County Commissioners must answer for their decisions.
From Palm Beach Post:
WORKFORCE HOUSING CRISIS
BREAKS FOR DEVELOPERS
County caved repeatedly on housing for workers. Now it’s a crisis.
Andrew Marra Palm Beach Post | USA TODAY NETWORK
E ach year the hopeful apply by the dozens: teachers, firefighters, county government workers. h Squeezed by rising housing costs, they queue up online for an increasingly rare opportunity — buying a new Palm Beach County home at a moderate, discounted price. hBut most emerge from the county program empty- handed. There are simply too few homes to buy or apartments to rent. h The shortage is no accident. It’s the result of years of decisions by Palm Beach County commissioners to weaken a program designed to provide affordable places to live for working, middle-class residents. hEstablished in 2006 amid skyrocketing real estate prices, the county’s workforce housing program was supposed to help fend off an affordable housing crisis by requiring developers to sell or rent a small portion of their units at moderate prices.
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ABOVE: Carol and Joe Smith tour one of the model homes during the opening of Arden, west of Royal Palm Beach, in 2019. Lennar, the developer, ended up not having to build any workforce housing.
PALM BEACH POST FILE
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POST INVESTIGATION WORKFORCE HOUSING CRISIS “Here they (the developers) were driving up in Porsches and $80,000 cars ... and I’ve got children living in the backs of 40-year-old cars or a tent.”
Former County Commissioner Paulette Burdick
But for 16 years, county leaders squandered repeated opportunities to use the program to create affordable housing for thousands of middle-class residents, a Palm Beach Post investigation has found.
Under pressure from politically powerful developers, commissioners repeatedly reduced the number of moderately priced homes those developers were required to build.
Then, at developers’ requests, county officials delayed and abandoned efforts to strengthen the requirements.
Ambitious and innovative when it was first conceived, the county’s workforce housing program today is one of the weakest of its kind, The Post found.
It has produced fewer than 1,100 discounted homes and apartments in 16 years — a period in which more than 35,000 housing units were approved by commissioners. Experts say tens of thousands of new, moderately priced residences are needed.
The watering down of the program ensured higher profits for some of the region’s largest developers, including GL Homes, Lennar and DiVosta Homes, companies that routinely sell milliondollar homes.
But it has left middle-class residents with fewer affordable living options as the local, state and national housing crises worsen.
“Here they (the developers) were driving up in Porsches and $80,000 cars,” said former Commissioner Paulette Burdick, a persistent critic of the program’s management, “and I’ve got children living in the backs of 40-yearold cars or a tent.”
‘The desperate need’: Housing problems keep getting worse
Palm Beach County’s dwindling supply of moderately priced homes has been a concern for years, but since the start of the COVID-19 pandemic it has grown into a full-blown crisis.
Nearly a third of the county’s renters spend more than half of their income on housing, a 2020 study found, while another found average rents in the county jumped 31% in a year, to more than $2,800 in May.
The dearth of affordable housing for middle-class workers has left businesses struggling to hire employees and pushed more long-time residents to flee north to Port St. Lucie and other less costly areas.
Some businesses have delayed or canceled plans to locate here, business recruiters say, citing the lack of affordable housing for employees.
Sterling Frederick, a chorus director at Forest Hill High School, remembers signing up for a course on homeownership and finding more than 100 other people in the room.
Frederick was one of the lucky few able to buy a discounted townhouse through the county’s workforce housing program. Many in more dire straits were not so fortunate.
“A lot of people were looking for housing and needed housing right away,” he recalled. “You could feel the desperate need in the room.”
Frustrated with their efforts so far, commissioners now are trying a new approach to address the crisis, asking voters to approve a tax increase in November to finance a $200 million program to build more affordable housing.
Developers push back, saying it wasn’t their crisis to solve
The Post’s review of the workforce housing program shows it is a far cry today from what county leaders first envisioned.
Requiring developers to provide a portion of their units at moderate prices was intended to ensure that some homes and apartmentswould always be salaries.
As the program was being mulled in 2005, county administrators aimed to set those portions high.
They initially wanted developers who build in the unincorporated county — where nearly half of county residents live – to provide at least 20% of their units at prices affordable to middleclass individuals, a former county official recalled. That meant, at the time, selling homes at between $164,000 and $304,000.
