3BR

Rent = 30% of income.Up to $36,600 for family of 3.

Elderly 9 unitsDisabled 5 unitsFamily 12 units

Late 1980’s

El Mira Sol

HOME (FHFC)

15 s/f homes

$438 for HH at 50% of median; $529 for HH at 60% of median.

Family 2002-3

Source: Interviews with managers, Shimberg Center, U of Florida.

Eighteen people are waiting for an apartment at Tanglewood. It takes up to four years to reach the top of the list. Between June 2003 and September 2004, only three apartments turned over. One occupant moved out of state, and the other two left as their incomes rose and the 30 percent of income formula produced a rental amount that exceeded market rents. (Households must meet income limits when they move in, but they cannot be evicted when incomes increase.) All units at Tanglewood are wheelchair-accessible.

The longest-waiting person on the Okeechobee Commons list has been waiting three years for an apartment.


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Okeechobee County does not have its fair share of subsidized rental housing. It has only one unit for every eight renter households with incomes between 20 and 60 percent of median income. The following table shows that the county’s ratio of 12.7 percent of low-income renters occupying a subsidized unit lags behind the ratio of neighboring counties and the state as a whole.

Subsidized Units as Percentage of Renters: Okeechobee, Counties East, and State (2001)Subsidized Units as Percent of All Renters

Subsidized Units as Percent of Renters with Incomes between 20% and


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Subsidized Units as % of Renters, by Income Category: Okeechobee, Counties East, and State (2001)

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Okeechobee Martin Palm Beach St. Lucie Florida

Location

Subs

idiz

ed U

nits

as

% o

f Ren

ters

Subsidized Renters As % of AllRenters

Subsidized Renters As % ofRenters with Incomes Between20% and 60% of Median

Source: Shimberg Center, Univ. of Florida, Rental Housing in Florida .

60% of MedianOkeechobee 4.9% 12.7%Martin 8.7% 30.5%Palm Beach 10.7% 37.9%St. Lucie 11.8% 47.4%Florida 11.3% 36.8%

Source: Shimberg Center, Univ. of Florida, Rental Housing in Florida.

The county has no Section 8 Housing Choice vouchers or public housing units, HUD’s two major housing subsidy programs. Section 8 vouchers allow low-income renters to afford privately owned rentals. Public housing is owned by government entities. Neighboring counties have the following number of vouchers and units:

Section 8 Vouchers and Public Housing Units, Counties East of Okeechobee

Section 8 Vouchers

Public Housing

UnitsPalm Beach County Housing Authority 2,595 543

West Palm Beach Housing Authority 1,994 712

Housing Authority of the City of Stuart 77 70Housing Authority of the City of Fort

Pierce 709 826Indian River County Board of County

Commissioners 345 0Source: Supportive Housing Report 3-04 by Technical Assistance Corp for Florida Housing Coalition.

Manufactured Home Rentals

Manufactured housing plays the same major role in Okeechobee’s rental stock as in its ownership housing. Nearly one-half of the county’s renter households (1,518) rent a manufactured home. (Source: Census 2000) Renters occupy 27 percent of the occupied manufactured homes in the county.

Not many new manufactured homes are placed into rental service. Only 156 manufactured homes built in the 1990’s are rentals.


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Manufactured homes filter down to the rental stock as they age. About 45 percent of MH rentals were built before 1980. Renters occupy a disproportionate share (39 percent, 572 units) of the county’s year-round occupied old mobile homes built before the 1976 HUD code.43 These 572 obsolete and unsafe units constitute a clear and urgent housing need in Okeechobee County.

Few senior households rent manufactured homes. The MH renter age distribution is as follows:

MH Renters: Age of HouseholderAge 15-24 25-34 35-44 45-54 55-64 65-74 75+ 65+

Percent 13.4% 23.9% 26.5% 19.5% 8.3% 5.7% 2.7% 8.4%Number of Household

s203 363 402 296 126 87 41 128

Source: Census 2000 compiled by Housing & Community Insight.

By contrast, 1,739 senior Okeechobee households live year-round in a manufactured home they own. They account for 42 percent of Okeechobee’s MH owners.

Manufactured home renter households have an average income of $23,828.44

Rents vary widely for manufactured homes. The range reflects the fact that “manufactured housing” encompasses an extremely wide range of units, from substandard to excellent. One very large multi-section home on a half-acre lot north of town rents for $880 per month, according to a local real estate agent. Another agent says it is not uncommon for single-section units 20 years old to rent for $600 to $700. In a mobile home park, a real estate agent reported a 2BR, 1BA single-section home renting for $500 per month in February 2004. About 60 basic MH units in 46th Ave. Villas rent for $400 per month and stay full, according to a local Realtor. A landlord who owns more than a dozen HUD-code homes rents 10-year old, 2 BR, 2BA units for $125 per week for those in good condition, and she reports 95 percent occupancy.

Market Rents

A large majority of Okeechobee renters occupy single-family units, either manufactured or site-built. The wide variation in the condition of single-family units and desirability of location makes it difficult to establish a typical rent by bedroom size.


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In the Douglas Park neighborhood, substandard homes not much better than shacks still command $400 per month plus utilities. In the same area, basic, unrenovated 3BR 1BA concrete block units without central air conditioning, financed originally by Farmers Home Administration, are renting for $500 per month plus utilities.

HUD estimates market rent levels annually for every market in the US. They are intended to represent the 40th percentile of rents paid under recently executed leases in the stated market. These rents are the maximum allowable, including utilities, in HUD’s Section 8 voucher program. Following are HUD’s estimates for Okeechobee:

HUD Fair Market Rents, Okeechobee and Counties East, 2004County/Unit 0 BR 1 BR 2 BR 3 BR

1 Univ. of Florida BEBR2 Okeechobee County Comprehensive Plan, page 1-2.3 Census 2000 Table P-28.4 Office of Federal Housing Enterprise Oversight Repeat Sales Index. As described by OFHEO, “The use of repeat transactions on the same physical property units helps to control for differences in the quality of the houses comprising the sample used for statistical estimation. For this reason the House Price Index is described as a “constant quality” house price index.”5 Palm Beach County considers incentives for builders of affordable housing. South Florida Sun-Sentinel, August 25, 2004. 6 Housing Element of SRPP, Treasure Coast Regional Planning Council, 1995, p. 2-13.7 Projections from Florida Long-Term Economic Forecast 2002, Bureau of Economic and Business Research, University of Florida.8 Livability and Affordability: Open Space Preservation and Land Supply. Linda E. Hollis, AICP with Douglas R. Porter and Paul S. Tischler The Growth Management Institute Chevy Chase, MD June 2000.9BEBR long-term forecast for Okeechobee County, from Florida Long-Term Economic Forecast 2002 p. 255.10 For $310 million, as many as 50,000 new jobs. Palm Beach Post, October 10, 2003.11 Scripps may move site of Palm Beach County research facility. Economic Council of Palm Beach County Inc. September 23, 2004.12 Rates not seasonally adjusted.13 Bureau of Economic and Business Research, University of Florida.14 The average wage is a weighted average calculated as follows: total wages divided by total number of jobs. Housing budget is based on 30 percent of income, the standard guideline used by federal housing programs and mortgage underwriters.15 Census 2000 Table P46. In 2000 there were 5,431 married-couple families with at least one employed member.16 Census 2000 Table P15.17 Census 2000 Table DP-3.19 2003 Florida Price Level Index.20 Florida Health Insurance study, cited in Florida Rural Health Plan, 2000.21 Okeechobee County Tax Appraiser data.22 Census 2000 owner self-valuations. Owner estimates of value have been found to average about 6-8 percent high.23 Office of Federal Housing Enterprise Oversight Home Price Index. The index uses both sale data and appraisals for refinancing are used to calculate home values.24 Office of Federal Housing Enterprise Oversight repeat sales home price index. 25 Building Performance: Hurricane Andrew in Florida. FEMA, February 1993.


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SizeOkeechobee $410 $449 $508 $630Martin/St. Lucie

$501 $549 $711 $925

Palm Beach $570 $665 $823 $1,092Including utilities.Source: HUD

HUD’s market rent estimates are low for Okeechobee as of 2004. The actual median rent, including utilities, paid by Okeechobee renters in 1999 was $486 as determined by Census 2000.

Town Center Apartments is a 48-unit complex built in 1987, located at 1799 South Parrot. All units are 2-bedroom and rent for $550/month plus utilities. There were no vacancies as of September 2004.

Oak Lake Apartments, built in 1981 and located at 2355 SW 28th St.., offers two-bedroom apartments for $575 per month/plus utilities. Townhomes with 2BR-2BA rent for $800/month, plus utilities.

26 www.bized.ac.uk. 27 Census 2000 SF-3, Table H79 and Table HCT-6 showing 4,141 owner-occupied MH.28 Real estate MH in Okeechobee that sold in 2004 had appreciated by a median of 3.8 percent annually since previous sale, as described in the report section on resale housing. 29 Census 2000 Table HCT 14 and Census data on total number of owner-occupied units.30 Based on calculations of Census 2000 data on the total owner-occupied MH debt outstanding and aggregate home value. Homes with debt outstanding are assumed to be at 50 percent loan-to-value.31 FMO’s accomplishments go beyond land-lease issues to address broad concerns of all manufactured home owners. For a timeline of legislative accomplishments, see: http://24.129.184.150/fmo/fmo_home/about_legislation.asp32 Shelterforce, Nov.-Dec. 2000, Letter to the Editor from George Allen. “Florida MH community residents enjoy as many, if not more, protections than just about anywhere else in the U.S. and Canada.”33 William Apgar, Harvard Joint Center for Housing Studies, presentation to Neighborhood Reinvestment Corp. conference Atlanta, Feb 2002.34 Source: Homes by Jolicoeur tabulations of county data.35 Since implementation of the Florida building code, the planning and development department has emphasized verification of builder cost estimates according to a local builder.36 Abdighani Hirad and Peter M. Zorn, A Little Knowledge Is a Good Thing: Empirical Evidence of the Effectiveness of Pre-Purchase Homeownership Counseling. May 22, 2001. http://www.freddiemac.com/corporate/reports/37 Source: HUD Atlanta email from Robert J. Reed, 10-13-04.38 Porter, George. Why Do We Need Two Foundations? Online at http://george-porter.com/articles.php?page=Why_Do_We_Need_Two_Foundations.html.39 Source: Census 2000 H-32.40National Low Income Housing Coalition 2003 Out of Reach.41 Source: Source Census 2000 H14.42Source: Shimberg, FL Hsg Data Clearinghouse and Census C-40 reports.43 Census 2000 Table HCT6 compiled by HCI; pre-1976 units estimated from data on units built between 1970 and 1979.44 Census 2000 compiled by HCI.


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http://george-porter.com/articles.php?page=Why_Do_We_Need_Two_Foundations.html

http://george-porter.com/articles.php?page=Why_Do_We_Need_Two_Foundations.html

http://www.bized.ac.uk/

At the bottom end of the rental market are rooming houses, occupied either by all-Hispanic or all-African American tenants. An example is the “yellow apartments” at 206 SW 6th Ave., occupied by Hispanic tenants who pay $25 per week per person. Douglas Park has a few units of this kind as well.

Estimated market rents in late 2004 are as follows, with coastal county rents for comparison:

Average Market Rents, Okeechobee and Counties East 2004 (Utilities not included)

0 BR 1 BR 2 BR 3 BROkeechobee Single-family house or double-section MH, good condition

n/a n/a $650 $800

Okeechobee single-section MH, good condition n/a $550 $675

Okeechobee apartment $400 $450 $565 no data

Martin County apartment* $632 $883 $1215Palm Beach County apartment* $663 $963 $963 $1210St. Lucie County apartment* $409 $523 $666

*2001 telephone survey data has been adjusted upward by 3.5% per year through 2004 (3 yrs).Source: Housing & Community Insight and Shimberg Center, Rental Housing in Florida Market Survey of complexes 17+ units, December 2001. (Data for Okeechobee alone was not collected by Shimberg survey.)

Occupancy Rate

The occupancy rate in the rental apartment market is estimated at 98 percent. Overall rental vacancies including single-family and manufactured home rental units are higher, in the 8-10 percent range. A comprehensive study of Okeechobee’s apartment rental market performed for Florida Housing Finance Corporation in October 2002 found only 4 units vacant, and estimated overall apartment occupancy at 97.6 percent.45 The overall rental market including apartment and single-family/MH units was 10.4 percent in 1999 according to Census data.

Rental Housing Needs

45 Prepared by Danter Company, Columbus Ohio.


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Renter Incomes

Renter incomes are substantially less than owner incomes. The county’s median renter household income in 2003 was $25,716.46 More than one renter household out of four in Okeechobee lives in poverty. Households with very low incomes have difficulty raising enough cash even to gain access to the rental market. Most Okeechobee rentals require at least the first and last month’s rent up-front. In addition, renters have to pay deposits for telephone and utility service.

To afford an average quality 2-bedroom apartment unit with utilities in Okeechobee, an adult in a single-earner household would need to earn $12.40 per hour ($25,800/year) in order to avoid spending more than 30 percent of income for rent. Half of Okeechobee renter households earn less. A worker at the minimum wage would need to work 19 hours per day, 5 days a week, to afford the average Okeechobee 2-bedroom apartment with utilities.

The following table shows how renter household incomes were distributed by family size in 2000 and how they are projected for 2010.

