How To Get A Low Cost Home Ownership Program

Transcription

1 Metro-LakelandCommunityHousingStrategy Appendix B: Housing Resources submitted to The Midtown Community Redevelopment Area Lakeland Vision Polk County Neighborhood Services Department & The Blue Ribbon Task Force

2 Appendix B Housing Resources Community Development Block Grant (CDBG) 1 The CDBG program provides annual grants to recipients to develop viable urban communities by providing decent housing and a suitable living environment, and by expanding economic opportunities, principally for low- and moderate-income persons. The annual appropriation for CDBG is split between states and local jurisdictions called entitlement communities. To receive its annual CDBG entitlement grant, a grantee must develop and submit to HUD a Consolidated Plan. To develop the Consolidated Plan, a grantee must follow a detailed citizen participation plan which emphasizes participation by persons of low- or moderate-income, particularly residents of predominantly low- and moderate-income neighborhoods, and areas in which the grantee proposes to use CDBG funds. Over a 1, 2, or 3-year period selected by the grantee, not less than 70% of the CDBG funds must be used for activities that benefit low- and moderate-income persons. All activities must meet one of the following national objectives for the program: benefit lowand moderate-income persons, prevention or elimination of slums or blight, and/or community development needs having a particular urgency because existing conditions pose a serious and immediate threat to the health or welfare of the community. CDBG funds may be used for activities that include, but are not limited to: acquisition of real property; relocation and demolition; rehabilitation of residential and non-residential structures; construction of public facilities and improvements, such as water and sewer facilities, streets, and neighborhood centers; public services, within certain limits; activities relating to energy conservation and renewable energy resources; and provision of assistance to profit-motivated businesses to carry out economic development and job creation/retention activities. Generally, the following types of activities are ineligible: acquisition, construction, or reconstruction of buildings for the general conduct of government; political activities; certain income payments; and construction of new housing by units of general local government. There is a cap of 20% on the amount of CDBG that can be used for administrative purposes. Annual performance and evaluation reports must be submitted by grantees at the fiscal year end, documenting what was accomplished during the fiscal year and how that met the goals stated in the Consolidated Plan. More specific rules and regulations governing the usage and reporting requirements of CDBG funds can be found on HUD s website at 1 Source: Appendix B - Housing Resources B-1

3 m. HOME Investment Partnerships (HOME) The HOME program was signed into law in 1990 as Title II of the Cranston-Gonzalez National Affordable Housing Act, and is intended to help to expand the supply of decent, affordable housing for low and very low-income families by providing grants to State and local governments. These participating jurisdictions use their HOME grants to fund housing programs that meet local needs and priorities. Recipients have a great deal of flexibility in designing their local HOME programs within the guidelines established by HUD. HOME funding may be used to help renters, new homebuyers, or existing homeowners. HOME program funds are allocated to units of local government on a formula basis that considers the relative inadequacy of each jurisdiction s housing supply, the incidence of poverty, fiscal distress, and other factors. Participating jurisdictions must also have a current and approved Consolidated Plan that includes an action plan describing how the HOME funds will be used, along with descriptions of planned and recently implemented activities undertaken by individual grantees. There are established limits for rents, income, purchase price, and per unit subsidy under the HOME program. HOME-funded housing units must remain affordable in the long-term (20 years for new construction of rental housing, 5-15 years for construction of homeownership housing and housing rehabilitation, depending on the amount of HOME subsidy). Additionally, the HOME program requires that participating jurisdictions match every dollar in program funds expended (except for administrative costs) with 25 cents from non-federal sources, which may include donated materials or labor, the value of donated property, or proceeds from bond financing. At least 15% of the allocation must be used to fund housing to be owned, developed, or sponsored by an experienced, community-driven non-profit groups designated as Community Housing Development Organizations (CHDOs). Of that 15%, up to 5% may be used for the operating expenses of CHDOs, but the amount received cannot be more than 50% or $50,000, whichever is greater, of the CHDOs total operating expenses in that fiscal year. Up to 10% of the HOME allocation may be expended for the payment of administrative and planning costs of the program. Participating jurisdictions have two years to commit funds and five years to spend funds. Specific information about the rules and regulations governing the usage of HOME program funds can be found on HUD s website at Emergency Shelter Grants (ESG) The ESG program, created under the McKinney-Vento Homeless Assistance Act of 1987, is intended to supplement State, local, and private efforts to improve the quality and number of emergency shelters and transitional facilities for homeless people. ESG funds can be used for the rehabilitation or remodeling of a building used as a new Appendix B - Housing Resources B-2

