Can I advertise for my next year's funds in May, so I can take applications in June and then provide assistance on July 1 when I start to get more funds from the next allocation year?

Yes you can. The advertisement requirements are outlined in the Statute and in greater detail in the Rule: 67-37.005 (6)(a).

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Do I have to advertise if the city later funds a strategy that is currently unfunded, like our disaster strategy?

Yes, you should advertise. When you first advertise upon receiving your new SHIP allocation in July, you can advertise that the city has a disaster strategy that will be funded pending a disaster or need. This will fulfill the requirement in Florida Statutes:
"The county or eligible municipality or its administrative representative shall advertise the notice of funding availability in a newspaper of general circulation and periodicals serving ethnic and diverse neighborhoods, at least 30 days before the beginning of the application period. If no funding is available due to a waiting list, no notice of funding availability is required." Section 420.9075 (3)(b)Florida Statutes

However, even in this case, you might still want to further advertise and inform your community about the disaster strategy once a disaster occurs.

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I know that I have to advertise the availability of SHIP funds for a specific housing strategy before I can begin to provide SHIP assistance from that strategy. My city has a disaster recovery strategy that is currently unfunded. Do I have to advertise this strategy if my city later funds the strategy during a disaster?

Yes, each of your strategies must comply with the advertising requirements outlined in Section 420.9075 (3)(b) of the Florida Statutes, which states, "the county or eligible municipality or its administrative representative shall advertise the notice of funding availability in a newspaper of general circulation and periodicals serving ethnic and diverse neighborhoods, at least 30 days before the beginning of the application period." Naturally, you do not want to delay the provision of SHIP assistance during a time of disaster. Therefore, you should advertise that the city has a disaster strategy at the time when you initially advertise the availability of your SHIP funds. The advertisement should indicated that the disaster is currently unfunded, but will be funded during a disaster. This will fulfill the 30 advertising requirement outlined in Florida Statutes. Even in this case, you should still advertise the availability of disaster recovery funds to notify income eligible citizens of this resource. Once a disaster occurs, it is a good idea to further advertise to let citizens know about this resource.

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How does the Sunshine Law apply to our SHIP advisory committees?

When dealing with advisory committees it is very important to keep in mind the requirements of Florida's open meetings laws. Any Board of County Commission appointed committee that is part of a fact finding commission, or any board or committee that has final decision making authority is covered by these laws. There is a strong legislative and judicial presumption in favor of openness. If you have any questions about these requirements, consult with your city attorney, county attorney, or other appropriate legal counsel.

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Are relocation expenses eligible SHIP costs? Is there a limit on the amount of relocation costs per family we can spend, or are there any standards for what should be spent?

Yes, relocation expenses are eligible costs under the SHIP program if expended in conjunction with a rehab assistance program. What you spend for temporary relocation will depend upon your local policies. You should decide in advance what will be paid as reasonable and customary in terms of temporary shelter, moving expenses, etc. and incorporate it as policy so as to avoid potential abuses.

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Can I help an applicant more than once with the SHIP program?

There is nothing in the SHIP rule or statute that specifically addresses this issue. It is a local policy decision. Many local communities have added a provision to their LHAP noting that an applicant cannot be assisted more than once with the SHIP program. If only one-time assistance is available, however, it is important to consider if the SHIP assistance provided is thorough and fully addresses an applicant’s needs. If an applicant purchases an existing home, for example, are there resources available to make needed repairs, or will the applicant be back soon to apply for assistance from your rehabilitation strategy. Similarly, when providing rehabilitation services, review the initial home inspection and consider whether repair priorities—including health hazard concerns, code violations, upgrading of electrical systems, and even energy efficiency—can be addressed with one-time assistance. As you consider limiting applicants to one-time assistance, you may need to increase your per unit subsidy level and other policies in order to ensure that a one-time recipient of services has been comprehensively assisted. This issue and many other policy considerations are discussed in two of the Coalition’s workshops entitled “A Quantitative Analysis of the SHIP Program” and “Enhancing Your Housing Strategies”. Both will be offered during the Coalition’s upcoming of cycle of workshops. Refer to the workshop section of the Coalition’s website, www.flhousing.org, for details.

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Can SHIP funds be used for demolition and site clearance?

Yes, as long as an eligible unit which serves an eligible household is put on the site.The local lender has notified one of our SHIP awardees that there is a shortage in his escrow account. The notice was given after closing and the lender now wants to increase the monthly payment to cover the shortage. It appears as if the lender greatly underestimated the amount of taxes and insurance needed for escrow, but the additional amount on the mortgage payment will place an undue burden on the homeowner.

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Can SHIP funds be used to pay for a shortage in the escrow account for a homebuyer?

SHIP funds can be used to pay for any and all costs associated with closing, unless otherwise specified in the local HAP. Since the closing has already occurred, it would be difficult to award these funds without another closing. Minimum escrow balances are mandated by Federal laws and/or the mortgage agreements. Since the lender made the error, you should encourage the homeowner to negotiate a more reasonable amount for escrow. Since the increased monthly mortgage payment may result in putting the homeowner in a potential default position on the first mortgage, the lender should be agreeable to alternative arrangements.

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Is the installation of central air conditioning an eligible SHIP expense?

Yes. In most parts of Florida air conditioning is a necessity for the health and safety of the occupants living in the units. Previous experience with housing programs that do not allow for the installation of air conditioning has shown that people will find a way to cool their home. This often means the purchase of very old, very inefficient window units. These window air conditioners can greatly increase a family's monthly utility bills, drastically reducing a family's ability to meet their other monthly bills.

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Funds have been encumbered for housing rehabilitation, but not completely spent. The housing activity is not complete. Are the funds expended?

No, funds are only encumbered until the rehabilitation activities are completed, the work inspected, the contractor paid, and the unit occupied by an eligible person. Refer to the definition of “expenditure” in the SHIP Rule, 67-37.002 (8), which notes that funds are considered expended "when the project is completed as evidenced by documentation of final payment to the contractor and release of all lien waivers, issuance of the certificate of occupancy by the local building department, and occupancy by an eligible person or eligible household.”

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Please explain: "First Dollar In, First Dollar Out?"

The SHIP rule requires that all program funds be spent within 24 months from the end of the applicable State fiscal year. Exceptions to this are very limited. Many communities have Housing Assistance Plans that continue the same strategies from year to year. In these instances, SHIP administrators should consider spending all of the money in a given strategy from a given year before moving on to the subsequent years' funds allocated to that strategy.

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There are leftover funds in an escrow account that were not used on a project. The funds were allocated from the 2000/2001 cycle. The bank wants to give the funds back to the SHIP program. Can we take the funds, and what should we do with them?

The bank should cut the County a check for the leftover funds and the funds need to be re-allocated to a SHIP recipient, to be spent on eligible activities within the expenditure deadline of three years from the date when your community first started receiving its allocation. In this case, for example, the 2000/2001 allocation was first received on July 1, 2000 and must be expended no later than June 30, 2003.

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What are the time limits on expenditure of interest earned on our local trust fund account?

Interest earned falls under the same time limits as all other SHIP funds. The interest earned must be spent within 24 months from the end of the applicable State fiscal year in which the interest was earned. The "applicable State fiscal year" is determined by when the interest was earned. For example, an agency currently has 1994-95 funds that have been encumbered but not yet expended. The interest earned on this money in May 1996 would have to be spent by June 30, 1998 (24 months from the end of the applicable State fiscal year). Even though his interest was earned on 1994-95 funds, it was not earned until fiscal year 1996. Therefore the appropriate State fiscal year is the year ending June 30, 1996.

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A lender is requiring a purchase assistance applicant to have a family member co-sign on the first mortgage loan. The co-signer is simply doing this to aid the applicant; he will not live in the home being purchased. Is this a permitted practice? Should I count the co-signer as a household member, count his income, and have him sign the SHIP mortgage?

There is nothing in the SHIP statute or rule that prohibits co-signers. If the co-signer is not going to reside in the home being purchased, then he or she is not considered a household member for purposes of determining household size or annual income. Have the co-signer sign the SHIP mortgage.

There is an exception to this policy if the co-signer is the applicant’s spouse—even if the applicant is separated from the spouse. Florida law does not legally recognize separation. Unless legally divorced, Florida=s joint property laws will likely entitle the estranged spouse to legal claim of ownership of the new house purchased. For this reason, most lending institutions will require the spouse to sign the mortgage, and you should require the estranged spouse to sign your SHIP mortgage. In your role as an advocate for the applicant, you should discuss the implications of the joint property laws and encourage the applicant to seek legal assistance on this issue before purchasing a home.