Okeechobee Renter Income Distribution by Household Size, 2000 and 2010Renter

Household Size

Percent of HUD Median Income*

Number Renter HH 2000

Number Renter HH 2010

1-2

<20% 199 23020-29.9% 199 23630-39.9% 113 13140-49.9% 130 14550-59.9% 107 12260-79.9% 212 23280-119.9% 237 248More than 119.9% 294 325

3-4 <20% 102 10520-29.9% 93 10230-39.9% 107 11740-49.9% 97 10250-59.9% 89 9760-79.9% 172 180

46 NLIHC Out of Reach.


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80-119.9% 201 208More than 119.9% 209 217

5+

<20% 86 8820-29.9% 59 5930-39.9% 60 6040-49.9% 50 5050-59.9% 40 4360-79.9% 97 10380-119.9% 188 202More than 119.9% 20 21

*In 2004, $43,200 for a 4-person household; $30,250 for one.Source: U of FL Shimberg Center.

Renter Cost Burden and Crowding

A basic measure of rental housing need is the percentage of renter households who are paying an unreasonably high share of income for rent and utilities. As of 1999, one renter household out of three (1,007) in Okeechobee was “cost-burdened,” i.e. paying more than 30 percent of income for rent and utilities. Of these, 781 households were paying 35 percent or more of their income for rent (25.5 percent of all renters).47

An even higher percentage of renter household budgets were overstretched in counties to the east. The following table presents rental needs in Okeechobee and counties east.

Renter Poverty, Cost-burden, and Crowding, Okeechobee and Counties East

% renters in poverty

% renterscost-

burdened

% of renter households crowded*

median gross rent

Okeechobee

28.3 32.9 20.7 $486

Martin 17.8 39.6 8.8 $633Palm Beach

18.9 42 12.5 $739

St. Lucie 26.6 41.3 11.0 $621Florida 22.7 40.9 12.9 $641

Source: Census 2000

47 Source: HUD CHAS Compilation of Census 2000.


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The number of Okeechobee cost-burdened renters will increase faster, by 10.7 percent, than the 8.3 percent overall increase in renters that the Shimberg Center projects through 2010.

Over 500 renter households in Okeechobee County are on the edge of homelessness, paying 50 percent of household income for rent and utilities. When a household budget is stretched this far, a medical emergency, car repair, divorce, or illness can put the family on the street.

Okeechobee County Renter Household Cost Burden, 2000 and 2010Rent and Utilities

as Percent of Income

Renter HH, 2000 Renter HH, 2010 % Change, 2000-2010

<30% 2,138 2,291 +7.2%30-39% 335 374 +11.6%40-49% 183 195 +6.6%50+ % 505 563 +11.5%Total Renters 3,161 3,423 +8.3%Total Renters Paying 30% or more of income for rent

1,023 1,132 +10.7%

Source: Univ. of FL Shimberg Center

Not surprisingly these households do not have much income. The majority of households paying 50 percent of income for housing are surviving on less $8,640 per year (20 percent of the 4-person median income in 2004). To provide decent, affordable rental housing to extremely low income renters requires large subsidies.

Income of Severely Cost-Burdened Okeechobee Renters, 2002 and 2010 Projection

Renter Household Income as % of Area

Median IncomeYear 2002 Year 2010

<20% 256 27520-29.9% 147 16130-39.9% 63 71


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40-49.9% 36 4150-59.9% 14 15

Total 516 563Note: 2002 median household income was $35,700. “Severe cost burden” means renter pays more than 50% of gross income for rent and utilities.Source: Univ. of FL Shimberg Center

Crowding is a problem for more than one renter household out of five in Okeechobee, a very high percentage. Crowding is defined as more than one occupant per room.

Targets: Fully Meeting the Need for Affordable Rental Housing

Okeechobee County clearly needs more affordable, good-quality rental housing. Even though low incomes give many renters limited buying power, the shortage of decent quality rental housing in the county has pushed rents to relatively high levels. The result is that some 893 low-income renter households are paying more than 30 percent of their income for rent and utilities. Several observers, including Janet McKenna at Okeechobee County Senior Services, see an urgent need to create subsidized rental housing for the county’s seniors.

There are two basic strategies to reduce the number of households who are overburdened with rent costs. The problem can be tackled from the income or demand side, with Section 8 vouchers or similar tenant-based rental assistance. Rental assistance would enable some renters to reduce their cost burden to a manageable level, and some would also move to better quality units.

However, rental assistance does nothing to improve the condition of Okeechobee’s rental stock, much of which comprises old manufactured and mobile homes. Besides, rental assistance funding is in short supply. A supply-side strategy for rental unit production is also needed.

The following table is not intended to prescribe a strategy, but to document in detail the depth of supply or demand-side subsidies that would address current rental need, based on the number of Okeechobee households now experiencing cost burden. Data on cost-burdened renter households’ size, income, and householder age shows that 893 subsidized units or rental assistance vouchers are needed to enable households to limit their share of rent payments to anywhere from $86 to $699 per month.


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Number, Type, and Target Rents for Affordable Units/Vouchers Needed by Okeechobee County Renters Who Are Cost-Burdened in 2004

Household Size and Income of Cost-Burdened

Renters

Type/Number

Non-Elderly Units

Needed

Type/Number ElderlyUnits

Needed

Target Rent Levels by Unit Type Needed

1-2 person HH 1 Bedroom 1 Bedroom

1 bedroom units at rent, including

utilities, of:< 20% of median

income 34 25 $8620.1-35% 103 21 $17335.1-50% 102 56 $30250.1-60% 36 23 $43260.1% and

higher 64 33 $5183-4 person HH 2 Bedroom 2-bedroom units at:< 20% of median

income 48 $10820.1-35% 70 $21635.1-50% 100 $37850.1-60% 33 $54060.1% and

higher 16 $6485+ person HH 3 Bedroom 3-bedroom units at:

< 20% of median income 37 $117

20.1-35% 28 $23335.1-50% 48 $40850.1-60% 0 $58360.1% and

higher 16 $699Total non-

elderly affordable

units needed:

735

Total elderly

affordable units

needed:158

Total affordable rental units

needed:893

Source: Estimates of existing cost burden by HH size and income from Florida Housing Data Clearinghouse. Calculation of affordable rent by Housing & Community Insight based on 30 percent of the minimum income in each category (and based on 10 percent of median for the first category, < 20%).


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Tax Credit Rental Housing

The federal low income housing tax credit is an 18-year-old program that supports private development of about 40 percent of all new rental housing nationwide. More than 53,000 units have been developed with credits, which are allocated by the Florida Housing Finance Corporation. The program pays for an average of 40 percent of the development cost of apartments that developers commit to set aside for low-income tenants for at least 30 years. Projects usually require additional subsidy such as low- or no-interest second mortgages from HOME or the state’s SAIL program.

Maximum tenant income is 60 percent of median ($25,920 for an Okeechobee household of four in 2004). Although mixed-income projects that combine subsidized with market-rate units are allowed, most developers choose to offer all units to households below the income limits.

Tenants can earn up to 60 percent of area median income. As detailed in the table below, the county has almost 3000 renter households whose incomes would qualify them for subsidized rental units produced through the state’s largest rent subsidy program, the housing tax credit program. More than 1,000 Okeechobee renters in 1-2 person households would meet tax credit rental income qualifications, and 29 percent of them currently are paying an unreasonably high percentage of income for rent. In terms of reducing existing cost-burden among renters, the most pressing need in Okeechobee is for assisted rentals for seniors. Almost 42 percent of Okeechobee seniors, 205 households, with incomes below $20,760 are paying 30 percent or more of their income for housing.

Gross Market Potential and Target Rents for Tax Credit Rental Housing in Okeechobee, 2004Non-

Senior HH under 60% AMI,

1-2 persons

(max $20,760)

Non-Senior

HH under 60% AMI,

3-4 persons

(max $25,920)

Non-Senior

HH under 60% AMI,

5-6 persons

(max $30,060)

Senior HH under 60% AMI

1-2 persons

(max $20,760)

Total Renter

Households Under 60% of Area

Median Income

Number of renter households 1,037 926 541 485 2,989

Number w/cost 303 230 45 205 781


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burdenPercent w/cost

burden 29.2% 24.8% 8.3% 41.9% 26.1%

Target contract rent excluding $80

utilities$335 $438 $521 $335

Note: cost burden means renters are now paying 30 percent or more for their units, including utilities. AMI is Area Median Income, as set by HUD for 2004. Senior means age 62 and over.Source: HCI calculations of Florida Housing Data Clearinghouse data.

This is only a starting point for a project-specific market analysis, which would consider preferences for single-family vs. multifamily housing, location, and other variables that affect actual demand for new units.

In the tax credit program, tenants pay the target rent even if it causes them to pay more than 30 percent of income for housing, unlike Section 8 or Rural Housing Service rental assistance which cap the tenant contribution at 30 percent. The target contract rent in the table is calculated to be affordable for households earning 80 percent of the maximum in each category. For example, the $335 per month rent excluding utilities is affordable to a 1 or 2-person household earning $16,608, or 80 percent of the allowable maximum. This “window of affordability” is important in order to ensure that rental projects target a wide band of income-eligible tenants. Part of El Mirasol’s difficulty in renting up has resulted from having to reach narrow groups of renters in order to meet both affordability and income eligibility criteria.

What Happened with Okeechobee II?

In 2002, Heritage Affordable Development Inc. applied to Florida Housing Finance Corporation for financial assistance to build 50 new rental units on a 5.7 acre site adjacent to Okeechobee Commons. The new project was called Okeechobee II. Heritage proposed to set aside 22 units for households at 50 percent of median income, and 28 units for households at 60 percent of median income. Forty units were to be for seniors. FHFC gave preliminary approval for $432,874 per year of tax credit subsidy for 10 years, plus a second mortgage from the SAIL program of $1,000,000. The project application also cited a $20,000 grant from the city of Okeechobee.

Okeechobee II did not come to fruition. The market study commissioned by Florida Housing Finance Corporation confirmed a strong demand for the units. Within 3 to 3.5 months of opening, the


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study estimated the project would achieve 95 percent occupancy. The project was viable with the subsidies it had won, but it failed when the developer lost the confidence of Florida Housing Finance Corporation. As outlined in the Strategy section of this report, Okeechobee II is a project that could be revived and built.


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Description and Condition of Housing Stock

Single-Family Site-Built and HUD-Code Manufactured Homes DominateMore than nine out of ten of Okeechobee’s 15,504 housing units are detached, single-family structures. Manufactured homes dominate the housing stock, with a 49.2 percent share of total units. About 2,885 of these are mobile homes built before the 1976 HUD code took effect.

Site-built single-family detached units comprise 43.1 percent of the stock. There are 974 (6.3 percent) units in multifamily structures, most of which have 4 units or less. The county has more RV’s (212) than apartments in structures of 10+ units (88).

The county’s housing stock was shaped during the seventies and eighties when population grew rapidly and three out of five units (9,387) existing as of 2000 were built. 48 Almost one unit in five (18.4%) is more than 40 years old.

Vacant and Seasonal Units

The overall vacancy rate was 18.8 percent as of Census 2000, or 2,911 units. Of these, 1,166 units were classified as seasonal or recreational. Many of the seasonal units are manufactured homes in the county’s MH parks. The vacancy rate for manufactured homes was over twice as high as for other units, roughly 26 percent vs. 12 percent.

Overall Condition of the Housing Stock

How the county evaluates condition

The physical condition of every residence in the county is evaluated at least once every three years by county appraisers. Appraisers leave their vehicles and perform a detailed exterior inspection of the front and rear of each home to evaluate condition. They do not enter buildings unless there is a challenge to the county’s appraised value. After each inspection, the appraiser rates the current condition of the home in increments of five on a 1 to 100 scale known as “percent


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good.” The “percent good” can and does increase from one review to the next when units are renovated or improved.

The county rates a home’s condition without regard for its construction quality and age. A home that rated low on quality of construction when new can retain a high “percent good” condition rating for many years with good maintenance. For example, a 40-year old home’s rating increases when jalousie windows are replaced. Likewise, if maintenance is poor, a high initial quality of construction is no guarantee of a high “percent good” condition rating.

Steve Cates, senior appraiser, and Charles Lambright of the county’s appraisal staff have decades of appraisal experience between them. Mr. Lambright, a former homebuilder, devotes much of his time to training county appraisers on how to accurately judge the condition of a home. Lambright says it is a difficult job to do well, and in his opinion many counties fall back on a mechanical, formula-based approach instead of actually learning to “read” the condition accurately. Steve Cates says that in a full day, an appraiser can assess the condition of 15-20 homes. Appraisers are trained to notice “index” features that frequently correlate with overall maintenance, such as a front door that has been upgraded. (Lambright believes that the front door is often the first item a diligent homeowner chooses to replace.)

Since Mr. Cates came on board about two years ago, a majority of the county’s housing has been re-appraised, including an update of each unit’s physical condition or “percent good.” Because of the county’s careful approach to evaluating home condition, and the timeliness of the current ratings, the county has an unusually reliable, house-to-house measure of the condition of its housing stock.

Single-family units: site-built and manufactured

For the 12,778 site-built units and mobile homes on the county tax rolls, the average condition rating as of 2004 is 69.4 percent good. For site-built homes, the average is 75.5 percent; for manufactured homes, it is 62 percent. (The appraiser’s office automatically reduces the observed condition of manufactured homes built before 1986 by a “mobile home obsolescence” factor ranging from 5 to 20 percent, depending on the year built.) All condition statistics include both occupied and vacant houses.

Mr. Cates stated that only those units rated 55 percent good or higher should be considered “livable” and up to standard. Mr. Lambright 48 Census 2000, manufactured home data from Census 2000 and Okeechobee County appraiser data.


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added that a condition score of 40 would describe units that are extremely dilapidated. Using 50 percent good as the indication of substandard housing, almost one-fourth of the county’s single-family and real estate manufactured housing stock is substandard.