4 shelter, operations and maintenance of a facility, essential supportive services (i.e., case management, physical and mental health treatment, substance abuse counseling, childcare, etc.), homeless prevention, and grant administration. Funding through ESG is done by formula using the same data as CDBG. Grantees make these funds available through an application process to eligible recipients, which can be either local government agencies or private nonprofit organizations. Up to five percent of the annual grant received may be used for administrative purposes by the grantee. Grantees must match ESG grant funds dollar for dollar with their own locally generated amounts, which can come from the grantee or recipient agency or organization; other federal, state and local grants; and from in-kind contributions such as the value of a donated building, supplies and equipment, new staff services, and volunteer time. Specific information about the rules and regulations governing the ESG program can be found on the HUD website at: American Dream Downpayment Initiative (ADDI) ADDI is a new program that was signed into law on December 16, 2003, and authorizes up to $200 million annually for FY Administered as part of the HOME program, ADDI provides funds to all 50 states, and to local participating jurisdictions with a population of at least 150,000 or would receive an allocation of at least $50,000 under the ADDI formula. The goal of ADDI is to increase homeownership among lower income and minority households, and to revitalize and stabilize communities through the provision of downpayment and closing cost assistance to first-time homebuyers. Buyers can also receive assistance for rehabilitation of the home carried out in conjunction with the home purchase. The amount of assistance available to an individual homebuyer is limited to $10,000 or 6% of the purchase price, whichever is greater, and the rehabilitation must be completed within one year of the home purchase. Homebuyers that qualify for ADDI assistance cannot have incomes that exceed 80% of the area median income (AMI), cannot have owned a home during the last three years. More information about the ADDI program can be found on the HUD website at: Continuum of Care Homeless Assistance Under the McKinney-Vento Homeless Assistance Act, aside from the ESG formulabased allocation program, there are three competitive sources of funds available that grantees must apply for during the annual Notice of Funding Availability (NOFA) released by HUD. These three programs are: Supportive Housing Program (SHP); Shelter Plus Care (S+C), and the Single Room Occupancy Program (SRO). The amount of funding available is determined by an area s pro rata need. Using U.S. Census Bureau data, HUD determines the relative homeless assistance need for a community or group of communities. The amount of funds available under each of the three programs is not predetermined, and is instead based upon local needs. Appendix B - Housing Resources B-3