You must still determine, however, whether or not to count the estranged spouse as a household member and whether to count the person’s income. In some situations, it seems clear that the applicant has no plan to reunite with the estranged spouse and the separation is permanent. The compliance division at the Florida Housing Finance Corporation has indicated that the local housing administrator may make the decision about a permanent separation. Obtain as many details as possible to document the SHIP recipient. In cases of permanent separation, the applicant and the estranged spouse maintain separate residences and file separate tax returns. With adequate documentation, the estranged spouse does not need to be counted in household size and his or her income does not need to be included in household income. The Florida Housing Coalition and the compliance division at the Florida Housing Finance Corporation (call 850 488-4197) are available for consultation on a case by case basis.

Another important issue must be considered. Check who owns the home once it is purchased. Naturally, the co-signer’s name and signature will be included on the first mortgage, since the co-signer is assuring the first mortgage provider that he or she will assume mortgage payments if the applicant fails to stay current on the mortgage. However, the co-signer should not be included on the title to the house. Ownership of the house must be fully in the SHIP applicant’s name.

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Does the SHIP Rule prohibit providing assistance to a person who is obtaining a first mortgage from an individual rather than through a lending institution?

No, the SHIP Rule does not expressly require that the lender be institutional in nature, and allows for this lending arrangement, known as "Purchase Money Mortgages." Please see Stan Fitterman's article in this issue of the Housing News Network entitled "Owner-Financing: What It Is, How It Works, and Why You Should Avoid It." In a traditional lending situation the lender or first mortgage holder has the responsibility of ensuring that the applicant has the ability to pay the monthly payments on the mortgage, as well as numerous other responsibilities, including arranging for insurance, termite inspections, surveys and doc stamps, and ensuring clear title. As you know, assuring that a low-income homebuyer can afford a monthly payment is critical to a successful affordable housing program. Without a mortgage lender in the process, however, the local jurisdiction's SHIP administrator will need to take on the above responsibilities in order to protect the low income borrower, as well as evaluate the borrower's income, assets, and ability to pay prior to approving the loan for the second mortgage for the downpayment assistance. These could prove to be burdensome tasks for a busy SHIP administrator who must, in addition to the above, verify and certify that the applicant is income-eligible to receive assistance. As stated in the SHIP act, the Legislature intends for the SHIP program to provide the maximum flexibility to local governments to determine the use of funds for housing programs, while ensuring accountability for the efficient use of public resources and guaranteeing that benefits are provided to those in need. In the spirit of the law, the Florida Housing Finance Agency Staff suggest that good, common-sense business practices be employed when awarding funds and managing your program. Should a local jurisdiction decide that "Purchase Money Mortgages" are a viable alternative to the more traditional approach, a system needs to be developed and maintained to enable the jurisdiction to take on the additional responsibilities outlined above.

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How does the SHIP Rule define first-time homebuyer?

Can a person who currently owns a mobile home but is requesting assistance to replace the mobile home be counted as a first-time homebuyer?
The SHIP Rule does not define first-time homebuyer, but leaves that definition up to each local jurisdiction. The Federal Mortgage Revenue Bond program defines a first-time homebuyer as someone who has not owned a home for the last three years. This definition can be used as a guide. Several programs also include displaced homemakers as eligible first time buyers. The HOME program defines a displaced homemaker as an adult that has not worked full time, full year in the labor force for a number of years, but has, during such years, worked primarily without renumeration to care for the home and family, and who is unemployed or underemployed and is experiencing difficulty in obtaining or upgrading employment. While SHIP funds cannot be spent on mobile homes, many communities have targeted mobile homes for replacement, and allow assistance to mobile home owners under their definition of first-time homebuyer.

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May we provide our downpayment assistance on a construction-perm loan?

Yes. If you do provide the assistance at the construction loan closing, which is before the unit is built, you cannot count funds as expended until the unit is finished and occupied.

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We have a divorced applicant who still co-owns a home with her ex-husband, even though she doesn't live in it. The divorce decree gives the home to the ex-husband, but her name is still on the mortgage and loan note. She is applying to the SHIP program for downpayment assistance. Can we consider her a first-time homebuyer, and should we give her assistance with purchasing a new home?

The SHIP Rule does not define "first-time homebuyer." The local government has the flexibility to put a definition in place, and many communities include displaced homemakers and divorced persons in their local definition. If you decide to consider a person in this situation for assistance as a first-time homebuyer, remember that if the balance of the first home is shown as a debt on her credit report, she may be responsible for the balance if something happens which prevents the ex-husband from repaying the loan amount of the first mortgage. This may result in an increase of her debt ratio and place her in a potentially dangerous situation for default on her current mortgage if she does not have enough income to cover both the original mortgage note and the mortgage amount of her current residence. Lenders consider each applicant on a case by case basis, and as a rule of thumb, if the first mortgage lender is willing to provide financing, then SHIP assistance should be considered favorably.

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What are the responsibilities of a local Housing Advisory Committee? Is my community required to have this Committee?

An Affordable Housing Advisory Committee (AHAC) is appointed by governing board of a local jurisdiction as required by Section 420.9076, F.S. Its purpose is to provide recommendations for strategies to reduce regulatory barriers to developing affordable housing in the community. The statute requires that the recommendations be presented to the local governing body, which must amend the Local Housing Assistance Plan (LHAP) to incorporate Local Housing Incentive Strategies. These strategies must be adopted within one year of adopting the LHAP. Having completed this task, the AHAC has fulfilled its statutory responsibilities and is free to be discharged from service. Many communities, however, have chosen to maintain their advisory committees and charge them with additional responsibilities. Some committees serve to review new local policies for their impact on the development of affordable housing. Other committees may work with SHIP staff to consider ways to enhance the housing strategies outlined in the Local Housing Assistance Plan. The AHAC in some communities serves as a more formalized version of the local housing partnership of lenders, builders, contractors and citizens that advises on implementation of the LHAP. It becomes an entity that provides the SHIP administrator with input and feedback from the community so that the SHIP program is highly responsive to local needs. Another way the AHAC is used is in the creation of locally adopted guidelines, policies and procedures that the SHIP staff follow to implement the housing strategies. For example, some AHACs have participated in the development of lending guidelines for a down payment assistance program. The implementation of the guidelines and policies is the responsibility of the SHIP Administrator, however. The AHAC should be exclusively advisory, and as such, an AHAC should not play an operational role.

Many communities have asked for information and clarification on the role of the local housing partnerships and the local affordable housing advisory committees within their affordable housing programs. Since the SHIP statute addresses both entities, it is easy to become confused on this issue.

Section 420.907, Florida Statutes-the SHIP statute- details specific information about the formation, powers and duties, and required membership of the affordable housing advisory committee. Advisory committee members must be appointed by local government resolution, must follow all laws related to government in the sunshine, and has as its specific statutory charge the recommendation of local housing incentive strategies to the local governing body. After the incentive strategies have been recommended, the duties of the Advisory Committee are fulfilled, and the statute makes no further requirements from the local government of the committee. Having no further responsibilities, the local government may sunset the advisory committee, or may elect to maintain the committee for the express purpose of reviewing the implementation of the incentive strategies and recommending additional incentive strategies to expedite the production of additional affordable units. The Florida Housing Finance Agency has stated that if the local government wishes to amend its incentives that were adopted in the original HIP, the advisory committee shall be a part of that process.
The Affordable Housing PartnershipWhile the presence of a locally formed affordable housing partnership is an integral part of the SHIP program, the statute gives no specific powers and duties to this partnership, but does give general information as to its membership. The legislative intent is to combine local resources to the extent that the effort will reduce the cost of producing or providing decent and affordable housing. It is important to note that the statute does not intend for the partnership to be formally constituted as a corporate body. The Legislative intent is to encourage partnerships in order to secure the benefits of cooperation of the public and private sectors and to reduce the cost of housing by effectively combining all available resources and cost-saving measures.

Implementation of Intent
Each community utilizes its partnership differently. While providing technical assistance in communities throughout the state, I have noticed that the most successful partnerships are those in which the membership is broad and inclusive and each member brings a service or product to the table which maximizes the value while reducing the cost of affordable housing within the community. I have also noticed that in many successful communities the partnership functions in an oversight capacity only, assisting with setting the direction of the program through suggesting policy to the local governing body and making specific recommendations for improving the overall program and amending the local housing assistance plan. Many of these successful partnerships may also review the internal administrative policies and procedures of the local program, and make suggestions for improvement directly to the program administrator, as well as to the local governing board. In most cases, quarterly meetings are adequate to perform these functions. In some communities, the appointed advisory committee functions as the partnership, with expanded responsibilities such as serving as a loan committee or otherwise assisting with applicant processing and other administrative duties. This type of arrangement can be counter-productive to a program, adding another layer of bureaucracy to the process. This additional layer of review often results in a poorly-run program, less production of affordable units, potential conflict of interest issues, negative attitudes and NIMBYism by the community at large and the target population, and potential program compliance problems. I would encourage local jurisdictions who have maintained their originally constituted advisory committees to utilize the individual member expertise and enthusiasm of advisory committee members through their participation in a local partnership. No matter what name is given to this partnership, it should include appropriate representation of all related industry and community interests. The statute states that the specific participants in partnership activities may vary according to the community's resources and the nature of the local housing assistance plan. Since each community's program and resources are unique, there is no Aright way to form and utilize your partnership. The Coalition stands ready to assist you with tailoring your community partnership to best meet local needs. Should the local governing board wish to maintain the original formalized affordable housing advisory committee as constituted by local resolution, this committee should actually participate as a Asub-set of the broader partnership, having the responsibility of Awatchdog over efforts to reduce regulatory barriers which have a negative impact on the overall production of affordable housing. Regardless of which approach is used, having your community partners actively participate in your affordable housing program will enhance local government efforts to provide decent, safe, and affordable housing for low-income people in your community.