Substandard Single-Family and Real Estate Manufactured Housing Units

Numbersubstandar

d% of housing type

substandardSite-Built S/F Homes 715 10.3% of site-built S/FReal Estate Manufactured Homes 2,273

39.0% of real estate MH

Total Substandard Site-Built S/F and Real Estate MH 2,988

23.4% of S/F and real estate MH

Total All Site-Built S-F and Real Estate MH 12,778

Note: Substandard is defined to include units rated 50 percent good or lower. Condition was rated before two hurricanes struck Okeechobee in 2004.Source: Okeechobee County Property Appraiser Office.

Within the substandard set of homes, a large share was rated less than 40 percent good: 394 site-built homes (5.7% of site-built) and 1,651 manufactured homes (28.3% of real estate manufactured). Moving even further down the scale, a total of 958 units were rated 30 percent good or less.

Property condition information is not available on the county’s approximately 2,171 personal property mobile and manufactured homes, most of which are located in parks. Over the past twenty years there has been a steady increase in the proportion of new manufactured homes placed on the owner’s private land. Homes in Okeechobee’s parks are very likely to be older on average, and in worse average condition than the real estate manufactured homes described above.

It is also unknown what part of substandard housing is owned versus rented, but Mr. Arnold Verwey, the county’s code compliance director, says rental housing is in substantially worse average condition than ownership housing. He said three-quarters of code compliance actions involve rental housing--even though only one-fourth of all occupied units are rented.

Finally, the ratings address the condition of all housing, whether or not it is presently occupied, occupied seasonally, or vacant for the


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long term. Census 2000 data shows that 25.8 percent of the county’s manufactured homes (both real estate and personal property) and 11.9 percent of non-MH units were vacant.

The ratings reflect housing condition before Hurricanes Frances and Jeanne struck the county in 2004. After Hurricane Jeanne, the county planning and development department reported that about 300 homes had been destroyed, the great majority of them mobile homes in parks. The county considers a unit destroyed or condemnable if it costs more than 50 percent of value to repair the unit. Because older MH have relatively small values, it does not take much damage to reach the 50 percent threshold.

Quality of Okeechobee Single-Family Construction is Trending Higher

The typical quality of new site-built homes in the county has been increasing over the past 10-15 years, according to chief appraiser Charles Lambright. The appraiser’s office tracks the basic quality of home construction with a letter grade that is assigned at first occupancy. Unlike the percent good condition rating, this grade is fixed for the life of the structure unless a unit is substantially modified. The grade is closely related to the replacement cost per square foot of a given home.

Prior to 1990, the typical new home in Okeechobee County received a “D” rating, meaning average quality. Since 1990, the typical new home’s quality has rated a D+, “above average.” Lambright added that Okeechobee grades are relative to local standards, i.e. “on the curve.” A quality rating of D+ as applied by national appraisal guides like Marshall & Swift would be somewhat higher than the same D+ grade issued by Okeechobee County appraisers.

Many Okeechobee homeowners and homebuyers prefer concrete block structures for hurricane safety. CBS structures were a large majority of non-manufactured home residential permits in 2004. Code Compliance Director Verwey told me that in his opinion, the two kinds of structures can be equally safe.

Condition of Multi-family Housing

There are 438 multifamily structures in the county’s property tax database, including 196 2-4 unit structures and 242 apartment


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buildings of 5 units or more. A much smaller proportion of this part of the housing stock is substandard.

Substandard Multifamily Housing in Okeechobee CountyNumber

Substandard

TotalStructures of

Type% of type

Substandard2-4 Unit Structures 13 196 6.6% of 2-4 unit5+ Unit Structures 3 242 1.2% of 5+ unit Total M/F 16 436 3.7% of all m/f

Source: Okeechobee County Property Appraiser data.

Manufactured Housing Quality and Condition

In addition to the condition ratings of the county’s property appraisers, the construction quality of HUD-code housing and mobile homes is a key component of the present condition of Okeechobee’s housing stock. Because there is so much variation in the quality, durability, and safety of the housing that is broadly referred to as “mobile homes,” a closer look is needed.

Vintages of Manufactured Housing

No single term like “mobile home” accurately captures the very wide range of manufactured housing. Like Eskimos with snow, affordable housing specialists need many categories to capture the full range of MH outcomes. Understanding changes in mobile homes and manufactured housing over time is a good way to begin to understand the wide range.

The “vintage” of a manufactured home directly relates to its safety. Before the HUD code took effect in 1976, mobile homes in Florida met a loosely enforced industry standard, and their quality was distinctly lower. Tallahassee retailer Leonard Bembry, who has sold homes since the early 1970’s, reports that home prices increased by as much as $2,000 when HUD’s code replaced a more lenient ANSI standard that governed home construction before 1976. That’s $6,500 in 2003 dollars.

Structural strength is poor for pre-1976 homes, and they are extremely vulnerable to high winds as everyone has seen in 2004. Ralph Nader’s Center for Automotive Safety found existing standards to be better than nothing, but reported in 1975 that “poor design,


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cheap materials, and sloppy workmanship…all too often result in shockingly bad products.”49 Fire safety is much worse for pre-1976 homes. Fires in homes built before the HUD code are much more likely to be spread from the room of origin than in HUD-code homes.50

Quality of manufactured housing improved steadily during the 1980s. Market forces, not changes by HUD’s slow-moving MH division, generated most of the improvements. Double-section units with more amenities steadily gained market share, and the HUD-code home matured somewhat beyond the bare-bones, minimal cost housing that it had been in the seventies. However, the HUD-code industry has always specialized in building minimum-cost housing that meets demand from extremely price-sensitive consumers, and this is still a key market segment. That marketing practice has been self-defeating for the industry as it has simultaneously attempted to compete with site-built homes and win favor with local land use regulators. Marketing minimum-quality units for year after year has caused the HUD code to be equated with minimal quality. However, if a site-built home were built to barely comply with the Florida Building Code, it too would stand out as cheap quality. The difference is that site-builders rarely target the buyer seeking a bare-bones home.

Expert researchers have concluded that many homes built to the HUD code are functionally equivalent to traditional site-built starter homes built to local codes.51 Consumer Reports has stated that manufactured homes can last as long as site-built homes.52 Florida consumers have a major advantage on home quality control because of the way the state administers the HUD building code, under contract with HUD. In Florida and only nine other states, state employees work in every manufacturing plant to oversee manufacturers’ code compliance. Florida’s inspectors are rotated to a different plant every six months to maintain their objectivity. In other states, manufacturers contract with private companies for the inspection function, and inspection companies can be fired by manufacturers without HUD’s approval.

The next big change for manufactured homes in Florida came in 1994.53 At that time HUD responded to Hurricane Andrew by instituting new wind-resistance standards based on a home’s location.

51 Factory and Site-Built Housing: A Comparative Analysis. US Department of HUD, Office of Policy Development and Research, Prepared by NAHB Research Center, October 1998. p. 128.52 Manufactured Housing: Dream or Nightmare? Consumer Reports, February 1998.


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(Florida manufacturers sued to prevent HUD from imposing the wind standards, but the court rejected their argument that buyers should be free to choose lightly built homes.) In Okeechobee, which is located in HUD’s Wind Zone 2, new manufactured homes placed since 1994 have been rated to resist winds of 105 mph. (In Wind Zone 3, which includes the coastal counties to the east of Okeechobee, homes are rated for 115 mph winds.) In Florida there are no Wind Zone 1 counties.

In a delayed response to Hurricane Andrew, in March 1999 the state of Florida substantially tightened its manufactured home installation requirements. Most problems with manufactured homes result from improper installation. The foundation and anchors transfer the home’s weight to the ground and hold it stable in case of high winds. The manufacturer’s engineers specify exactly how each home should be supported. These specifications are included in the owner’s manual. Faulty installation is a common cause of MH problems from jammed windows and doors to roofs that bow in the middle. A typical double-section home costs $3500-4000 to install, and dealers usually include this in the sale price of the home.

Florida has had strict installation standards since March 1999. Florida installation standards are among the nation’s strictest. The state was spurred to action by Hurricane Andrew, which damaged or destroyed over 10,000 manufactured homes in Dade County in 1992. In 1999, Florida instituted 1) rigorous testing requirements for all installation hardware components; 2) licensing, bonding, and training for all installers, as well as an installer warranty requirement; and 3) a requirement that each new installation be inspected by local building inspectors. Florida’s installation program is administered not by the SAA, but by a separate bureau within the Department of Highway Safety and Motor Vehicles.

As tough as Florida’s standards are, there are at least two weak links. Inspection is the first. There are still some Florida counties where local inspectors choose not to inspect setups. This is not the case in Okeechobee. County inspectors check every MH installation twice, once at the tie-down stage and again in a final inspection after skirting is installed. The final inspection is required for a Certificate of Occupancy and electricity turn-on. County inspectors have been trained by state DHSMV experts in MH installation methods.

Another weak link is Florida’s lack of standards for homes installed before 1999. There is a tie-down retrofit subsidy program for land-lease communities, but no money has found its way to Okeechobee parks according to Mr. Verwey. There is a requirement that


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insurance companies verify that installations meet current requirements before writing wind policies, but even so, only about 10 percent of Florida’s 900,000 manufactured homes meet state installation standards.54 In Okeechobee, only about 709 of the county’s manufactured homes meet the latest installation standards.

An additional gap in state installation regulations is their silence about how multi-section homes are assembled (and multi-section homes amounted to 82 percent of 2003 sales). Improper assembly is a major source of problems and is currently a hot topic with manufactured housing officials at HUD’s Washington headquarters.

In March 1999, Florida implemented installation standards for manufactured homes which are among the toughest in the nation.

In summary, the landmark dates in the evolution of Florida’s manufactured housing are:

Pre-1976: though individual well-maintained units may be attractive and comfortable, these homes are functionally obsolete, and pose unacceptable safety risks for year-round occupancy.

1976-1993: steady improvements in quality and amenities during this period, but homes are vulnerable to high winds. Obsolete installation standards during this period dictate installation retrofit for safety and stability.

1994-onward: homes meet the latest HUD wind-resistance standards.

1999-onward: homes meet latest Florida installation standards, which are state-of-the art except for their silence on close-up of multi-section units. Homes built and installed after 1999 appear to have withstood Charley’s category 4 winds successfully.

49 Cited by Wallis, Allan. Wheel Estate. The Rise and Decline of Mobile Homes. Oxford University Press 1991 and Johns Hopkins University Press, 1997. P. 213.50 Hall, John R., Ph.D. Manufactured Home Fires. National Fire Protection Association. May 2003, p. 3 and pp 12-13.53 Manufacturers and the Florida Manufactured Housing Association sued HUD to prevent imposition of wind standards. According to a DCA-funded report by Florida International University, the actual implementation of wind standards in the state may have been delayed until June 12, 1995, when the 11th Circuit US Court of Appeals ruled against the industry and upheld the standards.54 Based on 66,700 new manufactured homes placed in Florida since 1999, plus estimated relocations and retrofits.


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The table shows where Okeechobee’s manufactured homes fall in these various categories.

Okeechobee Manufactured Housing by Year Built

Real Estate or Personal Property

Pre-1976(Pre HUD code)

1976-1993(Pre HUD wind

standards)

1994-1998

(Pre FL strict install

standards)

1999 and later

Total MH

Real estate 1,912 2,834 517 570 5,833Personal

(est.)760 1,064 266 139 2,171

Total 2,672 3,898 783 709 8,004*Total number of personal property homes (2,171 as of Mar 2000) is derived by subtracting real estate homes on the tax rolls as of early 2000 (5,459) from Census 2000 total MH units, 7,630. Age data is estimated for personal property MH based on known age of real estate MH, and assuming personal property is somewhat older.

The figures above reflect estimates of the age of all MH, including those that are vacant or occupied seasonally. About one-fourth of the county’s year-round occupied manufactured homes were built before the HUD code, some 1,466 units (including both real and personal property units).55

How meaningful are post-1994 HUD wind standards and post-1999 Florida installation standards? Solid information will emerge from research on the performance of HUD-code homes that met the latest construction and installation standards in hard-hit areas. An early investigation of 33 MH parks in Charlotte and Lee counties resulted in a report to the Florida Bureau of Mobile Home and RV Construction in August 2004. It states that homes built since 1994 “performed (without exception) admirably.” The same report states that “homes installed since our rule change in March 1999 showed no movement whatsoever.” It notes that attachments to new and old homes, such as carports and additions, performed poorly. Homes built before the HUD code did not perform well, and those built to HUD standards in the 70’s and 80’s “fared somewhat better.”56 I visited Punta Gorda in September 2004 to see how the new standards performed. Parks of old homes suffered severe damage. Homes in Ventura Lakes, a 260-unit park of high-end, post-1999 homes adjacent to the Charlotte

55 Census file SF-3 table HCT-6 calculations.


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County Airport, performed well. I saw no wall failures. Park management told me that only two homes had lost roof decking, and that wind speeds well over 140 mph had been recorded at the nearby airport.

Septic Systems on Small MH Lots

Many of the MH units on the east side of Taylor Creek are on lots as small as ½ acre, with septic systems. John Burton of the county health department oversees septic systems. He says system failures have not yet been a problem, partly because many units have received weekend or seasonal use only for many years. He considers sewer extension to prevent “cluster failures” of multiple septic systems in the area as a “moderate-to-high priority.”

Code Enforcement

Minimum Housing Code

The county has a minimum housing code that sets quality standards for existing housing units. Beginning in mid-2004, the code is enforced by three code enforcement officers who actively monitor conditions in their designated territories. If the officers spot problems on the exterior of a home, such as trash and debris or broken windows, they then inspect the entire structure inside and out.