5 Supportive Housing Program (SHP) 2 The SHP is designed to promote, as part of a local Continuum of Care strategy, the development of supportive housing and services to assist homeless persons in the transition from homelessness and to enable them to live as independently as possible. Eligible applicants are States, units of local government, other governmental entities such as public housing authorities, and private nonprofits. SHP assistance is provided to help homeless persons meet three overall goals: achieve residential stability, increase their skill levels and/or incomes, and obtain greater self-determination (i.e. more influence over decisions that affect their lives). SHP funds supportive housing projects that include: (1) transitional housing (generally used for 24 months or less as a stepping stone to permanent housing); (2) permanent housing for homeless people with disabilities; (3) supportive services for homeless people not living in supportive housing; and (4) other types of innovative supportive housing for homeless people. SHP provides funding for new projects and for the renewal of projects currently receiving SHP funds. Providers may choose among a variety of activities: to acquire a homeless facility; to build, rehabilitate, or lease a homeless facility; to pay for new or increased supportive services to homeless people; and to meet some of the day-to-day operating expenses of homeless facilities. They may also use SHP to pay limited administrative expenses. Grantees must match funds for acquisition, rehabilitation, and new construction with equal or greater funding amounts from other sources. They may use up to $200,000 for acquisition and rehabilitation of structures (up to $400,000 in designated high-cost areas) and up to $400,000 for new construction. SHP funds up to 75% of the operating costs for a supportive housing project. Finally, grantees may use up to 5% of their grant for administrative expenses. Shelter Plus Care (S+C) 3 S+C is a program designed to provide housing and supportive services on a long-term basis for homeless persons with disabilities primarily those with serious mental illness, chronic problems with alcohol and/or drugs, and AIDS or related diseases and their families who are living in places not intended for human habitation (e.g. streets) or in emergency shelters. The program allows for a variety of housing choices, and a range of supportive services funded by other sources, in response to the needs of the hard-toreach homeless population with disabilities. Program grants are used for the provision of rental assistance payments through four components: 1. Tenant-based Rental Assistance; 2. Sponsor-based Rental Assistance; 3. Project-based Rental Assistance with or without rehabilitation; and 4. Section 8 Moderate Rehabilitation Program for Single Room Occupancy Dwellings. 2 Source: www. hud.gov/offices/cpd/homeless/programs/shp/index.cfm 3 Source: Appendix B - Housing Resources B-4

6 Single Room Occupancy Program (SRO) 4 The SRO program provides rental assistance for homeless persons in connection with the moderate rehabilitation of SRO dwellings. SRO housing contains units for occupancy by one person. These units may contain food preparation or sanitary facilities, or both. Under the program, HUD enters into contracts with public housing agencies in connection with the moderate rehabilitation of residential properties that, when completed, will contain multiple single room dwelling units. These agencies make Section 8 rental assistance payments to participating owners on behalf of homeless individuals who rent the rehabilitated dwellings. The rental assistance payments cover the difference between a portion of the tenant s income and a unit s rent. Rental assistance for SRO units is provided for a period of 10 years. Owners are compensated for the cost of some of the rehabilitation (as well as the other costs of owning and maintaining the property) through the rental assistance payments. To be eligible for assistance, a unit must receive a minimum of $3,000 of rehabilitation, including its prorated share of work to be accomplished on common areas or systems, to meet housing quality standards. Assistance provided under the SRO program is designed to bring more standard SRO units into the local housing supply and to use those units to assist homeless persons. The SRO units might be in a rundown hotel, a Y, an old school, or even in a large abandoned home. HOPE VI The HOPE VI program, began in 1994 to provide public housing authorities (PHAs) a vehicle through which to redevelop distress public housing sites, is a competitive program that encourages PHAs to develop innovative and comprehensive approaches in partnership with other public and private entities to create mixed-income communities that better the lives of public housing residents as well as revitalize the surrounding neighborhood. Today, the HOPE VI program awards both revitalization and demolition grants on an annual competitive basis to PHAs. HOPE VI Revitalization Grant Program The HOPE VI revitalization program, which awards grants up to $20 million 5 to public housing authorities, is meant to: o improve the living environment for public housing residents of severely distressed public housing projects through the demolition, rehabilitation, reconfiguration, or replacement of obsolete public housing projects; o revitalize sites on which such public housing projects are located and contribute to the improvement of the surrounding neighborhood; o provide housing that will avoid or decrease the concentration of very low-income families; and o build sustainable communities. 4 Source: 5 Starting in FY2002, HOPE VI grants were capped at $20 million. Prior to that, the limit was $35 million. Appendix B - Housing Resources B-5

