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.
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