Compliance with county code violation write-ups has been good. About 75 percent of owners comply based on the write-up; another 15 percent comply after a hearing. On the non-complying 10 percent, a lien is placed against the property so the home is brought into compliance upon sale or foreclosure.57

To date there has been no inspection of tie-downs on existing manufactured homes in the county. A state-sponsored inspection of older mobile homes in the Orlando area revealed that 75 percent were improperly tied down.58

The primary goal of the county’s new proactive housing code enforcement is to clean up the appearance of the county, according to county administrator George Long. Enforcement officers put top priority on monitoring debris and unsightly conditions along the major thoroughfares that are visible to all who enter the county. “We’re trying to make this county attractive, as part of our economic development strategy. Life-safety and health issues are an important 57 Source: Interview with Arnold Verwey, Code Compliance Director, August 11 2004.58 Orlando Sentinel, Set Up to Fail, August 16, 1998.


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part of it, too, but after decades of mobile homes and make-do housing construction, this county needs much more than code enforcement,” Long said. “We need major resources for housing rehabilitation.”

Licensing Farmworker Housing

Migrant farmworker housing is some of the county’s worst-quality stock. As local implementer of the state’s Migrant Labor Camp program, the health department issues operating permits for migrant worker facilities housing five or more workers in one unit. The department inspects each unit and its water/sewer system for compliance with state Chapter 64E-14 regulations. A total of 26 facilities were licensed at the end of the spring 2004 work season, including some large mobile home parks. However, by October, 10 facilities, mostly manufactured home parks including the 100-unit Azteca Park, had converted to family housing. Kathy Shorter at the health department said feedback from owners indicated that management and code compliance were more trouble than they were worth. As the fall 2005 work season begins, the county licenses 435 units in 16 migrant housing facilities. Fees range from $125 to $500 depending on the number of units in the licensed facility. As required by the state, each facility is inspected at least twice per quarter during the work season. The health department does some cruising of the county to identify unlicensed facilities, but on the whole county enforcement of licensing requirements for farmworker units amounts to “voluntary compliance,” according to Ms. Shorter.

Additions to MH: Gray Area of Code Enforcement

In Florida, 78 percent of MH have rooms, porches, carports, or garages attached.59 Many of these attachments have been built improperly so that they place a load on the HUD-code structure and take the home out of code compliance. The state’s preliminary investigation of Hurricane Charley’s impact revealed that almost all MH accessory structures suffered major damage in the storm. Another problem is when improperly installed additions increase wind loads on the HUD-code structure. Okeechobee Building Inspector Verwey told me that the county stopped issuing building permits for MH additions in 2000. Because local inspectors are not trained to evaluate HUD code structures, regulating additions is a gray area of code enforcement which has important safety impact. The gray area also comes into play when a HUD-code structure suffers structural damage and has to be repaired. Smart homeowners will hire an


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engineer with HUD code knowledge to approve specifications for additions or repairs.

Fire safety of manufactured homes has increased dramatically in newer homes. From 1994 through 1999, the incidence of fires per 1,000 housing units was substantially lower for manufactured and mobile homes than for other one- and two-family dwellings.60 As of 1999, the fire death rate per 1,000 housing units was the same for manufactured and mobile homes as for all other dwellings. Fires in homes built after the HUD code are much more likely to be confined to the room of origin than in pre-HUD-code homes.61 The National Fire Prevention Association reports that manufactured home fires and deaths have declined by more than half since 1980, a rate of decline comparable to that for other dwellings.62


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County’s Housing in Racial/Ethnic Perspective

Housing problems exist for larger proportions of minority households than for Whites in the county. We will first examine housing problems for minority households county-wide. Then we will analyze housing problems in small areas, known as “block groups,” where a high proportion of Black and Hispanic households live.

Ownership Rate

While more than four out of five white, non-Hispanic households own their homes, among blacks and Hispanics the proportion is closer to one-half.

Ownership Rate by Race/EthnicityOwnership

rateWhite not Hispanic 80.1%Black 54.8%Hispanic 48.4%

Housing without Plumbing or Kitchen

About 4 out of 100 African-American households lack plumbing or kitchens in their homes. Smaller proportions of Hispanics and Whites lack them. No data is available by race/ethnicity on households without heat.

Homes without Plumbing

Without plumbing

Number

Percent of race/ethnic group

householdsBlack 21 3.6%56 Memo from Wayne Jordan, Community Assistance Consultant, to Phil Bergelt, DHSMV Program Manager responsible for enforcing Florida MH installation standards, August 24, 2004.59 Florida International University survey of MH owners, 2001.60 Hall, John R., Ph.D. Manufactured Home Fires. National Fire Protection Association. May 2003, p. 3 and pp 12-13.61 Hall, p. 4.62 Hall, Executive Summary.


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Hispanic 22 1.5%White 58 0.6%

Homes without KitchenWithout kitchen

Number Percent

Black 25 4.3%Hispanic 22 1.5%White 46 0.4%

Crowding

Crowding was a severe problem in the first part of the twentieth century but began declining during the 1940s, as houses grew in size and families became smaller. But during the 1980s, as immigration levels rose following the passage of the Immigration Reform and Control Act, overcrowding stopped its four-decade decline and began to increase. The increase has been concentrated in certain states where the reversal was especially dramatic, such as California and New York. HUD defines a home as crowded when there is more than one occupant per room.

Today, the United States has almost reached the same number of crowded households as it had in the 1940s and the number is still rising. In 2000, 6.1 million American households—or six percent—were considered crowded, a 21 percent increase since 1990. Of these crowded households, half are severely crowded, a 53 percent increase since 1990. Severe overcrowding is defined as more than 1.5 occupants per room.

A Fannie Mae Foundation study found that the counties with the highest percentage of severely crowded households tended to have large immigrant populations.

Crowded Homes, by Race/Ethnicity of HouseholderMore than one occupant

per roomNumbe

r PercentBlack 88 15.2%Hispanic 624 41.6%White 537 5.2%

In Okeechobee County, more than one Hispanic household (of any race) out of four is severely overcrowded. The proportion is about equal for owners and renters.


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Severely Overcrowded Units, Hispanic Householder by Tenuremore than 1.5 persons per room

Hispanic owners 26.9%Hispanic renters 24.8%All Hispanic householders 25.8%

Many black renter households are severely overcrowded, but no owner households are.

Severely Overcrowded Units, African American Householder, by Tenuremore than 1.5 persons per room

Black owners 0.0%Black renters 13.8%All Black householders 6.2%

Almost no white households are severely overcrowded.

Severely Overcrowded Units, White Householder, by Tenuremore than 1.5 persons per room

White owners 0.7%White renters 4.0%All White householders 1.4%

Countywide, almost 5 percent of all households are severely overcrowded; most of these are renters.

Severely Overcrowded Units, All Okeechobee Households, by Tenure

more than 1.5 persons per roomOwners 2.8%Renters 9.8%All households 4.6%

White renters have a higher incidence of cost burden than Hispanics and Blacks in the county. Blacks have the lowest incidence of cost burden, but a large majority of Blacks who are cost-burdened are severely burdened. Severe cost burden of 50 percent or more, which puts a household at risk of homelessness, is almost equally common among black and white renters, at 18+ percent of all renters. More


89

than one-third of Hispanic households are cost-burdened, but fewer than half of these are paying more than 40 percent of income for rent.

Percent of Renters Cost Burdened, by Race/EthnicityRent as %

of Gross Income

30+% 35-39% 40-49% 50+%

Hispanic 36.0% 27.1% 13.7% 12.4%

Black 30.7% 24.5% 21.9% 18.8%White 41.5% 32.0% 25.8% 18.2%

Housing Problems in Block Groups with High Proportion of Minority Population

Defining Block Groups with High Proportion of Minority Population

A block group is the smallest geographic unit for which the Census Bureau tabulates sample data. Okeechobee County’s nineteen block groups had populations ranging from 441 to 4,080 in 2000. For this assessment, block groups where minority population is 10 percentage points higher than in the county as a whole are considered to have high proportions of minority households. For Hispanics, the threshold is 29 percent of population; for African Americans, 18 percent.

Looking at Okeechobee’s population through this lens reveals that the county’s large Hispanic population is dispersed widely throughout the county. There are no block groups in which the Hispanic population is 29 percent or more. Hispanic population amounts to 26 percent of the total in the area between Eagle Bay Drive and Seventh Avenue, south of Highway 70 (block group 2, tract 9906).

Three block groups have high proportions of African Americans. The three adjacent block groups are between Parrot Avenue and Highway 70 in the northeast quadrant of the city of Okeechobee. On the map below, they are tract 9901/1 in the upper right corner, and tract 9903/2-3 between N. Parrot and Highway 70.


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Many units are overcrowded in these neighborhoods. A few units have no heat, and renter cost burden is a problem.

Housing Conditions in Okeechobee Neighborhoods with High Proportion of Minority Population

Block Group/Tract 1/9901 2/9903 3/9903

African American population 810 441 182African American % of total population in block group 20% 100% 22%


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Owner rate, African American HH N/A* 69.9% 66.2%

Total owner/renter households 621/296 109/47 269/66No kitchen, % total units 2.6% 0 0No plumbing, % total units 1% 0 0No heat, % total units 2.8% 5.8% 4.5%Rent cost burden 30%+, % of all renters 38.4% 25.5% 63.6%Rent cost burden 50%+, % of all renters 24.2% 25.5% 30.9%Owner cost burden 30%+, % of all owners 5.8% 5.3% 7.5%More than 1 occupant per room, % of all renter HH 14.5% 12.8% 63.6%More than 1.5 occupants per room, % of all renter HH 11.8% 0 27.3%More than 1 occupant per room, % of all owner HH 3.1% 0 7.4%More than 1.5 occupants per room, % of all owner HH 1% 0 4.8%

*Overall ownership rate is 67.7%. Only 33 African American households are accounted for in Census ownership statistics for the block group, an apparent error. Very high renter cost burdens and crowded unit percentages were re-checked for accuracy. Source for all tables this section: Calculations of Census 2000 SF-3 by Housing & Community Insight.


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Farmworker HousingAn entire study could be devoted to the complicated challenge of how to meet Okeechobee migrant and seasonal farmworker needs for decent housing affordable on very low incomes. This assessment will set out the basic terms and the latest estimates of farmworker demographics, with a few strategy recommendations drawn from those who work closely with farmworkers.

In a September 2004 report, the Shimberg Center at the University of Florida estimates that there are about 2,300 farmworkers living in the county.63 These 2,300 workers comprise about 15 percent of the county’s total employed population. Total population living in Okeechobee’s farmworker households was estimated at 3,351. In Okeechobee, there are an estimated 1,541 farmworkers who are not accompanied by any family members. There are about 774 workers accompanied by family, and living in some 517 households. (Many households have more than one farmworker.)

The following tables present the details on farmworker population in Okeechobee and nearby counties:

Farmworkers in Okeechobee and Nearby Counties, 2002County Percent

age of State’s Farm Labor

Expendi-tures

Unaccom-

panied Migrant Worker

s

Unaccom-

panied Season

al Worker

s

Total Unacco

m-panied Worker

s

Accom-

panied

Migrant

Workers

Accom-

panied

Seasonal

Workers

Total Accom-

panied

Workers

Total Farm-worke

rs

Total Farm-workerHouse-

holdMemb

ers

Okeechobee 1.7%

1,078 462

1,541 253 521 774

2,315

3,351

Highlands4.0% 2,505 1,074 3,579 588

1,211

1,799

5,378

7,786

Martin2.0% 1,231 528 1,759 289 595 884

2,642

3,825

St. Lucie2.2% 1,351 579 1,930 317 653 970

2,899

4,197

Palm Beach 9.3% 5,866 2,515 8,381

1,376

2,836

4,212

12,592

18,229

Source: University of Florida Shimberg Center September 2004

Accompanied Farmworker Households in Okeechobee and Nearby Counties, 200263 Shimberg Center, U of Florida. The Need for Farmworker Housing in Florida. September 2004. p. 15.


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County Accompanied Migrant Worker

Households

Accompanied Seasonal Worker

Households

Total Accompanied

Worker Households

Okeechobee 136 381 517Highlands 316 884 1,200Martin 155 434 590St. Lucie 170 477 647Palm Beach 740 2,070 2,810

Source: University of Florida Shimberg Center September 2004


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The farmworker population and its housing needs are diverse. Here are the basic categories of the farmworker population, and housing issues unique to each one.

Category of Worker and Definition

Housing Issue

Seasonal farmworker: “An individual whose principal employment [51 percent of time] is in agriculture on a seasonal basis, who has been so employed within the last twenty-four months.” (US Migrant Health Program)

Because seasonal farmworkers often work for nine or more months per year in the greater Okeechobee region and supplement agricultural work with other income in the off-season, they are in a position to settle into the Okeechobee community—if decent housing is affordable to them.

Migrant farmworker meets the seasonal farmworker definition but “establishes for the purposes of such employment a temporary abode” in Okeechobee and at other work-sites. (US Migrant Health Program)

Periodic migration to distant agricultural or other employment causes housing vacancies during Okeechobee’s off-season. Workers face the choice of breaking the lease on their Okeechobee residence and losing it, or paying rent for an Okeechobee unit they will not occupy for several months.

Unaccompanied farmworker lives in the county alone, although might have spouse in Mexico or other country of origin.

Privately owned mobile homes and trailers commonly house unaccompanied workers in very poor conditions. Some barracks-style facilities exist, but these are also bad solutions according to farmworkers and housing advocates. Other options are motel, dormitory, or apartment units.