7 The availability of HOPE VI revitalization funding is announced through HUD s annual NOFA process. Applications are scored on a number of factors, including the capacity of the applicant, the need for revitalization, the quality of the overall approach towards revitalization, the soundness of the self-sufficiency program proposed, and the amount of resources leveraged to support the redevelopment program. This is a very competitive program, and, on average, about 25% to 30% of the applications submitted are awarded funding. HOPE VI Demolition Grant Program The demolition funding component of the HOPE VI Program enables PHAs to expedite the demolition of severely distressed public housing units, but does not provide any funding towards the rebuilding of public housing units. Public Housing 6 Public housing was established to provide decent and safe rental housing for eligible low-income families, the elderly, and persons with disabilities. Public housing comes in all sizes and types, from scattered single family houses to high-rise apartments for elderly families. There are approximately 1.3 million households living in public housing units, managed by some 3,300 public housing authorities (PHAs). HUD administers Federal aid to local PHAs that manage the housing for low-income residents at rents they can afford. Public housing is limited to low-income families and individuals as defined by HUD. HUD sets the lower income limits at 80% AMI and very low income limits at 50% AMI for the county or metropolitan area in which the units are located. In addition to income, a PHA determines eligibility based on: 1) whether one qualifies as elderly, a person with a disability, or as a family; and 2) U.S. citizenship or eligible immigration status. Section 8 Housing Choice Voucher Program 7 The housing choice voucher program is the federal government s major program for assisting very low-income families, the elderly, and the disabled to afford decent, safe, and sanitary housing in the private market. Since housing assistance is provided on behalf of the family or individual, participants are able to find their own housing, including single-family homes, townhouses and apartments. A family that is issued a housing voucher is responsible for finding a suitable housing unit of the family s choice where the owner agrees to rent under the program. Rental units must meet minimum standards of health and safety, as determined by the PHA. Housing choice vouchers are administered locally by PHAs. The PHAs receive federal funds from the HUD to administer the voucher program. A housing subsidy is paid to the landlord directly by the PHA on behalf of the participating family. The family then pays the difference between the actual rent charged by the landlord and the amount subsidized by the program. Under this program, there are a number of different types of vouchers available which are targeted to different groups of people. These include 6 Source: 7 Source: Appendix B - Housing Resources B-6

8 Welfare-to-Work vouchers which are targeted to families who have a critical need for housing in order to obtain or retain viable employment; Mainstream program vouchers that enable families who have a person with disabilities to lease affordable private housing of their choice; and Family Unification Vouchers to enable families to lease or purchase decent, safe and sanitary housing that is affordable in the private housing market for whom the lack of adequate housing is a primary factor in the separation, or threat of imminent separation, of children from their families or in the prevention of reunifying the children with their families. Under certain circumstances, if authorized by the PHA, a family may use its voucher to purchase a modest home. Section 202 Housing for Low-Income Elderly Grants 8 The Section 202 program helps to expand the supply of affordable housing with supportive services for the elderly through the provision of capital advances to finance the construction, rehabilitation, or acquisition with or without rehabilitation of structures that will serve as supportive housing for very low-income (less than 50% of area median income) elderly persons, including the frail elderly, and provides rent subsidies for the projects to help make them affordable. Capital advances do not have to be repaid as long as the project serves very low-income elderly persons for 40 years. Project rental assistance contracts are approved initially for 5 years and are renewable based on the availability of funds. Only private non-profit organizations can apply to develop a Section 202 grant, and public entities are not eligible for funding under this program. Criteria for allocation of program funding to HUD s local field offices include the number of elderly rental households served, the number of very low-income elderly renters in the area, and the number of very low-income elderly renters with housing problems who pay more than 30% of their incomes for rent. This is a very competitive funding program for example, in FY2002, 384 groups applied for the Section 202 assistance and only 41% or 157 received grants. Florida Housing Finance Corporation Programs Low Income Housing Tax Credit Program The federal government created the Low Income Housing Tax Credit (LIHTC) program in 1986 under Section 42 of the Internal Revenue Code. The program provides federal tax credits to investors in projects that develop, rehabilitate, or preserve rental housing units that are affordable. Projects receive annual tax credits of 4% or 9% for the development or rehabilitation costs of each affordable unit for 10 years. Private investors buy the credits and their investment serves as equity in the project, reducing the mortgage needed and thus reducing project costs. At least 20% of the units in a tax credit project must be affordable to households earning less than 50% of the area median or at least 40% must be available to households earning up to 60% of the area median. Most projects provide a much higher percentage of affordable units than required by federal guidelines. The program offers two types of credit-4% and 9% credits. 8 Source: Appendix B - Housing Resources B-7

