Question about ‘Expended Funds’:
On Form 4, I added an amount of expended funds per strategy that exactly matches the figures reported on Form 1. Yet the Review Tab still shows an error. Specifically, it indicates:
“There are no "Expended Funds" records for the "Homebuyer Assistance" strategy listed under the Distributed Funds' "Home Ownership" section on Form 1.”
Please provide guidance.
Answer:
This is a result of an update Florida Housing has made to the web annual report. Florida Housing has now programmed the web system to total up the expended funds for each strategy. Now, a “Summary by Strategy” total appears at the end of the list of expended funds you have added to Form 4.
The error in this case is caused by the fact that this jurisdiction labeled a strategy “Homebuyer Assistance” on Form 1, but called it “Purchase Assistance” next to the name of each buyer listed on Form 4. In order for Florida Housing’s new programming to work properly, the name of each strategy must be identical on Forms 1 and 4. Pay attention to capitalization, since this also makes a difference. In this case, the jurisdiction decided to change the strategy name on Form 1 to “Purchase Assistance” and the error message disappeared.
Question:
I am having difficulty logging onto the webpage for the Annual Report. Please provide guidance.
Answer:
To log on, go to the following webpage: https://apps.floridahousing.org/StandAlone/Extranet/
On the first occasion when a jurisdiction logs on to the web report, one must use the email address of the jurisdiction’s primary SHIP contact person. Identify the email address of the person who usually receives direct SHIP-related emails from Florida Housing. It is likely this email address that must be entered. The generic password to use is ‘password!’. Once logged on, you may add the email addresses of additional staff members who need access to the annual report. In the “User Administration” tab, click the button to ‘create a new user’. Each new user may choose to have a different password.
Question:
On the Form 2 question about rental units, I am having difficulty entering text. The information in this box disappears instead of saving when I click the ‘Save Changes’ button. Please provide guidance.
Answer:
When typing in the rental description, you must fill in all of the fields for Efficiency, 1 bedroom, 2 bedroom, etc. If you leave any field blank, the system will not save the rental description. If some of the unit mix data does not apply, enter 0.00 in the non applicable field.
Question:
I have just completed the data entry on my close out annual report. I went to the ‘Review’ tab, read through the ‘issues identified on the report’ and have corrected these errors. However the report status remains ‘unsubmitted’ and I cannot see how I am supposed to officially submit this report. Please provide guidance.
Answer:
You cannot officially submit your complete close out annual report until you also create complete and error-free reports for the first and second interim distributions. The ‘Review and Submit’ tab on the Second Interim report contains a ‘submit this report to FHFC’ button that will become activated once you have corrected all the identified errors on all three reports.
Question:
I have not yet completed all three of my annual reports. Yet I want to save to my computer a copy of the data I have entered. Is it possible to do this?
Answer:
Yes it is. In the upper right corner of the ‘Review’ tab, choose ‘Click here for a printer-friendly (PDF) copy of this annual report’. You may print this or save it to your computer. The upper right corner of each form also contains this print feature, in case you only want to print the data from one form. Once you have completed and submitted all three of your annual reports, this feature will allow you to save a copy of your reports. This is necessary, since the SHIP program requires you to make the reports available for public inspection and comment. You may also want to email the annual report PDFs to the lenders, contractors and other partners with whom you work.
Question:
When I attempt to ‘Click here for a printer-friendly (PDF) copy of this annual report’, I receive an error message. I am unable to open or save a PDF of my annual report. Please provide guidance.
Answer:
This feature requires users to have Adobe Reader version 8 or above on their computer in order to view or save a report PDF. Fortunately, this product is available for download from the Adobe site for free: http://get.adobe.com/reader/
Question:
Our jurisdiction has a new supervisor who will serve as our main SHIP contact person. How should I inform Florida Housing of this contact change?
Answer:
This may be done using the web reporting system. Change the information in the “SHIP Contact Information” tab, which asks for two types of contacts: 1) the staff person most directly responsible for creating the jurisdiction’s annual reports and 2) the jurisdiction’s main SHIP contact person. The latter name and phone number will be posted by Florida Housing on its SHIP contacts webpage.
Set Aside Questions
Question:
Are the SHIP set-aside percentage calculations based only on the annual distribution and not on any recaptured funds or interest?
Answer:
No, you must include other revenue sources when calculating set-aside compliance. You calculate compliance with the Homeownership Set-aside and the Construction/Rehab Set-aside based on the sum total of Distribution plus Recaptured Funds. [Keep in mind the 2009 change to the definition of Recaptured Funds, which are now only a repayment that a SHIP jurisdiction receives if it provides SHIP funding for a housing project, but this funding is ultimately not used to assist eligible households.]
Compliance with the Income Set-aside, on the other hand, is calculated based on the total of all sources of SHIP revenue, including carry forward funds and program income.
Question:
The annual report asks for information on Extremely Low Income (ELI) households? Is there a requirement to assist a specific number of ELI applicants? I do not see a space to track ELI on the SHIP tracking spreadsheet.
Answer:
There is not a “Set-Aside” requirement to assist a specific number of ELI applicants. However, ELI households are part of the larger group of Very Low Income (VLI) SHIP recipients, and the Income Set-Aside requires at least 30 percent of all SHIP funds to be dedicated to VLI households. The Coalition has updated the SHIP tracking spreadsheet to include columns for collecting information about ELI households. The free updated version is available for download for the Coalition’s website (http://www.flhousing.org/) and directly from Florida Housing’s online reporting website.
Question:
I have a question about the section of Form 2 that addresses the homeownership and construction/rehabilitation set-asides. The amount of SHIP funds we have expended and committed to compliance with these set-asides is significant. According to the annual report, it even exceeds the amount of the Trust Fund used to calculate set-aside compliance. Do we need to add an explanation as to why this amount is greater than 100% of the Trust Fund?
Answer:
No special explanation is needed. Consider how “Trust Fund” is defined for this question: compliance with these two set-asides is calculated as a percentage of the sum total of the Distribution plus Recaptured Funds. However, several communities receive a significant amount of program income, which they also spend on homeownership and/or construction or rehabilitation activities. Therefore, it is common in many jurisdictions that this percentage exceeds 100% of the Trust Fund. This question illustrates an important lesson about Program Income, which may be expended on activities that do not comply with the homeownership and the construction/rehab set-asides. If your jurisdiction receives a significant amount of program income, you could dedicate it to a rental project, for example.
Question:
I have a Multi-Family Rental Rehabilitation project with a $650,000 SHIP funding agreement on it. SHIP pays $150,000 for acquisition and $500,000 for rehabilitation work. On my tracking spreadsheet and annual report, can I count the entire $650,000 towards compliance with the Construction/Rehab set-aside? Alternatively, should I not count the $150,000 since it pays for acquisition, not construction or repair work?
Answer:
The full $650,000 in this case should be reported towards compliance with the Construction/Rehab set-aside. SHIP funds helped finance a project that included a significant amount of rehabilitation, so the full amount of SHIP assistance counts towards compliance. There is an even more common example of SHIP assistance that follows the same rule. Consider the assistance your jurisdiction provides to help a SHIP household buy an existing house. Your jurisdiction spends only a small amount to repair this house—a majority of SHIP assistance is devoted to down payment and closing cost assistance. Yet the full amount of SHIP assistance counts towards compliance with the Construction/Rehab set-aside, since SHIP helped buy a house that was repaired. Furthermore, in this example it is not even necessary for a portion of SHIP to pay for repairs. Set-aside compliance is interpreted broadly. Compliance is achieved so long as you can document that some source of money paid for repairs, and repairs were completed during the period 12 months prior to through to 12 months after the purchase.
Question:
The Annual Report seems to contradict with the SHIP Statute when it defines what funds to count towards compliance with the homeownership and construction/rehab set-asides. The Statute indicates that only the distribution—not program income or recaptured funds—must comply with these set asides. This is different than the wording on the Annual Report for the Income Set-Aside:
(a) At least 65 percent of the funds made available in each county and eligible municipality from the local housing distribution must be reserved for home ownership for eligible persons.
(b) At least 75 percent of the funds made available in each county and eligible municipality from the local housing distribution must be reserved for construction, rehabilitation, or emergency repair of affordable, eligible housing.