Accompanied farmworker has raised the money and negotiated the legal process to bring a spouse, and sometimes children, into the US. The reunion usually happens after several years of living in Okeechobee as an unaccompanied worker.

Workers accompanied by a spouse but no children may continue to live in motels or low-cost apartments. With children, a single-family rental house is the right beginning, but homeownership should be the goal. Okeechobee Nonprofit Housing specializes in promoting homeownership for farmworker


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families on this part of the continuum.

Undocumented status prevents many seasonal and migrant farmworkers from occupying subsidized housing, including Okeechobee’s two subsidized apartment complexes. However, Okeechobee’s lack of Section 8 vouchers and scarcity of subsidized housing makes documentation a non-issue for most workers seeking rentals, since waiting lists for the county’s few subsidized units are years long. In Okeechobee, advocate Sister Elinor Sevigny reports code enforcement efforts by the health department have resulted in closure of several licensed migrant labor camps, typically trailer parks of old mobile homes. Code enforcement was easier to accomplish when substandard and dilapidated homes were concentrated in these camps. Since no alternative housing has been produced, and farmworker demand has remained steady, the result has been that farmworkers have crowded into scattered-site single-family units, both site-built and manufactured. The overcrowded, substandard conditions continue to exist in large numbers, but the problems are now less visible and code enforcement has become less stringent.

Frank Williamson, a longtime citrus grower in the county, confirmed that the four-month off-season gap in a farmworker’s income over the course of a year is a key problem in devising housing solutions. “If workers had 12 months of income, housing problems would have worked themselves out many years ago,” he said. On the positive side, Mr. Williamson emphasized the strong work ethic of farmworkers and their determination to persist for years with minimal comforts in an attempt to bring their families into the US and climb into the middle class.

Some observers interviewed for this study commented that unaccompanied men living alone and working long hours, for a few years, may not care much about substandard housing conditions. However a recent University of Florida research study including farmworker interviews emphasized that “all stakeholder groups concurred that the most important things are that housing be structurally sound, clean, safe, and healthy.” The study quoted one farmworker as follows:

“I thought it would be better here than in Mexico, but I was wrong. The material used to construct houses is better in Mexico. The houses here are full of creatures, like cockroaches. When I first came I lived in a trailer. When we moved to Pierson [FL], there was no place to rent. Everyone I knew said they had the same experience. For five years, housing was a very bad experience.”64


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For accompanied workers seeking to become homeowners, documentation becomes an important issue. Fannie Mae, Freddie Mac, and Ginnie Mae, the secondary mortgage market giants, do not purchase mortgages made to undocumented immigrants. Banks can legally lend to undocumented people, but in general they must hold loans in portfolio, and most lenders strictly limit the quantity of non-saleable mortgages they are willing to accumulate. Another problem is that many undocumented people do not have accounts with financial service institutions that enable them to build the credit history that portfolio lenders must analyze to approve a mortgage. On this front there are solutions available. More and more institutions are accepting the consular identity card known as a matricula card. Thousands of Texas bank accounts have been opened using the matricula. The IRS Individual Taxpayer Identification number also helps lenders approve mortgage applications from otherwise undocumented immigrants, by giving lenders access to an IRS tally of the loan applicant’s earnings.65


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Housing Programs in Okeechobee County

Overview

The county’s existing housing programs are tightly focused on particular segments of housing need, such as first-time homebuyers (SHIP) and farmworkers (ONPH). A comprehensive housing initiative has yet to emerge. The Affordable Housing Advisory Committee is taking steps to understand and address the county’s housing needs as a whole. The following section summarizes briefly the individual housing activities underway.

Okeechobee Nonprofit Housing

Okeechobee Nonprofit Housing (ONPH) has operated in the county since 1988. The organization is incorporated as a nonprofit corporation under section of 501(c)(3) of the federal tax code. It is recognized by HUD as a Community Housing Development Organization, or CHDO. CHDO’s must meet HUD requirements for grassroots representation on the board of directors. They are eligible for a set-aside of funds from the federal HOME block grant program.

ONPH built its first eight units in 1990-1991. Single-family homes were built for $26 per square foot and sold for just $40,000 thanks to the efforts of a local builder who kept costs and profit to a minimum. Barnett Bank supported the project with below-market interest rate loans, and Okeechobee N-P housing contributed soft second mortgage funds.

ONPH has supported Sister Elinor Sevigny’s homeownership promotion work among farmworkers in Okeechobee. Sister Elinor says 100 homeowners have resulted from the organization’s facilitation. Sister Elinor uses her real estate license, knowledge of Spanish, and connections with local lenders and homeowners to connect upwardly mobile farmworkers with appropriate housing and loans. This program requires no subsidy, since Sister Elinor is supported by the Catholic Church and can provide her services without cost when necessary. There has only been one foreclosure since the program began.


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The organization received a HOME grant of $975,000 to construct 15 single-family rental units in the El Mirasol/Dewberry area. Harbor Federal provided a $225,000 market rate loan and Okeechobee N-P housing donated sites. HOME program assistance came with restrictions that have proven to be difficult to work with in the local rental market.

All non-US citizen occupants must be documented (all household members) Households earning less than 50 percent of median income pay

$438/month including utilities Households earning less than 60 percent of median income pay

$529/month including utilities Households must spend no more than 30 percent of income for rent, including utilities

The 30 percent limitation means that to afford the 50 percent of median rent of $438, a household must earn at least $17,520. Only households with three or more members can meet that minimum income test. Households of three must fall within a narrow band ($17,520 to $19,450) or they will exceed the maximum income test.

To afford the 60 percent of median rent of $529, a household must earn at least $21,160. Only households with three or more members can meet that minimum income test. Households of three must fall within a narrow band ($21,160 to $23,340) or they will exceed the maximum income test.

For both income levels, in practice it will primarily be families of four or more that constitute a viable market for these rental units. Rent levels for these new, single-family, CBS structures are far below market rates. However, occupancy of HOME-assisted rentals requires tenants to provide documentation and also to limit the number of residents who can share the unit. Even though competing housing options such as mobile home rentals are not as desirable and cost substantially more, some households prefer to stay away from government assistance altogether.

There are some mismatches between HOME fund regulations and the economics of the Latino households who are prime candidates for this housing developed by ONPH. Some workers in the Latino community make low wages but work very long hours, as on dairy farms where they work twelve hour shifts. This can push incomes over the maximum and reduce the number of renters eligible for the program. In some households, teenage or college-age children, or siblings, have


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income that must be counted toward household income under HOME regulations.

It would seem that a concentrated marketing campaign oriented to families of 4 or more members, including paid advertising, could make these rental units a success story. The market is there.

Okeechobee Community Improvement Association

The Okeechobee Community Improvement Association began as a cleanup program with a focus on the Douglas Park neighborhood. The organization has an all-volunteer staff. It is moving beyond cleanup with plans to use Community Development Block Grant (CDBG) funds to demolish vacant houses and prepare eight lots for construction of homes which would be priced to qualify for SHIP assistance. The group also wants to program CDBG funds to create a second access point for the neighborhood.

Affordable Housing Advisory Committee

For almost ten years the county’s Affordable Housing Advisory Committee has overseen the county’s SHIP program planning. The Committee was instrumental in advocating for preparation of a housing needs assessment, which it sees as the basis for a county affordable housing strategy and attracting funding for affordable housing.

In February 2003, the committee voted to recommend to the County Commissioners that the county enter into a formal partnership with an established nonprofit housing organization or a local housing authority. The committee has also researched the formation of an Okeechobee Housing Authority or other vehicle for bringing Section 8 Housing Choice Vouchers into the county.

Continuum of Care/Mission Outreach

A new organization has formed to fulfill the HUD mandate for a “continuum of care” to address the needs of homeless. Replacing the Treasure Coast Homeless Services Council (Louise Hubbard) in this role will be Ms. Penny Phillippi, Director of the Florida Heartland Rural Consortium based in Sebring (863-402-6925).

Ms. Hubbard is familiar with the profile of people homeless and at-risk of homelessness in Okeechobee. The definition of homelessness in a rural county does not often fit the urban image of a person


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camping in the open or sleeping under a bridge. Although she reports there are some people in that situation in Okeechobee County, more common are situations like single adults and families who wind up being the ninth or tenth occupants of a two-bedroom mobile home in an age 55+ park, where eviction could happen at any time. She estimates that there may be up to 200 single adults in such situations. In addition, Hubbard reports that working poor households with children comprise about one-third of the homeless or those at-risk. Families are commonly among those who seek help from organizations like Mission Outreach in the county, led by Bruce Swinford. Many homeless or at-risk people migrate to coastal areas where more services and shelters are available.

According to Ms. Hubbard, the new Consortium in Sebring could apply for a small amount of funding, about $28,000, from the state for homeless services. A point-in-time survey of homelessness is an important part of any application.

Kristen Barker of New Horizons, a mental health/substance abuse service-provider in Fort Pierce, serves Okeechobee County as a caseworker. Most of her agency’s clients have serious, persistent mental illness and are receiving Medicaid assistance. Ms. Barker says Okeechobee has no housing facilities for these individuals, or for those needing supportive housing while recovering from substance abuse. Unless family support and housing is available, people with these special needs have to leave the county to try to find the living environments they need.

Okeechobee Senior Services

Okeechobee Senior Services arranges in-home health care for 38 senior households. Forty are on the waiting list. There is one assisted living facility in the county. Dunklin has 20 beds, and will be expanding to 50 beds. The facility is Medicaid-approved and rents are $1500 per month.

OSS case manager Janet McKenna reports there are also two market-rate assisted living facilities with rents at about $2000 per month. Both are full, with waiting lists. In Ms. McKenna’s view, the urgent need for seniors in the county is for quality rental housing. “We need to help people move out of old mobile homes into good rental units where they’re not so isolated,” she said.64 Shimberg Center, University of Florida. Farmworker Housing Needs. September 2001, p. 17.65 For detailed discussion see Rob Parel & Associates, The Potential for New HomeownershipAmong Undocumented Latino Immigrants, October 2004. Available from the website of the National Association of Hispanic Real Estate Professionals.


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1,134 Okeechobee seniors (19.3%) have difficulty going outside the home without assistance.

Persons Experiencing Difficulty Going Outside Home Alone, Okeechobee County

Age Number of Persons16-64 1,51965+ 1,134Total 2,653

Source: Census 2000 Table P-41. Excludes persons in institutions like nursing homes.

A general indication of the need for supportive housing among non-institutionalized Okeechobee seniors is the number who have a self-care disability, which was 407 in 2000. This amounts to about 7 percent of the senior population over 65. Self-care disability is any condition making it difficult to dress, bathe, or get around inside the home.

Indiantown Non-Profit Housing and Community Development Corporation

Indiantown Non-Profit Housing (INPH) was established in 1979. It is the only nonprofit group building low-income housing in Martin County, and has responded to requests to operate in Palm Beach, Martin, and St. Lucie counties. The organization won a Maxwell Award from Fannie Mae for its Booker Park in-fill single-family farmworker project in the early 1990’s. INPH has assisted Okeechobee Nonprofit Housing in developing its HOME-assisted single-family rental units, and has provided some technical advice to the county’s Housing Advisory Committee. Donna Carman, executive director, says she is ready and willing to partner with Okeechobee County if her organization’s development capacity can be of assistance.

Like other nonprofit developers, the organization uses a wide array of government financing programs, including Rural Development and HOME funds. Indiantown constructed and manages three multifamily developments housing 150 families. It also is building 44 three- and four-bedroom affordable for-sale homes and redeveloping a mixed-use project of affordable rental apartments and a grocery store. Indiantown won a national award from Fannie Mae in the early nineties for its 8-unit Booker Park infill project consisting of new single-family units for migrant farmworkers in Indiantown.


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INPH has not yet used low income housing tax credits in rental development. It has used USDA Section 515 funds with accompanying rental assistance for its projects to date, along with HOME funds to minimize debt costs.

INPH provides a six-hour homebuyer education training program.


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How County Policies and Regulations Affect Housing

Land Use Regulation

Background

In 1974, the county adopted a zoning code. It was too late to prevent a haphazard development mix of mobile and site-built homes in the urbanized area, but the county has succeeded well in concentrating development in the southern part of the county. Ninety percent of the county’s land has been preserved as undeveloped agricultural land. The future land use plan continues this pattern of concentrating development in the south while recognizing 11 rural activity centers where low-density residential development is accommodated.

Manufactured Housing is Tightly Regulated

In addition to preserving agricultural character, the present land use regulations are very strong on controlling HUD-code manufactured housing. Recently the City of Okeechobee revised its manufactured housing regulations to conform to the county’s in most respects. Those regulations are described in the manufactured housing section of this assessment. They impose important controls on the quality of used HUD-code units that may be installed, and also regulate the design and appearance of new homes. These controls benefit both the county and homebuyers. The regulations that impose 15 and 30 acre minimums on new MH parks and subdivisions have the effect of discouraging such developments. This policy is entirely understandable given the county’s very heavy reliance on this particular form of housing, but the county’s goals could be better achieved with even more attention to design standards, incentives for construction quality upgrades, and consumer education.

County Has No Sites for Multifamily Housing

A major problem is the absence of multifamily zoning in the county. While this may be rooted in the vision of preserving the county’s rural character, the unavailability of multifamily housing in Okeechobee County has undoubtedly played a role in driving both renters and owners to manufactured housing as the only affordable alternative.