What the Statute Says
The Advisory Committee: Section 420.9076, Florida Statutes, states that the governing board from each community which receives a direct distribution of funds from the state shall appoint the members of the affordable housing advisory committee by resolution, such members being specifically representative of certain industries related to affordable housing. The advisory committee will review all established policies, procedures, ordinances, land development regulations, and adopted local comprehensive plan and make specific recommendations of initiatives to the governing board to encourage or facilitate affordable housing. The appointment of the committee and the adoption of the housing incentive strategies must take place within 12 months after the original adoption of the Housing Assistance Plan.

The Partnership: Section 420.9072, F.S., states that "the Legislature finds that affordable housing is most effectively produced by combining available public and private resources to conserve and improve existing housing and provide new housing for very low, low, and moderate income households. The Legislature intends to encourage partnerships in order to secure the benefits of cooperation of the public and private sectors and to reduce the cost of housing for the target group by effectively combining all available resources and cost-saving measures." The intent is to "achieve this combination of resources by encouraging active partnerships between government, lenders, builders and developers, real estate professionals, advocates for low-income persons, and community groups to produce affordable housing and provide related services." Section 420.9075 (2)(a) F.S., further states that "each county and each eligible municipality participating in the SHIP program shall encourage the involvement of appropriate public sector entities as partners . . ." and details the specific representation of the partnership. Section 420.9075(2)(b) F.S., states that "The specific participants in partnership activities may vary according to the community's resources and the nature of the local housing assistance plan."


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An applicant has custody of her children for only part of the year. Do I count the children as part of the number of individuals in the household?

You count the children in the household if they live with the applicant for 50% or more of the year. Properly document this with school records, court documents, or other records that indicate that the child's permanent address is with the applicant. If an applicant has joint custody of his or her children for 50% of the year, you can count the children as part of the number of individuals in the household. Each parent in a joint custody arrangement has significant expenses for children. They must provide clothing, a bed and perhaps a room, food and other items for the children. For this reason, the children should be included among the members in a household.

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An increasing number of employers are not directly responding to our verification for employment forms. Instead, these employers subcontract this income verification activity to a company that requires SHIP administrators to pay a fee for receiving verification information. On occasion, I have to call a 1 (900) telephone number to contact the verification company. How should I proceed with my verification process in cases like these?

The SHIP program requires that the primary source of income eligibility documentation is third party verification forms. It should be a priority to receive third party income verification in written form or—if necessary—oral confirmation over the phone. Fortunately, SHIP administration expenses can be used to pay for any fees associated with paying for this information—including telephone fees for a (900) telephone number to contact a verification company. These fees are a cost of properly implementing the SHIP program and are, therefore, eligible administrative expenses. Some SHIP communities have had success in getting a verification company to waive this fee, since the information is being requested to assist by a “social service organization” offering assistance to an employee.

If, for some reason, you are not physically able to make a (900) telephone call from your office, other options are available. Recruit your applicant to help you. He or she may be able to appeal to a supervisor to fill out the verification form. Alternatively, you may be able to get the needed verification information by phone from the supervisor. On rare occasions, none of these options is available. As an absolute last resort, use whatever written documentation is available—including pay stubs and tax returns—to document an applicant’s employment income. You must fully document in the applicant’s file all of your attempts to obtain third party verification.

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How do we treat assets when computing annual income?

All income from assets must be added to anticipated annual income, regardless of the cash value or combined cash value of the asset(s). If the value of a single asset or combined value of multiple assets is greater than $5000, then an imputed value is taken (multiply value by 2 percent) and then compared to actual income earned - the higher number is then added to the other forms of income to get the total anticipated annual income. If the value of an asset or combined assets does not exceed $5000 and the actual income is not known, then the amount of asset income added to annual income is zero. In all cases, always document the file that the calculation was done both ways.

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If an applicant owns a second home which is occupied by relatives, and receives no rents on the home, is it counted as an asset when computing total household income?

Yes. All real property is counted as an asset. Rather than requiring that the household dispose of the property in order to be income eligible, an imputed value of the property at the current passbook-rate (currently 2%) is added to the annual household income.

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One of the applicants for my rehabilitation strategy has a second home that she rents out. I know that this second home is considered an asset and that the rent she collects is the actual income derived from this asset. Should I deduct the mortgage payments and maintenance costs that the applicant pays from this source of asset income and only count the net income after expenses?

Yes. HUD has recently provided clarification on how to treat income from rental property. Appendix 15 of the newly revised HUD Handbook 4350.3 addresses this issue. It notes that you can use the IRS’s Schedule E of the 1040 form as a guide for subtracting expenses from gross rent. Schedule E outlines a variety of expenses that can be deducted from gross rent payments, including mortgage interest paid to banks, taxes, insurance, cleaning and maintenance, repairs, advertising and utilities. These are, therefore, the expenses that can be deducted from gross rent payments to be received in the 12 months.

Refer to section 15-C (M) of the Handbook appendix for a list of acceptable documents to collect to verify this asset income. These materials will document the applicant’s recent rental expenses and help estimate expenses for the next 12 months. It is likely that the largest expense will be mortgage interest that is paid to banks. Look at the bank amortization schedules provided by your applicant to calculate the exact amount of interest that will be paid in the next 12 months. Rely on reasonable estimates to calculate the deductions for taxes, insurance, repairs and other expenses.

The income from rental properties should be handled in a different manner if the applicant receives a majority of her income from rental property management. Exhibit 5-2 in Chapter 5 of the HUD Handbook addresses this scenario, “NOTE: If the person’s main business is real estate, then count any income as business income under paragraph 5-6 G of the chapter. Do not count it both as an asset and business income.” (HUD Handbook 4350.3, Ch. 5, Exhibit 5-2 (A)(3)).

Remember, once you have calculated the actual income from the rental property asset, you will have to compare this to the "imputed income" if the total value of the applicant’s assets exceed $5,000. The cash value of a rental property asset is its market value minus reasonable costs that would be incurred in selling or converting the asset to cash. You must also subtract the remaining mortgage on the rental property to derive the cash value.

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Our community is still providing assistance with our 1998/99 SHIP allocation dollars. When calculating an applicant's income eligibility, should we use the 1998 income limit chart for our area, or the more recent chart that we received in 1999?

Always use the most recent, updated income chart to calculate an applicant's eligibility for the SHIP program. The new income guidelines are distributed by the Florida Housing Finance Corporation (usually in February of each year) and should be used as your new, updated guidelines as soon as they are received, regardless of which allocation year the assistance comes from. Some communities use SHIP funds for rental strategies that require them to check tenants for income eligibility each year for fifteen years. In these cases also, the newest income guidelines should be used each year when annual re-certification takes place.

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What is the "120 day clock?" Does the letter of commitment legally require a SHIP jurisdiction to provide assistance even if the applicant’s change in income now places him or her above the level of income eligibility?

The "120 day clock" refers to the period of time during which third party income and asset verification forms are considered to be up-to-date and valid. The HUD Handbook 4350.3 recognizes that verification forms can only be considered accurate and current for a certain length of time:

"Verifications are valid for 90 days from the date received. If the information is orally updated by the source, these verifications may stand for an additional 30 days. You may not rely on verifications that are more than 120 days old." Source: HUD Handbook 4350.3, Chapter 3 Section 2 Subsection C. Part 3-32 a. (2)

If more than 120 days passes from the time that you have received a verification form, you must get a new, updated verification form. Here are activities that will "stop the 120 day clock." Any one of the following activities will enable you to turn your attention from getting current household income information to proceeding with the other activities involved in helping the applicant. The 120 day clock will stop when:

1.The local government issues an award letter (also called a letter of commitment) to the applicant after a certification form has been executed. This letter will encumber SHIP funds to this specific household, or

2.The local government and applicant sign a construction contract to proceed with rehabilitation services on the applicant's home. Once an award letter is issued or a rehabilitation contract is executed, the 120 day clock stops and you do not have to obtain new, updated verification forms, even if you have not completed your assistance to the client within 120 days. You never again have to ask the applicant income-related questions.