But developers pushed back. They argued the requirement was too onerous. Selling a fifth of their units at moderate prices would force them to mark up the rest, they said.
It wasn’t their responsibility, they insisted, to bear the cost of fixing a housing crisis being driven by market forces.
Requiring developers to sell some units under market rates is “not a fiscally, financially viable way of solving this problem,” Brenda Talbert, executive vice president of the Gold Coast Builders Association, said at the time.
County staff and developers spent more than a year negotiating. Administrators wanted to find a compromise that developers would find acceptable.
Failing to do so, they knew, could make it difficult to win county commission approval.
“Let’s face it, the builders and developerswere a very powerful group,” said Barbara Alterman, director of the county’s planning, zoning and building department at the time. “Palm Beach County was developing very quickly, and I think there was a desire on the commission to allow that building to continue.”
By February 2006, administrators had agreed to lower the minimum requirement in their proposal to 15%.
When county commissioners approved an interim program the following month, the requirement had plummeted even further, to 7%.
Commissioners framed their support for the program as standing up to development interests, and indeed it was one of the first of its kind in Florida. Miami-Dade County considered a similar program but never adopted it.
“The builders are going to hate it. The Realtors are going to hate it,” Commissioner Warren Newell said. “Too bad. We’ve got to do what’s right for the county, and that’s to diversify these units.”
But already, the requirements were far below those in the county’s model: a program in Montgomery County, Maryland, where the requirements ranged from 12.5% to 15%.
Not all developments in Palm Beach County would have a requirement of just 7%. To encourage the building of more workforce housing, the program required a higher percentage for planned communities with extra amenities and higher permitted densities (units allowed per acre).
And developers willing to build even more workforce housing could, in exchange, get permission to create more units per acre than the county’s zoning rules normally allowed, boosting their potential profits.
But the reductions were only beginning.
How developers got out of building any workforce housing
As developers pushed back against the requirements, they secured another loophole. County officials agreed that, if developers wished, they could build no workforce housing at all.
Instead of building moderately priced units, county officials declared developers could simply pay a $90,000 fee for each unit they’d been assigned.
Such opt-out fees aren’t uncommon in similar programs. But county administrators didn’t like it. “It allowed you to buy out of it, and I don’t think at the time we wanted that,” Alterman said. “But it became an option because the builders said, ‘We need that option.’ ” Despite the accommodations, developers continued to oppose the program.
“They asked the developers to carry the entire burden for the entire community,” complained Skeet Jernigan, president of the Community and Economic Development Council, a now-defunct group representing major developers.
By the summer of 2006, their complaints were aided by a faltering real estate market. The housing bubble, which had triggered the push for a workforce housing program in the first place, had started to burst. Housing prices were declining.
When a permanent program was approved in September, commissioners had agreed to weaken it again, just six months after the initial approval.
Now, the minimum workforce housing requirement was 6%, a percentage point lower, and less than half of the Maryland program it was modeled on.
Once the program was in place, it would be years before the first results appeared.
The requirements generally did not apply to projects already approved. New projects, and the workforce housing they would produce, would take time to be developed.
In the ensuing years the housing market collapsed and the world economy entered the Great Recession. Little
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POST INVESTIGATION WORKFORCE HOUSING CRISIS new construction was occurring, and many approved projects were delayed or canceled.
By late 2009, the recession had officially ended. Unemployment remained high, and county home sale prices were 40% below their peak.
But real estate transactions were on the rise, and construction of new homes was starting to pick up.
“Our sales are up tremendously,” a GL Homes executive told The Post in November 2009. “We’re seeing numbers we haven’t seen since 2006.”
Still, developers argued that the workforce housing requirements were too demanding. And in early 2010, they scored another coup.
Under pressure from developers, county commissioners agreed to deal the program its biggest blow yet.
In January 2010, commissioners unanimously approved a 111-page ordinance making a series of small but significant changes to their land-development rules.
The title and summary of the ordinance made no mention of the workforce housing program, but buried far down, in an appendix on page 105, were two provisions watering down its requirements once more.
First, the ordinance lowered the minimum requirements once again, this time from 6% to 5%.
Then it delivered a bigger blow: A new provision declared that developers who didn’t want large density increases no longer had to fulfill even that 5% requirement.