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Although up to 18 units per acre are permitted in the large area zoned urban residential mixed use, a zone change is required. Zone changes for very small multifamily buildings have been approved without controversy, but larger-scale projects almost invariably provoke opposition from neighbors. Multifamily construction can bring down the cost of ownership units and make them competitive with high-end manufactured homes. Even more importantly, multifamily construction is badly needed to increase the stock of quality rentals in the county. The “not in my backyard” syndrome is just as strong in Okeechobee as elsewhere, and the several developers interviewed for this assessment were unanimous in saying that the absence of sites zoned for multifamily construction is a major obstacle to developing rental or townhouse units in the county. The housing element of the county’s comprehensive plan lays out the goal of “provid[ing] adequate sites for low and moderate income housing based on projections and demand for such housing.” Designating well-located land for multifamily housing would be a straightforward and effective way to meet this goal. High-density residential development would be especially useful on the east side of the county, where it could contribute to the county’s integration with the coastal county economy. Multifamily zoning there could also support the county’s economic development efforts by attracting businesses wishing to relocate to Okeechobee near the I-95 corridor.

City of Okeechobee

The city has zoned land for multifamily housing to a maximum of 10 units per acre. There are about 44 acres of RMF-10 land vacant in the city, according to consulting planner Jim LaRue’s rough estimate.

The city offers a 20 percent density bonus for housing affordable to “lower income families,” enabling developers to build one extra unit per acre in RSF-1 and RSF-2 zones. The provision has not been used during the past six years. City council is empowered to reduce or eliminate fees and charges for affordable housing developments initiated by government agencies, and nonprofit or limited profit organizations.

Subdivision Regulations

The county’s engineering standards were updated in 1992. Underground utilities, sidewalks, and curb-gutter construction are expensive items often required in counties east but not in Okeechobee. As land costs increase, curb-gutter systems may become more cost-effective than drainage systems that require wider rights-of-way.


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Infrastructure

Sewer and Water

Subdivision development will be constrained by the capacity of the county’s sewage treatment plant. The plant is at about 90 percent of capacity. The Okeechobee Utility Authority estimates the plant can service expected growth through approximately May – November 2005. The possibility of a development moratorium has been discussed, but county administrator George Long does not foresee the need for it. He says sewer capacity expansion is county government’s top priority, and a $589,000 contract has been signed for system design.

Hookup fees are $1,500 per unit for water and $3,000 per unit for wastewater.

Water and sewer is available throughout the urbanized area in south Okeechobee County. Extending lines to service new subdivisions is the responsibility of the developer. To date no major extensions have been funded by developers.

Septic systems are feasible on lots as small as ½ acre, depending on soil conditions. In some areas around the lake, muck makes septic systems impractical.

Well water is widely used outside the urbanized area.

Transportation

Highway 70 four-laning has been in the works for many years and is not expected to happen for at least another 5-7 years.

To date, traffic congestion has not been an issue for subdivision approval.

Timely, Predictable Permitting

Several builders and developers interviewed said that permitting was reasonably timely and predictable. Some gave the City the edge for clarity of procedures and for being somewhat more developer-friendly.


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From the first due diligence examination to final approval, an experienced builder said a 25-unit subdivision takes about one year to process.

Property Taxes and Fees

Taxes in Okeechobee County are relatively low, at 8 mills. Inside the city, an additional 7.1 mills are levied. The large number of low-valued mobile/manufactured homes reduces the tax base, but the county’s landfill generates revenue by serving coastal counties.

Impact fees were first discussed by county officials in 1996. With the recent surge in construction activity, a consensus has developed to impose impact fees, and in 2004 the county is preparing to contract for a study to set fee levels.

Okeechobee’s Housing Plan

The Housing Element of the county’s comprehensive plan was last revisited in 1995. Some of the initiatives the document calls for include:

Periodic workshop to address housing needs and opportunities in Okeechobee County Review regulation and permitting processes to maximize private

sector participation in meeting housing needs Identify and eliminate substandard housing, including

replacing/demolishing 20 units per year Planned unit development and cluster development Density bonuses or tax incentives to encourage provision of

affordable housing by the private sector

Recommended StrategiesStrategy: Promote Development of Affordable Rental Housing

Development of new rental housing is a major need, to address existing cost burden and improve the quality of rental stock. The county needs to invite rental development by creating a clear path for developers, and by attracting subsidy.


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Action: Re-zone land for multifamily housing

At present there is no land outside the city of Okeechobee that is zoned for multifamily housing. Although land can be rezoned, and small parcels are readily being rezoned, when a project of 15 or more units is proposed, NIMBY obstacles mount. From a housing developer’s perspective, having to begin the already-complex process of developing affordable rental housing with a zone change and a public hearing is anything but inviting.

The county should take the initiative to re-zone land for multifamily housing. This is admittedly a bold proposition because it means the county takes the heat, sending a strong signal to developers that Okeechobee wants to promote development of multifamily housing.

Action: Compete for limited Section 8 Vouchers for people with disabilities

Okeechobee County does not currently benefit from the major federal rent subsidy program, the Section 8 voucher program. Section 8 Housing Choice Vouchers are so named because the program enables low-income renters to choose privately owned rental housing anywhere in a community, so long as the market rent is below HUD’s maximum ($508 for a 2BR, including utilities in 2004). Voucher holders generally pay a maximum of 30 percent of household income, although new rules enable localities to increase the tenant contribution in order to serve more households. HUD pays landlords the difference between the tenant’s payment and the actual rent including utilities. Section 8 vouchers are available to households earning less than 80 percent of median ($34,550 for a four-person household in 2004).

Although Section 8 is often considered a program to subsidize existing units, it can be critical for new rental development. The costs of land and construction in many markets are out of proportion with local renter incomes. Even when other subsidies are used in the development, such as rental tax credits and subsidized second mortgages, the resulting rents may still exceed what qualifying low-income tenants can afford.

Section 8 Voucher funding is provided by HUD on a competitive basis. Bringing Section 8 to Okeechobee County would require demonstrating administrative capacity to operate the program. The county could create that capacity, or partner with an existing organization, probably one that already manages it.


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According to Karen Cato-Turner in HUD’s Miami office, the county could file an application to administer the Section 8 voucher program using any of the following administrative mechanisms:

A local housing authority (Note: the idea of forming a local housing authority is discussed in the final recommendation of this assessment.)

An office of county government A non-profit organization

Once an administrative approach is decided, there remains a major obstacle: HUD is not accepting applications for new vouchers, except to benefit people with disabilities. Disabilities include physical, mental, or emotional impairments that substantially impede a head of household or spouse from living independently. The program is called Mainstream Housing Opportunities for Persons with Disabilities.66 In FY 2004, HUD offered a tiny $11.8 million (320 vouchers) for competitors nationwide. Except for this pool of vouchers, at present there is no opportunity for Okeechobee to bring Section 8 to the county.

At a minimum, by competing for the limited vouchers available for people with disabilities, the county will position itself to win vouchers when and if HUD expands the program in the future. Section 8 is such a basic housing resource that the county needs to be involved on whatever scale is available.

Action: Seek Rural Housing Service rental assistance

The USDA’s Rural Housing Service (RHS) provides rental assistance to low income tenants, but rental assistance from RHS is tied to specific apartments that are financed at least partially by either the Section 515 Rural Rental Housing Program or the Section 514 Farm Labor Housing Program. The rental assistance itself is part of the Section 521 program. A combination of 515 and 521 support is providing the county’s only subsidized rental housing at the Tanglewood and Okeechobee Commons projects.

Greg Caruthers, the agency’s director for Okeechobee and 14 other counties in the West Palm Beach area office, expects that some $3 million in 1 percent mortgage funds from Section 515 and another $3 million in farm labor housing funds will be available statewide in the next funding round. Funds are made available for competitive applications in November every year.67 Some funds are set aside for 66 For full details on the program and definition of persons with disabilities, see Federal Register, Friday May 14, 2004 page 27807 and following.


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developments sponsored by nonprofits. Although RHS mortgage financing itself is a relatively minor subsidy to a rental project, since each project typically receives only a few hundred thousand dollars of funding, the real benefit to developers is the availability of rental assistance. Caruthers says that rental projects financed partially by 515 or 514 mortgages commonly receive rental assistance commitments for 70 percent of the units in the project. Like Section 8 vouchers, RHS rental assistance makes up the difference between 30 percent of renter income and the full market rent, including utilities. Very low income households earning less than 50 percent of median income get priority for rental assistance ($21,600 for a household of four in 2004).

The county should work closely with the RHS West Palm Beach office to calculate which development organizations the county could partner with, and what incentives the county could offer, to be competitive for RHS 515 financing and 521 rental assistance funding to the county.

Action: Compete for rental-related HOME funds

The Florida Housing Finance Corporation manages a competitive funding process for federal HOME Investment Partnership block grant funds. Local governments sometimes use HOME funds to provide rental assistance, on the Section 8 voucher model, for up to two years. This is known as Tenant-Based Rental Assistance, or TBRA. For at least the 2005 funding round, FHFC will devote all competitive HOME funds to hurricane-related housing rehab. In October 2004 the agency was still working on a funding formula that would send HOME money to counties depending on the estimated hurricane damage in each county.

Another common use for HOME funds is below-market rate and/or deferred payment second mortgage funding to increase the financial feasibility of rental housing development. HOME funds for rental project second mortgages are allocated as part of the agency’s “universal application” for rental tax credits, depending on how a particular project scores on a variety of measures.

The county should partner with nonprofit or for-profit developers to seek HOME funds for rental assistance and/or for low-interest rental project financing.

67 See the following website for Federal Register notification of funding availability in the Section 515 program for 2004: http://www.rurdev.usda.gov/rd/nofas/2004/rrh031704.pdf.


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Action: Partner with nonprofits to develop Section 202 supportive housing for the elderly

HUD’s Section 202 program provides funding to nonprofit organizations for development and operation of senior housing. It is currently HUD’s largest rental construction program, but relative to the needs it is a small program that funds only about 5,800 new units per year. The 202 program makes capital grants to reduce construction costs and also provides rental assistance to enable projects to reach very low income seniors. Pre-development funds are also available to help nonprofits with feasibility analysis, site control, and project planning. Many projects get funding for service coordinators who help seniors both in the project and in the neighborhood to access needed services.

Although senior housing typically gains local approval more readily than family housing, Okeechobee has experienced NIMBY for senior rental housing proposals. There are two obstacles that could provide opponents of a Section 202 project with ammunition:

Because apartments are owned by nonprofits and are not syndicated, they do not pay local property taxes

HUD’s cost controls on 202 structures tend to force developers to skimp on design and produce buildings that may have a “project” look

These problems are not insurmountable. The loss of tax revenue can be explained as the county’s contribution to a needed facility. Additional subsidy from HOME could contribute to more attractive design features.

Action: Revive Okeechobee II

Okeechobee does not have any rental projects subsidized by tax credits.

Okeechobee has a significant advantage in attracting tax-credit subsidized apartments. For 2004, HUD has designated the county as one of 30 nonmetropolitan counties that are “difficult development areas” (DDA). Projects in these counties can receive up to 30 percent more competitively-assigned tax credits under the Florida Housing Finance Corporation’s allocation plan. FHFC reserves 10 percent of the state’s total tax credit allocation for use in small counties.


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Federal law requires that 10 percent of credits be set-aside for projects sponsored by nonprofit developers. Tax credit projects sponsored by nonprofits do pay property taxes to local jurisdictions.

The county and the city of Okeechobee have an immediate opportunity to revive the Okeechobee II expansion of Okeechobee Commons. This project has already won the blessing of FHFC, including tax credit allocation in the 2002 funding round, and a subsidized $1 million second mortgage from the agency’s Sadowski Act-funded SAIL program. Although the Heritage Company executive responsible for Okeechobee II stated in a phone interview that the project did not proceed due to Florida Housing Finance Corporation concerns about weak demand, and the absence of Section 8 vouchers, this appears not to be the case. Jane Dixon, Housing Credits Manager at FHFC, confirmed that the project was rejected due to the FHFC board’s lack of confidence that Heritage could successfully complete Okeechobee II. Heritage was having “numerous problems” with agency-funded rental projects, and the problems came to a head in 2003, Ms. Dixon said.

A copy of the FHFC market study was obtained for this assessment via Freedom of Information Act request. It projected that the market of income-qualified tenants was such that “absorption is expected to average 15 to 18 units per month, resulting in a 3 to 3.5 month absorption period to achieve a 95 percent occupancy level. Absorption could be higher during the first few months after opening.” The study also reported that “it is likely that the 22 units with rents at 50 percent of area median household income will be leased before completion.”

The site is already zoned for multifamily housing, and reportedly there was no neighborhood opposition to the 50-unit expansion, which included 40 units set aside for elderly households. Rents were to be affordable to households from $15,100 to $19,450 (one-person to three-person households).

The county and the city could approach developers who have been successful in the current round of FHFC tax credit allocation, and are in good standing with the agency. Pinnacle, Carlisle, Gatehouse, and CED are examples of FHFC-experienced development firms that could be approached. The availability of a properly zoned site and FHFC’s prior approval of a tax credit project should definitely interest developers.

Strategy: Improve Farmworker Housing


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The county could identify potential sponsors and seek out funding from two programs of government-subsidized housing that provide housing specifically for Florida farmworkers:

US Department of Agriculture Section 514 and 516 housing for farmworker families.

Florida has 3,822 units of Section 514/516 housing. There are none in Okeechobee County.