(e)2. At least 30 percent of the funds deposited into the local housing assistance trust fund must be reserved for awards to very-low-income persons
Note that (a) and (b) address the “local housing distribution”. The Distribution is shown to be distinct from Program income and recaptured funds, as seen in this section of 420.9075:
(6) Each county or eligible municipality receiving local housing distribution moneys shall establish and maintain a local housing assistance trust fund. All moneys of a county or an eligible municipality received from its share of the local housing distribution, program income, recaptured funds, and other funds received
Is there a contradiction?
Answer:
The SHIP Statute does address this topic—read further down in the same section of the Statute that you reference. Subsection (k) indicates that program income is exempt from the homeownership and construction/rehab set-aside requirements. Yet this section does not mention recaptured funds, so they are not exempt from the set-aside requirements.
(k) Funds from the local housing distribution not used to meet the criteria established in paragraph (a) or paragraph (b) or not used for the administration of a local housing assistance plan must be used for housing production and finance activities, including, but not limited to, financing the purchase of existing units, providing rental housing, and providing home ownership training to prospective home buyers and owners of homes assisted through the local housing assistance plan. Notwithstanding the provisions of paragraphs (a) and (b), program income as defined in s. 420.9071(24) may also be used to fund activities described in this paragraph.
Furthermore, the SHIP Rule explicitly exempts the expenditure of program income from compliance with these set-asides, and this exemption does not include recaptured funds.
Finally, the SHIP Statute gives Florida Housing authority to clarify SHIP Rules:
420.9072(9) The corporation shall adopt rules necessary to implement ss. 420.907-420.9079.
On the subject of set-aside compliance, Florida Housing has done just that. The annual report—which is authorized by the SHIP Rule—explicitly indicates that recaptured funds must be expended in compliance with the two set-asides.
MORE: There is more to be said about set-aside compliance. Review the following videos on this topic. Each of the videos are about 7 minutes each.
To advance or back-up the video, use your cursor to click on the red dot below the video, hold down and drag it left or right.
Homeownership Set-Aside
Construction Set-Aside
Income Set-Aside
Are the SHIP set-aside percentage calculations based only on the annual distribution and not on any recaptured funds or interest?
Answer:
No, you must include other revenue sources when calculating set-aside compliance. You calculate compliance with the Homeownership Set-aside and the Construction/Rehab Set-aside based on the sum total of Distribution plus Recaptured Funds. [Keep in mind the 2009 change to the definition of Recaptured Funds, which are now only a repayment that a SHIP jurisdiction receives if it provides SHIP funding for a housing project, but this funding is ultimately not used to assist eligible households.]
Compliance with the Income Set-aside, on the other hand, is calculated based on the total of all sources of SHIP revenue, including carry forward funds and program income.
Question:
The annual report asks for information on Extremely Low Income (ELI) households? Is there a requirement to assist a specific number of ELI applicants? I do not see a space to track ELI on the SHIP tracking spreadsheet.
Answer:
There is not a “Set-Aside” requirement to assist a specific number of ELI applicants. However, ELI households are part of the larger group of Very Low Income (VLI) SHIP recipients, and the Income Set-Aside requires at least 30 percent of all SHIP funds to be dedicated to VLI households. The Coalition has updated the SHIP tracking spreadsheet to include columns for collecting information about ELI households. The free updated version is available for download for the Coalition’s website (http://www.flhousing.org/) and directly from Florida Housing’s online reporting website.
Question:
I have a question about the section of Form 2 that addresses the homeownership and construction/rehabilitation set-asides. The amount of SHIP funds we have expended and committed to compliance with these set-asides is significant. According to the annual report, it even exceeds the amount of the Trust Fund used to calculate set-aside compliance. Do we need to add an explanation as to why this amount is greater than 100% of the Trust Fund?
Answer:
No special explanation is needed. Consider how “Trust Fund” is defined for this question: compliance with these two set-asides is calculated as a percentage of the sum total of the Distribution plus Recaptured Funds. However, several communities receive a significant amount of program income, which they also spend on homeownership and/or construction or rehabilitation activities. Therefore, it is common in many jurisdictions that this percentage exceeds 100% of the Trust Fund. This question illustrates an important lesson about Program Income, which may be expended on activities that do not comply with the homeownership and the construction/rehab set-asides. If your jurisdiction receives a significant amount of program income, you could dedicate it to a rental project, for example.
Question:
I have a Multi-Family Rental Rehabilitation project with a $650,000 SHIP funding agreement on it. SHIP pays $150,000 for acquisition and $500,000 for rehabilitation work. On my tracking spreadsheet and annual report, can I count the entire $650,000 towards compliance with the Construction/Rehab set-aside? Alternatively, should I not count the $150,000 since it pays for acquisition, not construction or repair work?
Answer:
The full $650,000 in this case should be reported towards compliance with the Construction/Rehab set-aside. SHIP funds helped finance a project that included a significant amount of rehabilitation, so the full amount of SHIP assistance counts towards compliance. There is an even more common example of SHIP assistance that follows the same rule. Consider the assistance your jurisdiction provides to help a SHIP household buy an existing house. Your jurisdiction spends only a small amount to repair this house—a majority of SHIP assistance is devoted to down payment and closing cost assistance. Yet the full amount of SHIP assistance counts towards compliance with the Construction/Rehab set-aside, since SHIP helped buy a house that was repaired. Furthermore, in this example it is not even necessary for a portion of SHIP to pay for repairs. Set-aside compliance is interpreted broadly. Compliance is achieved so long as you can document that some source of money paid for repairs, and repairs were completed during the period 12 months prior to through to 12 months after the purchase.
Question:
The Annual Report seems to contradict with the SHIP Statute when it defines what funds to count towards compliance with the homeownership and construction/rehab set-asides. The Statute indicates that only the distribution—not program income or recaptured funds—must comply with these set asides. This is different than the wording on the Annual Report for the Income Set-Aside:
(a) At least 65 percent of the funds made available in each county and eligible municipality from the local housing distribution must be reserved for home ownership for eligible persons.
(b) At least 75 percent of the funds made available in each county and eligible municipality from the local housing distribution must be reserved for construction, rehabilitation, or emergency repair of affordable, eligible housing.
(e)2. At least 30 percent of the funds deposited into the local housing assistance trust fund must be reserved for awards to very-low-income persons
Note that (a) and (b) address the “local housing distribution”. The Distribution is shown to be distinct from Program income and recaptured funds, as seen in this section of 420.9075:
(6) Each county or eligible municipality receiving local housing distribution moneys shall establish and maintain a local housing assistance trust fund. All moneys of a county or an eligible municipality received from its share of the local housing distribution, program income, recaptured funds, and other funds received
Is there a contradiction?
Answer:
The SHIP Statute does address this topic—read further down in the same section of the Statute that you reference. Subsection (k) indicates that program income is exempt from the homeownership and construction/rehab set-aside requirements. Yet this section does not mention recaptured funds, so they are not exempt from the set-aside requirements.
(k) Funds from the local housing distribution not used to meet the criteria established in paragraph (a) or paragraph (b) or not used for the administration of a local housing assistance plan must be used for housing production and finance activities, including, but not limited to, financing the purchase of existing units, providing rental housing, and providing home ownership training to prospective home buyers and owners of homes assisted through the local housing assistance plan. Notwithstanding the provisions of paragraphs (a) and (b), program income as defined in s. 420.9071(24) may also be used to fund activities described in this paragraph.
Furthermore, the SHIP Rule explicitly exempts the expenditure of program income from compliance with these set-asides, and this exemption does not include recaptured funds.
Finally, the SHIP Statute gives Florida Housing authority to clarify SHIP Rules:
420.9072(9) The corporation shall adopt rules necessary to implement ss. 420.907-420.9079.
On the subject of set-aside compliance, Florida Housing has done just that. The annual report—which is authorized by the SHIP Rule—explicitly indicates that recaptured funds must be expended in compliance with the two set-asides.
MORE: There is more to be said about set-aside compliance. Review the following videos on this topic. Each of the videos are about 7 minutes each.
To advance or back-up the video, use your cursor to click on the red dot below the video, hold down and drag it left or right.
Homeownership Set-Aside
Construction Set-Aside
Income Set-Aside
Deadline Questions
Question:
On the annual report for my close out distribution, I list a small amount of unspent SHIP funds. The amount is only $300 and I listed it in the Unencumbered Column on Form 1. Why do I get the following error messages? “There are "UnEncumbered" dollar amounts listed in a "CloseOut" year report.” “There are "UnEncumbered" units listed in a "CloseOut" year report.”