Instead, they could select a “partial incentive” option, one that required a minimum of just 2.5% of their units to be workforce housing.
For many developments, effectively, the minimum requirement was being lowered from 6% to 2.5% – a 42% drop.
It was the last time the commission would make a major change to the program’s minimum requirements. It was approved unanimously at a zoning meeting, with no discussion, debate or public explanation.
Building industry starts to boom, but workforce housing rules don’t change
In the following years, workforce housing units started to come online.
By 2012, Wellington Club apartments, a gated rental apartment community on State Road 7 southeast of Wellington, became one of the first and largest, offering what would become 154 workforce housing apartments to qualifying residents.
Today, some residents in its workforce apartments can still rent twobedroom units for as little as $1,200 or $1,300 a month, significantly less than rents in similar apartments.
Other projects followed. Blu Atlantic Apartments, a roughly 170-unit complex west of Delray Beach, contributed 62 workforce units. Elysium at Osprey Oaks, a roughly 200-unit complex west of Lantana, built 37.
The housing market was recovering. Home values and rents were rising, and unemployment continued to fall.
But the changes that weakened the workforce housing program, justified by a once-collapsed housing market, remained in place. As builders moved forward with development plans, the effects began to be felt.
Over the next several years, dozens of new development proposals were approved.
But because of the 2010 reductions, far fewer workforce units were being required.
This new benefit was even being provided retroactively. Several developers already assigned workforce-housing obligations for their projects found they could go back and have them reduced by more than half.
At the Colony Reserve apartments west of Lantana, the project’s developer was approved in 2008 to build 221 units, with help from incentives from the program that allowed extra density.
In exchange, the developer had to agree to set aside 51 units as workforce housing.
After the commission’s 2010 changes, the developer resubmitted the plans, making use of the new “partial incentive” option that allowed workforce housing requirements as low as 2.5%. In 2014 the project won approval to build slightly fewer units — 191 instead of 221 — but with a dramatically smaller number of workforce housing units: 11 instead of 53.
The project had shrunk by 13%. But under the commission’s new rules, the workforce-housing requirements had dropped by nearly 80%.
It was a pattern that repeated for much of the decade. All told, developers have used the “partial incentive” provision to reduce their workforce housing obligations by more than 300 units, The Post found.
Arden: One of the biggest squanderings
One of the biggest losses came at Arden, a 2,334-home development being built west of Lion Country Safari and Royal Palm Beach.
Under the pre-2010 rules, the development of $600,000 and $700,000 homes could have generated 280 workforce housing units through the county program.
Instead, it generated none. The reason: In 2016, Lennar opted for the partial incentive in its plans to build 2,000 units on the site.
Later, county commissioners raised the number of permitted units by 334 while requiring only 20% of the extra homes to be workforce units. Under the pre-2010 rules, the requirement could have been double that amount.
Instead of 280 workforce units, the project was assigned an obligation of 127.
Then commissioners disregarded administrators’ recommendation to require Arden’s units be built on site.
They decided, instead, that Lennar could fulfill the obligation by building off-site or simply paying an opt-out fee.
Lennar chose the fee. Rather than build, Arden’s developers wrote checks. Of the 2,334 homes planned for Arden, not one will be a workforce housing unit.
Developers told county they didn’t need what it was offering
Today, county officials struggle to explain why the partial-incentive option has been kept in place for developers years after the economy fully recovered and the demand for housing surged.
“The policy decision that was made at the time (in 2010) was because the economy was bad,” County Administrator Verdenia Baker said in an interview. “It didn’t necessarily come back because we wanted to see where the economy was going.”
But it was also a concession to developers’ general resistance to creating workforce housing even when they weren’t asking for the “bonus” of extra density in exchange, said Assistant County Administrator Patrick Rutter, who oversees the program.
“There was feedback and pushback at the time,” he said, “and it came back to, ‘We don’t need this stuff you’re offering.’” “’You’re not giving me a lot so you should be asking less of me’ is the simplest way to explain it,” he said.
Rutter cited another factor: a 2019 state law that says local governments that require developers to build affordable housing must “fully offset all costs” by providing extra benefits, such as allowing more density or waiving fees.