9 9% credits-the federal government limits the amount of 9% credits and allocates the amount according to a per capita formula. States then allocate the credits according to a Qualified Allocation Plan (QAP). 4% credits-projects using tax exempt bond financing that is subject to the state s private activity bond cap (also set by federal formula on a per capita basis) can qualify automatically for 4% credits. The FHFC issues a QAP each year that details how the 9% credits will be allocated. Florida s QAP has a particularly detailed set-aside and formulaic scoring and allocation process. 9 Developers compete for scarce credits and carefully review the set aside categories, tie-breakers and other point-related categories to make a competitive application. FHFC sets aside credits based on geography (ex. Keys development area), type of units (elderly, family), targeted area programs (Front Porch Florida, Urban Infill) as well as occupation (farmworker/commercial fisherman housing), homeless units, nonprofit, and then finally small, medium and large County allocations. The scoring process is complex but transparent with all applications available for viewing by all competitors. Competitors may also challenge scores of rival developers. Most tax credits developers are large, for-profit developers who have learned the complex system. The FHFC selects 1 out of 3.5 projects that apply. Mortgage Revenue Bonds and Tax Exempt Financing The less competitive 4% tax credits are automatically awarded in conjunction with tax exempt financing. The FHFC Mortgage Revenue Bond program (MRB) of low interest loans from the sale of bonds is available for the new construction or rehabilitation of rental housing that will serve lower income families. In addition to MRB financing available through the FHFC, the Housing Finance Agency of Polk County also may issue tax exempt bonds that allow access to the 4% credits. The developer in that case must also submit an application to the FHFC, conform to the Florida QAP and certain FHFC threshold requirements. State Apartment Incentive Loan The State Apartment Incentive Loan program (SAIL) is available to supplement the feasibility of tax credit projects. It was created under the Sadowski Act and provides low interest mortgage loans to developers who create housing for populations below 50% AMI. The interest rate is 3% but homeless and special needs projects as well as targeted projects such as farmworker projects, receive additional interest rate reductions on the mortgage loans. Loans are limited to 25% of a project s total development costs, but may go higher for targeted projects. While the program targets low income persons, it may be used in a mixed income development. In 2000, 83% of the units awarded SAIL funds served households at or below 60% AMI. Loans have 15 year terms but may be longer if project feasibility requires it. Affordability restrictions are imposed for the length of the loan, but many developers restrict the affordability further. In the latest FHFC application, the use of SAIL and tax credits together is limited to projects in the Keys, in Front Porch communities, projects in rural areas and projects for 9 The QAP is available to view at the Florida Housing Finance Corporation s web site Appendix B - Housing Resources B-8