Answer:
Recognize first that it is common to have a small amount of unspent SHIP funds from a close out distribution and this is not a violation of the expenditure deadline. You are technically correct that this unspent amount is comprised of unencumbered funds. However, the annual report instructions indicate that you must not list these funds in the Unencumbered Column on Form 1. In this way, the Web Annual Report will automatically calculate on the bottom of Form 1 that this amount of money will be carried forward to the next distribution. Similarly, it will include this carry forward as a separate type of revenue on the annual report for this next oldest distribution.
Question:
My jurisdiction has not yet expended all the funds in the close out distribution. How do I request an extension for turning in my annual reports after September 15, so we can quickly finish expending funds?
Answer:
There is no available extension for the annual report, which must be turned in on or before September 15th. On September 15, you must turn in a report that illustrates that your jurisdiction has not yet finished expending funds. You can, however, request an extension to your expenditure deadline for your close out distribution.
First, recognize that it is common to have a small amount of unspent SHIP funds from a close out distribution; this is not a violation of the expenditure deadline. Whether the amount is $300 or $3000, this small unencumbered amount is insufficient to fully assist the next recipient for any of your strategies. In such a case, you may simply “carry forward” these remaining dollars. The new Web Report will identify these unencumbered funds as the carry forward amount and will automatically add this amount as the carry forward revenue on the 07/08 annual report.
In the case at hand, however, the remaining amount of encumbered and unencumbered funds is not considered carry forward funds. Your jurisdiction may have tens or hundreds of thousands of SHIP dollars left to spend. As soon as you discover that you will miss the expenditure deadline, you should request an expenditure deadline extension from Florida Housing. This request must be done in writing. Direct your correspondence to SHIP staff member Terry Auringer.
Your request should include:
*The exact amount of funds still encumbered and/or unencumbered, and the number of months for which an extension is requested.
*A brief explanation of why these funds have not been expended within the three year deadline. Was there, for example, a lack of contractors or materials, or is the jurisdiction still working to achieve some set-aside compliance?
*Outline your plan to expend funds quickly, along with a timeline and estimate of when the funds will be fully expended. Indicate if changes have been made to SHIP strategies to address the delays. If a strategy has not been working, have you redesigned it, replaced it, or reallocated funds to a strategy known to be successful?
Question:
What about the SHIP distribution facing the June 30 encumbrance deadline—can I request an encumbrance deadline extension?
Answer:
Florida Housing does not offer an encumbrance deadline extension, only an extension of the expenditure deadline. If you have not encumbered all of the required funds by the June 30th deadline, call to inform Florida Housing’s SHIP staff members Darlene Raker and Terry Auringer. Since your annual reports include expenses and encumbrances through June 30 of this year, the reports you create will show that your jurisdiction has not met the encumbrance deadline. However, work diligently to commit all the required funds—you may be able to get them all committed before the September 15th deadline. If you do, you can include a cover letter with your reports to provide Florida Housing with this update. If you are not able to encumber all these funds by September, however, your cover letter should indicate a plan to quickly encumber the funds. Florida Housing has the discretion to require that you receive a site visit from the Florida Housing Coalition to help implement a plan to quickly encumber these funds.
Question:
Where exactly does the SHIP statute indicate the encumbrance and expenditure deadlines?
Answer:
The details of these deadlines are outlined in the SHIP Rule Chapter 67-37.005(6)(f)1,2, Florida Administrative Code, states:
“1. The county or eligible municipality to encumber the local housing distribution funds deposited into the local housing assistance trust fund for each State fiscal year by June 30 one year following the end of the applicable State fiscal year; 2. The expenditure of the local housing distribution deposited into the local housing assistance trust fund by any eligible person or eligible sponsor within 24 months of the close of the applicable State fiscal year unless otherwise extended as provided at Subsection 67-37.002 (8), F.A.C.;”
The phrasing of this portion of the SHIP Rule can be confusing. The phrase “within 24 months of the close of the applicable State fiscal year” means three years after you first started receiving this distribution. Consider, for example, that the end of the 08/09 fiscal year is June 30, 2009. 24 months from this date is June 30, 2011, which is three years from when you first received the money.
Question:
Our auditors are questioning the way we are tracking encumbrances for our Multi-Family Rehabilitation strategy. The funds were encumbered before the encumbrance deadline and I have logged them in on the tracking spreadsheet as Recipient 1, 2, 3 etc. We will not know the names of the recipients until the project is complete and the money is fully expended. Is this an acceptable tracking process and have we properly met the encumbrance deadline?
Answer:
Yes, you have met the encumbrance deadline. The process you describe is a common and acceptable method used to keep track of the SHIP funds encumbered but not yet fully expended. During the period between when you commit/encumber SHIP funds to this project and when you record that the funds are fully expended, you may not know the name of the household that will receive the repair assistance. Naturally, all the households that will be listed in the future on your SHIP tracking spreadsheet must be income eligible.
Question:
My jurisdiction is ahead of schedule in meeting its expenditure deadline. Last September, I turned in a 06/07 annual report that showed that these funds were fully expended at the end of two years. This year, should I just turn in reports for the “interim years”: 07/08 and 08/09?
Answer:
No, you must turn in a 06/07 close out annual report which shows the same information as the report last September. However, the annual report form has been updated since last year and you must now enter this information using the new online reporting system.
Question:
I have prepared for the SHIP encumbrance deadline by fully encumbering all of the funds in my County’s “First Interim Distribution” with the exception of the final $5000. This amount is too small to commit to any of our latest projects, which are each commitments of about $30,000. Is it all right to simply report this $5000 as currently unencumbered?
Answer:
No, the annual report for this First Interim Distribution must show that the sum total of your SHIP money is either expended or is encumbered. Therefore, here are several solutions to help you achieve compliance with the encumbrance deadline. First, try an easy solution: Check if you have fully expended the 10 percent administrative budget associated with this distribution. If you have not, then you could encumber this $5000 as some of the remaining money from the 10 percent administrative budget that you plan to expend in the next twelve months. If this is not applicable to your situation, try a second easy solution. Review the projects that currently have fund commitments from the First Interim Distribution. Do any of these commitments fall short of the maximum award amount? If so, perhaps you could increase the commitment for a project by the $5000 in your question.
Sometimes neither of these suggested ‘easy solutions’ may be applicable to your situation. The final solution for addressing your problem is commonly referred to as establishing a “Negative Carry Forward”. Commit funds from the First Interim Distribution to one of the $30,000 projects that you referenced. Yet since there is not $30,000 of revenue remaining in the First Interim Distribution, the sum total of the expenses and encumbrances listed on this distribution’s annual report will be a number that slightly exceeds the revenue on this report. The commitment of this $30,000 is only possible by temporarily ‘borrowing’ money from the next distribution, and the annual report you create for the Second Interim Distribution will include a -$25,000 negative carry forward as a source of revenue. Put another way, the report for the Second Interim Distribution will show a little less revenue available since the report for the previous distribution shows more expenditures plus encumbrances than revenue. This solution is not uncommon, and Florida Housing accepts the practice of temporarily establishing a negative carry forward to show that the First Interim Distribution complies with the encumbrance deadline.
Carry Forward Questions
Question:
As I learn about SHIP annual reports, I need more guidance and an explanation of “carry forward” funds.
Answer:
Three years after receiving a SHIP distribution, you must determine if any small amount of funding remains unencumbered. It is common to have a small amount of unspent SHIP funds from a close out distribution and this is not a violation of the expenditure deadline. Yet whether the amount is $300 or $3000, you may find that this small unencumbered amount is insufficient to fully assist the next household waiting for assistance from any of your strategies. In such a case, you may simply “carry forward” these remaining dollars. This means that the small amount should be assigned as a source of revenue on the annual report for the next SHIP distribution. The new online reporting system will automatically identify a close out distribution’s unencumbered funds as the carry forward amount and will add this amount as the carry forward revenue on the annual report for the first interim distribution. In order for the system to successfully accomplish this automated task, do not report these remaining unencumbered funds in the unencumbered column of Form 1. In other words, your close out annual report should not have any dollar amounts reported in the encumbered or unencumbered columns.
