This guidebook is a training and reference guide for the administration of Florida Housing's Multi-Family Rental Programs. It is designed to answer the most frequently asked questions regarding the program procedures, rules and regulations. It should be a useful resource for owner representatives, management companies and on-site management personnel. It is important to note that this manual is a compendium of compliance procedures and should be used as a supplement to existing laws, rules, and regulations.

This guidebook does not constitute legal advice with respect to the qualification of persons to reside in set-aside units. Owners, developers and managers of Housing Credit (HC) developments shall consult with their own tax counsel regarding the application of the tax law to specific factual situations. The Internal Revenue Service, not Florida Housing, determines qualification for the HC program.

Information regarding additions or changes in program requirements will be provided by Florida Housing, as available.

All requirements must be met fully and consistently in order to remain in compliance with the various program requirements. As questions arise, please contact your monitoring agent or Florida Housing’s Asset Management Staff.

1.1 Florida Housing Finance Corporation

Florida Housing Finance Corporation was established in 1997, as the successor to the Florida Housing Finance Agency created by the Florida Legislature in 1980. The legislature declared it necessary to create a state housing finance corporation to encourage the investment of private capital in residential housing through the use of public financing to stimulate the construction and rehabilitation of residential housing, to facilitate the purchase and sale of existing residential housing, to provide construction and mortgage loans for developments, to make loans to and purchase mortgage loans from private lending institutions, and to create new programs to stimulate the construction and substantial rehabilitation of housing for eligible persons and families.

Florida Housing issues mortgage revenue bonds and lends the proceeds for the production of multifamily rental developments (MMRB); allocates tax credits through the Housing Credit (HC) Program for the construction, rehabilitation, and/or acquisition and substantial rehabilitation of low income housing; issues mortgage loans through the State Apartment Incentive Loan (SAIL) Program for the production of rental developments; issues low interest rate loans for multifamily rental developments and provides loans to local governments for home ownership through the HOME Investment Partnerships (HOME) Program. These programs shall be discussed more fully in the following sections:

1.2 Multifamily Mortgage Revenue Bond (MMRB)

The MMRB Program was created to help meet Florida’s growing housing needs by providing lower interest rate loans to non-profit and for profit developers. These loans are generated from both taxable and tax-exempt bonds, which are sold through either a competitive or negotiated method of sale or private placement.

Florida Housing participates in the United States Department of Housing and Urban Development (HUD) Multifamily Risk-Sharing mortgage insurance/credit enhancement program. The program enables Florida Housing to share the default risk with HUD on bonds issued for developments participating in this program.

1.3 State Apartment Incentive Loan (SAIL)

The SAIL Program is designed to provide financing (in an amount not to exceed the lesser of 25 percent of the development’s cost or the minimum amount required to make the development economically feasible) for the difference between a development's total cost and the amount of other financing. The SAIL Program may provide mortgage loans in excess of 25 percent of the development's cost for eligible farm worker housing developments or certain developments sponsored by public or non-profit entities.

The Affordable Housing Loan (AHL) Program was created to provide lower interest rate loans to eligible developers of affordable rental housing and was the forerunner of the SAIL Program.

1.4 Housing Credit (HC)

Congress created the Housing Credit Program through the Tax Reform Act of 1986. The purpose of this program is to facilitate the production of affordable rental housing by both non-profit and for profit private sector developers via the use of federal tax credits.

1.5 HOME Investment Partnerships Program (HOME)

The HOME Program is a federally funded program that provides money to state and local governments to strengthen public-private partnerships and to expand the supply of decent, safe, sanitary, and affordable housing. Florida Housing has been designated by the state of Florida to administer the program. HOME funds are used to provide low interest rate loans for acquisition, construction, and rehabilitation of multifamily rental housing.

2.1 Florida Housing Finance Corporation

Florida Housing compliance responsibilities include but are not limited to:

A. Providing continuing education to the development owner, management company, and on-site personnel.

B. Approving management companies selected by the owners to manage developments participating in Florida Housing programs.

C. Providing income limit and rent limit information on a periodic basis, as the information is made available by the U. S. Department of Housing & Urban Development (HUD):

• 1. Income limits (Appendix A)
• 2. Rent limits by number of bedrooms (Appendix B1)
• 3. Rent limits by household size (Appendix B2)
• 4. HOME program rents (Appendix C)

D. Reporting non-compliance with federal regulations and State rules to owners, management personnel and the Internal Revenue Service.