10 the homeless. SAIL and HOME may no longer be used in the same project and SAIL may not be used for elderly projects. FHFC would like to move to an award system that reserves state HOME for smaller, more difficult deals and allows larger tax credit, family housing projects to utilize SAIL. FHFC Predevelopment Loan Program Funded by the Sadowski Act, the pre-development loan program is resource available through the FHFC to non-profit developers and public entities to help them to develop affordable rental or homeownership projects. The program provides up to $500,000 in low interest loans for acquisition or pre-development activities. An important component of this program is the access to technical assistance available as well. The technical assistance is provided through the Florida Housing Coalition who has contracted with a number of skilled TA providers to help organizations carry out development projects. Technical Assistance The Florida Housing Coalition (FHC) in addition to administering the FHFC s predevelopment loan fund, and offers an Affordable Housing Catalyst Program that provides on-site and telephone technical assistance and training on SHIP, State HOME and other FHFC programs to help leverage these dollars with other private and public funding. The Sadowski Act provides for technical assistance and the FHC provides the assistance in the following core areas: Administering program implementation Assessing housing needs and developing local strategies Designing local programs for community impact Developing organizational capacity for local governments and organizations Budgeting, internal controls and effective Board techniques for non-profits Legal issues concerning joint ventures Financing strategies for affordable and special needs housing Construction and rehabilitation process and property management Leveraging local contributions Due Diligence of site assemby and other development issues Combating NIMBYism Disaster mitagation Homebuying education best practices Compliance with state and federal funding requirements Technical assistance is provided to municipalities as well as non-profits and CDCs. Through a partnership with the Florida Developmental Disabilities Council, FHC provides technical assistance to increase supportive housing opportunities. Homeownership Loan Programs FHFC offers below market rate loans to qualified first-time homebuyers. Interest rates vary according to the bond market, but are generally one-half to one percent below the market rate. In March 2004, the interest rate for FHFC s basic affordable homeownership product was 5.68%. First-time homebuyers in federally-designated targeted areas and specific programs such as Front Porch Florida and Urban Infill neighborhoods may be eligible for mortgages with interest rates at 4.99 percent. Appendix B - Housing Resources B-9

11 In addition, FHFC offers down payment assistance to eligible home buyers. HAP Down Payment Loans (HAP), and HOME Loans are second mortgage loans that are available on a first-come, first-serve basis for down payment and closing costs assistance. No interest is charged for these loans and they may only be used with the FHFC First Mortgage. FHFC provides a number of set-aside homeownership programs called Targeted Area loans that are available for communities or census tracts designated as Urban Infill, Front Porch Communities and HOPE VI communities. Loans in this seta-side are available at 4.99%. Lakeland presently is not designated for either Front Porch Florida loans or Urban Infill loans. To qualify for FHFC loans, households must be below specified income limits. For example, to qualify for a First-time Homebuyer loan with bond funds, a three-person household cannot make more than $59,685. If the loan is a targeted area loan, then the buyer may earn up to $72, 660. The sales price limit is $189,682 for most loans. If HOME funding is included the sales price limit is $160,176. FHFC does not provide loans directly but rather through a network of participating lenders. The following participating lenders in Polk County offer FHFC homeownership loan products for Lakeland and Polk County residents: First Bank Mortgage First Horizon Home Loans Flagship Mortgage Homelife Financial Huntington National Bank National City Mortgage Pinnacle Financial Southtrust Mortgage Corporation SunTrust Mortgage FHFC also offers construction financing for homeownership projects. The Homeownership Loan Program consolidates the HAP construction and permanent loan program and the HOME loan program. 10 These include: - The HAP Construction Loan - Five-year, zero percent interest construction loan to eligible developers for the lesser of 33 percent of the total development cost or $1,000,000. Eligible developers include nonprofit developers and nonprofit sponsors, and local governments/public housing authorities. - The HAP Permanent Loan Program - Zero percent interest non amortized second mortgage loan to eligible homebuyers purchasing a home built by a participating developer. In order to be eligible, a person's or household's adjusted income cannot exceed 80 percent AMI. This loan is available in an aggregate amount not to exceed the lesser of $30,000, 25 percent of the purchase price of the home. - HOME Loan Program for Homeownership - Five-year, zero percent interest construction loans to nonprofit developers and three percent interest construction 10 Details of this comprehensive homeownership loan product are available on the Florida Housing Corporation s web site at Appendix B - Housing Resources B-10