Question:
As I review the tracking spreadsheet for my close out distribution, I have discovered that I have “over expended” this distribution. That is to say, the expenses listed on the spreadsheet exceed the revenue by $1200. Please advise me how to proceed.
Answer:
This is not a problem since the annual report instructions indicate that your close out annual report may indicate a carry forward amount that is either a positive or negative number. The new online reporting system will identify this negative carry forward amount and will automatically add this amount to the revenue section of the annual report for the jurisdiction’s first interim distribution.
As I learn about SHIP annual reports, I need more guidance and an explanation of “carry forward” funds.
Answer:
Three years after receiving a SHIP distribution, you must determine if any small amount of funding remains unencumbered. It is common to have a small amount of unspent SHIP funds from a close out distribution and this is not a violation of the expenditure deadline. Yet whether the amount is $300 or $3000, you may find that this small unencumbered amount is insufficient to fully assist the next household waiting for assistance from any of your strategies. In such a case, you may simply “carry forward” these remaining dollars. This means that the small amount should be assigned as a source of revenue on the annual report for the next SHIP distribution. The new online reporting system will automatically identify a close out distribution’s unencumbered funds as the carry forward amount and will add this amount as the carry forward revenue on the annual report for the first interim distribution. In order for the system to successfully accomplish this automated task, do not report these remaining unencumbered funds in the unencumbered column of Form 1. In other words, your close out annual report should not have any dollar amounts reported in the encumbered or unencumbered columns.
Question:
As I review the tracking spreadsheet for my close out distribution, I have discovered that I have “over expended” this distribution. That is to say, the expenses listed on the spreadsheet exceed the revenue by $1200. Please advise me how to proceed.
Answer:
This is not a problem since the annual report instructions indicate that your close out annual report may indicate a carry forward amount that is either a positive or negative number. The new online reporting system will identify this negative carry forward amount and will automatically add this amount to the revenue section of the annual report for the jurisdiction’s first interim distribution.
Program Income & Recaptured Funds Questions
Question:
This question is related to Form 1. Please explain the definition change for Recaptured Funds, which was established in May, 2009. What changes do SHIP administrators need to make?
Answer:
Recaptured Funds are now defined as only one thing: a repayment that a SHIP jurisdiction receives if it provides SHIP funding for a housing project, but this funding is ultimately not used to assist eligible households. Here is the official new definition of Recaptured Funds, now that the SHIP Statute has been changed:
“Recaptured funds” means funds that are recouped by a county or eligible municipality in accordance with the recapture provisions of its local housing assistance plan pursuant to s. 420.9075(5)(h)(g) from eligible persons or eligible sponsors, which funds were not used for assistance to an eligible household for an eligible activity, when there is a default on the terms of a grant award or loan award.”
Now that Senate Bill 360 has changed the definition of recaptured funds, this means that all other types of repayments that a SHIP office may receive are categorized as program income, including money repaid when a SHIP lien it triggered.
SHIP Administrators should change their SHIP lien and LHAP if it makes any reference to recaptured funds that does not meet this new definition. For example, if the LHAP currently indicates that recipients must pay back SHIP assistance as recaptured funds if they sell their house before the end of 10 years, this should be changed to reflect the new definition. This also affects the annual reports. Administrators should use the new definition when reporting on revenue for the Close Out, Interim 1 and Interim 2 distributions.
Question:
I have a question about Program Income and Recaptured Funds. When a formerly assisted household repays money as required by the recapture agreement/SHIP lien, do I count this repayment revenue as recaptured funds or program income?
Answer:
This repayment is Program Income, since Senate Bill 360 was signed into law in May of 2009. This bill changed the statutory definition of Recaptured Funds, which are now defined as only one thing: repayment that a SHIP jurisdiction receives if it provides SHIP funding for a housing project, but this funding is ultimately not used to assist eligible households. Here is the official new definition of Recaptured Funds:
“Recaptured funds” means funds that are recouped by a county or eligible municipality in accordance with the recapture provisions of its local housing assistance plan pursuant to s. 420.9075(5)(h)(g) from eligible persons or eligible sponsors, which funds were not used for assistance to an eligible household for an eligible activity, when there is a default on the terms of a grant award or loan award.”
This definition change means that all other types of repayments that a SHIP office may receive are categorized as program income, including money repaid when a SHIP lien it triggered. Remember, the most significant difference between Program Income and Recaptured Funds is that a small portion of Program Income may be expended on additional administrative expenses—above and beyond a jurisdiction’s 10 percent administrative budget. No Recaptured Funds may be used for this purpose.
Question:
You recently provided an example of the new definition of “Recaptured Funds”. The SHIP Jurisdiction provided a non-profit a check for $100,000 and they paid back $50,000 they could not spend. This $50,000 is to be considered “Recaptured Funds.” What if, by contrast, you have an executed contract with a non-profit for $100,000 and only provide the funds on a reimbursement basis? The nonprofit sends a letter indicating they cannot spend the last half of the encumbered funds. In this case, does the remaining $50,000 of this contract count as “Recaptured Funds”? If not, how is it treated?
Answer:
This is not an example of recaptured funds according to the new definition. In your example, the nonprofit receives funds on a reimbursement basis. The final $50,000 that was encumbered to be paid to the nonprofit has never actually left your Local Housing Trust Fund. The new definition of recaptured funds discusses money “recouped by a county or eligible municipality”. In this case, there is no money that must be repaid or “recouped” by the local SHIP program. Instead, money that is in your trust funds was encumbered but then became unencumbered when the nonprofit’s project fell through. Do not categorize this as recaptured funds. Simply commit this $50,000 to other projects.
Question:
What expenses can program income pay for?
Answer:
Section 420.9075 (6) of the SHIP Statute states:
“The cost of administering the program may not exceed 10 percent of the local housing distribution plus 5 percent of program income deposited into the trust fund, except that small counties, as defined in s. 120.52(17), and eligible municipalities receiving a local housing distribution of up to $350,000 may use up to 10 percent of program income for administrative costs.”
Administrative costs are the same expenses that may be paid for with the 10 percent administrative budget: salary, travel, advertising, and much more. The remainder of your program income must be dedicated to paying for SHIP assistance to applicants, using the strategies in your LHAP.
This question is related to Form 1. Please explain the definition change for Recaptured Funds, which was established in May, 2009. What changes do SHIP administrators need to make?
Answer:
Recaptured Funds are now defined as only one thing: a repayment that a SHIP jurisdiction receives if it provides SHIP funding for a housing project, but this funding is ultimately not used to assist eligible households. Here is the official new definition of Recaptured Funds, now that the SHIP Statute has been changed:
“Recaptured funds” means funds that are recouped by a county or eligible municipality in accordance with the recapture provisions of its local housing assistance plan pursuant to s. 420.9075(5)(h)(g) from eligible persons or eligible sponsors, which funds were not used for assistance to an eligible household for an eligible activity, when there is a default on the terms of a grant award or loan award.”
Now that Senate Bill 360 has changed the definition of recaptured funds, this means that all other types of repayments that a SHIP office may receive are categorized as program income, including money repaid when a SHIP lien it triggered.
SHIP Administrators should change their SHIP lien and LHAP if it makes any reference to recaptured funds that does not meet this new definition. For example, if the LHAP currently indicates that recipients must pay back SHIP assistance as recaptured funds if they sell their house before the end of 10 years, this should be changed to reflect the new definition. This also affects the annual reports. Administrators should use the new definition when reporting on revenue for the Close Out, Interim 1 and Interim 2 distributions.
Question:
I have a question about Program Income and Recaptured Funds. When a formerly assisted household repays money as required by the recapture agreement/SHIP lien, do I count this repayment revenue as recaptured funds or program income?
Answer:
This repayment is Program Income, since Senate Bill 360 was signed into law in May of 2009. This bill changed the statutory definition of Recaptured Funds, which are now defined as only one thing: repayment that a SHIP jurisdiction receives if it provides SHIP funding for a housing project, but this funding is ultimately not used to assist eligible households. Here is the official new definition of Recaptured Funds:
“Recaptured funds” means funds that are recouped by a county or eligible municipality in accordance with the recapture provisions of its local housing assistance plan pursuant to s. 420.9075(5)(h)(g) from eligible persons or eligible sponsors, which funds were not used for assistance to an eligible household for an eligible activity, when there is a default on the terms of a grant award or loan award.”