But that law did not take effect until nearly a decade after the 2010 changes, and experts say in any case it does not prevent requiring workforce-housing units.
Kevin Ratterree, a GL Homes vice president who took part in the discussions that preceded the 2010 changes, said developers argued long before the law was signed that it was unfair to make them provide workforce-housing units if they weren’t getting extra benefits.
“What has the county provided to you to fully offset the cost of you being obligated (to build) those workforce housing units?” he said.
Opt-out fees collected by county couldn’t be used to build housing
While the loosening of those requirements meant hundreds of lost opportunities to create workforce housing, something else was leading to the loss of hundreds more.
A loophole that let developers pay an opt-out fee instead of building a workforce housing unit was meant as an escape hatch for developers who, for logistical reasons, couldn’t construct the housing on site or find another place to do so.
But it was being used more widely than many county officials wanted.
To date, developers have paid fees to avoid constructing more than 300 workforce housing units, records show. It’s a number likely to increase significantly as more projects progress.
The fees were originally conceived as a way to pool money for other projects to build workforce housing.
But that’s not the way the county used them.
As the construction industry revved up in the mid-2010’s, money from the opt-out payments piled up quickly in a special account. By 2021, it had ballooned to $5 million. None of it was used to build housing.
Instead, the county limited the money to covering down payments for residents who qualified to buy the relatively few workforce-housing units put up for sale by developers.
It was a purpose with little demand, as the number of for-sale units has remained low since the program’s inception. To date, fewer than 130 for-sale units have been sold, records show.
County executives and commissioners now acknowledge the money should have been put to better use, but they blame each other for the failure to do so sooner.
Administrators could use the money only for down-payment assistance because, until earlier this year, it was the only use commissioners had permitted, said Jonathan Brown, the county’s housing and economic development director.
Commissioner Mack Bernard
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countered, though, that it was only this year, as commissioners grilled administrators about the workforce housing program’s performance, that they learned the fund “wasn’t used to create new units.”
“As commissioners, sometimes there are piecemeal decisions,” he said in an interview, “and sometimes we don’t get the full picture. It’s when we’re trying to get a full picture that we uncover that.”
Developers find another loophole and commissioners go along
Workforce housing obligations weren’t dodged solely through weakened rules and opt-out provisions. Developers found another workaround: convincing commissioners to let them increase the permitted density on their land by rezoning it instead of using the program’s “density bonuses.”
When Lennar wanted to build Gulfstream Preserve west of Lake Worth, it sought to increase the number of units permitted on the site.
Under the workforce housing program, doing so with a density bonus would have required them to set aside 30% of the extra units in exchange.
So the company asked the county commission to rezone the land instead.
County commissioners agreed. In exchange, commissioners required in 2009 that just 15% of the units be workforce housing — half of what would have been required by the program’s density bonus.
Instead of 74 units, Gulfstream Preserve produced 37.
When GL Homes wanted to build a housing development on an old municipal golf course near Boca Raton, it sought in 2018 to have the land rezoned.
By then, county administrators had settled on a policy of recommending that such density increases only be approved with a requirement that at least 25% of the extra units be workforce housing.
But at the golf course, commissioners required just 10% in exchange for rezoning the land, persuaded by GL Homes’ argument that the normal requirements shouldn’t apply because the rezoning was to convert it from park land.
Instead of 131 workforce units, GL Homes was required to produce 53.
The single largest loss of potential workforce housing units came in 2016, when county commissioners approved the massive Indian Trail Groves development west of The Acreage.
The 3,900 GL Homes project was made possible by county commissioners’ decision to rezone the land from an agricultural area to a low-density residential neighborhood. Under the county’s general practice at the time, such a rezoning would have required 25% of the units to be built and sold as workforce housing.
County commissioners, though, disregarded the typical requirements. Rather than 25%, they asked GL Homes to provide just 10% of the units as workforce housing.
Instead of 974 workforce unit “obligations,” the project will produce 390, a loss of 584.
Palm Beach County’s program one of few that’s mandatory
Palm Beach County remains one of relatively few local governments in Florida to have a mandatory affordablehousing program. Today, Jupiter and Delray Beach appear to be the only other local governments in the county to implement them. Several other cities, including West Palm Beach and Palm Beach Gardens, have optional programs that don’t require workforce housing but encourage it by allowing more units in exchange.
