Rogo In the Florida Keys

The anticipation is high regarding the future of ROGO in the Florida Keys, and we’re curious too! Islamorada has officially exhausted its building allocations, and they’re now considering what to do with a few “administrative permits.” The City of Marathon is set to deplete its allocations by mid-2024, and the county has slowed its pace, anticipating the end of ROGO in 2026.

Background

For those not familiar, the Rate of Growth Ordinance, or ROGO, was established in 1992 to ensure resident safety during hurricanes. It introduced a competitive permit allocation system, where the highest-scoring applications receive building permits. If you want a deeper understanding of ROGO, check out our previous posts for more detailed information.

Legal Battles Ahead

For a while now, the county and other municipalities have been aware that the conclusion of ROGO would trigger lawsuits. Numerous legal challenges could emerge, potentially costing millions or even billions of dollars. The pressing question is: who foots the bill for these lawsuits—the state, the county, or the cities? In 2019, proposed legislation recommended a 50-50 split between the state and local municipalities for compensation in successful takings cases.

Latest Update on ROGO

If you missed it, Keys Weekly recently published an article following a County Commissioners meeting. Check out the link for the full read.

In essence, the article delves into the Florida Department of Commerce’s exploration of changes to hurricane evacuation models, potentially resulting in 8,000 new building permits in the Florida Keys.

If the state issues these additional permits, allowing construction on all lots, it could significantly impact the local real estate market!

Transferable building rights in Marathon are currently at an all-time high, costing $200,000. However, with transfer fees and closing costs factored in, buyers are paying around $275,000 for a building allocation today.

Consider the effort people have put into obtaining allocations; it has become incredibly competitive in recent years. All the extra expenses individuals incurred to gain more points might now seem like a wasted investment!

Our Prediction for ROGO

This is what I think will happen. It’s just my opinion and thoughts, so please make your decision based on what you want to do!

I think that the state and the county don’t currently have, and will not have, the funds to take on all the lawsuits that are about to occur once ROGO officially stops.

ROGO was designed for life safety reasons, but we all know how government works, and money talks. Due to financial reasons, I think the state will end up issuing about 4,000 more allocations. Even though, in my prediction, it’s still only half, this number of allocations will still disrupt the real estate market.

Right now, it has been extremely hard to sell vacant land because every buyer is worried they won’t be able to build on the lot. The value of land has gone down, which is crazy to think about because here in the Keys, land is so valuable. In Marathon, there was a sale of a vacant lot with an allocation for $225,000. If the allocation is worth $200,000, then that would make the land only worth $25,000.

If the state issues more permits, then the cost of a building allocation will go down, and the land value will go up.

As previously noted, sellers are currently earning around $200,000 for a building allocation. If I had an additional allocation to sell, I would prefer to sell it soon before the county distributes these new allocations, causing a decrease in their value.

If I had some extra cash, I would try to buy vacant land. Many people and other real estate agents are not paying attention to this, so prices are low right now for land. Yes, there is still some risk to this as none of this is guaranteed. As it sits right now, getting a permit on a vacant lot is extremely hard. But they say the bigger the risk, the bigger the reward.

If I owned a vacant lot and didn’t need to sell or wanted to invest in something else, I would keep my vacant lot for a little longer to see what happens. However, there is some risk in this; if they do end ROGO, you’ll end up having to go through the lawsuit process.

Alright so that’s the scoop on the ROGO rollercoaster in the Florida Keys!  What do you think is going to happen? 

Prumo & Carden

Amy’s success as a Florida Keys Elite Agent and Diamond Award Winner is truly awe-inspiring. With over a decade of experience in the real estate industry, she has cemented her position as a trailblazer and pioneer. Her unwavering commitment to excellence is reflected in her impressive academic credentials, which include a Master’s Degree in Marketing and Management. Amy’s marketing programs are simply unmatched, ensuring that your property is showcased to the widest audience of potential buyers, thus guaranteeing maximum exposure.

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