By The Star Staff
The rehabilitation of abandoned housing, zoning modifications to allow higher density residential units, tax credits for affordable and senior living housing, and the conversion of single-family units into multiple-family units are some of the proposals from real estate firm In Realta Grupo Inmobiliario to curb the U.S. territory’s affordable housing crisis.
The lack of affordable housing in Puerto Rico is not just a problem, it’s a crisis that urgently needs to be addressed. It’s a critical issue that affects middle- and low-income families, and hinders the island’s ability to attract its diaspora, according to a report from Ivan Zavala Steidel, from In Realta Grupo Inmobiliario, exploring alternatives and examples from other regions with similar housing challenges.
According to the 2022 Federal Census, there are nearly 1.6 million housing units in Puerto Rico, of which 309,259 (19%) are vacant. “These properties represent a significant opportunity to increase affordable housing inventory and long-term rental options. However, the political complexity of Puerto Rico, with its 78 municipalities, makes the identification, planning, and efficient disposition of these properties challenging,” he said.
His proposal calls for a regulated methodology to identify and classify these vacant and/or abandoned properties by categories, whether they are land, residential, commercial or mixed-use. Once classified, cities must determine which of these properties should be retained for conservation, and which should be made available for urban development or mixed social and economic impact projects of the private sector and/or public-private partnerships. “To this end, it is essential that the public nuisance inventories undergo a process of analysis to determine their best use. Each property may represent different opportunities, such as the creation of parking areas, green spaces, passive parks, or spaces for waste collection,” he said.
He also proposed modifications to zoning and land use regulations to allow higher-density residential units and mixed land uses. This includes allowing high-rise buildings and converting single-family zones to multi-unit zones, especially near public transportation hubs. This would incentivize buildings with more than 10 units to be rehabilitated and redeveloped. He also proposed converting underutilized commercial areas to residential housing and providing incentives to developers to build affordable housing in densified urban areas, such as tax breaks, direct subsidies, and access to public land, the real estate firm said.
He proposed tax incentives in key sectors such as senior housing, long-term rentals, urban commerce, and tourism. “However, to facilitate reconstruction and rehabilitation across all the municipalities of the island, an economic incentive is necessary to make these projects viable and motivate the private sector, as has been done in the past with now-defunct laws and is currently being done with the tourism sector, where up to 40% tax credits are offered for the total cost of tourism projects,” he said.
“The reason for a tax credit is straightforward: generating new construction or rehabilitation for the conversion of deteriorated and disused housing is not viable without an economic return. The cost of construction, the limitation in labor, and the fact that Puerto Rico relies on importing most raw materials such as iron, aluminum, and copper, makes economic intervention indispensable to make these projects financially feasible,” he wrote.
In urban developments, urban centers, and even in rural Puerto Rico, it is typical to find homes divided into several units of 2, 4, 6, or even 10 units, with tenants living in them for years. Many tenants living in these units would like, if possible, to acquire the unit for themselves, but the lack of a process specifically for this sector hinders this possibility. It is estimated that more than 100,000 families in this sector could benefit if there were processes to facilitate this alternative, he said.
“A fact that hinders this scenario is the lack of individualized utilities. There is a tendency that, given the laboriousness and difficulty of individualizing utilities, many owners have opted for short-term rentals, as the increase in utility bills does not correspond with the increase in long-term rent, and they cannot transfer this cost to the lessee. This reality predisposes the lessor to think twice about renting their property on a long-term basis since they are prevented from individualizing their utilities,” he wrote.
He said the conversion of these homes into condominium-type units is a real possibility, provided they comply with parking requirements and side and rear yards, as well as the individualization of utilities. This would facilitate their sale or long-term rental and counteract the trend of their use as short-term rentals, which has impacted the inventory available for middle and low-income families.
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