Background
The State of Florida enacted the William E. Sadowski Affordable Housing Act, Chapter 92-317 of Florida Sessions Laws, allocating a portion of documentary stamp taxes on deeds to local governments for the development and maintenance of affordable housing. The State Housing Initiatives Partnership (SHIP) Act, §420.907-420.9079, Florida Statutes (1992), and Rule Chapter 67-37, Florida Administrative Code, requires local governments to develop a one-to three-year Local Housing Assistance Plan (LHAP) outlining how funds will be used. The LHAP also establishes the maximum SHIP funds allowable for each programmatic strategy.
The City’s LHAP’s for FY 13-16 and FY 17-19 was approved via Resolution No. 2013-28178 and Resolution No. 2016-29364, respectively. Approved strategies include: 1) Owner-Occupied Rehabilitation; 2) Disaster Mitigation Recovery; 3) New Construction; 4) Purchase Assistance; 5) Rental Housing Development; and 6) Acquisition/Rehabilitation.
The City must comply with the following SHIP statutory regulations on an annual basis: a minimum of 75 percent of the City’s SHIP allocation must be expended in construction-related activities; a minimum of 30 percent of overall funds must benefit households earning up to 50 percent Area Median Income (AMI) or very low-income households; and a minimum of 30 percent of overall funds must benefit households earning up to 80 percent AMI or low-income households. SHIP grantees must submit an expenditure report to Florida Housing Finance Corporation by September 30th of each year.
Analysis
Miami Beach Community Development (MBCDC) was awarded $135,464 in SHIP funds for the rehabilitation of the Jefferson Apartments, an affordable housing property designated for low-, very-low and extremely-low income elderly residents, via Resolution No. 2015-29051 on June 10, 2015. The scope of the work included: the replacement of its roof, the replacement of an air conditioning unit located on the roof, and upgrades and repairs to the nine (9) units located on the building’s third floor.
On July 11, 2016, MBCDC executed two SHIP funding agreements: 1) an agreement for $109,093.15 utilizing FY 14/15 funds with an expiration date of May 31, 2017; and 2) an agreement for $26,371 utilizing FY 15/16 funds, with an expiration date of May 31, 2018. Expenditure deadlines are aligned with State reporting guidelines to ensure compliance with program rules.
MBCDC expended $83,370 completing a portion of the project’s scope of work, including the replacement of the roof and HVAC units for nine (9) units, as delineated in the agreement for FY 14/15 funds. Unexpended funds in the amount of $25,723 were designated to complete the rehabilitation of the kitchens in the nine (9) units on the third floor and were anticipated to be transferred to FY 15/16 in order to comply with State reporting guidelines as well as to extend the expenditure deadline from May 31, 2018 to June 30, 2018. The City subsequently prepared amendments to the funding agreements in June 2017 for review and form approval by the Office of the City Attorney.
On May 4, 2018, the City received the revised agreements from the Office of City Attorney and contacted MBCDC to schedule the execution of both amendments. The City advised MBCDC that, while the timeline was not practical because of the delay in approving the amendment, the City would request an extension of the expenditure deadline to September 30, 2018. MBCDC staff responded that they were unable to meet any expenditure deadlines for this fiscal year because they did not have the financial capacity to advance payment towards additional capital projects at this time. The City will amend all mortgages and necessary documents to reflect the actual amount expended by MBCDC to ensure that the property remains affordable until 2048, the end of the affordability period.
In addition to the $25,723 in unexpended FY 14/15 funds, the City is recapturing $26,371 that MBCDC is unable to expend for the rehabilitation of the kitchen cabinets in the nine (9) apartments in the third floor. Please note that the Jefferson Apartments will not be eligible for additional SHIP funds until the expiration of the affordability period in 2048.
In order to secure the ongoing use of the unexpended funds, the City would like to recapture the unexpended funds and reallocate them to an eligible homeowner activity such as first time homebuyer assistance and homeowner rehabilitation assistance. Both of these programs have waiting lists comprised of income-eligible applicants.