Housing Hocus-Pocus? Is the City Losing the Workforce Housing Battle One House at a Time?

410 simonton Kerr House

by Naja and Arnaud Girard…….

It was not the Sistine Chapel, but the ceilings were painted with beautiful scenes of Florida Keys’ waters, with schooners and fishermen. The artists had been Cuban refugees who long ago paid for their stay at “The Kerr House” by redecorating the inside of the old conch house.

When we visited the house at 410 Simonton Street seven years ago there were seven apartments bursting with local residents. Today we read in a redevelopment plan that the house will soon become part of a guesthouse complex and only three long-term residential units will remain.

So what happened to the other four?

The profit in making such a transformation is obvious: In Key West a 1-bedroom longterm residential unit brings in around $1800/month whereas a guest-room can bring in $9000/month or more.

The developers purchased three adjoining properties, including a 6-room guesthouse at 411 Bahama Street, an 8-room guesthouse called “The Pilot House” at 414 Simonton and the 7-unit permanent residential property, The Kerr House, at 410 Simonton.

At The Kerr House, two of the units were, historically, rented without the legal ROGOs or occupational licenses, but the five others were legal and had been rented to the local workforce for years. According to Carolyn Walker of the City’s Licensing Department, none of them have been sold or transferred to other properties.

On October 15th, the Planning Board voted to recommend that the City Commission approve the application for Major Redevelopment. Two transient residential units and an office for the guesthouse operation will move over to the Kerr House and only three permanent residential units made it, anywhere, into the plans for the complex.

The result: A loss of two legal longterm housing rental units.

Yet under City code, Section 122-807, a commercial modification may not be permitted if it results in a reduction of permanent residential units. This is one of the few ordinances the City enacted over the years to protect permanent residential housing stock.

410 simonton sec 122-807

Here, it seems, transient rentals are being spread geographically through the capture of adjacent permanent residential property.

We contacted the Planning Department on Tuesday in an attempt to understand just what loophole might have been used to achieve such a result in a City in the midst of a critical workforce-housing crisis. As of press time we have not received our answer.

However, the loophole could be pure and simple misrepresentation.

The Kerr House was the first of the three properties purchased by this developer. Initial permit plans [shown below] called for the renovation of five legal permanent residential units. [click on the image to enlarge]

410 simonton 5 unit plan

But after the developers purchased the adjacent Pilot House and Bahama Street guesthouses, the same architect, Tom Pope, appeared before the City’s Planning Board with the current plans, claiming there had only been three non-transient units located at 410 Simonton.

From the Staff Report for the Major Redevelopment:

Staff report 3 non transient

Whatever the case may be, the developers seem to have made headway toward unloading their permanent residential units to make way for transient rentals.

According to former City Commissioner Teri Johnston, an overhaul of Key West’s workforce housing code is long overdue. “We have been working with legal and we have been working with Planning now for 7 years asking for that ordinance to be tightened up,” said the frustrated Commissioner earlier this year. She could never make it happen. [see video documentary at end of article]

”If we don’t get affordable housing, Key West is going to be a spot only for the wealthy and the indigent. There will be no in-between.” That was Wilhelmina Harvey, [“First Lady of the Island” ] as quoted in a New York Times article in December of 1986. That was nearly 30 years ago.

“This City has no credibility when it comes to affordable housing concerns,” says community advocate Christine Russell, “They refuse to do anything for years. Their laws are just a shroud of loopholes, all for developers’ profit, and all of a sudden they need to spend $55 Million to “save” Peary Court. I have to question that.”

The Planning Board’s decision is not the final answer. The City Commission will ultimately decide whether or not the Major Development Plan will move forward as planned.

Stay tuned.

UPDATE:  How was it done?  The City’s Building Official allowed the property owners to turn 2 of the long-term residential ROGO’s back over to the City.  The Planning Department officials then claimed in their official staff report that the property “historically” contained only 3 long term residential units. And that folks is how, in the midst of a “workforce housing crisis”, the rule prohibiting renovations that result in a reduction in the number of permanent residential units is quite underhandedly cast aside.

What did the City Commission decide? Who are we kidding?  Yes, of course they approved it (and with full knowledge – thanks to Blue Paper’s investigation –  of how it was done).

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9 thoughts on “Housing Hocus-Pocus? Is the City Losing the Workforce Housing Battle One House at a Time?