Florida Housing Finance Corporation-assisted farmworker family developments using SAIL, HOME, and tax credits. FHFC has allocated or approved funding for 1,743 units of farmworker housing, including 365 of the units also receiving Section 514/516 funding.68

Competition for these limited resources will be very keen. Subsidy programs require at least one resident to be a legal immigrant, ruling out a large part of the market. Market-based solutions supported by progressive county action on code enforcement and high-density land use regulation would avoid both of these problems. Aggressive code enforcement to eliminate substandard farmworker housing should be combined with corresponding efforts to create acceptable substitute housing. A creative approach from county government would introduce flexible standards for the replacement housing. A basic challenge in housing migrant workers is to keep costs low enough so that a $160-$200/month revenue stream for just 8 months out of the year suffices to cover construction and maintenance costs. Maintenance is a large expense given the wear-and-tear involved in housing groups of unaccompanied men. Sister Elinor Sevigny, who has extensive experience with the county’s farmworker community, thinks unaccompanied workers would choose to live in small, low-cost KOA-style cabins if such housing were available on the market. She envisions a compound of simple units where workers live 3-4 to a cabin. If an ownership stake were devised for the workers, they would have an incentive to care for the housing.

A recent study that included extensive interviews of farmworkers, growers, local officials, and housing providers found that barracks-style housing was not favored. Dormitory, motel, or apartment-style housing was preferred for unaccompanied workers.69 A different opinion was expressed by Kathy Shorter, who handles worker camp licensing for the Okeechobee health department. Ms. Shorter says that of all the licensed facilities she sees, the plan that best meets workers’ needs is known as Willard Mays, a barracks-style 68 Shimberg Center, U of Florida. The Need for Farmworker Housing in Florida. September 2004. p. iii.69 Flocks, Joan et al. Stakeholder Analysis of Farmworker Housing in Florida. 2002. Univ. of Florida Department of Anthropology.


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accommodation that houses 60 workers in 2 bedroom units, with a separate outside bathhouse.

A model farmworker housing project exists in Homestead’s Everglades village. Key elements of the 382-unit worker-managed project include:

A mix of units from 2-BR duplexes to 5 BR S/F homes Rents from about $375-$425, subsidized by USDA so that tenants

pay no more than 30 percent of income (average tenant income $12,000)

Miami-Dade County contribution of $1 million USDA funding of $38 million Month-to-month leases and tight management Incremental development over the years, beginning as a 400-unit,

county-operated, dilapidated trailer park; now consists of 450 homes with 1,800 residents

Okeechobee’s high-density mobile home parks could present an opportunity for farmworker housing because high density reduces unit costs. A park could be purchased by a consortium including growers, the county, and farmworkers. Replacement of old units with safe, late-model, professionally inspected used or repossessed units could provide decent units for as little as $20-$25 per square foot. An alternative would be to preserve the high density of an MH park while converting the park into a site-built neighborhood with low-cost, safe, basic homes. Owner-built units might be possible with good management of the project (as in the RHS 532 owner-builder program).

For many workers accompanied by their spouses, homeownership is the right strategy. Financing is a key challenge. It is not illegal to lend to undocumented aliens, but mortgage lenders must innovate to control risks and identify funding sources. A county partnership with local lenders could generate portfolio loan programs that avoid legal restrictions of the secondary mortgage market. Workers may be difficult to qualify for loans both because of income/credit constraints and legal status. The Mortgage Guaranty Insurance Corporation (MGIC) has just begun a pilot mortgage insurance program to serve farmworkers. Consumer credit counseling organizations have developed experience in building farmworker credit histories and banking relationships. Self-Help, a statewide development credit union in Durham NC, has extensive experience with mortgage lending for undocumented aliens and could be consulted informally by Okeechobee lenders.


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Strategy: Education

Promoting affordable housing is about more than bricks and mortar. Households need preparation in order to meet the market. Unqualified, would-be buyers and renters with poor credit may remain locked out of even the most affordable units.

Homeowners who view a home or manufactured home simply as shelter may overlook wealth-building possibilities that are essential to the long-term prosperity of their families.

Consumer education about housing benefits lenders by reducing loan delinquencies and defaults. Lenders often prefer to deliver education through partnerships with governments and non-profits.

Another dimension of housing education is community-wide information about the nature and role of affordable housing in building a diverse, viable community.

Action: Take steps to pre-empt NIMBY

Public receptivity to basic housing, including rental housing, is a crucial resource. If the people of Okeechobee County remain open to the creation of modest rental and ownership units, resources and developer energy will flow to the county. If, on the other hand, the county develops a reputation as a “not in my backyard” community, resources and developer energy for affordable housing will go elsewhere.

Informational campaigns such as the successful one mounted in the State of Maine to support a housing bond issue can be organized around the concept that “working families need affordable housing.” The county’s website, media events, posters and billboards, and the words of public officials should all be used to promote the basic concept that working families need affordable housing. Examples of attractively designed, well-managed affordable housing projects can be used to overcome resistance. Good design should be emphasized in the project approval process too.

In conjunction with the school district, an educational campaign about housing costs and worker incomes could be incorporated in public schools.

Action: To prevent NIMBY (not-in-my-back-yard) disputes from polarizing, consider using mediation


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Mediation has been effective in some thorny affordable housing disputes. In Connecticut, mediators successfully guided municipalities to an agreement on their individual targets for producing a minimum “fair-share” of affordable housing units.

The county could offer to fund the services of a professional mediator to resolve differences between neighbors and would-be affordable housing developers, before issues reach a confrontational point before the Planning Board. A Request for Proposals could be issued by the county, and project(s) could be selected for mediation funding. One criterion might be the number of parties already actively participating in the proposal.

There are limits to this approach. Experts in mediating land use disputes acknowledge that if protesting neighbors are unwilling or embarrassed to place their genuine concerns on the table for resolution, the mediator’s tools may not work. As one report noted, “prejudices masquerading as concerns” need to be exposed for what they are.

Thinking bigger, the county could support a legal strategy at the state level. Three years ago Florida amended its Fair Housing Act to prohibit discrimination in the permitting of development based on the source of financing, for example, low income housing tax credits or tax-exempt bonds. In a test of the ordinance, a developer in Oldsmar settled a $10 million lawsuit out-of-court with the City.

Action: Provide an ongoing buyer education and counseling program

Buyer education is a proven, low-cost initiative to facilitate the move from renting to ownership. Buyers who complete a 6-8 hour in-person training program gain access to a wider array of financing programs. Research by Freddie Mac has proven a solid relationship between classroom training and loan performance. In Okeechobee, it would make sense to supplement the usual curriculum materials with information about buying a HUD-code manufactured home. The author of this assessment recently completed a curriculum for the Florida Department of Community Affairs (supervised by Mr. Marcus Hepburn at DCA).

Okeechobee does not have to reinvent the wheel to offer a buyer education program. Many counties are funding home buyer education provided by Consumer Credit Counseling Service (CCCS). Workshops are offered in English and Spanish. Each class lasts six hours; some sessions are all-day on a Saturday, and others are broken into two 3-


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hour sessions. Attendance in central Florida has typically been about 100. High attendance is driven by county and municipal requirements for buyer education in their financial assistance programs, such as a SHIP or HOME. Tying buyer education to special financing develops momentum for the training. CCCS says word-of-mouth referrals, fueled by subsidized financing availability, are the most effective publicity for the classes. Also productive are lender referrals and newspaper advertising. Information about classes is posted on bulletin boards at major employers, too.

The West Palm Beach chapter of CCCS is prepared to deliver 6-hour training programs in Okeechobee County for a fee of $1000 per session. The organization is collaborating with Fort Pierce Housing Authority on homebuyer education. CCCS organizes speakers including representatives from lenders, real estate agencies, etc. Richard Clements is the contact person (561-515-2323).

CCCS in West Palm Beach offers free one-on-one credit counseling, and often works with clients over the telephone on a regular basis for up to 1-2 years.

Strategy: Ownership Housing Production

Action: Increase use of FHA 203(b) financing for manufactured housing

Although 64 FHA loans financed new and existing home purchases in Okeechobee during FY 2004, none of these loans financed manufactured housing. Because Florida installation standards qualify as a permanent foundation under FHA Atlanta office guidelines,70 the FHA loan program is a valuable resource for Okeechobee MH buyers. Once a home is financed by FHA, future buyers can also use FHA, which contributes to higher resale value. The program can be used for single-wide and double-wide MH built after 1976 and placed on the owner’s land, not on leased land.

MH retailers need new sources of financing in the wake of the collapse of the personal-property financing industry. They could be partners.

Action: Activate the USDA Rural Housing Service 502 Guaranteed Loan Program

70 Email to the author from Charles E. Gardner, Office Director, 4-29-04.


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The RHS 502 Guaranteed Loan Program offers important benefits to middle-income Okeechobee buyers (up to $66,150 for a family of four).

No downpayment, 100% + loan-to-value ratio No private mortgage insurance Market interest rates Low paperwork, private lender origination Ample guarantee authority means loan funds are always available Loans are saleable to secondary market agencies including Fannie Mae

During FY 2004, lenders originated only 6 Section 502 loans in the county. There is a real opportunity to expand this program and give homebuyers a useful financing choice.

Action: Provide information and financial support for owners of pre-1976 manufactured homes to enable them to upgrade to late-model units.

Pre-1976 homes were built prior to the HUD code. Quality has improved steadily since the code was enacted, although it still varies widely. Upgrading all pre-1976 homes to post-1994 units installed to current Florida standards will address a major deficiency in the county’s housing stock. Some buyers may need information about home quality as much or more than they need financial support. Replacement units should meet existing county design standards to promote equity-building.

Strategy: Improve the Condition of the Housing Stock

Action: Offer rehab loan financing to address limited “aesthetic” improvements as well as code problems in owner-occupied and rental properties.

The county’s present SHIP program plan calls for $80,000 in low-interest housing rehab loans for the 2005-06 period. However, because the program is strictly limited to repairing code violations, it has been difficult to put this money to use. The high percentage of manufactured housing, which by statute may not be assisted with SHIP, is partly to blame. But clearly there is enough substandard site-built housing in the county to make the rehab loan an important program. Some proportion of the funds, say 40 percent, should be allowed for carpeting, painting, cabinetry, and similar items that update and improve homes, and provide homeowners with an incentive to also repair code violations.


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Action: Apply for MH rehab, replacement, or park re-development funding from Corporation for Enterprise Development

The Corporation for Enterprise Development, a Washington DC based foundation, is preparing to request proposals for funding HUD-code manufactured housing development initiatives. Re-development of aging MH communities will probably be one of the focus areas. Another is development of model MH subdivisions. The program is set to begin in the first part of 2005. Mr. David Buccholz is the contact person.

Action: Work with local lenders to design a rehab program for HUD-code manufactured homes.

Manufactured home owners could benefit from equity-line financing for home improvements. Even if lenders cap combined loan-to-value ratio of the first and second mortgage at 80 percent, many Okeechobee MH owners could qualify for a $5,000 to $10,000 equity line for improvements to their units. The county could consider partnering with lenders by pre-screening applicants and facilitate marketing. Another option would be for the county to develop a loan guarantee fund to facilitate private lending for MH improvement. The Austin (Texas) Housing Finance Corporation created a $250,000 reserve fund to cover any rehab loan losses. This was sufficient incentive, along with the mayor’s leadership, to induce nine Austin banks to agree to lend $25 million at prime, for 20 years, for rehab of 1-4 unit homes. The combined loan-to-value maximum was 95 percent. The city agency agreed to handle loan administration, including four draws from escrow during rehab completion.

Action: Promote use of home equity conversion mortgages for seniors

Cash-poor, house-rich seniors often allow home maintenance to slide because their monthly cash flow leaves no room for maintenance or home improvement. Equity conversion mortgages enable house-rich homeowners to receive annuity payments for as long as they live. The amount paid is an interest-bearing, federally insured loan secured by the residence. The loans are insured by FHA and are formally known as Home Equity Conversion Mortgages (HECM). Single- or double-section manufactured homes on the owner's private land are eligible, if they are certified to meet current Florida installation standards.


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Marketing equity conversion is a specialized undertaking. Consumer Credit Counseling in West Palm Beach has expertise in explaining how the program works to seniors. As Okeechobee home values continue to rise, the program could improve housing and quality of life for the county’s seniors.

Action: Inspect and certify rental units

A change in utility billing for rental units could trigger a county inspection to ensure that rental properties meet the minimum housing code. Utilities could not be turned on without county approval for occupancy. Over time this would increase the quality of the rental stock. This admittedly controversial step could also be applied to ownership housing that changes hands. In the current strong real estate market, many sellers are realizing sufficient gains that they could afford to pay for basic code improvements.

Action: Consider a rehab sub-code

Requiring rehabilitations of older homes to conform to the standards of brand new construction can be counterproductive. While it holds out a high standard, this conventional approach may in fact lead to lower-quality housing. High costs imposed by the new construction standard prevent rehab jobs from ever taking place. A major HUD report, Barriers to the Rehabilitation of Affordable Housing (Listokin) has recognized this issue. In one response, the state of New Jersey has implemented a sub-code for rehab.

Action: Promote favorable personal property financing for replacement of MH units in parks and on private land

One of the county’s top housing priorities should be to upgrade as many pre-1994 HUD-code homes as possible, beginning with pre-1976 homes as first priority. Origen Financial and possibly other firms are offering special financing for owners whose homes were damaged or destroyed by 2004 hurricanes. Homeowners may obtain financing for new homes with no downpayment, on leased land, at the rates of 8.75 percent for a multi-section and 9.75 percent for a single-section.

For double-section homes on private land, Fannie Mae buys loans from selected lenders that have met quality control standards. FHA insures loans on single- and double-section homes. Working with local lenders and HUD-code home retailers, the county should promote the availability of these low-cost loan programs to encourage existing MH owners to upgrade to post-1994 units that meet county design standards.