Of course, an applicant can also be fully assisted within the 120 day period. In such a case, it is also possible to verify income, certify a household as income eligible, and then not issue a commitment letter, but assist an applicant and fully expend SHIP funds before 120 days expires. In such a case, the 120 day rule is moot. On occasion, an application may provide information that the household size or income has changed since the 120 day clock stopped. In such instances, contact the Florida Housing Coalition or the compliance office at the Florida Housing Finance Corporation to determine on a case by case basis whether or not to re-calculate the applicant's income and eligibility.

In a recent SHIP Clip answer, you outlined a scenario when an administrator learns that an applicant’s income has changed after a letter of commitment was provided but before the applicant received SHIP assistance. You noted that a SHIP administrator is obligated to re-verify and re-certify the applicant’s income to determine if the household is still eligible for assistance. What about the letter of commitment in such a case? Does this letter legally require a SHIP jurisdiction to provide assistance even if the applicant’s change in income now places him or her above the level of income eligibility? After all, the applicant was income eligible for SHIP assistance on the date when the letter of commitment was signed and mailed.

The Florida Housing Finance Corporation’s legal counsel has concluded that SHIP jurisdictions should deny assistance to applicants discovered to be income ineligible after a Commitment Letter has been issued. Ultimately, it is most important for administrators to ensure that all households receiving SHIP assistance are income eligible. This is stated in section 420.9075 (4)(j) of the SHIP Statute, which notes that “the benefit of assistance provided through the State Housing Initiatives Partnership Program must accrue to eligible persons occupying eligible housing.”

Even after you have signed an income certification form and issued an award letter indicating that an applicant is income eligible, you may receive new information indicating that household income has changed. An applicant may inform you that she has just received a raise or lost her job. The applicant’s first mortgage lender may inform you that the applicant has a second job that you did not know about. In all such cases, you must document the new income information with a verification form and re-calculate income eligibility if you learn about a change in household income before the applicant has been assisted with SHIP funds (i.e. before the applicant has signed a rehabilitation contractor’s construction contract, or the applicant has closed on a loan, or before SHIP funds have been provided for some other form of assistance to the household). This is not to say that a SHIP administrator needs to actively look for changes in an applicant's income once the income certification form is signed. Rather, the administrator must act on any information that is brought to him or her from any source.

The Florida Housing Finance Corporation’s legal counsel has reviewed a sample letter of commitment and has concluded that such a letter could not legally force a SHIP jurisdiction to provide assistance to a household that is discovered to be income ineligible before assistance is provided. The legal council does, however, recommend that SHIP administrators add a sentence to the letter to give applicants notice of this aspect of the income qualification process. The letter should note that a household’s annual income will be re-calculated based on changes all the way up until the date when assistance is provided.

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An applicant has a 17 year old son who works. His income is excluded right now, but do I start counting it once he turns 18 sometime in the next 12 months?

es. You correctly note that you do not count the employment income of children under the age of 18 years, as required by 24 Code of Federal Regulations (CFR) Part 5F (c)(1). Once the applicant's son turns 18, however, count the employment income for the remainder of months in the next 12 month period for which you are estimating annual household income. For example, an administrator may estimate a household's income on March 1st, 2002. The applicant's son will turn 18 in June, 2002. The administrator will not count the son's income until June, but will count his employment income from the date of his birthday until February 28th, 2003.

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An applicant is separated, but not divorced. Do I count the income of the estranged spouse who is no longer living in the house as part of household income?

Florida law does not legally recognize separation. When an applicant is married and separated, count the estranged spouse’s income as part of the annual household income. Consult with your city or county attorney to determine if the spouse should sign any SHIP recapture provisions. This is the rule that also applies to cases of temporary separation when a spouse does not live in the house due to military service, attendance in college, offshore work, or other instances where a family member is temporarily residing in another location.

In some situations, it seems clear that the applicant has no plan to reunite with the estranged spouse and the separation is permanent. In such a case, the applicant is essentially divorced for purposes of SHIP income eligibility determination. The spouse’s income should not be counted as part of the annual household income, and the spouse should not be counted as a household member.

The Florida Housing Finance Corporation’s compliance division has noted that local housing administrators have the discretion to determine if an applicant’s separation is permanent. In making this determination, the administrator should obtain as many details as possible to document that the SHIP recipient’s separation is permanent. In cases of permanent separation, for example, the applicant and the estranged spouse maintain separate residences and file separate tax returns. Documentation that the separation has been ongoing for a long time further strengthens the case that the separation is permanent. The Florida Housing Coalition and the compliance division at the Florida Housing Finance Corporation (call 850 488-4197) are available for consultation on this subject.

In cases where a separated applicant is requesting SHIP assistance with purchasing a house, Florida’s joint property laws should be considered. Unless legally divorced, the State’s laws will likely entitle the estranged spouse to legal claim of ownership of the new house being purchased. SHIP administrators should ensure that applicants are aware of this.


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An applicant's adult son is reluctant to sign an affidavit of unemployment. On the affidavit, the applicant indicates whether or not he is seeking employment and-if he is looking for work-what rate of pay he anticipates he will receive with his new job. Do I have to wait until the individual gets a job before I can fully count anticipated income and determine if the household is income eligible for assistance?

He is not required to sign an affidavit of unemployment. Administrators can use the information on the applicant's signed SHIP application to as the sole documentation that an adult living in the household is unemployed. Several local jurisdictions across the state may currently be using an "unemployed affidavit" form. This is not a requirement of the SHIP program. You should check for and document all sources of income that the unemployed adult is providing to the household, including social security and unemployment compensation. In addition, if the applicant is a home buyer, you can verify the employment information provided in the SHIP application against the first mortgage lender's application. Administrators determine income eligibility by annualizing all sources of income that are currently verifiable. Even if an unemployed individual anticipates that he or she will soon secure a new job, it is not necessary to delay the income certification process until this occurs and can be documented. If, however, you learn that an unemployed member of the household has started a new job before you have signed your income certification form and presented the applicant with an award letter, you are obligated to count and verify the income from this employment.
Follow-up Question: I have another applicant who is employed, but is currently interviewing for a better job.

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Anticipated Gross Annual Income: Just how much do we have to anticipate?

The SHIP program calculates anticipated income rather than past income, and there's a reason for it: it was thought to be better for the applicant not to be penalized based upon previous circumstances which may have changed significantly (for example, an applicant who is starting his/her life over after a divorce and now has only one wage-earner in the household. The American Heritage Dictionary defines anticipate as "to feel or realize beforehand, see synonyms at expect." So, how do you realize someone's income before they receive it? Basically, we must project what someone's income will be over the next 12 months. To do this, we annualize current income. As far as the rule is concerned, what someone is currently earning is what they will be earning over the next 12 months. It does not matter that they received a three percent raise last April - you do not assume that they will get another raise next April. The only exception to this is if you have verification that an application's income is about to change, such as an employer verifying that the applicant will receive a $0.50 per hour raise in four weeks. In this case, you would calculate four weeks at their current rate, and 48 weeks at their new rate, and add the two numbers together. The sum is the anticipated annual income. Remember, for rental projects, verification of income should follow Section 8 guidelines. If someone is on unemployment that is scheduled to expire in 90 days, you still use the current circumstances to anticipate annual income. It is not possible to know when someone will find a job, or if Congress will extend benefits, so don't even try.

In some instances, the information provided by an employer on the Verification of Employment (VOE) form my seem to contradict information available from a pay stub-the stub may indicate, for example, that overtime is a regular income source, while the VOE does not include any income from overtime. Remember that pay stubs are not the proper documentation for determining an applicant's income in the next 12 months. Pay stubs are not required to be included in a SHIP applicant's files. However, when they are included in there and when they provide information about overtime that contradicts what you are reading on a VOE form, you should contact the employer and amend the VOE form with some explanation for the discrepancy in information.

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Do I count earned income tax credits as a source of income when determining the household's annual income?

No. This subject is addressed in HUD Handbook 4350.3, one of the guidebooks to outline the federal regulations that govern income qualification topics for the SHIP program. Section B of the handbook lists what income sources are excluded from annual income. Item 19(i) states:"19. Income excluded by Federal statute: Any earned income tax credit to the extent it exceeds income tax liability. (26 U.S.C. 32(j))"

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Do I delay the income eligibility process until the applicant learns whether or not she is hired for the new job?