Rutter, who has been involved in the program’s management since its creation, said criticisms of the decisions to water down the program miss that point.
“In the toughest of times that the world was in back then, we kept our program in place,” he said. “Our board did not drop that, and that’s a real crucial point. That would have been the greater failure.”
But the years of changes had left it one of the weakest of its kind in the country, according to experts and a national survey of municipal housing policies.
The minimum building requirements are different in every municipality, but “you’re going to find they pretty much vary from a low of 10% to a high of 20%,” said Jaimie Ross, president of the Florida Housing Coalition, a nonprofit that advocates for policies to create more and better housing.
Tallahassee, one of the first cities in Florida to put in place such a program, has a 10% minimum requirement. Jupiter’s is 6%. Montgomery County’s is 12.5%, while Fairfax County, Virginia’s is 8% for rental projects and 12.5% for forsale projects.
By 2015, the housing market was booming. Affordable housing was becoming an increasing concern.
And county officials once again began deliberating changes to the program.
Administrators hired a consultant to study the issue. It was debated at county commission meetings and housing summits.
More consequentially, it was debated in meetings between administrators and developers.
But for years, no changes occurred. There were calls of concern about the consequences of allowing developers to opt out of building so easily. Burdick, the county commissioner, warned that it was costing too many opportunities to provide affordable housing.
“When are we going to say no to developers?” she asked in 2015. “When do we say no to private interests? We have the ability and control to provide workforce housing.”
A warning came even from a landuse lawyer, who told commissioners at a public meeting that the opt-out option should be done away with.
“If you’re going to get the incentive, you have to build the housing,” the lawyer, F. Martin Perry, suggested. “You can’t buy out of it. I’ll be chastised for making that statement, but the reality is it’s not working and you need to try some different things here.”
County chief: ‘We acquiesced’ to developers’ wishes
By 2018, county administrators had come up with a potential solution, one that would have boosted the program’s productivity significantly: raising the minimum housing set-aside from 2.5% to 10%.
If approved, the change would – in many cases – at least quadruple the amount of workforce housing units created.
The proposal was vetted and approved by the county’s paid consultant, BAE Urban Economics, which concluded it would not prevent developers from earning a profit on their projects.
But developers hated it. And in private conversations with administrators, they let them know.
Before even floating it publicly, administrators agreed to nix the proposal. It was never brought up for debate at a public meeting, nor offered up for input from the public.
County administrators, by their own admission, had “acquiesced” to developers.
“We dropped the 10% flat across the board because they (developers) made some very good points,” Baker told commissioners in 2018. “So we acquiesced to that and left it as it is today.”
Asked in an interview about her decision, Baker acknowledged change would have benefited the program.
But she said that getting reforms through the county commission was easier if a “compromise” could be worked out beforehand with industry leaders.
“I try to bring programs to the board where it is still in the best interest of the public but I’m not at adamant odds with whom I’m working with,” she said.
After four years of debate and delay, administrators in 2019 finally proposed, and won approval for, a new set of changes. They included no increase in the minimum number of required units.Instead, they created more loopholes.
Hoping to entice developers to build more workforce units inside their developments (instead of using the buy-out option or building off-site), administrators decided to reduce the requirement for units built on site.
A developer building townhomes for sale on site would now have to produce 10% fewer than before. A developer producing single-family homes on site would produce 20% fewer.
The changes also raised the opt-out fees, the first increase since the program’s creation more than a decade earlier. But the change primarily brought the fees to their original inflation-adjusted levels. Otherwise, they remained intact.
Developers had commissioners’ ears, official says
From its creation in 2006 through this summer, the workforce housing program produced about 920 rental apartments and 128 townhouses or homes sold, records show.
That’s fewer than 70 housing units a year, though new units continue to be constructed.
Another roughly 2,000 “obligations” had been created under plans developers submitted in past years, but it remains to be seen how many will be built.
Alterman, heavily involved in the program’s creation as the county’s planning, zoning and building director, called its performance disappointing.
“I think the staff really wanted a lot more than what came out of it,” she said.
She said, though, that county staff faced a difficult task in persuading commissioners to be more demanding of developers.
Developers, she said, had the financial means and expertise to make their case persuasively to commissioners.