This definition change means that all other types of repayments that a SHIP office may receive are categorized as program income, including money repaid when a SHIP lien it triggered. Remember, the most significant difference between Program Income and Recaptured Funds is that a small portion of Program Income may be expended on additional administrative expenses—above and beyond a jurisdiction’s 10 percent administrative budget. No Recaptured Funds may be used for this purpose.
Question:
You recently provided an example of the new definition of “Recaptured Funds”. The SHIP Jurisdiction provided a non-profit a check for $100,000 and they paid back $50,000 they could not spend. This $50,000 is to be considered “Recaptured Funds.” What if, by contrast, you have an executed contract with a non-profit for $100,000 and only provide the funds on a reimbursement basis? The nonprofit sends a letter indicating they cannot spend the last half of the encumbered funds. In this case, does the remaining $50,000 of this contract count as “Recaptured Funds”? If not, how is it treated?
Answer:
This is not an example of recaptured funds according to the new definition. In your example, the nonprofit receives funds on a reimbursement basis. The final $50,000 that was encumbered to be paid to the nonprofit has never actually left your Local Housing Trust Fund. The new definition of recaptured funds discusses money “recouped by a county or eligible municipality”. In this case, there is no money that must be repaid or “recouped” by the local SHIP program. Instead, money that is in your trust funds was encumbered but then became unencumbered when the nonprofit’s project fell through. Do not categorize this as recaptured funds. Simply commit this $50,000 to other projects.
Question:
What expenses can program income pay for?
Answer:
Section 420.9075 (6) of the SHIP Statute states:
“The cost of administering the program may not exceed 10 percent of the local housing distribution plus 5 percent of program income deposited into the trust fund, except that small counties, as defined in s. 120.52(17), and eligible municipalities receiving a local housing distribution of up to $350,000 may use up to 10 percent of program income for administrative costs.”
Administrative costs are the same expenses that may be paid for with the 10 percent administrative budget: salary, travel, advertising, and much more. The remainder of your program income must be dedicated to paying for SHIP assistance to applicants, using the strategies in your LHAP.
‘Form 2, Form 3 & Attachments’ Questions
Form 2 Question:
I have a question about “Recap of Funding Sources” on Form 2. One of the sources listed on this table is “owner equity”. I thought that our SHIP office was supposed to report any money an applicant contributes to pay for his or her overall housing assistance. But my co-worker has told me that we are supposed to calculate the amount of equity that a rehabilitation applicant owns in a house to be repaired. Please provide guidance.
Answer:
You are correct. On the “Recap of Funding Sources”, record only the amounts that an applicant pays to purchase a house, to repair a dwelling, or to in some other way pay for a portion of the housing assistance provided.
Form 2 Question:
I have a question about “Recap of Funding Sources” on Form 2. Our jurisdiction provided SHIP funds to the local Housing Authority to build 30 of the 171 units in a new rental project. By the end of the fiscal year, 30 units were built and occupied. We are assigning 15 of them the close-out distribution, and we will report the SHIP assistance for construction of the other 15 on the annual report for the next distribution. We have split them up in this way to help meet very-low-income set-aside requirements.
When I add up the public and private contributions to the “Recap of Funding Sources”, how much should I attribute to each batch of units on the two separate reports? Should I divide the amount of those funds in half, or should I count them all on both reports?
Answer:
Assign the amount of public and private funds based on the proportion of total units that appear on an annual report. It this case it is simple: each report contains half of the total units, so equally split the public and private funds between the reports. If 10 units were assigned to the close out distribution and 20 to the next distribution, then one third of public and private funds would be added to the former report with the other two thirds on the latter report.
Question:
I have a question on Form 2 about “Project Funding: Expended Funds”
Sometimes our jurisdiction provides SHIP assistance as a loan and grant to the same household. The majority of assistance is a forgivable loan, although a small portion is granted. How would I count this on Form 2, which asks for numbers of Loans and Grants?
Answer:
Since the majority of assistance was a loan, count the full amount of assistance as a loan on the annual report. The reverse would be true if a household received assistance mostly as a grant.
Question:
On the "Regulatory Reform Certification" page that accompanies the Annual Report, how do we calculate the dollar amounts for Sections 3 and 4?
Answer:
Section 67-37.019 (5) of the SHIP Rule outlines the following “Incentive Strategy” requirements for all SHIP jurisdictions:
The local government staff or entity with administrative authority for a local housing assistance plan shall provide documented evidence to the Corporation or its designated monitoring agent, that:
(a) Permits, as defined in Sections 163.3164(7) and (8), F.S., for affordable housing projects are expedited to a greater degree than other projects; and
(b) There is an ongoing process for review of local policies, ordinances, regulations, and plan provisions that increase the cost of housing prior to their adoption.
The “Certification for Implementation of Regulatory Reform Activities Required by SHIP” is one main method that the Florida Housing Finance Corporation uses to document a jurisdiction’s compliance with this SHIP requirement.
Sections 1 and 2: These are simply statements to evidence that the jurisdiction has implemented the incentive Strategies (a) and (b) that are referenced in the SHIP Rule.
Section 3: First, enter the Fiscal Year that is ending this June 30.
Talk with the group or individual in your jurisdiction that performs the “Ongoing Review” SHIP incentive strategy and ask them about their review process during the 12 months of this fiscal year. Include in Section 3 the group’s per unit estimate of housing cost increases for new construction that have resulted from new local policies, ordinances, regulations, and more that were considered during the state fiscal year. If there have been no new policies to increase costs, enter $0.
Section 4: Similar to Section 3, provide in Section 4 the group’s per unit estimate of housing cost increases for rehabilitation activities that have resulted from new local policies, ordinances, regulations and more that were considered during the state fiscal year. If there have been no new policies to increase costs, enter $0.
NOTE: The SHIP Statute and Rule provide no guidance or method by which a local jurisdiction must determine the cost increase that will result from a new rule, ordinance, fee, etc. Such estimates are a local determination, and the jurisdiction should retain back up material to justify the dollar amounts reported on this certification form, which is signed by the jurisdiction’s chief elected official.
I have a question about “Recap of Funding Sources” on Form 2. One of the sources listed on this table is “owner equity”. I thought that our SHIP office was supposed to report any money an applicant contributes to pay for his or her overall housing assistance. But my co-worker has told me that we are supposed to calculate the amount of equity that a rehabilitation applicant owns in a house to be repaired. Please provide guidance.
Answer:
You are correct. On the “Recap of Funding Sources”, record only the amounts that an applicant pays to purchase a house, to repair a dwelling, or to in some other way pay for a portion of the housing assistance provided.
Form 2 Question:
I have a question about “Recap of Funding Sources” on Form 2. Our jurisdiction provided SHIP funds to the local Housing Authority to build 30 of the 171 units in a new rental project. By the end of the fiscal year, 30 units were built and occupied. We are assigning 15 of them the close-out distribution, and we will report the SHIP assistance for construction of the other 15 on the annual report for the next distribution. We have split them up in this way to help meet very-low-income set-aside requirements.
When I add up the public and private contributions to the “Recap of Funding Sources”, how much should I attribute to each batch of units on the two separate reports? Should I divide the amount of those funds in half, or should I count them all on both reports?
Answer:
Assign the amount of public and private funds based on the proportion of total units that appear on an annual report. It this case it is simple: each report contains half of the total units, so equally split the public and private funds between the reports. If 10 units were assigned to the close out distribution and 20 to the next distribution, then one third of public and private funds would be added to the former report with the other two thirds on the latter report.
Question:
I have a question on Form 2 about “Project Funding: Expended Funds”
Sometimes our jurisdiction provides SHIP assistance as a loan and grant to the same household. The majority of assistance is a forgivable loan, although a small portion is granted. How would I count this on Form 2, which asks for numbers of Loans and Grants?
Answer:
Since the majority of assistance was a loan, count the full amount of assistance as a loan on the annual report. The reverse would be true if a household received assistance mostly as a grant.
Question:
On the "Regulatory Reform Certification" page that accompanies the Annual Report, how do we calculate the dollar amounts for Sections 3 and 4?
Answer:
Section 67-37.019 (5) of the SHIP Rule outlines the following “Incentive Strategy” requirements for all SHIP jurisdictions:
The local government staff or entity with administrative authority for a local housing assistance plan shall provide documented evidence to the Corporation or its designated monitoring agent, that:
(a) Permits, as defined in Sections 163.3164(7) and (8), F.S., for affordable housing projects are expedited to a greater degree than other projects; and
(b) There is an ongoing process for review of local policies, ordinances, regulations, and plan provisions that increase the cost of housing prior to their adoption.