  1. Thanks for another expert piece of investigative journalism. You have given the city commission the facts they need to make the right decision to save workforce housing. Will they step up?

  2. This is simple math for the owners of any property in KW. We considered purchasing an older home in KW and then live in it part time and rent out a couple of rooms to make it affordable. With the price of even bad condition 3 bedroom 1 bath homes it simply with mortgage payment , insurance, taxes , upkeep and utilities it simply was a no way in hell to even break even. Even with high room rents it would not break even. This is why they are turning into bed and breakfast homes that easily get $300 a night . Same house could easily turn a profit if bought for half a million or more. As recent as last July we seen a 900 sq ft home in old town that was gutted and for sale. So called the number. They already had cash offer of $400k and it would took another $100 k to fix. We simply find it cheaper to rent a motel or bed and breakfast for a week about 6 times a year to visit than to even think of owning a place. Only the poor that live in government section 8 or very rich can afford KW. Something is wrong in this.

    What we see now is many of the 100 year old homes are falling apart and torn down. The price tag to rebuild with new codes makes it non affordable to buy and build. Look at the Chapman house and you clearly can see it will never be livable again.

    The only affordable housing for workers are fire traps that cost as much as most workers get paid and that is to rent just a bedroom with shared bath. One by one they are getting torn down.

    You fell for the whopping story of the Simonton trailer park and look at what that developer has put in. Nothing at all like the original pictures of a deluxe building. In July they started at $995 K and in Oct. dropped to $759 K and guess what , they still were not getting finished or ready to move in. Chances are high it is another bankruptcy in the making.

    When will KW wake up and see that without workers your tourist town will soon be a ghost town. Is no shortage of HELP WANTED SIGNS on store windows.

    Is no solution because with developers creating more high end homes more help is needed. At best workers might find something on Stock Island in a 30 year old mobile home and if they work 60 hours can live but not enjoy.

    1. Jimmy, What you seem to be missing is that all the problems you speak of for someone who wants to buy a house have been artificially created by the honchos who don’t want houses to be used like you wanted. If there was really a committment to work force housing, and the ROGO rules were adhered to, just think how much cheaper a house would be to buy. In the truman annex when the deal was made, there was supposed to be a 30 day minimum for those who stayed there. Ha! What a joke. If that rule was enforced, just imagine how many people who work in town could live there and just think how much cheaper it would be to buy such a unit. ciao, PCM

      1. Having been buying , building and selling homes for 40 years yes I understand artificial prices. That is all part of supply and demand and the cause of the crash in housing about 5 years ago. Investors want it to look like a shortage to justify the outrages prices. Key West is not the only place this is happening.

        Key West does have a high demand by the rich to buy a home , vacation and that drives up the prices. Was told many years ago that a home is worth what ever someone is willing to pay.

        I do not know of any way to fix the working class housing problem in KW. Maybe had some laws been put into place 30 years ago it would not be what it is now. Far too many houses were turned into bed and breakfast rentals. And had I bought an old big home and seen the profit potential to convert it to a BB then yes would done it too. It is all about making a profit from what you own.

        30 day rules are easy to break with simple leases that permit early cancellation with penalty. So yes might work out cheaper to rent for a week or 2 and pay the penalty.

        We are retired and live fine off of our rental properties. What I see is no future for anyone in the workforce in KW. Even if they can manage to work and live for many years they will face a time when they need to retire and then will be forced to leave KW because social security will not begin to be enough.

        Only the few that managed to buy a home and paid it off will be able to stay.

        It is too late to fix the shortage of affordable housing in KW. It will work out as wages go up and they will when help can not be found.

        What I suspect is happening in KW is that young 20’s type people save up a few thousand dollars and head to KW. They last a few months before they figure out they can’t afford to live here and leave broke. And someone else will replace them.