Again, it is not necessary to delay the income eligibility process. Proceed with the collection of income verification forms and then sign an income certification form if the household is currently income eligible. You may learn that the applicant has received a higher paying job at some time before the applicant has been assisted with SHIP funds (i.e. before the applicant has signed a rehabilitation contractor's construction contract, or the applicant has closed on a loan, or before SHIP funds have been provided for some other form of assistance to the household). In such a case, you are obligated to re-verify and re-certify the applicant's income to determine if the household is still eligible for assistance.

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How should I estimate overtime? Should I use the information I have from what is reported on the household’s income tax return?

Do not use a tax return to obtain overtime estimates. It only provides information about past overtime earned and you need an estimate of overtime to be earned in the next 12 months. Instead, you must rely on the estimated overtime information provided to you by the employer on the Verification of Employment form. Verification forms are the primary source documentation for determining an applicant’s annual income. The questions on this verification form should ask the employer to estimate all of the earned income that the applicant is expected to receive during the next twelve months. The form should include a question specifically asking about the amount of overtime that is expected to be earned.

For some jobs, it is easy for the employer to provide an estimate for future overtime, based on the applicant’s past history of receiving overtime and the employer’s knowledge of future work to be performed. In other cases, however, an employer may indicate on the verification form that it is not possible to estimate future overtime. In such a case, you may wish to call the employer, explain the importance of fully estimating the applicant’s income, and request that he or she make an informed guess about overtime earnings. If the employer is still not able to provide an estimate of overtime after this discussion, however, do not count any overtime earnings.

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I know that I only count the first $480.00 of earnings for each full-time student in a household who is 18 years old or older. What if the student is receiving Social Security Disability as income? Does this rule still apply or do I count the full amount of the disability benefit?

The rule to which you are referring is outlined in 24CFR, Section 5.609(6)(4). It only directs you to count the first $480.00 of employment earnings for full time students. Social Security Disability, on the other hand, is a source of entitlement income. 24CFR notes that you must include in your income calculations "the full amount of periodic amounts received from Social Security, annuities, insurance policies, retirement funds, pensions, disability or death benefits, and other similar types of periodic receipts" for all family members. So you must count the full amount of the Disability payment in this case.

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I understand the policy for documenting child support income. Most of our applicants have initiated a file with the Child Support Enforcement Office, which provides a printout of the money it has collected for those people who have initiated files with their office. This printout often shows that no money has been collected. The Child Support Enforcement office can only provide this printout for individuals who have initiated a file with their office. For this reason, can I use this printout as the documentation that the applicant’s child support is not being received and that the applicant has made every attempt possible to collect it?

Yes, you can use this printout. The Coalition recently discussed this issue with the compliance office at the Florida Housing Finance Corporation. FHFC staff confirmed that the Child Support Enforcement Office’s printout is acceptable documentation that a file has been initiated and that child support is not being received. Briefly stated, the SHIP program requires that the full amount of court-ordered child support be counted as household income regardless of the amount being received. This is true unless you can document that the applicant has exhausted all legal means of obtaining the support. If all legal means have been exhausted, then the actual amount received is counted as income.

Your question pertains to the specific documentation that you must collect to document that child support is not being collected and that all legal means of obtaining the support have been exhausted. In Florida, there are two methods available to pursue child support that is not being received–filing a contempt of court hearing or establishing a file with the office of Child Support Enforcement. Either option meets the requirement of exhausting all legal means. If an applicant is pursuing the first option, the applicant must provide the SHIP office with documentation that a contempt of court hearing has been scheduled. If the applicant is pursuing the matter through Child Support Enforcement, adequate documentation is the printout mentioned above or a letter from the Child Support Enforcement Office stating that the applicant has initiated a file. By including any of this documentation in your file, you are demonstrating that the applicant has exhausted all legal means of attempting to obtain the child support. If, after all legal means have been exhausted, the support is still not being received, it is not included as income.

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If a person does not live in a unit to be assisted, but his or her name appears on the deed as a co-owner, do we count his or her income toward the computation for income eligibility?

No, unless the co-signer is an estranged spouse, because the State of Florida does not recognize legal separations. The income guidelines state that if someone is permanently removed from the household, you do not have to count his or her income, but the applicant must provide proof that the spouse is no longer a part of the household by providing a copy of the divorce decree or restraining order. In the case of a parent or other relative who co-owns the unit but does not legally reside there, use only the incomes of those persons residing in the unit. However, if a lien is to be placed on the property in the amount of SHIP assistance, you should have the co-owner sign the lien as well as the resident co-owner.

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Is combat pay counted as part of household income?

It is not counted. This issue is address in Chapter 25, Part 5 of the Code of Federal Regulations, commonly referred to as “24CFR”. The Code is used by almost all SHIP communities to outline the income sources that are and are not included in the calculation of annual household income when calculating SHIP income eligibility. Section 5.609 (b)(8) specifically notes that household income must include “all regular pay, special pay and allowances of a member of the Armed Forces (except as provided in paragraph (c)(7) of this section). Paragraph (c)(7) then outlines that “the special pay to a family member serving in the Armed Forces who is exposed to hostile fire” is not included as part of household income.

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One of my SHIP home buyer applicants is participating in a housing authority Section 8 Homeownership Voucher program. Through this program, the housing authority will pay a certain portion of the monthly mortgage payment. Do I count this mortgage contribution as a source of income when determining the household's annual income?

No. Staff at the Florida Housing Finance Corporation reviewed the information provided by Fannie Mae and HUD for the Section 8 Homeownership Voucher program. The information included a recapture agreement with a loan forgiveness clause that the applicant must sign to receive the Section 8 subsidy. The compliance staff concluded that this mortgage contribution is a deferred payment loan and that it should be excluded from annual income. The main intent of the Section 8 Homeownership Voucher program is to help increase the affordability of a low income home buyer's mortgage payment. Counting the mortgage payment subsidy as a source of income might simply defeat the purpose of enabling an applicant to receive additional assistance from SHIP, since the additional income may push the applicant's income beyond the eligible range.

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One of our applicants is seasonally employed. His employer has verified that he will work six months during the next 12 months. He has had a similar work schedule for several years. In the past, he has collected unemployment benefits in the other months of the year. However, since he is currently working for the employer and is not currently collecting unemployment, this is not a verifiable source of income. Should I still count the unemployment benefits as a source of income during the next 12 months, based on what I know about his income from past tax returns and past unemployment payment documentation?

Normally you would annualize income based only on what the applicant is currently collecting. During the 2000 session, the Florida Legislature changed the definition of "annual gross income" in Section 420.9071(4), F.S. from "projecting the prevailing annual rate of income" to calculating income by "annualizing verified sources of income" for the household as the amount to be received during the 12 months following the effective date of the determination. However, the compliance office of the Florida Housing Finance Corporation recognizes that the applicant in your situation will likely receive unemployment payments some time in the next 12 months. If the seasonal employer can provide a statement verifying the applicant's start and stop dates of employment, and you have tax returns from prior years verifying the amount of unemployment benefits, you may use these sources to calculate his anticipated income.

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Should I count non-court ordered child support as a source of income? If I do count it, what documentation would be acceptable to verify this income source?

You should count non-court ordered child support only when the household is actually receiving it regularly. Document the income source by having the provider of the child support complete a verification form for regular cash contributions.

This process is in contrast to the policy for court ordered child support, which states that the full amount of court ordered child support must be included in household income whether or not it is regularly received by the household. The difference in these policies results from the court’s involvement in court ordered child support. A divorce decree is a legal document mandating the payment of child support. A household that is not receiving court ordered child support has legal recourse to force payment of the support. They can schedule a contempt of court hearing or contact the Department of Revenue’s Child Support Enforcement office (the contact phone number is 1 (800) 622-5437). Court ordered child support that is not being received can only be disregarded once you document that a household has exhausted legal means for trying to obtain the support. In contrast, there is no legal document associated with non-court ordered child support. If it is not being received, it is simply not a source of income to be included in overall household income.

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At what point in the process of rehabilitating a house should I place a security instrument on the homeowner's property?

As a best business practice, we recommend that you secure the property prior to starting rehabilitation. This is the same practice that any home improvement contractor would follow. It prohibits the home owner from selling his or her house while construction is in process without resolving the debt incurred using public funds. Before your contractor starts repairs, have the home owner sign a security agreement for the amount of the contractor's bid. To be fair to the home owner and to be mindful of careful spending of public funds, you should always file an updated security instrument when the final cost of repairs is actually less than initially anticipated. In some instances, however, change orders will increase the final cost of the rehabilitation. You can choose to file an updated security instrument that accurately records the larger repair amount, especially if the additional amount is several hundred dollars or more. You can, however, choose to simply leave the original security instrument in place and provide the extra SHIP funds in the form of a grant. (This is a different policy than federal programs like CDBG or HOME, which require the security instrument to accurately document the final cost of repairs).

