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The Hometown Heroes Program: Noble Intent, Hidden Costs, and Who it Really Leaves Behind – Part 4

    In the final part of this series, I examine the true cost of the Hometown Heroes Program since its inception. While the program is frequently described as “cost-neutral” on the basis that funds are eventually repaid, this characterization ignores the substantial economic cost borne by the State of Florida in the form of foregone investment returns.

    When public funds are deployed as 0% interest, non-amortizing, deferred loans, the state gives up the opportunity to earn a return on that money until it is repaid. This cost accumulates from the day funds are disbursed. The analysis below quantifies that cost.

Assumptions Used in This Analysis

To measure the present fiscal impact of the program, the following assumptions were applied:

  1. Grants Are Disbursed at the Beginning of Each Program Year
    Funds issued in 2022 are assumed to have been released at the start of 2022, and similarly for subsequent years.
  2. No Repayment Has Occurred Yet
    Since the loans are repaid only upon sale or refinance, we have assumed that each loan is repaid in 7 years from its origination date.
  3. Opportunity Cost of Capital = 4.25%
    This represents a reasonable long-term rate of return that the State of Florida could have earned had funds been invested in at a risk-free rate.  
  4. Costs Are Measured as of December 31, 2025
    For each year’s grant, the cost is calculated as the compounded value of missed returns from the disbursement date to the end of 2025.
Methodology

For each year:

  1. The State of Florida disbursed the grant money.
  2. Had the State of Florida invested the money at 4.25%, it would have earned compounded returns.
  3. Because these loans earn 0%, the difference between the potential value and the original amount represents the foregone earnings.
  4. By calculating the present value of the foregone earnings and discounting it back to today’s terms, we arrive at the cost of the program since its inception in today’s money.

 Fiscal Cost of the Program to Date

 

Interpretation of the Table

This table calculates:

1. The foregone earnings Florida has missed out on so far

Since each dollar deployed earns 0% interest, the State of Florida forfeits any return it could have generated elsewhere.

2. The cost grows with time

Funds disbursed earlier (e.g., 2022) have had more time to accumulate lost returns.

3. The total cost as of now is $95 million

This represents the actual economic cost incurred to date—not the total eventual cost and not the FV of future repayments.

What This Means for Florida Taxpayers

    Even though the Hometown Heroes loans are technically repaid later, the State of Florida effectively subsidizes each loan in the amount of the foregone return. These costs:

  • Reduce fiscal flexibility
  • Represent real resources that could have funded infrastructure, salaries, or rental assistance
  • Accumulate every year repayment does not occur

    A program disbursing $350 million to date has already created $95 million in foregone earnings, strictly from the lack of interest or investment returns.

Conclusion

    The Hometown Heroes Program is often praised for being “budget neutral” because the money eventually returns to the State. However, when analyzed through an economic lens, the program imposes substantial and ongoing fiscal costs.

As of the end of 2025, the State of Florida has absorbed:

$95 Million in foregone returns.

    These losses represent real dollars the State of Florida could have earned had the funds been deployed differently. This analysis focused solely on the opportunity cost of the program’s funds, and ignored any of the additional administrative costs that are required to keep the program running. Any evaluation of the program’s long-term viability should incorporate these fiscal impacts alongside its distributive, structural, and economic shortcomings discussed earlier in this series.

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