“It was having the commissioners’ ear, very definitely,” Alterman said. “I can actually recall going in on most topics and staff would brief commissioners about what was going on, and then you’d see developers in the waiting room waiting to see the same commissioners, sometimes after we came in and sometimes before we came in.”
At the same time, very few individuals or groups besides developers had enough vested interest or understanding of the complex workforce-housing rules to advocate for stricter requirements.
“They were the ones whose livelihood depended on building,” Alterman said. “They were the ones who built Palm Beach County, who influenced how it looked. So they had a very large stake. In my opinion the other constituencies were not necessarily listened to or heard.”
‘It would be a big help if they opened up more homes for people like myself’
Today, people who meet the income qualifications can apply for one of the discounted apartments through the complexes’ property managers.
To buy homes, people must apply to the county government, which then approves them if they meet the income
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qualifications. Many who are approved receive assistance to help cover the down payment.
But even though the program is littleknown, it has far more applicants than homes on offer. Of the 314 people approved through May, just 121 had been able to purchase a home, records show.
For those lucky few, the offer can be a great deal.
Frederick, the Forest Hill High chorus director, was in his 40s and tired of renting. But by 2019, fewer and fewer modern homes were in his price range.
He heard about the county’s program through a relative and applied. He was approved and, to be eligible, took an eight-hour course on the steps to homeownership.
In March 2020, he bought a new twobedroom townhouse in the Colony Reserve development for $204,000, one he said was perfect for his living needs. Zillow.com estimates its current value at more than $300,000.
“I didn’t get to choose, but I got a great lot,” he said.
“I’m in a house because of the program.”
Most applicants are less fortunate.
A school district special-education specialist who applied was deemed eligible to buy a home and was told the units would be given out on a firstcome, first-served basis.
But there were so many applicants, she said, that the developer turned the process into a lottery. Her number didn’t come up.
“The end of the story is I did not get a home,” said the specialist, who asked that her name not be used because she is employed by a public agency. “I feel like it would be a big help if they opened up more homes for people like myself.”
The program is under another round of review this year, though county officials say changes have become less of a focus.
Instead, county leaders have been moving to shift the burden of creating workforce housing from developers to taxpayers.
If voters in November approve a $200 million housing bond placed on the ballot by county commissioners, it will provide money that supporters say could build 20,000 new affordable housing units over 10 years around the county.
County leaders acknowledge that the bond will not fully resolve the county’s housing woes. No government program could.
But Bernard, the county commissioner, said better planning and management in past years would have meant less need today and more tools to combat the need that does exist.
“I would say we dropped the ball,” he said, “and now we have to fix the issue that we caused. And that’s why there’s a frustration from both the staff and the board, because we’ve got a crisis.”
Andrew Marra is an investigative reporter at The Palm Beach Post. email@example.com @AMarranara
h How the workforce housing program got weaker over time. 12A
h Do you qualify for workforce housing? 14A
Wellington Club apartments near Wellington offers 154 workforce housing units created through the county’s program. BILL INGRAM/PALM BEACH POST
Skeet Jernigan, president of the now-defunct Community and Economic Development Council, addressing commissioners in 2012. He said in 2006 that “the asked the de elopers to carr the entire b rden for the entire comm nit ”
Gulfstream Preserve, west of Lake Worth, produced only 37 units of workforce housing. THOMAS CORDY/PALM BEACH POST
Farm directors Carmen Franz and Tripp Eldridge weed and thin out okra plants in the master-planned Arden community west of Royal Palm Beach. One of the biggest losses of potential workforce housing came at Arden. ALLEN EYESTONE/PALM BEACH POST FILE
Palm Beach County Administrator Verdenia Baker said that after reducing workforce housing requirements during the Great Recession, “we wanted to see where the economy was going.” LANNIS WATERS/PALM BEACH POST
Palm Beach County Commissioner Mack Bernard says sometimes commissioners “don’t get the full picture” from county staffers. LANNIS WATERS/PALM BEACH POST
“When are we going to say no to developers?” Former Palm Beach County Commissioner Paulette Burdick asked in 2015. BRUCE R. BENNETT/PALM BEACH POST
A public school teacher was able to buy a $204,000 townhouse in Colony Reserve through Palm Beach County’s workforce housing program. PROVIDED