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Can we award grant funds and deferred payment loans on a single unit?

Yes. It is common, for instance to make the amount spent on the actual activity, such as rehabilitation, a deferred payment loan, while making the cost of fees to cover the filing the security instrument (lien) a grant.

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Do any SHIP communities have due upon sale clauses attached to their SHIP assistance? What are the advantages and disadvantages of due upon sale? Isn't the administrative burden of due upon sale rather onerous?

Many communities have due upon sale clauses in their down payment assistance programs. There are many advantages to such an arrangement, the biggest being that you are establishing a program where, over time, funds will constantly be reinvested into the SHIP program. Even if the note is not repaid for 15 years, the purchasing power of the assistance provided will still be around half of what it was at the time of the original assistance. Due upon sale can be less of an administrative burden than notes that are satisfied after a certain length of time. Many communities in which the assistance is forgiven over time have second mortgages that must be satisfied by the local government. This takes time, and an elaborate tickler file. With due upon sale, the second mortgage is recorded, and can be virtually forgotten. When the property is sold, the title company notifies the city that a check will be forthcoming. There are also some disadvantages with due upon sale, not the least of which is what happens if the home is sold, and the proceeds from the sale are not enough to cover both the first and second mortgage. This situation can be addressed by having the second mortgage state that the second mortgage reverts to an unsecured note if the net proceeds from the sale are not enough to satisfy the first mortgage. Another issue is the local jurisdiction's philosophy toward affordable housing. Is it the public sector's role to provide low-income families with decent safe and affordable housing, or is it the public sector's role to also provide people with the potential for future equity. One unavoidable consequence with due upon sale clauses is that they have the potential to leave people with very little equity at the time of sale. This is an issue that the local jurisdiction must resolve for itself.

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Does the local SHIP office have to monitor the property for 15 years? Is there a way to do this without monitoring? What happens if the property is sold before 15 years?

You must monitor the property for 15 years to ensure that income-eligible tenants occupy the units assisted with SHIP funds. These monitoring requirements are outlined in the Section 420.9075(3)(e), F.S. The only way that your SHIP office would not have to monitor is if the Florida Housing Finance Corporation (FHFC) has also provided funding to finance this property. During its 2000 session, the Florida Legislature added new language to the SHIP statute which states "to the extent the FHFC provides the same monitoring and determination," the SHIP jurisdiction 'may rely on such monitoring and determination of tenant eligibility." Sometimes the requirements for SHIP and the FHFC's program differ, however. For example, a SHIP-funded unit may rent to a SHIP eligible recipient with an income as high as 120% of the area median income, while FHFC requirements may require tenants to have incomes at or below 60% of the area median income.

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My community's SHIP second mortgage states that if the property is sold, refinanced, or transferred, the owner or estate repays the entire amount of the loan. There is nothing specific about paying off the loan at the end of 30 years, however. If one of our homebuyers lived in a home for 30 years and paid off the first mortgage, does he or she have to pay back the funds borrowed from SHIP?

Section 95.281(1)(b), F.S., states that a lien without a specified term automatically terminates after 20 years, unless it is renewed by the lien holder. In this case, the lien had no term and was not renewed after 20 years. Therefore, no SHIP assistance would be repaid.(01.6) My community is planning to partially fund a small-scale rental rehabilitation with SHIP funds.

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One of the homeowners that we have previously assisted is requesting that the city subordinate its SHIP second mortgage on her house. What are some of the reasons why homeowners request subordinations? What is the subordination policy of the SHIP program?

There is no SHIP rule or statute that addresses this subordination issue. Each SHIP jurisdiction has the responsibility of formulating its own subordination policy. Put the policy in writing to fairly address all subordination requests. The Florida Housing Coalition recommends that local governments subordinate a SHIP loan if doing so will lower the homeowner’s interest rate, lower the home owner’s monthly housing cost, or increase the affordability of the housing. Furthermore, it is important to require any refinancing to lower the monthly payment by an amount that will allow the closing costs and fees to be recovered within a specified, reasonable number of years. Finally, the Coalition strongly advises against allowing recipients to receive cash back from refinancing.

There are several reasons why homeowners request a SHIP subordination. Some wish to make room for a debt consolidation loan. Such a loan commonly secures credit card obligations, car loans and similar debt with the equity in the property. In most cases, the equity in the house is primarily SHIP funds from the down payment assistance. SHIP funds are intended to help provide affordable housing, not secure consumer debt. Since debt consolidation loans do nothing to lower monthly housing costs, this type of subordination request should be denied.

In other instances, homeowners may be working with a predatory lender whose refinancing proposal will only lower the mortgage interest rate by a fraction of a percentage, while charging the homeowner excessive fees. In this scenario, the monthly mortgage payment will go down, but only slightly. It will take a long time for this slight monthly savings to make up for the upfront fees charged. This is why SHIP administrators should require refinancing to produce interest rate reductions that are significant enough to compensate for closing costs and fees within a short timeframe.

Other homeowners may be faced with a growing household. The houses they purchased are no longer big enough for their families, and the homeowner may want to add a room onto the home with a home improvement loan. Even though this loan will increase the homeowner’s overall housing costs, it may still be the most affordable option for addressing the changing housing needs of the household. After helping the homeowner consider options, a SHIP administrator may conclude that it is best to subordinate the SHIP loan.

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A rehabilitation applicant has a masonry house that was originally a mobile home. The unit's roof and walls have been built around the mobile home, and more rooms have been added outside the mobile home perimeter. Is this considered eligible housing for the SHIP program?

All assisted housing must meet the SHIP program requirements for eligible housing, as outlined in section 420.9071 (8) of the Florida Statutes. "Eligible housing" means "any real and personal property located within the county or the eligible municipality which is... designed to meet the standards of Chapter 553" of the Florida Statutes. Chapter 553 outlines the Florida Building Code. According to the Codes and Standards office at the Florida Department of Community Affairs, the house in question does not meet Chapter 553 standards since it does not comply with plumbing, electrical, venting and structural code requirements. For more information to determine if a house meets Chapter 553 standards, contact the DCA Codes and Standards office at (850) 487-1824.

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An applicant has requested rehabilitation assistance for a duplex. The applicant’s daughter lives in the other half of the duplex and she pays rent. There is one legal description for the duplex and only one insurance policy. The daughter’s name does not appear on the deed. Can I provide assistance to this unit?

Yes, you can provide rehabilitation assistance, but several conditions must be met. First, the daughter’s half of the duplex is considered a rental unit—even though she does not pay rent—since the applicant does not reside in that portion of the duplex. In order to provide rehabilitation assistance, your Local Housing Assistance Plan (LHAP) must include a rental rehabilitation strategy. Any repairs to the rental portion of the duplex must be attributed to the rental rehabilitation strategy. Moreover, the rental unit is subject to all the requirements for using SHIP funds with rental housing, as outlined in Section 420.9074, subsections 3(e) and 4(f). Specifically, the rental unit must be “reserved for (a SHIP income) eligible persons for 15 years or the term of the assistance, whichever period is longer.” Also, if the rehabilitation loan is more than $3000, the rental unit must be annually monitored to determine tenant income eligibility and to ensure that the rent is at an affordable level.

Other requirements must also be met. The value of the home cannot exceed the value limit listed in your LHAP. Also, the rent that the daughter pays must be included in the applicant’s household income when determining income eligibility.

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At what point in the process of rehabilitating a house should I place a security instrument on the homeowner's property?

As a best business practice, we recommend that you secure the property prior to starting rehabilitation. This is the same practice that any home improvement contractor would follow. It prohibits the home owner from selling his or her house while construction is in process without resolving the debt incurred using public funds. Before your contractor starts repairs, have the home owner sign a security agreement for the amount of the contractor's bid. To be fair to the home owner and to be mindful of careful spending of public funds, you should always file an updated security instrument when the final cost of repairs is actually less than initially anticipated. In some instances, however, change orders will increase the final cost of the rehabilitation. You can choose to file an updated security instrument that accurately records the larger repair amount, especially if the additional amount is several hundred dollars or more. You can, however, choose to simply leave the original security instrument in place and provide the extra SHIP funds in the form of a grant. (This is a different policy than federal programs like CDBG or HOME, which require the security instrument to accurately document the final cost of repairs).

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Does the State require that all SHIP-assisted units carry hazard insurance? Should we require it? What if the homeowner can't afford it?