12 loans to for-profit developers for the lesser of 33 percent of the total development cost or $2,000,000 Other Resources Historic Tax Credits Historic tax credits are also available to help feasibility of projects. To qualify, a developer must have a building with an historic designation, either federal or state, and rehabilitate the building to an historic standard. The credit, which frequently only covers the costs of the historic rehabilitation standard (if that), can still be useful as a gap filler particularly when the developer will have to comply with historic standards in any case to meet City design or zoning guidelines. New Markets Tax Credits New Markets Tax Credits (NMTC) became available through legislation passed by Congress in The NMTC program was designed to stimulate investment of private capital in distressed inner cities and rural areas through the provision of $15 billion in tax credit-supported financing. The NMTC program will provide up to 39% of the investment over a seven-year period as a credit against federal income taxes. Investors must invest in certified, for-profit Community Development Entities (CDEs) that have received a tax credit allocation from the Community Development Financial Institutions (CDFI) Fund. Community Contribution Tax Credit Program. (CCTCP) CCTCP is available through the Office of Tourism, Trade and Economic Development and is funded annually at approximately $10 million of tax credits. These credits are used as an incentive to encourage corporations to make donations toward community development and low income housing projects. Businesses may take a 50% tax credit on their Florida corporate income tax, franchise tax or insurance premium tax. A business may donate up to $400,000 per year and receive up to $200,000 in tax credits. Approved sponsors are community action programs, community development corporations, neighborhood housing services, local housing authorities, redevelopment agencies, historic preservation district agency, private industry council or enterprise zone development agency. State Housing Initiatives Partnership (SHIP) SHIP provides funds to local governments as an incentive to create partnerships that produce and preserve affordable homeownership and multifamily housing targeted to very low, low, and moderate income families. Funding for the program was established by the 1992 William E. Sadowski Affordable Housing Act, and is allocated to local governments each month on a population-based formula. These funds are derived from the collection of documentary stamp tax revenues, which are deposited into the Local Government Housing Trust Fund. Total actual disbursements are dependent upon these documentary stamp collections. SHIP funds are distributed on an entitlement basis to all 67 counties and 48 CDBG entitlement cities in Florida. To participate, local governments must establish a local housing assistance program by ordinance; develop a local housing assistance plan and housing incentive strategy; amend land development regulations or establish local policies to implement the incentive strategies; form partnerships and combine resources Appendix B - Housing Resources B-11

13 to reduce housing costs; and ensure that rent or mortgage payments within the targeted areas do not exceed 30% of the AMI limits, unless authorized by the mortgage lender. SHIP may be used to fund emergency repairs, new construction, rehabilitation, down payment and closing cost assistance, impact fees, construction and gap financing, mortgage buy-downs, acquisition of property for affordable housing, matching dollars for federal housing grants and programs, and homeownership counseling. SHIP funds may not be used to assist mobile homes or manufactured housing. A minimum of 65% of the funds must be spent on eligible homeownership activities; a minimum of 75% of funds must be spent on eligible construction activities; at least 30% of the funds must be reserved for very-low income households (up to 50% AMI); an additional 30% may be reserved for low income households (up to 80% AMI); and the remaining funds may be reserved for moderate-income households (up to 120% AMI.). No more than 5% of SHIP funds may be used for administrative expenses. More information about the SHIP program can be found on the FHFC website at: State of Florida Homeless Assistance Challenge Grants 11 Created in 2001, the homeless assistance Challenge Grant is a State grant available to assist in implementing the services and activities contained within local homeless continuums of care plans. The grant can fund any activity that is contained within a locally developed continuum of care plan. The funding is available on an annual competitive application process, and the designated lead agency of the local continuum of care effort is the eligible applicant. The lead agency may apply on behalf of any of the local providers of service or housing, consistent with their local plan. In FY 2004, the maximum grant award to a lead agency is $137,500, and there is no matching grant requirement. State of Florida Homeless Housing Assistance Grants 12 This State grant program can assist in the construction of new, or repair of existing housing for the homeless. The housing assisted may be either permanent housing or transitional with supportive services linked to the residents. As a condition of receiving these grant dollars, the housing built shall be reserved for occupancy by homeless persons or families for at least 10 years. Housing projects to be assisted must be contained and consistent with the local homeless continuum of care plan. The applicant for the grant can only be the designated lead agency for that local homeless continuum of care plan. The lead agency applies on behalf of specific housing sponsors and/or development teams. The grant is distributed in an annual competitive application cycle. While there are no limits on the number of project applications that may be submitted from a community, the State cannot award more than two grants to any given continuum of care in a given year. In FY 2004, individual project awards were 11 Source: 12 Source: Appendix B - Housing Resources B-12