The “Certification for Implementation of Regulatory Reform Activities Required by SHIP” is one main method that the Florida Housing Finance Corporation uses to document a jurisdiction’s compliance with this SHIP requirement.
Sections 1 and 2: These are simply statements to evidence that the jurisdiction has implemented the incentive Strategies (a) and (b) that are referenced in the SHIP Rule.
Section 3: First, enter the Fiscal Year that is ending this June 30.
Talk with the group or individual in your jurisdiction that performs the “Ongoing Review” SHIP incentive strategy and ask them about their review process during the 12 months of this fiscal year. Include in Section 3 the group’s per unit estimate of housing cost increases for new construction that have resulted from new local policies, ordinances, regulations, and more that were considered during the state fiscal year. If there have been no new policies to increase costs, enter $0.
Section 4: Similar to Section 3, provide in Section 4 the group’s per unit estimate of housing cost increases for rehabilitation activities that have resulted from new local policies, ordinances, regulations and more that were considered during the state fiscal year. If there have been no new policies to increase costs, enter $0.
NOTE: The SHIP Statute and Rule provide no guidance or method by which a local jurisdiction must determine the cost increase that will result from a new rule, ordinance, fee, etc. Such estimates are a local determination, and the jurisdiction should retain back up material to justify the dollar amounts reported on this certification form, which is signed by the jurisdiction’s chief elected official.
FORM 4 Questions
Question about ‘Expended Funds’:
On Form 4, I added an amount of expended funds per strategy that exactly matches the figures reported on Form 1. Yet the Review Tab still shows an error. Specifically, it indicates:
“There are no "Expended Funds" records for the "Homebuyer Assistance" strategy listed under the Distributed Funds' "Home Ownership" section on Form 1.”
Please provide guidance.
Answer:
This is a result of an update Florida Housing has made to the web annual report. Florida Housing has now programmed the web system to total up the expended funds for each strategy. Now, a “Summary by Strategy” total appears at the end of the list of expended funds you have added to Form 4.
The error in this case is caused by the fact that this jurisdiction labeled a strategy “Homebuyer Assistance” on Form 1, but called it “Purchase Assistance” next to the name of each buyer listed on Form 4. In order for Florida Housing’s new programming to work properly, the name of each strategy must be identical on Forms 1 and 4. Pay attention to capitalization, since this also makes a difference. In this case, the jurisdiction decided to change the strategy name on Form 1 to “Purchase Assistance” and the error message disappeared.
Question about ‘Administrative Expenses’:
For this Form 4 question, do you count all of a jurisdiction’s expenses paid for administration and program implementation? In other words, should I include the administrative expenses that our jurisdiction paid with the five percent of our program income, as allowed by the SHIP Statute?
Answer:
No. You must count only the administrative expenses paid with the 10 percent administrative budget. Do not include administrative expenses paid with program income. You should also not count any program dollars that paid for ‘service delivery fees’ when a sub recipient implemented one or more of your SHIP strategies.
Question about ‘Administrative Expenses’:
Form 4 asks for a breakdown of Administrative expenses by the Local Government and by its Sub Recipients. Our city hires an individual to teach our homebuyer classes. We also contract with a housing inspector who handles our rehabilitation inspections on a fee for service basis. Are these individuals considered Sub Recipients?
Answer:
Florida Housing’s staff has provided this answer:
This term was added to identify those organizations or individuals that are contracted by the local government to administer a portion of the SHIP program and are compensated by SHIP “Administrative Expenditures” funds. The list of Sub Recipients will be reported on the annual report to allow Florida Housing to know where all Administrative Expenditure funds are being spent. This requirement is not intended to require you to list your lenders, inspectors or other vendors that are involved in the SHIP process that are compensated through program funds. Here is the simple way to view this: if they are paid by your traditional ten percent administrative budget, then they should be listed.
Question about Incentive Strategies:
In filling out Form 4 of the annual report, I checked our jurisdiction’s old reports, which referenced the Local Housing Assistance Plan (LHAP). Should I reference the LHAP that was in effect for the close out distribution, or the current LHAP which just went into effect?
Answer:
Reference your most recent LHAP for purposes of the question about incentive strategies. You must provide the most updated information about how these incentive strategies are implemented. Commonly, jurisdictions write very little here beyond “strategy is fully implemented.”
Question:
Do I have to complete Form 4 for each of the three distributions reported this September?
Answer:
No, the online reporting system only requires a jurisdiction to complete the data for Form 4 once, when creating the close-out annual report. In the past, jurisdictions were required to answer several Form 4 questions with data specific to each of three distributions. Now Florida Housing will only collect data specific to the closeout distribution for the Form 4 questions about average strategy production costs, administrative expenditures for sub recipients, and sources of recaptured funds and program income.
There is now only one Form 4 question that requires data specific to each of three distributions. As required by SHIP reporting instructions, each local government must provide a list of recipients for whom assistance is complete and funds are fully expended. This data must be provided for each strategy, including names, addresses, zip codes and amounts expended for each fiscal year reporting to Florida Housing.
Question about Defaults and Foreclosures:
Form 4 asks about mortgage foreclosures and mortgage defaults. Please help me understand how to track and report this information.
Answer:
This question only requests information about defaults of the first mortgage on the home of a household that has received SHIP purchase assistance. Do not collect information about defaults of SHIP liens. A default occurs when a homeowner falls behind on paying the first mortgage. By contrast, a foreclosure occurs when a homeowner goes through the legal process and loses his or her house to foreclosure. Not all of those who are in default will eventually foreclose.
You can track this information by maintaining a list whenever you hear that a former SHIP homebuyer has fallen late in payments for the first mortgage on the unit. The recipient may call you to request help. Your county's legal department may receive a “lis pendens” notification. Later on, you should check back to learn if any recipients actually lost their homes to foreclosure. This is all that is required by way of tracking this data.
It is possible that a person may fall into default more than once in the 12 month period on which you are reporting—this household should only be counted as one default during the 12 month period. It is also possible that this household might also default at some time in the next 12 months. In this case, you will count and report this household’s default in the next Annual Report you submit a year from now. Similarly, a household might count as a default in one 12 month period and count as a foreclosure in the next 12 month period.
On Form 4, I added an amount of expended funds per strategy that exactly matches the figures reported on Form 1. Yet the Review Tab still shows an error. Specifically, it indicates:
“There are no "Expended Funds" records for the "Homebuyer Assistance" strategy listed under the Distributed Funds' "Home Ownership" section on Form 1.”
Please provide guidance.
Answer:
This is a result of an update Florida Housing has made to the web annual report. Florida Housing has now programmed the web system to total up the expended funds for each strategy. Now, a “Summary by Strategy” total appears at the end of the list of expended funds you have added to Form 4.
The error in this case is caused by the fact that this jurisdiction labeled a strategy “Homebuyer Assistance” on Form 1, but called it “Purchase Assistance” next to the name of each buyer listed on Form 4. In order for Florida Housing’s new programming to work properly, the name of each strategy must be identical on Forms 1 and 4. Pay attention to capitalization, since this also makes a difference. In this case, the jurisdiction decided to change the strategy name on Form 1 to “Purchase Assistance” and the error message disappeared.
Question about ‘Administrative Expenses’:
For this Form 4 question, do you count all of a jurisdiction’s expenses paid for administration and program implementation? In other words, should I include the administrative expenses that our jurisdiction paid with the five percent of our program income, as allowed by the SHIP Statute?
Answer:
No. You must count only the administrative expenses paid with the 10 percent administrative budget. Do not include administrative expenses paid with program income. You should also not count any program dollars that paid for ‘service delivery fees’ when a sub recipient implemented one or more of your SHIP strategies.
Question about ‘Administrative Expenses’:
Form 4 asks for a breakdown of Administrative expenses by the Local Government and by its Sub Recipients. Our city hires an individual to teach our homebuyer classes. We also contract with a housing inspector who handles our rehabilitation inspections on a fee for service basis. Are these individuals considered Sub Recipients?