  3. I just now wonder, since it appears from all quarters that the mayor and city commissioners’ focus is on housing for what I call middle class people, and not on poorer and poor people having housing, and since Mayor Cates, which sometimes is echoed from commissioners, keeps saying KOTS, the city’s homeless shelter, is affordable workforce housing (free), so the Housing Authority’s funds should be allowed to pay for the new KOTS being built, wherever that ends up being, that the unspoken sentiment in action speaks louder City Hall and among the powers behind the scenes is let the poor eat cake, if the Housing Authority does not house them, because the city government is going to do what it can to take care of middle class residents’ housing needs. If so, that’s seriously ass backward. Without the low-paid workers, for example, sanitation workers, maids, street cleaners, yard workers, Key West would become uninhabitable and the Feds would have to send in Hazmat units. Whereas, if the mayor and city commissioners were, say, suddenly abducted by aliens, the Feds would only send in psychiatrists and spin doctors to explain what everyone on Green Street saw swoop in and hover and suck the mayor and the six city commissioners sitting behind the dais at a commission meeting straight up through the ceiling into the waiting beam ship in plain view, was simply a Navy weather balloon, and the seven gone missing actually are alive and well in a secure secret bunker, being protected until such time as it can be figured out what was out to get them, while, yeah, the Bum Farto chants begin, and increase, but are drowned out by Bermuda Triangle chants, while the Feds say nothing more, because they are as clueless about what went down, as the city’s elected officials and their hidden authorities are about who the important workers in Key West really are.

  4. “Affordable” housing in Key West will be completely gone within 10 years. Just look at the weekly home sales. Almost every time a house sells for less than $500k, it was one that had been rented. We all have had friends who had to leave town after they lost their lease following a sale, and the new owners wanted them out. The sellers probably either wanted to get out of the frustrations of renting or the owner died and the heirs sold to split up the inheritance. The new people who buy will kick out the renters and spend another half million or more on a full gut renovation. After they put over a million into what was once a work force rental, that place will become a 2nd or 3rd home and only be occupied a couple months a year. More importantly, it will be permanently out of the affordable rental market. This is happening an average of 10 times a week. Multiply that by a few years, and the Key West single family rental properties will be all but gone.

    The truth is that I really can’t blame the sellers. The renters had probably (rightfully) complained about termites, poor plumbing, smoking electrical or broken appliances, and the house needed over $100k in repairs. Why would anyone sink that much into a property that would only deliver a couple thousand a month when they could cash out for a half million, bank the cash and not have to deal with the headaches?

    1. I did not even consider that idea but yes the problem is return on investment. On lets say a $500 K home they need to make at a min. a 10% profit after taxes, insurance, repairs and such.

      That means 52,000 plus the cost. Will guess at taxes at about $5 k and that is likely low now add another $3 for insurance and any ones guess as to repairs in such a costly town.
      Roughly they need $60 K and if divided by 12 they need $5 ,000 a month and even more if it has property maintenance and rental fees. And with all rentals you have a percentage of vacancy and dead beat tenants you must evict.
      Profit in a bad year might be zero.

      Now just how can a worker pay this ? And even if they rent it out as rooms they just barely make it.

      We are landlords and do demand a much better return. In many cases it is likely a house they bought 10 or more years ago at about half or even far less than that. They sell when property is at it’s peak value and the buyers usually can easily pay cash and yes likely just want a second home. That is when they make a real profit. Go back about 5 years when we had so many foreclosed homes and cash buyers were buying up homes at as low as 25 cents on the dollar. And yes that home is now worth 500 K. We looked at a half of a duplex that had major fire damage on North end of KW. It got sold for $72k. Had it been in a better location we would have purchased it and rented a room out and kept one for us to live part time. After repairs and in todays market it would be selling for $500 k and would not be profitable as a rental.

      Good luck KW as your about to see some serious problems that nothing short of wages going up can fix.

      It is only normal to want a fair profit from investments. For this reason we stopped looking to buy an old house in KW. It is far cheaper for us to simply rent a motel or bed and breakfast and even with visiting KW about 6 times a year it works out cheaper. I feel sorry for the workers that are living in badly kept up rentals and paying such high rent. It comes down to supply and demand and with a shortage of rentals the rent will be very high. Only way they can make it is work 60 or 70 hours a week. Is it worth working that hard to live in paradise if you can’t enjoy going out ?

      In time I agree there will be a huge workforce problem unless employers start paying proper wages. That maid or other store workers must live some place. At FF this year we heard of a young girl and her BF paying $600 for a shed just big enough for a bed. That is sad. And even Stock Island is not cheap.

      In time this system will crash and with no help paradise can not go on. Only the very rich and the very poor such as section 8 will be living in KW.

      We love KW but seldom stay more than a week at a time. Only cure I see is for the city to create new cheap housing and that is not likely to happen. You have plenty of vacant lots but the cost to build anything on them is profitable as a rental unit.