No. The State does not require that all units assisted with SHIP funds be covered under an insurance policy and it is not uncommon for very low and low income persons not to have insurance on their home. It is probably a good idea to require that the homeowner who receives substantial rehabilitation assistance to carry hazard insurance, at a minimum, to cover the cost of potential loss due to fire or other disasters, in order to protect the jurisdiction's investment in the unit. But this approach is not without its administrative burdens. With a rehab program, unless a mortgage is filed to secure the assistance provided for the rehab, it is difficult, if not impossible, to enforce a provision requiring that insurance be maintained. A mortgage would have to be filed with the standard hazard insurance clause, insuring that the mortgagor (the SHIP program), be notified if insurance ever lapses. Also, the SHIP program would need to have a remedy available if the owner fails to maintain the insurance. The decision to make this a requirement for the receipt of SHIP funds should be weighed against the amount of SHIP subsidy, the additional administrative burden in maintaining that the policy does not lapse, and the homeowner's need to maintain the unit as affordable.

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Is construction management which is outsourced considered a project soft cost?

Yes, construction management activities, including work write-ups, inspections, and contractor oversight are all related to project delivery, and are considered to be soft costs. Soft costs can be paid with program funds rather than tapping into the very limited administrative funds. For example: An owner-occupied rehabilitation job is estimated to cost $20,000 in materials and labor. Your construction management company charges you $500 to manage the project, perform the work write-ups and inspections, and provide contractor oversight. The total amount of the job is now $20,500. If you have a maximum per unit cap of $20,000, then you must reduce the amount of work to be done by $500, so that the total job cost is $20,000. If for some reason this is not feasible, then the construction management fee of $500 must be paid from the administrative portion of your SHIP funds. Remember that you may exceed the maximum per unit amount ONLY with the approval of the local governing body on a case by case basis, and evidence thereto must be retained in the individual applicant file. Note: If part of the service is a feasibility test which results in a "no-go" decision, then the fee paid for that service cannot be paid from program funds, because there is no work performed on the unit.

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What are the requirements for lead based paint abatement on a SHIP assisted unit?

SHIP assisted units must meet Chapter 553 F.S. Building Construction Standards, which does not require lead based paint abatement. However, if the unit will also be assisted with any federal housing dollars, lead based paint requirements apply. If the local jurisdiction has adopted local building construction standards which require abatement of lead-based paint in its Local Housing Assistance Plan, then lead-based paint abatement procedures must be conducted on the SHIP units.

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What are the rules regarding rehabilitation of a unit located in a flood zone?

If the cost of the rehabilitation is greater than 50 percent of the cost of the home, excluding the land, then the home must be elevated so that it is above the 100 year base flood level. This is federal law in conjunction with the National Flood Insurance Program administered by the Federal Emergency Management Agency. In the velocity zone, the cost of the repairs made to the home is required to be tracked on a cumulative basis over five years. If the cost of the rehabilitation over this five year period is greater than 50 percent of the cost of the home, excluding the land, then the home must be elevated. This is state law. SHIP administrators should be aware of these, and any other local codes which govern construction-related practices within their communities. However, the responsibility for implementing these laws and practices ultimately falls to local building department officials.

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When we rehabilitated a house, we were unprepared for the number of change orders, and therefore the total cost exceeded the maximum per unit amount set in the local Housing Assistance Plan. What can we do?

You may exceed the maximum per unit amount, with approval from the local governing body, on a case-by-case basis. However, if this occurs frequently, you may need to either raise your per unit maximum or evaluate the completeness and accuracy of the initial work write-up. In some communities, it is common practice to build a contingency amount into each work write-up.

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A local developer has requested information on all of our qualified applicants for solicitation purposes. Our County Attorney has advised that all our records are to be made available for public review, subject to Florida's open records laws. Is this true, and is there anything I can do to discourage this practice?

This may evolve to harassment of our applicants and make them fearful of our assistance. All records, including applicant files, are subject to Florida's open records laws. When an applicant applies for assistance, he should be made aware of this at the time of application. The local jurisdiction may charge a fee for copying, as well as charge for excessive time spent by a city employee who is supervising a person who examines the files. This sometimes acts as a deterrent to reporters or others who wish to use the information for solicitation purposes.

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An applicant has asked me if the SHIP assistance she receives is considered taxable income that must be reported on her income taxes.

The Florida Housing Finance Corporation (FHFC) has indicated that SHIP assistance would not be considered income. This is based on a similar issue regarding the pilot program using Section 8 funds to help pay for a mortgage. The FHFC compliance office concluded that this Section 8 assistance is not income since the Section 8 program placed a deferred payment loan lien on the recipient's house. Similarly, your SHIP funds are provided as a deferred payment loan. In addition, the legal counsel at the FHFC issued a legal opinion memorandum in 1997 indicating that SHIP assistance is not taxable income. “Because SHIP funds are analogous to a gift rather than a quid pro quo, they can be characterized as general welfare or welfare assistance payments. As such, they are not includible in the recipient’s income and local governments need not file Form 1099-C’s”.

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Based upon a recent file review, we have recently discovered that the annual reports from previous (closed out) years, as submitted to FHFC, are incorrect. If I report the activity accurately, we will not be able to meet the very low-income set-aside. What should we do?

You should file amended reports, and shift files to cover the very low-income set-aside. Since the income set-asides are statutory, they must be strictly adhered to; therefore shifting files between program years to ensure that you meet the income set-asides is an accepted business practice.

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Can SHIP funds be used for emergency shelters and/or transitional living facilities? How do you report units from a transitional housing facility, and do you have to conduct income certifications on each assisted person who applies for temporary residence in the transitional housing facility?

Emergency shelters and/or transitional living facilities, provided that they conform to the building construction standards in Chapter 553 of the Florida Statutes, are an eligible SHIP expense. For reporting units under a transitional housing strategy, count the number of beds. Individual income certifications as are typically performed when providing SHIP assistance can be cumbersome. FHFA suggests that the local jurisdiction propose a procedure for processing applicants be put in writing to the Review Committee for review and approval. In cases where the facility is receiving funding from other sources, such as CDBG or other HUD programs targeted for the special needs population, the local jurisdiction will be required to perform income certifications as prescribed by those programs, but this procedure must be approved by the SHIP Review Committee prior to expending SHIP funds on the facility. Since transitional housing is classified as rental activity, long-term affordability provisions must be met.

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Do I pay documentary stamps and intangible taxes on my SHIP second mortgage when I assist a home buyer?

Documentary stamps must be paid on SHIP second mortgages. However, intangible taxes do not have to be paid on SHIP second mortgages. The statutory basis for this is outlined in Chapters 199 and 201, F.S. Section 199.183 (1), F.S., addresses the intangible tax. It states that "intangible personal property owned by this state or any of its political subdivisions or municipalities shall be exempt from taxation under this chapter." Regarding SHIP transactions, conversations with the Florida Department of Revenue have confirmed that SHIP funds are the property of the state's municipalities and are considered to be "intangible personal property" discussed in this statute. Therefore, SHIP second (or third) mortgages are exempt from intangible taxation. Section 201.08 (1), F.S., addresses the documentary stamp tax. The State requires that all notes or mortgages be subject to this tax and that the Florida Legislature must explicitly state if a certain type of transaction is exempt from the tax. The Legislature has not provided an exemption for SHIP transactions.

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Does Florida’s Open Records law include an exemption for documents associated with individuals receiving SHIP housing assistance?

No, SHIP housing files are not exempt from the Florida Open Records law. However, the law provides for a very limited exemption of certain information that may be included in the files of your housing assistance applicants. Chapter 119 of the Florida Statutes outlines what is commonly referred to as the open records law. The law is stated most directly in section 119.07:

“Every person who has custody of a public record shall permit the record to be inspected and examined by any person desiring to do so, at any reasonable time, under reasonable conditions, and under supervision by the custodian of the public record or the custodian's designee. The custodian shall furnish a copy or a certified copy of the record upon payment of the fee… of not more than 15 cents per one-sided copy.”

The Florida Statutes also outline a list of exceptions to the open records law. Section (3)(bb)1 of the Florida Statutes outlines several exceptions that are relevant to SHIP housing files: “Medical history records, bank account numbers, credit card numbers, telephone numbers, and information related to health or property insurance furnished by an individual to any agency pursuant to federal, state, or local housing assistance programs are confidential and exempt.”

In addition, Section 119.0721 provides an exemption for social security numbers: “Effective October 1, 2002, all social security numbers held by an agency or its agents, employees, or contractors are confidential and exempt.” Despite these exemptions, it is strongly recommended that you check with your legal counsel prior to denying anyone access to a public record.

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Is there a limit to the number of amendments a local jurisdiction may file and does the time frame for filing an amendment to a LHAP ever expire?

No. There is no limit to the number of amendments a local jurisdiction may file. Amendments to an approved HAP must be adopted by local government resolution and a copy submitted to the FHFA's Review Committee within 21 days after adoption by the local government. A local jurisdiction may amend its HAP at any time if it is determined that a strategy will not be used, or when adding another strategy. Note: an amendment is not necessary when shifting funds between approved strategies in the HAP, but a copy of the new Housing Delivery Goals Chart reflecting the changes should be submitted to the FHFA.