14 limited to $750,000. No matching funding is required, but the leveraging of other sources of funding is a grant selection criterion. Housing Opportunities for Persons With AIDS (HOPWA) The HOPWA program, established by HUD to address the specific needs of persons living with HIV/AIDS and their families, makes grants to local communities, States, and nonprofit organizations for projects that benefit low income persons medically diagnosed with HIV/AIDS and their families. HOPWA funding provides housing assistance and related supportive services as part of HUD s Consolidated Planning initiative that works in partnership with communities and neighborhoods in managing Federal funds appropriated to HIV/AIDS programs. HOPWA funds are awarded as grants on a formula or competitive basis. Awards given on a formula basis are distributed using a statutory formula that relies on AIDS statistics from the Centers for Disease Control and Prevention (CDC), with funding awarded to qualified States and Metropolitan areas with the highest number of AIDS cases. Lakeland and/or Polk County do not have a sufficient prevalence of AIDS cases to receive this funding on an entitlement basis. Additionally, it appears that no organizations have attempted to secure HOPWA funding on a competitive basis. Instead, any HOPWA funds that might be utilized within the City would come from the State, which received $4,063,000 in FY2004. Self-Help Homeownership Opportunities Program (SHOP) 13 SHOP provides funds for eligible non-profit organizations to purchase home sites and develop or improve the infrastructure needed to set the stage for sweat equity and volunteer-based homeownership programs for low-income persons and families. SHOP funds are used for eligible expenses to develop decent, safe, and sanitary non-luxury housing for low-income persons and families who otherwise would not become homeowners. Homebuyers must be willing to contribute significant amounts of their own sweat equity toward the construction of the housing units. HUD awards grants to nonprofit organizations for self-help housing projects of at least 30 homes. Among the grantees for FY2002 was Habitat for Humanity International (HFHI) who was awarded $10,809,000 in SHOP funds. SHOP funds will be used to purchase land and make necessary infrastructure improvements, primarily in support of new construction. Local affiliates have to compete for SHOP funding from HFHI on a national basis. Based upon conversations with the Lakeland affiliate of Habitat, they do intend on applying for SHOP funds from HFHI this year if they are able to assemble together a current development project they are pursuing with a for-profit developer. Section 811 Housing for People with Disabilities Grants Source: 14 Source: Appendix B - Housing Resources B-13

15 Similar to the Section 202 program, Section 811 provides funding to nonprofit organizations to develop rental housing with the availability of supportive services for very low-income (less than 50% of area median income) adults with disabilities, and provides rent subsidies for the projects to help make them affordable. The term person with disabilities also includes two or more people with disabilities living together, and one or more persons with disabilities living with one or more live-in attendants. Through Section 811, HUD provides interest-free capital advances to nonprofit sponsors to help them finance the development of rental housing such as independent living projects, condominium units and small group homes with the availability of supportive services for persons with disabilities. The capital advance can finance the construction, rehabilitation, or acquisition with or without rehabilitation of supportive housing, and does not have to be repaid as long as the housing remains available for very low-income persons with disabilities for at least 40 years. The initial term of the project rental assistance contract is 5 years and can be renewed if funds are available. Available program funds for a fiscal year are allocated to HUD s local field offices according to factors that include the number of persons age 16 years or older with a work disability and those without a work disability. Each project submitted for funding must have a supportive services plan. The appropriate State or local agency reviews a potential sponsor s application to determine if the plan meets the needs of persons with disabilities and must certify to the same. Services may vary with the target population but may include case management, training in independent living skills, and assistance in obtaining employment. However, residents cannot be required to accept any supportive service as a condition of occupancy. The Section 811 program is not as competitive as Section 202, but many more groups apply for funding than those awarded. For example, in FY2002, 248 groups applied for funding with 56% or 139 groups receiving awards. Appendix B - Housing Resources B-14