      What you will continue to have is investors buying up adjoining homes and turn them into bed and breakfast places that make a serious profit. Take a look at the ones you have now and they were once a residence. Loop holes will let this continue.

      1. Jim, thanks for seeing my point. You forgot, however, to include the cost of money for the $500k that would be required to purchase the property plus a minimum of another $100k in renovations to make the place livable. That would easily add an extra 5% to the cost. Together with a 10% investment return, an investor would probably need to clear closer to 15% on their ultimate $600k investment (but probably more). That works out to around $7,500 a month. It is no coincidence that is right at the price that is being paid for monthly in-season rentals.Even if they were paying 100% of their income towards rent, no working person in Key West earns enough to pay anywhere close to that.

  5. The mayor and city commissioners appear to have no interest in creating new housing, nor preserving existing housing, which is affordable to poorer and poor people. The Peary Court referendum is about housing that requires $80,000-plus income a year to afford, by one person, or by 2 or more people going in together living in the same unit. The Housing Authority is the only supplier of inexpensive housing, and its rents depend on tenants’ income. That’s subsidized housing. And that’s what a great deal more of is needed in Key Weest. What’s the city going to do if its street and sanitation workers, for example, quit and move away because they cannot afford to live here? The city government would keep going if the mayor and city commissioners were all abducted by aliens, literally; but if aliens abducted all of the street and sanitation workers, the city would become a toxic waste dump in a few days, and uninhabitable. How many of City Commissioner Jimmy Weekley’s grocery clerks and shelf stockers and deli workers at Faustos, his family business, do you think can afford to live in Peary Court today, or ever? The city buying Peary Court is Jimmy’s masthead. He keeps calling Peary Court workforce housing, and affordable housing (for people who make $80,000 plus income a year, individually or combined). I call Jimmy’s project workfarce housing.

    Donna Windle, a local Realtor lives at Peary Court. She spoke at Jimmy’s recent town hall meeting about how much she likes living at Peary Court, it’s great for her. I have crossed paths with Donna a few times in the past. I can’t stand listening to her talk. She never met a developer she didn’t like, until she was threatened with being moved out of her unit at Peary Court. She did not cry foul, did she?, when the mayor and city commissioners let a developer run off all the tenants in the Simon Court trailer park not all that long ago.

    Make no mistake, folks. The city, the mayor, the city commissioners, the city manager, city staff, have changed the meaning of affordable housing. They have changed the meaning of workforce housing. They are talking about middle income housing at Peary Court. The new 48 units the developers will build at Peary Court, whether or not the referendum passes, will be “moderate” affordable, yes? Which is equivalent to, or higher than, market rate, yes? No? Certainly, it will not be something any of Jimmy Weekley’s grocery clerks can afford to rent. It will not be something street and sanitation workers can afford to rent.

    48 “affordable” building rights the city GAVE to the developerd, which the developers valued at $12,000,000, when Jimmy Weekley and the rest of the city’s crack negotiating team, City Manager Jim School and Housing Authority CEO Manny Castillo, started “negotiating” to buy Peary Court. Manny told the developers he didn’t want to pay $12,000,000 for building rights (the city had GIVEN the developers). Manny said the city could not pay the mortgage loan out of non-existent rents generated by 48 units not yet built. So, wow. The developers said, okay, we will sell you everything at Peary Court but the 48 building rights, for $55 million. (Which will make us a $20 million profit over what we paid two years ago, plus the $12 profit on the building rights you GAVE us.) And the city’s crack negotiating team said, great, we will try to get paying you what you are asking approved by the mayor and the city commissioners, and then by the voters in a referendum.

    Well folks, if there really had been negotiations, if the city’s crack negotiating team had gotten the purchase price down to something reasonable – hell, the developers were on the ropes after being ground up and spit out several times by HARC; the developers had not been maintaining the units, because they were going to be torn down; the developers would looking at big costs in upgrading the units to either rent out or sell at high end market rates – the city’s mortgage on Peary Court could have been smaller, and then the rents could have been lower, and middle class (or higher) tenants like the Peary Court poster child Donna Windle would be making too much money to live there and would not have their leases renewed, and they would have to find housing affordable to them elsewhere in Key West – how about the new Simonton Court, or whatever it’s called now?

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