Sanibel Faces Stalemate Over $10M Affordable Housing Grant

by SC Reporter Emilie Alfino

The Sanibel City Council’s agenda for its November 3, 2026, meeting included several Below Market Rate Housing issues. The City of Sanibel must bring its affordable housing program into compliance with the Fair Housing Act.

“We have compliance-related concerns with the FHS. It’s incumbent upon us to act on that quickly,” said City Attorney John Agnew.

There is also the matter of the nearly $10 million grant, which cannot be claimed while the parties disagree on the terms of its issuance, if it is issued at all.

The disagreement is over who will be the sub-recipient. Lee County wants the City of Sanibel in that role; Sanibel says absolutely not. Community Housing & Resources is willing, but the County rejects the idea. (A sub-recipient is essentially a pass-through agency but with strict compliance and other requirements.)

“I believe the County is not going to go forward with the grant,” said Council Member Laura DeBruce. “The only way Riverview II goes forward is if the City agrees to be sub-recipient.”

The City has vehemently opposed taking on the sub-recipient role. CHR is willing, however, to act as sub-recipient.

“I find this very distressing,” said DeBruce. “I think at the [BOCC] meeting today, not only did the County Commissioners say CHR was not financially worthy, but they didn’t think the City of Sanibel was.”

DeBruce also said the Board of County Commissioners made dismissive comments about whether the City of Sanibel, as currently constituted in its leadership, was financially sound and able to handle the CHR’s potential liability.

DeBruce had some respectful criticisms of Sanibel Mayor Mike Miller regarding negotiations with the BOCC. The mayor had volunteered to represent City Council with the County Commissioners, rather than have each Council member contact County Commissioners directly.

“Some of us found out and were quite distressed that you had attended one or two of those meetings with CHR,” DeBruce said to the mayor. “Which, in my mind, was not exactly in the interest of the City Council or what we would have wanted.

“You also, when we asked about the meetings, you said you didn’t want to tell us something about these meetings,” DeBruce continued. “Out of great deference to you, I didn’t push it; no one pushed it. We allowed you not to tell us about these meetings. But I think it’s come to almost a crisis point, and I do think we need to hear about these meetings.

“Apparently, at today’s [BOCC] meeting, Commissioner Kevin Ruane mentioned he spoke to you yesterday. If it was in your capacity as a private citizen, in that case, that’s certainly your business. But if it was in your capacity as our mayor, representing all of us, I think it’s important information that we should hear.

“Because I find this very distressing. I think at the [BOCC] meeting today, not only did the County Commissioners say CHR was not financially worthy, but that they didn’t think the City of Sanibel was,” DeBruce said.

DeBruce continued that Commissioners made dismissive comments about whether the City of Sanibel, as currently constituted in its leadership, was financially sound and able to handle the CHR’s potential liability.

Mayor Miller explained that in his meetings with the BOCC and CHR, everyone was on the same page: the City of Sanibel would not serve as sub-recipient, and CHR wanted to serve in that role. Miller said he had met with four commissioners, some with CHR. He stated, however, that he was still reluctant to go into specifics about his meetings with commissioners.

“Regarding ‘what Commissioner said what,’ I wasn’t going into specifics,” the mayor said.

Council member Holly Smith said, “I think it’s extremely important that we know what these conversations were. When we found out it was CHR, (Sanibel Captiva Community) Bank, and maybe six other people in the room, that has a different perspective. It did make me uncomfortable.”

“I don’t know why [the BOCC] is kicking the can down the road,” DeBruce added. “It feels especially ironic that we were told in March they had to make this happen by July. Everyone in the audience came up to say, ‘Take the money.’

“I feel very manipulated by that, by all of this. I feel very strongly in the best fiscal interests of our residents; there’s no way the City of Sanibel should be the sub-recipient for this,” DeBruce concluded.

To give one possibility, if CHR made an administrative error resulting in a HUD (Housing and Urban Development, the grantor working through the BOCC) audit finding, Sanibel taxpayers would be legally obligated to repay HUD millions of dollars.

The City of Sanibel would then be forced to try and recoup those funds from a local non-profit, creating an unacceptable risk to the municipal budget. Mayor Miller told DeBruce she will have another opportunity to vote on it.

“The decision is ultimately up to the BOCC,” said City Manager Dana Souza. “They want it to be a municipal partner; they want it to be us.”

Re-Working the Affordable Housing Program

At the City’s request, outside counsel, Klein Hornig LLP (KH), reviewed the City’s existing Below Market Rate Housing (BMRH) regulations to ensure compliance with applicable federal and state fair housing laws.

After lengthy discussion at a joint workshop, staff was directed to bring to the Planning Commission a further revised version as well as any other changes to LDC Chapter 102 that appeared necessary or appropriate. The matter is now before City Council.

The BMRH program has a dual intent: providing rental housing for residents of very low, low, and moderate incomes and for workforce housing.

Qualification is entirely rewritten:
i. requires all applicants meet certain “tenant selection criteria” that include Sanibel employment-related requirements;
ii. tenant selection criteria establish priorities for housing, with full-time employment (35 or more hours/week) on Sanibel occupying the highest priorities, followed by part-time employment (20 or more hours/week) on Sanibel, followed by those ready, willing, and able to seek employment on Sanibel;
iii. provides that applicants with part-time employment only become eligible to rent if a habitable unit remains vacant more than 90 days and that applicants without current Sanibel employment but who are ready, willing, and able to seek such employment only become eligible if a habitable unit remains vacant for more than 180 days;
iv. eliminates the preference category for seniors;
v. deletes the points-based preference system in favor of a first-come, first-served system;
vi. provides that if all units are occupied, the wait list is established by the priorities of the tenant selection criteria;
vii. provides that, all else being equal, a household that includes a minor child shall have housing priority over a household that does not include a minor child;
viii. annual review, exempts existing senior housing tenants from work requirements for continuing housing eligibility
ix. requires leases to include a provision that each BMRH tenant will be reevaluated for continued eligibility

Discussion ensued. For example, preference may be given to essential city employees, but should it be given to nonessential city employees? On the one hand, that could benefit the community (just 11 percent of the City workforce live on the island).

Consider that the City contributes $400,000 to CHR. Should that be fair consideration to give employees a preference?

“They should be on the same footing,” said DeBruce. “But companies donating land get consideration?”

“I don’t think there should be any preferences,” said Council member Holly Smith.

The council discussed the current standard for permitting employees who work on Captiva but for a Sanibel-based business (such as Tween Waters). For example, Bailey’s businesses don’t qualify because they are two different businesses, rather than one being the extension of the other. Laura DeBruce, however, has businesses on both islands and would qualify.

Council members John Henshaw and Holly Smith prefer to keep the standard to Sanibel only.

A provision was added for people with disabilities. “I want to make sure they have an opportunity to occupy BMRH,” Mayor Mike Miller said out of the outset. Reasonable accommodation will be made for people with disabilities.

Council members voted NOT to move this forward to first reading and instead are seeking a date for a special Council meeting to address these issues.