3 min read September 2023 — Invest: interviewed Hugo Pacanins, CEO at Pinnacle Housing Group, about their new Pinnacle 441 project, which will bring 113 units of affordable housing to Broward County. Pacanins also discussed challenges with entitlements and zoning and the Live Local Act — “a great initiative to build incentives” for much-needed affordable housing projects. “We are actively looking for all types of multifamily projects: market rate, workforce, and affordable housing projects as we believe there is a lot of potential over the next few years. Ideally, we would like one to two starts a year, but understand that the next 12-18 months will be tough. But, after the market stabilizes, our goal can be achieved. The tailwinds in Broward will continue to be strong and bring strong demand,” he said.
What are some highlights or milestones for Pinnacle Housing Group over the last 12 months?
For the last 12 months, we have been working on an affordable housing deal in the City of Hollywood in Broward County. We call the project “441,” which has 113 units and is a few months away from reaching completion. It is a joint venture of multiple parties, including the city and county, as we all come together to make affordable housing work. We have a second phase for that project, which adds another 100 units of affordable housing, bringing a total of 213 units of affordable housing to the area. It is rare that we have multiple projects like this happening at the same time in the county. Our current pipeline also includes a project in Miramar, and we are very excited to pursue opportunities in Broward County and the Tri-county area.
How do you promote affordable housing in Broward County and Florida?
There are many challenges, particularly funding. There is not enough to offset the rising costs so we constantly need multiple layers to make a project work. It needs city, state, county and federal funding. The county doesn’t have significant resources, so it is hard to meet the growing need. With the growing rise in financing costs, insurance and construction costs,it is hard to make projects work, especially affordable housing projects. Counties need to find sources of funding and revenue to allocate towards affordable housing to be able to keep up with the growing demand. The Live Local Act is a great initiative to build incentives for these projects, and it will have a positive impact on being able to provide and develop workforce housing. We call this the missing middle because it is market-rate housing but for a segment that has been underserved in the past decade. There is a growing demand and need for more funding for developers to build the number of units needed. Live Local involves property tax abatements, so it is a sensitive issue for municipalities, but it is really a powerful tool in getting these deals financed.
What strengths do you see in Broward County’s market fundamentals? What are the overarching opportunities for a company such as Pinnacle?
The Florida story has been quite strong for many years, but post-COVID it strengthened a lot. There is increasing demand for housing because people migrated to Broward County and Florida. We have a strong employment base, and many organizations are moving here to take advantage of the tax environment and the beautiful weather. We are perfectly located with ports and airports as employment drivers, and we have culture and beaches. We have everything. This trend will continue, and with these new jobs comes increased housing demand. It is important to build housing, so we don’t drive people away. Rents are rising and to keep up we need more and more affordable, market-rate housing for the workforce. This is our focus and main opportunity, and we are actively looking for new opportunities in every sector. The demand is there
How is the county working to fill infrastructure gaps during this growth period?
The county has done a good job of maintaining utilities such as water and sewer treatment, which is a major challenge. The biggest challenge we deal with is traffic and road infrastructure. As cities and the county get denser, traffic becomes an increasingly important issue. The transit infrastructure needs to expand and get better before it creates even worse traffic issues. Unfortunately, Florida doesn’t have a solid public transportation system. Broward has a good base with Broward County Transit and the Brightline, but it doesn’t have a main mode for taking people out of their cars like in other cities. Nearly every county in Florida is focusing on that and it needs to get even better
What regulations or government policies are you watching that might have an impact on Broward County?
Entitlements and zoning is a long process that involves a lot of feedback, takes a lot of money and is a risky process. Broward took an early initiative to allow for residential in commercial and industrial properties but it has not really taken off. The Live Local Act added the tax abatement proponent, which is what we believe is needed to make this happen. This is a quicker path to entitlements, and it also gives a property tax incentive when the project is complete. There is now a tangible financial incentive to build important projects.
What is your outlook for Pinnacle and the Broward County real estate market over the next few years?
We are actively looking for market rate, workforce, and affordable housing projects and there is a lot of potential over the next few years. Ideally, we would like one to two starts a year, and the next 12-18 months will be tough. But, we fully believe that after the market stabilizes a little bit, our goal can be easily achieved. The tailwinds in Broward will continue to be strong and bring demand. That is why we are focusing on Florida and Broward County as our main markets, and we will continue to do that in the future.
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