Ron DeSantis Admin Says in New Lawsuit That the Free Market Won't Produce Affordable Housing

Florida's Department of Economic Opportunity is suing the city of Gainesville to block its legalization of small "missing middle" apartment buildings in single-family neighborhoods.

The administration of Florida Gov. Ron DeSantis (R) is suing the city of Gainesville to stop its legalization of new small apartment buildings in all residential areas. Allowing more housing in existing neighborhoods will worsen housing affordability, the state argues, while straining infrastructure and upending established neighborhood character.

"It is simply illogical for the City to argue that by entirely removing the concept of lower density detached residential dwellings…it is doing anything more than helping provide housing to college students and higher income residents," reads the petition filed last week by the Florida Department of Economic Opportunity (DEO) in the state's Division of Administrative Hearings.

The DEO's petition, which was first reported on by The Independent Florida Alligator, contends that creating affordable housing requires Gainesville to adopt "inclusionary zoning" policies, whereby developers are allowed to build denser housing on the condition that they provide some of the new units at below-market rates to low-income renters or buyers.

Just legalizing denser construction without subsidies and restrictions needed to create below-market-rate housing provides no benefit to lower-income residents, argues the department, saying in the petition that "the 'invisible hand' of a free market operates simply in this situation—without inclusionary zoning tools, developers will not build affordable housing."

In October, the Gainesville City Commission narrowly approved a series of ordinances that allow more homes per acre and small four-unit apartments to be built on residential land citywide, including in areas where only detached single-family housing was allowed.

Cities and states around the country have adopted similar "missing middle" zoning reforms on the grounds that allowing new duplexes, triplexes, and more will make residential neighborhoods more affordable, sustainable, and equitable.

The results of these reforms have been pretty modest so far. In places like Minneapolis and Portland, Oregon, they've enabled the construction of a few hundred missing middle homes that sell for prices well below that of new single-family homes. One would expect Gainesville's reforms to have a similar impact.

That hasn't mollified the fears of activists who formed the group Gainesville Neighborhood Voices (GNV) in June 2022 to oppose single-family zoning abolition.

In written materials, letters to government agencies, rallies, and testimonies to the City Commission, GNV members have argued that Gainesville's housing problems are not due to a lack of supply per se, but to existing homes costing too much. They warn that there's no telling what the elimination of single-family zoning will do for affordability but that it "will likely be destructive to stable neighborhoods."

These complaints didn't move the City Commission, but they have found a receptive audience at the Florida DEO. In September, the department sent a comment letter to Gainesville Mayor Lauren Poe echoing activists' concerns about the impacts single-family zoning abolition would have on affordability, infrastructure, and neighborhood stability.

The DEO's lawsuit comes a few weeks after two GNV activists filed their own petition opposing the city's zoning reforms. Alachua County, which contains Gainesville, has also filed a petition to stop the city's zoning reforms.

The Florida state government plays a limited role in local zoning decisions and can typically only step in when state assets are threatened. The DEO is justifying its interventions by claiming that "affordable housing" generally is a state asset that could be damaged by Gainesville's elimination of single-family zoning.

"That's a really big leap for DEO," Thomas Hawkins, a lawyer, planner, and assistant professor at the University of Florida, told Bloomberg CityLab in October. He said a state asset is usually something like a major piece of infrastructure or an environmental resource.

Housing politics is weird. It rarely falls neatly along party lines. Nevertheless, the DEO petition is an exceptionally strange document to come from the nominally free market–supporting DeSantis administration.

Its explicit premise is that a general increase in new housing supply at market rates won't make housing more affordable and, in fact, will make affordability worse. Instead, the department argues that government regulations, subsidies, and incentives are necessary to ensure truly affordable housing gets built and gets built in the right places.

That's an incredibly government-centric view of housing affordability. It ignores both the theory and the evidence that when new housing is built, even very expensive housing, it lessens demand on existing housing stock, leading to lower prices and rents.

New missing middle housing typologies also typically sell for much less than a new single-family home. Cities that legalize them are giving homebuilders more property rights and homebuyers more affordable choices.

These improvements are marginal, but they're improvements nonetheless. DeSantis' administration is going to great lengths to stop them from happening, including making novel arguments about the expansive powers of state regulators.

The Alligator reports that the lawsuits against Gainesville's single-family zoning abolition prevent developers from getting permits to build newly legal duplexes, triplexes, and so on. The hope among anti-reform activists is that the ordinance can be delayed long enough until the new City Commission (which is stacked with zoning reform opponents) can reinstate single-family zoning.