Answer:
Florida Housing’s staff has provided this answer:
This term was added to identify those organizations or individuals that are contracted by the local government to administer a portion of the SHIP program and are compensated by SHIP “Administrative Expenditures” funds. The list of Sub Recipients will be reported on the annual report to allow Florida Housing to know where all Administrative Expenditure funds are being spent. This requirement is not intended to require you to list your lenders, inspectors or other vendors that are involved in the SHIP process that are compensated through program funds. Here is the simple way to view this: if they are paid by your traditional ten percent administrative budget, then they should be listed.
Question about Incentive Strategies:
In filling out Form 4 of the annual report, I checked our jurisdiction’s old reports, which referenced the Local Housing Assistance Plan (LHAP). Should I reference the LHAP that was in effect for the close out distribution, or the current LHAP which just went into effect?
Answer:
Reference your most recent LHAP for purposes of the question about incentive strategies. You must provide the most updated information about how these incentive strategies are implemented. Commonly, jurisdictions write very little here beyond “strategy is fully implemented.”
Question:
Do I have to complete Form 4 for each of the three distributions reported this September?
Answer:
No, the online reporting system only requires a jurisdiction to complete the data for Form 4 once, when creating the close-out annual report. In the past, jurisdictions were required to answer several Form 4 questions with data specific to each of three distributions. Now Florida Housing will only collect data specific to the closeout distribution for the Form 4 questions about average strategy production costs, administrative expenditures for sub recipients, and sources of recaptured funds and program income.
There is now only one Form 4 question that requires data specific to each of three distributions. As required by SHIP reporting instructions, each local government must provide a list of recipients for whom assistance is complete and funds are fully expended. This data must be provided for each strategy, including names, addresses, zip codes and amounts expended for each fiscal year reporting to Florida Housing.
Question about Defaults and Foreclosures:
Form 4 asks about mortgage foreclosures and mortgage defaults. Please help me understand how to track and report this information.
Answer:
This question only requests information about defaults of the first mortgage on the home of a household that has received SHIP purchase assistance. Do not collect information about defaults of SHIP liens. A default occurs when a homeowner falls behind on paying the first mortgage. By contrast, a foreclosure occurs when a homeowner goes through the legal process and loses his or her house to foreclosure. Not all of those who are in default will eventually foreclose.
You can track this information by maintaining a list whenever you hear that a former SHIP homebuyer has fallen late in payments for the first mortgage on the unit. The recipient may call you to request help. Your county's legal department may receive a “lis pendens” notification. Later on, you should check back to learn if any recipients actually lost their homes to foreclosure. This is all that is required by way of tracking this data.
It is possible that a person may fall into default more than once in the 12 month period on which you are reporting—this household should only be counted as one default during the 12 month period. It is also possible that this household might also default at some time in the next 12 months. In this case, you will count and report this household’s default in the next Annual Report you submit a year from now. Similarly, a household might count as a default in one 12 month period and count as a foreclosure in the next 12 month period.
Annual Audits
Question:
In addition to the annual reports we submit, is there another report we must submit?
Answer:
Yes, you must submit a copy of your jurisdiction’s annual audit. This is an independent review of the General Ledger, which provides a method for ensure that your SHIP annual reports ultimately reconcile with your jurisdiction’s General Ledger related to SHIP revenue and expenses. The audit is sometimes referred to as a Comprehensive Annual Financial Review (CAFR). Florida Housing’s staff has provided the following guidance on what they specifically look for when reviewing CAFRs:
Separately stated Trust Fund for SHIP and a Separately Trust Fund for HHR (Can Not be combined in the reporting format)
“Findings” section in the FSAA (if applicable)
Florida Housing requests that you email the “link” or attach the document(s) to an email, rather than providing a paper copy.
In addition to the annual reports we submit, is there another report we must submit?
Answer:
Yes, you must submit a copy of your jurisdiction’s annual audit. This is an independent review of the General Ledger, which provides a method for ensure that your SHIP annual reports ultimately reconcile with your jurisdiction’s General Ledger related to SHIP revenue and expenses. The audit is sometimes referred to as a Comprehensive Annual Financial Review (CAFR). Florida Housing’s staff has provided the following guidance on what they specifically look for when reviewing CAFRs:
Separately stated Trust Fund for SHIP and a Separately Trust Fund for HHR (Can Not be combined in the reporting format)
“Findings” section in the FSAA (if applicable)
Florida Housing requests that you email the “link” or attach the document(s) to an email, rather than providing a paper copy.
Properly Tracking SHIP Funds
Question:
Last September, I had my first experience creating the SHIP annual reports for our county. It took a lot longer than I thought it would to compile the data. What can I do now to prepare for the next reports due next September?
Answer:
The key to creating timely and accurate annual reports is maintaining an accurate SHIP tracking system. The creation of an annual report actually begins 15 months before you have to turn it in. When you first receive a new SHIP allocation on July 1st, create a system to track how this money will be encumbered and then expended. The SHIP administrator in each jurisdiction is required by the SHIP Rule to maintain a tracking system (Rule 67-37.019, FAC). You cannot simply rely on data provided by your finance department. Although they maintain detailed records of SHIP expenditures, finance department staff may not track SHIP encumbrances—and they almost certainly do not track demographic data or compliance with SHIP set-asides. It is essential for you to track this information, and you must do so on a very regular basis. Update your tracking system more often than once a month. Florida Housing’s SHIP staff has indicated that your tracking system should be updated often enough that they can call you on any given day if they need to know how much of your jurisdiction’s SHIP funding is currently expended, encumbered and unencumbered.
Entering updated data into the tracking system is at least a two-step process. After determining an applicant’s eligibility, you provide an award letter that commits SHIP funds specifically to this applicant. This is when you should first enter information about the applicant into your tracking system, along with the amount of the SHIP commitment. It is only later, however, that you start expending these SHIP funds. For example, it is several weeks or over a month later when a home buyer applicant receives SHIP payment assistance at the time of closing. At this time, you should update your tracking system; the funds that had been committed for the applicant are now officially expended.
Each SHIP jurisdiction should document that the annual report it generates reconciles with the general ledger maintained by the jurisdiction’s finance department. This helps document compliance with the Florida Single Audit Act (FSAA), which directs auditors to “determine whether required reports include all activity in the reporting period”. The State Projects Compliance Supplement outlines several suggested audit procedures that an auditor can use to determine whether or not the SHIP reports contain all required activity (and reconcile to the general ledger), including the following: “Select a sample of reports and test specified line items for accuracy and completeness.” (from State Projects Compliance Supplement Part 3, Section H. “Reporting”).
Work with your finance department to ensure your compliance with the FSAA. Set up a way to periodically meet with finance staff to reconcile the general ledger with your SHIP tracking system. Consider suggesting a system to communicate to the finance department whether an expense should be charged to the 04/05 SHIP distribution, for example, or to the 05/06 distribution.
There are many ways that the Coalition can help you reach the goal of creating complete and accurate SHIP annual reports. First, the Coalition has designed an Excel-based SHIP tracking system. It has been used by many SHIP jurisdictions for years, and is available to you at no charge. Call the Coalition for technical assistance on properly setting up a tracking system, accurately updating information, or using the tracking system to create the annual reports that you will submit to Florida Housing. Some questions require more assistance than others; the Coalition may need to visit you in your community to assist you with your tracking and reporting questions. After all, some SHIP administrators have inherited a faulty, unorganized or inaccurate SHIP tracking system. The Coalition can assist you with getting your tracking system back on track by helping you work with your finance department to reconcile your system with the general ledger.
Last September, I had my first experience creating the SHIP annual reports for our county. It took a lot longer than I thought it would to compile the data. What can I do now to prepare for the next reports due next September?
Answer:
The key to creating timely and accurate annual reports is maintaining an accurate SHIP tracking system. The creation of an annual report actually begins 15 months before you have to turn it in. When you first receive a new SHIP allocation on July 1st, create a system to track how this money will be encumbered and then expended. The SHIP administrator in each jurisdiction is required by the SHIP Rule to maintain a tracking system (Rule 67-37.019, FAC). You cannot simply rely on data provided by your finance department. Although they maintain detailed records of SHIP expenditures, finance department staff may not track SHIP encumbrances—and they almost certainly do not track demographic data or compliance with SHIP set-asides. It is essential for you to track this information, and you must do so on a very regular basis. Update your tracking system more often than once a month. Florida Housing’s SHIP staff has indicated that your tracking system should be updated often enough that they can call you on any given day if they need to know how much of your jurisdiction’s SHIP funding is currently expended, encumbered and unencumbered.