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Is there a new law requiring water management districts to expedite permitting for affordable housing?

Yes. This statutory change, along with many others, was adopted into law after the Florida Legislature passed HB 547, considered to be the Affordable Housing Bill of 2002. It resulted from a recommendation of the Affordable Housing Study Commission. The Commission recognized the important incentive offered by local governments to expedite permits for affordable housing, as required under the SHIP program. The Commission further noted, however, that awaiting approval of water management district permits can delay the development of an affordable housing apartment property or subdivision of homes.

Obtaining these permits can indeed be time consuming. Water management districts generally issue permits to address flood protection, wetland protection, and the treatment and quality of storm water runoff. Chapter 373.4141 (2) of the Florida Statutes states that water management districts must approve or deny permits “within 90 days after receipt of the original application, the last item of timely requested additional material, or the applicant's written request to begin processing the permit application.” The statutory change enacted recently adds a simple directive to Chapter 373.4141: “Processing of applications for permits for affordable housing projects shall be expedited to a greater degree than other projects.”

This legislative mandate to expedite the permitting process can be understood by comparing it to the SHIP program. SHIP requires local governments to expedite permitting. Chapter 420.9076 (4)(a) states that “the processing of approvals of development orders or permits… for affordable housing projects is expedited to a greater degree than other projects.” Several communities implement this SHIP mandate by ensuring that builders of affordable housing jump to the head of the queue in cases when several builders are waiting for their permit requests to be considered.

I am concerned about the SHIP Income Limits Chart provided annually by the Florida Housing Finance Corporation for purposes of determining income eligibility. The income limits for my city are based on the income data for a nearby metropolitan statistical area (MSA). Although the median area incomes may accurately reflect the MSA, these income levels are too high for my city. Most of the households in my area would be considered low or moderate income according to the Income Limits Chart.
Your city and the rest of your county are clustered in with the metropolitan statistical area due to criteria established by the U.S. Census. Your community met the Census definition for inclusion in the MSA. According to the Census website (www.census.gov), an MSA has a large population nucleus, together with adjacent communities that have a high degree of economic and social integration with that nucleus. An outlying county in an MSA must have a specified level of commuting to the central counties and also must meet certain standards regarding metropolitan character, such as population density, urban population, and population growth.

Before you conclude that the income levels outlined in the SHIP Income Limits Chart are too high, you must first research housing costs in your community. It is the relationship between housing costs and income levels that should determine the income levels of the population you will target and serve. You may discover that even moderate income households experience financial difficulty with housing costs. They may not qualify for enough mortgage money to purchase an average priced home in your community, for example. On the other hand, you may conclude that moderate income households do not experience hardships, once you have considered the relationship between housing costs and income levels. There are communities in the state-especially unincorporated areas and small cities-where housing staff are concerned with how they get bundled in with their "richer" neighboring communities. Remember that The SHIP income limits establish the maximum income for households that can be assisted. If you believe that the income levels provided to you by Florida Housing do not adequately assist you in targeting assistance to those most in need, you can place additional restrictions on your program. Specifically, several communities have written their Local Housing Assistance Plans to indicate that SHIP assistance is only available to Low and Very Low-income households, not those with Moderate Incomes.

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Our community is considering lowering the amount of assistance and the house values in order to target lower income people with our SHIP home buyer strategy. Is this a good idea?

Lowering the subsidy amount can actually prevent a very low income (VLI) or low income (LI) person from getting into an affordable and decent house. Check with your lender partners to gauge the profile of the typical low income buyer to see what is the usual amount of loan given. Also, check with your real estate professionals for a listing of lower-value homes. Many times the lower value homes need many repairs and will ultimately result in either the LI person living in a substandard unit or faced with repair bills that increase housing costs. To help assure the long-term affordability of the house, consider providing the extra subsidy to bring the unit up to livable standards.

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We have a person on our advisory committee who could benefit from a contract award. Is this a potential conflict of interest?

Depending on the circumstances of the award, it might be. To be safe, you may want that member to recuse himself from the decision making process for the award, and document the files accordingly.

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We have an elderly couple who have applied for rehabilitation assistance. Their home is a life estate. Is this considered owner-occupied?

Generally yes. It is common for elderly persons to place their property in trust as a means of providing for their children after they are gone. Local governments can decide how they want to define ownership. In some communities, the local government has decided to tightly define ownership and in many cases will not provide assistance to a home if the deed is held in another family member's name, or if there are judgments against the owner, such as those in favor of the local government for payment of back taxes. While this may seem like a prudent and wise use of public funds, these types of policies do little to address the furtherance of overall community improvement through affordable housing activities, not to mention that the households which are denied assistance in these instances may have no choice but to continue to live in substandard units.

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What are the common elements of a disaster strategy?

An effective way of quickly responding to community needs, aftermath of a state or nationally declared disaster, is by creating a strategy to assist a community's residents. A disaster relief strategy can be a new, stand-alone strategy, or it can be incorporated into an existing homeowner rehabilitation strategy. Similar to a homeowner rehabilitation strategy, eligible repairs may include roof repair, window repair or replacement, and the rest. Some communities also allow activities which are responsive to the immediate health and safety needs of the resident. Tree and debris removal, and materials needed to temporarily halt damage caused by wind and rain entering the unit fall into this category. An often overlooked need is payment of insurance deductibles once the need for repairs has been determine, this is an eligible cost associated with repairing a unit. The SHIP rule also allows for payment of relocation costs; however, rental subsidies are expressly prohibited. It is also permissible to use SHIP funds for disaster mitigation activities. Elevating an eligible unit which is located in a flood plain is one example of permissible activities. Some communities may choose to fund the disaster strategy regardless of whether there are other funds available to assist families in these situations, such as FEMA funds. It is important to remember that SHIP dollars can only be used to assist eligible units for eligible persons, those whose household income falls within the allowable income range, whereas FEMA funds provide assistance regardless of income. The traditional income verification and certification process may be cumbersome and difficult to implement in cases where traditional documentation is destroyed and action must be immediate. Local jurisdictions may wish to submit an alternative income certification process to the FHFC Review Committee for review and approval when creating a new strategy or adding language to an existing homeowner rehabilitation strategy. Creating a selection process which is fair and equitable is another important consideration. All local jurisdictions have an applicant selection process in place for serving eligible persons. If the intent is to address the immediate health and safety needs in the event of a disaster through an existing homeowner rehabilitation strategy, (and there is typically a waiting list for rehabilitation assistance) then the local jurisdiction must specify the circumstances and criteria under which an application for assistance can supersede the established process. Remember that funds must be encumbered and disbursed in accordance with the SHIP Rule, regardless of how a disaster-relief strategy is created. As a practical matter, this means that if funds are budgeted for an under-utilized strategy, where there is no need for disaster-relief, then the funds must be re-allocated to a strategy which is being utilized within the time frames established for that fiscal year.

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What are the responsibilities of the local jurisdiction when a qualified sponsor is utilized for performing eligible SHIP activities?

The local jurisdiction has ultimate responsibility in assuring that all program requirements are met. Rule 9I-37.002(15) defines an eligible sponsor as a person or private or public for-profit or not-for-profit entity that applies for an award under the Local Housing Assistance Program for the purpose of providing eligible housing for eligible persons. At the local level, the sponsor might be a local chapter of Habitat for Humanity, a Community Action Agency, a Regional Planning Council, a local non-profit organization, CDC, or CHDO, or a local consultant or developer. A qualified sponsor who receives an award from the local SHIP program is required to contractually commit to the local jurisdiction that it will comply with all SHIP requirements, and it is the local jurisdiction's responsibility to ensure that the sponsor follow all state and local program requirements. If the sponsor provides development services to the local jurisdiction's SHIP program, the sponsor may include all development soft costs (work write-ups, inspections, etc.) in the project costs. If the sponsor is providing additional administrative support for the SHIP program, such as applicant income determinations and certifications and referrals to housing counseling services and lenders, then the local jurisdiction should pass through a portion of its administrative funds (from the 5% or 10% held back for program administration) to the sponsor. The local jurisdiction must have a system in place which ensures that all applicant files are complete and that the income verifications and certifications are in order, that there is adequate documentation to support expenditures for work performed, and that all SHIP funds are encumbered and expended in accordance with the deadlines as stated in the SHIP Rule. While daily monitoring of activities should not be necessary, the sponsor should be required to provide adequate information to the local jurisdiction for completion of the annual report, such as household characteristics, amount of SHIP funds expended, as well as use of any other funds on the assisted unit, and appraised or anticipated value of the unit at completion. The local jurisdiction may provide blank copies of the forms used in the annual report to the sponsor so that the sponsor will know exactly what information is required for reporting.

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