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Action: Eliminate the existing “gray area” of code enforcement for additions to HUD-code manufactured homes

A majority of HUD-code homes have site-built additions. The county’s code compliance office got out of the business of issuing permits for such additions about four years ago, according to the compliance director Mr. Verwey. Construction of these structures is now unregulated. It is important that code enforcement be extended to cover additions. Improperly installed additions can take a home out of compliance with HUD code. As the hurricanes showed, additions are highly vulnerable to wind damage and then become projectile hazards.

Action: Develop county incentives to encourage buyers to purchase Wind Zone 3 HUD-code homes for placement in Okeechobee.

Wind Zone 2 is the minimum for Okeechobee. Retailers report that some (wise) buyers are already upgrading to Wind Zone 3 construction, rated to resist 115 mph. Given the popularity of HUD-code homes, the county could encourage consumers to opt for this critical upgrade, which will also contribute to the longevity and resale value of the MH. Hookup fees for individual buyers could be reduced or waived. For MH subdivision developers, density could be increased or permit fees reduced.

Action: Apply for state assistance to retrofit and upgrade pre-1999 MH installations in MH parks.

Since 1999, state funds have been available on a competitive basis to install or replace tie-down hardware on manufactured homes in communities. $2.8 million was available in fiscal year 2004. The program’s formal name is the Residential Construction Mitigation Program.

Action: Investigate special assessments for code repairs

At present the county’s recourse in case a property owner fails to make mandated code repairs is a tax lien. A special assessment affirmatively requiring the landlord to pay for repairs would be a more effective tool. The county should investigate the possibility of charging such an assessment.

Action: Increase staffing for pro-active code enforcement


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To complement financing initiatives that make it easier for homeowners and landlords to upgrade homes, the county should consider increasing patrolling code enforcement officers. Their present strategy focuses on improving the appearance of the county. With more staffing, the county could go deeper and address the large number of units, particularly manufactured homes, that need to be upgraded or replaced.

Action: Activate HUD’s Section 203(k) purchase/rehab program

HUD’s 203(k) loan program makes it possible for home purchasers, current owner-occupants, or nonprofit developers (but not investors) to purchase and/or rehabilitate a 1-4 unit home with very small cash investment (about 5 percent for purchasers; less for existing owners). There is paperwork involved, and it would be important for the county to provide some administrative support to private lenders to facilitate the program.

Action: Maintain strict regulation of installation of HUD-code and modular units.

The county should continue to exercise great care in inspecting and approving the installation of HUD-code and modular units. Counties in Florida vary widely in enforcing their responsibilities in this respect, but Okeechobee’s inspectors are thorough according to all MH market participants interviewed. The county should consider advocating with Phil Bergelt of the state DHSMV to persuade HUD to expand MH installation standards to include local inspection of the way multi-section units are joined at the site (close-up). HUD is developing new regulations on this matter during fall-winter 2004-05.

Strategy: Modify Regulations, Programs, and Policies

Action: Use multifamily zoning to promote homeownership

The county has very few multifamily ownership units. Oak Park Villas is one example. Construction costs are lower with shared-wall construction, and so are land costs per unit.The county needs more high-quality ownership units, and multifamily ownership units can deliver more quality per dollar than detached single-family homes. Multifamily condos or town homes would add needed diversification to the county’s housing stock, and could compete effectively with the top end of the HUD-code market.

Action: Provide affordable housing density bonus


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A density bonus rewards developers for targeting low-income buyers or renters. The City of Okeechobee offers a 20 percent density increase for such projects. The provision has not been used in recent years, if ever. A bonus of 50 percent should get builders’ attention, especially if coupled with an outreach campaign from the county that makes it clear affordable housing is desired by county officials.

Density bonuses for affordable housing are referenced as a possible initiative in the housing element of the county’s comprehensive plan.

Action: Reduce utility hookup fees for affordable housing units

The county and Okeechobee Utility Authority could collaborate to reduce or eliminate utility hookup fees for newly built units at prices and rents affordable to, say, households at 80 percent of median or less.

Action: Identify county-owned land for affordable housing development

The county could donate, or sell at a reduced rate, land it owns or buys for affordable housing development, either rental or ownership. Local governments elsewhere have used government-owned land as the basis for issuing to developers a competitive request for proposals to create affordable units. The local government is able to select the winning project based on affordability, and quality of design. Some have chosen to cap resale prices on ownership units developed in this way, creating a long-term stock of affordable units.

Action: Review 30-acre minimum for MH subdivisions meeting design standards

The purpose for the 30-acre minimum for manufactured home subdivisions is not clear. A well-executed HUD-code subdivision meeting the county’s existing design standards would be compatible with site-built homes, as demonstrated by Seminole Cove subdivision west of highway 441, north of the lake. Manufactured housing that is designed for compatibly with site-built units have been permitted in all residential districts in California for over 20 years, and the MH units have in effect “disappeared” into the housing stock. Allowing subdivisions of such homes to be built near site-built neighborhoods would help to ensure that MH owners could experience home equity accumulation over time. Segregating well-designed manufactured housing perpetuates the stigma that reduces MH property values.


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For example in the Raleigh-Durham NC triangle, Pulte Homes, a large conventional homebuilder, chose to use HUD-code homes in a 1996 subdivision of 72 units. Most units had attached garages and design features similar to those required by Okeechobee’s planning ordinance. An analysis of 39 pairs of resales involving 29 homes showed that value increase in the subdivision closely tracked site-built home appreciation in the larger market.

Action: Consider inclusionary zoning

Inclusionary zoning takes the momentum of a hot construction market and channels some potential profits to low-income buyers and renters, in order to maintain housing suitable for a wide range of incomes in the community. It is specifically permitted by Florida statutes (Sec. 125.01055 and 166.0415). Mandatory inclusionary zoning means that any housing development must automatically include some proportion of affordable units in order to be approved. In a strong housing market, such a requirement need not discourage housing development; it becomes a cost of doing business in a particular location. In Florida, the only major city to have adopted inclusionary zoning as of 2002 was Tallahassee. Its ordinance allowed builders to pay a fee to opt out of the affordable housing requirement. Nineteen of the first twenty builders applying for permits after enactment of the ordinance chose this route, raising some housing funds for Leon County but essentially thwarting the attempt to stimulate creation of mixed-income neighborhoods.

Inclusionary zoning is designed to include a range of housing types, sizes, and/or prices in a single development. Advantages of inclusionary zoning:

Reduces economic segregation by dispersing affordable units into market-rate projects

Promotes decentralized production of affordable housing; in effect, units are delivered via partnership program with any housing developer

Proven results and widespread use, including some beginnings in North Carolina

Inclusionary zones can be mandatory or voluntary. Set-aside requirements range from 5 to 25 percent. Often there is a tradeoff in which the developer provides the kinds of units desired by the local government in exchange for higher density. Usually there are long-term price or rent controls imposed on the units as well.71

71 White, S. Mark. Affordable Housing: Proactive and Reactive Planning Strategies. p. 20.


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Example: Montgomery County, Maryland

There is a good reason why Montgomery County is so well-known for its inclusionary program. It was first (originated in 1974), and as of 2000 the program had generated over 10,781 units priced or rented at rates affordable to households at 65 percent of the area median income. Most programs nationwide “can trace some aspect of their inclusionary zoning ordinances to the Montgomery County program.”72

Key features of Montgomery’s program:

From 12.5 to 15 percent of units in a project must be set aside for buyers or renters below 65 percent of median. (example, $33,500 for one person; $52,000 for five)

Developers receive a density bonus of up to 22 percent, depending on the actual percentage of affordable units in the development

Mandatory program Applies to rental or ownership developments of 50 units or more Ownership developments with lots larger than one acre exempted Owner units designated affordable must remain so for 10 years;

rentals, 20 years Owner unit resale price regulated by deed restriction Provisions for developers to buy out of the program have rarely

been used Of the nearly eleven thousand affordable units produced, only

3,805 remain subject to formal affordability restrictions

Example: Davidson, North Carolina

Davidson NC, population (pop. 7,100 but growing fast) recently amended its zoning ordinances to require new housing developments to price one-eighth (12.5 percent) of units at levels affordable to households at 80 percent of the median income. Of those, 30 percent must be affordable to households at 60 percent of median income. Planning Director Warren Burgess says the ordinance applies to all projects over 7 units.

Burgess reports that four projects including over one thousand units have been approved by the town. A single project will develop 900 units, of which 112 will be set aside as affordable for a 30-year period as provided by deed restrictions. The smallest of the approved projects will develop a total of about 30 units each. 72 Brown, Karen Destorel. Expanding Affordable Housing Through Inclusionary Zoning: Lessons from the Washington Metropolitan Area. The Brookings Institution Center on Urban and Metropolitan Policy. October 2001, p. 2. Points describing Montgomery County’s program, page 5.


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Davidson offers developers no “opt-out” provision for payment of a fee in lieu of creating affordable units.

Affordable units must be dispersed throughout the development.

1000 Friends of Florida Research on Inclusionary Zoning

Jaimie Ross, affordable housing director for 1000 Friends of Florida, won an award from Fannie Mae in 2004 that will fund her to perform one year of research on inclusionary zoning ordinances around the country.

Action: Organize an ongoing county housing initiative

As noted in the section on Okeechobee’s housing programs, the county has several initiatives underway which target specific housing needs. But there is no one organization or department that attempts to focus on county housing needs in an integrated, ongoing fashion. The Affordable Housing Advisory Committee is taking a comprehensive view of Okeechobee’s housing, but it has no staff and is not in a position to manage housing programs.

Step one is for the county to decide whether it wants to systematically commit resources to improve housing opportunities and affordability, on an ongoing basis. If the political will exists for the mission, an organizational structure should be developed to accomplish it.

One organizational model is to create a semi-autonomous local housing entity with independent authority to finance and/or develop housing, or receive federal housing funds. Two kinds of such organizations can be formed: a local housing authority, or a local housing finance agency.

I talked with Anne Lockwood Williamson at the University of Florida, who recently completed a study of housing authorities statewide.73 Based on my discussion with her about the powers and funding access of housing authorities in the state, I see no compelling reason for Okeechobee County to create a housing authority.

Housing authorities deliver two core housing resources: publicly owned rental units, i.e. public housing units; and Section 8 vouchers. HUD is not funding new public housing units, and housing authorities do not get preferential access to the very limited Section 8 funding 73 Public Housing Authorities in Florida: An Analysis of Selected Issues. February 2004. Shimberg Center for Affordable Housing.


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that is available. The county would need to satisfy HUD about the administrative capacity of any entity, whether it be a housing authority, department of county government, or a non-profit.

Experienced housing authorities do sometimes undertake more entrepreneurial housing finance and development activities. Some develop HUD Section 202 subsidized rental housing for the elderly and disabled, tax credit apartments, or ownership housing. But a nonprofit housing development organization is a simpler and more flexible tool for pursuing these opportunities. Alternatively, Okeechobee could partner with a housing authority that has development expertise. HUD’s Linda Lindstrom recommended Mr. Gleicester Brooks, director of the Fort Pierce Housing Authority, as a potential partner.

Some housing authorities finance housing by issuing tax-exempt revenue bonds, but if the county wants to take the initiative to expand financing options, it should first develop a working relationship with Florida Housing Finance Corporation. At present the FHFC is having trouble using all of its authorized bonding capacity.

In contrast to a local housing authority, a local housing finance agency is an organization that could bring many of the capacities of Florida Housing Finance Corporation to the local level. The Housing Finance Authority of Palm Beach County is an example. It issues tax-exempt single-family and multi-family mortgage revenue bonds. Bond proceeds are used by apartment developers and first-time homebuyers. However, because bond issuances have large transaction costs, it is very unlikely that Okeechobee County would want to issue bonds on its own. A partnership with other counties (like Escambia) on a bond issue could make sense, if and when FHFC has insufficient capacity to meet the county’s financing needs.

In summary, neither the housing authority nor the local housing finance agency option appears to fit the county’s organizational needs in the event that it launches an ongoing housing initiative. In my view, if the county does decide to formalize a housing initiative, it would make sense to assign coordination of the initiative to a department of county government, possibly planning. A county staff member could serve as housing policy and program director. The staff person could be charged with evaluating any substantive changes in county land use policy and infrastructure policy from a housing perspective with a kind of “housing impact statement.” Other roles would include attracting subsidized financing, monitoring and analyzing housing data over time, liaison with nonprofit and private


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developers for specific projects, and ensuring that housing initiative activities are coherent and complement one another.

In addition, local capacity to deliver housing and housing-related services should be developed and supported. The county could consider systematically building the capacity of one or two broadly focused nonprofit housing organizations. A nonprofit housing group is a mission-driven organization that otherwise replicates the skills and knowledge found in a private housing development company. It develops housing that is financially viable, but for various reasons is unattractive to companies that are purely profit-driven. Frequently such projects involve “layered financing” from multiple government programs, each with its own set of rules. The organization(s) should have housing finance and development expertise; be able to provide buyer education; understand housing rehab; be willing and able to engage the special issues surrounding manufactured housing; and be skilled at assembling financial packages from many sources. Finally, the ongoing housing initiative would need to develop a practical strategy to attract private developers who are qualified to deliver high-quality affordable housing.

This network of 1) government commitment, staff expertise and policy support; 2) nonprofit housing development, finance, and education; and 3) private sector partnership has produced results in many other locations. The Florida Housing Coalition is in effect a trade organization whose members come from all three sectors of the affordable housing industry, and the Coalition could support development of such a network in Okeechobee County.


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Endnotes

18 Average wage earners can’t afford home. Palm Beach Post, March 12, 2004.


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