Entering updated data into the tracking system is at least a two-step process. After determining an applicant’s eligibility, you provide an award letter that commits SHIP funds specifically to this applicant. This is when you should first enter information about the applicant into your tracking system, along with the amount of the SHIP commitment. It is only later, however, that you start expending these SHIP funds. For example, it is several weeks or over a month later when a home buyer applicant receives SHIP payment assistance at the time of closing. At this time, you should update your tracking system; the funds that had been committed for the applicant are now officially expended.
Each SHIP jurisdiction should document that the annual report it generates reconciles with the general ledger maintained by the jurisdiction’s finance department. This helps document compliance with the Florida Single Audit Act (FSAA), which directs auditors to “determine whether required reports include all activity in the reporting period”. The State Projects Compliance Supplement outlines several suggested audit procedures that an auditor can use to determine whether or not the SHIP reports contain all required activity (and reconcile to the general ledger), including the following: “Select a sample of reports and test specified line items for accuracy and completeness.” (from State Projects Compliance Supplement Part 3, Section H. “Reporting”).
Work with your finance department to ensure your compliance with the FSAA. Set up a way to periodically meet with finance staff to reconcile the general ledger with your SHIP tracking system. Consider suggesting a system to communicate to the finance department whether an expense should be charged to the 04/05 SHIP distribution, for example, or to the 05/06 distribution.
There are many ways that the Coalition can help you reach the goal of creating complete and accurate SHIP annual reports. First, the Coalition has designed an Excel-based SHIP tracking system. It has been used by many SHIP jurisdictions for years, and is available to you at no charge. Call the Coalition for technical assistance on properly setting up a tracking system, accurately updating information, or using the tracking system to create the annual reports that you will submit to Florida Housing. Some questions require more assistance than others; the Coalition may need to visit you in your community to assist you with your tracking and reporting questions. After all, some SHIP administrators have inherited a faulty, unorganized or inaccurate SHIP tracking system. The Coalition can assist you with getting your tracking system back on track by helping you work with your finance department to reconcile your system with the general ledger.
HHRP Related Questions
Question:
We are one of those counties that need to submit a close out HHR report this September. Should I use the SHIP online reporting system, or is there a separate HHR report I should use?
Answer:
Do not use the online reporting system. There is a separate HHRP annual report form that you can request from Florida Housing.
Question:
Now that we have research the expenditure deadline for HHRP, our jurisdiction has a small amount of HHRP funds remaining. What formal tracking process should administrators follow for remaining HHRP funds assigned to SHIP?
Answer:
Determine if the HHRP funds remaining are Program Income or Recaptured funds rather than the HHRP Allocation you received from Florida Housing Finance Corporation. Program income and recaptured funds are recorded cumulatively from when the HHRP funds were first received on July 1, 2005.
If the amount of the remaining funds does not exceed the sum total of your HHRP Program Income or Recaptured Funds, then according to Emergency Rule 67ER06-45 (10), you may transfer this amount of HHRP unencumbered funds into your SHIP Local Housing Assistance Trust Fund at the termination of the HHR Program. Your jurisdiction will “close out” the local HHR program by providing a final annual report. Any small amount of remaining unencumbered funds should be assigned as a source of revenue for your 08/09 SHIP distribution. These funds should be categorized as program income. When you create an annual report for 08/09, you will answer the final question on Form 4 by indicating that HHRP is the source of this program income revenue.
If, however, the source of your jurisdiction’s remaining unencumbered HHRP funds are from the initial HHR program allocation, then your jurisdiction has failed to meet the HHRP expenditure deadline. Contact the Florida Housing Finance Corporation to explain your situation and receive guidance on how to proceed.
Question:
As I create a HHRP Annual Report I have a question about Form 2, which asks about compliance with the Homeownership Set-Aside. Should I include the ELI allocation as part of the “Trust Fund” amount when calculating homeownership set-aside compliance and the Income Set-aside?
Answer:
Although a minimum of 65 percent of SHIP funds must be expended on homeownership activities, remember that there are three distinct HHRP allocations: Base allocation, ELI allocation and Collaborative Funds. The separate HHR funding allocated for ELI households is entirely exempt from the homeownership set-aside requirement.
For purposes of homeownership set-aside compliance, the trust fund is the sum total of the base allocation, the collaboration allocation and recaptured funds. Exclude the ELI allocation, along with program income. Regarding the income set-aside, the trust fund is the sum total of all funds except the ELI allocation.
As a side note, a local entity may expend less than 65 percent of its base HHR allocation and supplemental community collaboration funds on homeownership activities if previously received FHFC approval to do so at the beginning of its program implementation.
Question:
I know that all of the ELI allocation of HHRP dollars must be expended to assist Extremely Low Income households. Yet is it the case that only 85% of these funds are expended in this fashion, since up to 15% of the funds may be dedicated to administrative budget expenses?
Answer:
Yes. Although all of the ‘program dollars’ from your ELI allocation must be devoted to ELI households, you also have ‘administration dollars’ to expend. Florida Housing’s staff provides this guidance: Local Governments can account for 15% (Admin) less ELI allocation funds on Form 2 of the HHRP Annual Report.
We are one of those counties that need to submit a close out HHR report this September. Should I use the SHIP online reporting system, or is there a separate HHR report I should use?
Answer:
Do not use the online reporting system. There is a separate HHRP annual report form that you can request from Florida Housing.
Question:
Now that we have research the expenditure deadline for HHRP, our jurisdiction has a small amount of HHRP funds remaining. What formal tracking process should administrators follow for remaining HHRP funds assigned to SHIP?
Answer:
Determine if the HHRP funds remaining are Program Income or Recaptured funds rather than the HHRP Allocation you received from Florida Housing Finance Corporation. Program income and recaptured funds are recorded cumulatively from when the HHRP funds were first received on July 1, 2005.
If the amount of the remaining funds does not exceed the sum total of your HHRP Program Income or Recaptured Funds, then according to Emergency Rule 67ER06-45 (10), you may transfer this amount of HHRP unencumbered funds into your SHIP Local Housing Assistance Trust Fund at the termination of the HHR Program. Your jurisdiction will “close out” the local HHR program by providing a final annual report. Any small amount of remaining unencumbered funds should be assigned as a source of revenue for your 08/09 SHIP distribution. These funds should be categorized as program income. When you create an annual report for 08/09, you will answer the final question on Form 4 by indicating that HHRP is the source of this program income revenue.
If, however, the source of your jurisdiction’s remaining unencumbered HHRP funds are from the initial HHR program allocation, then your jurisdiction has failed to meet the HHRP expenditure deadline. Contact the Florida Housing Finance Corporation to explain your situation and receive guidance on how to proceed.
Question:
As I create a HHRP Annual Report I have a question about Form 2, which asks about compliance with the Homeownership Set-Aside. Should I include the ELI allocation as part of the “Trust Fund” amount when calculating homeownership set-aside compliance and the Income Set-aside?
Answer:
Although a minimum of 65 percent of SHIP funds must be expended on homeownership activities, remember that there are three distinct HHRP allocations: Base allocation, ELI allocation and Collaborative Funds. The separate HHR funding allocated for ELI households is entirely exempt from the homeownership set-aside requirement.
For purposes of homeownership set-aside compliance, the trust fund is the sum total of the base allocation, the collaboration allocation and recaptured funds. Exclude the ELI allocation, along with program income. Regarding the income set-aside, the trust fund is the sum total of all funds except the ELI allocation.
As a side note, a local entity may expend less than 65 percent of its base HHR allocation and supplemental community collaboration funds on homeownership activities if previously received FHFC approval to do so at the beginning of its program implementation.
Question:
I know that all of the ELI allocation of HHRP dollars must be expended to assist Extremely Low Income households. Yet is it the case that only 85% of these funds are expended in this fashion, since up to 15% of the funds may be dedicated to administrative budget expenses?
Answer:
Yes. Although all of the ‘program dollars’ from your ELI allocation must be devoted to ELI households, you also have ‘administration dollars’ to expend. Florida Housing’s staff provides this guidance: Local Governments can account for 15% (Admin) less ELI allocation funds on Form 2 of the HHRP Annual Report.
Subscribe to:
Posts (Atom)