2.2 Owner

A. General

The owner is the responsible party for ensuring that the applicable Florida Housing programs are properly administered. The owner shall ensure compliance with the applicable rules, regulations and policies that govern the programs and make certain that all requirements committed to in the Regulatory Agreement (Land Use Restriction Agreement/Extended Use Agreement) are met on an ongoing basis.

Each unit and building in the development shall be suitable for occupancy, taking into account local health, safety and building codes, as well as HUD Physical Condition Standards and Inspection Requirements. It is the responsibility of the owner to conduct an efficient maintenance program. The condition and general appearance of the development shall be taken into consideration by Florida Housing and the monitoring agent during Management Review and Physical Inspections. Refer to Appendix D for an example of HUD's Physical Condition Standards and Inspection Requirements.

It is the responsibility of the owner to keep Florida Housing and the monitoring agent informed during all phases of construction and rehabilitation, lease up and operation throughout the compliance period. Owner's responsibilities include but are not limited to:

• 1. Attendance by the owner representative at a Florida Housing Regional Compliance Training Workshop prior to pre-leasing units.
• 2. Notification of commencement of leasing activities.
• 3. Notification of expected date of initial occupancy of any unit in the development.
• 4. Preparation and submission of Certificate of Continuing Program Compliance (MMRB/HC).
• 5. Preparation and submission of Certification of Commencement and Termination of the Qualified Project Period (MMRB). Refer to Appendix U or Appendix V for an example of the certificate.
• 6. Providing Florida Housing with a copy of the completed and signed first year IRS form 8609, including schedule A, for each building along with a form listing the fiscal operating year for the development and, for each building, the first taxable year in which Housing Credits were claimed.
• 7. Marketing and advertising shall be consistent with the intent of Florida Housing’s affordable housing programs.
  • a. Copies of advertising shall be provided at the Management Review and Physical Inspections
  • b. Documentation shall show marketing efforts directed to the categorical and demographic commitment
  • c. The approved Affirmative Fair Housing Marketing Plan shall be kept on-site, and marketing efforts shall adhere to the plan (HOME/MMRB with HUD Risk Sharing)
• 8. Educating staff on nondiscrimination.

Discrimination is prohibited on the basis of race, religion, color, sex, national origin, familial status and disability. Each development shall comply with local codes, the Americans with Disabilities Act ("ADA"), the federal Fair Housing Act, and Section 504 of the Rehabilitation Act of 1973, as applicable.

• 9. Conducting an efficient maintenance program.
• 10. Providing the monitoring agent and Florida Housing with responses to all reviews.
• 11. Notifying Florida Housing of any impending ownership changes.

B. Management Company Approval

It is the owner's responsibility to obtain Florida Housing’s approval for the management company selected to manage the development. This requirement is in addition to the review of the management company information by the credit underwriter. The owner shall advise the Asset Management Staff of Florida Housing of any change in the owner's selection of a management company; any such new management company shall be approved by Florida Housing prior to the firm assuming responsibility for the development.

C. Non-compliance

If a unit is not in compliance with program requirements, the owner shall notify Florida Housing, the monitoring agent and the trustee, when applicable. All correspondence regarding non-compliance matters shall be sent to Florida Housing, the monitoring agent and the trustee, when applicable.

Failure to cure non-compliance within a reasonable time may result in default; the loan may be accelerated and foreclosure proceedings may be instituted. Non-compliance by developments participating in the Housing Credit Program shall be reported to the Internal Revenue Service on Form 8823 whether or not the non-compliance is corrected.

Non-compliance includes, but is not limited to:

• 1. Failure to maintain commitments in the Regulatory Agreement including:
  • a. Low-income set aside percentage requirements
  • b. Categorical set aside requirements; Farmworker, elderly, etc.
  • c. Non-compliance with public purpose requirements and/or qualified resident programs
• 2. Failure to document lower-income occupancy, including:
  • a. Lack of verification of all income
  • b. Certification or recertification of household members
  • c. Non-disclosure of all income on Tenant Income Certifications
  • d. Incomplete Tenant Income Certifications
  • e. Undisclosed occupants in unit
• 3. Failure to meet the Next Available Unit rule
• 4. Failure by owner to submit annual certification and/or other required reports.
• 5. Withdrawal from HC Program after final allocation
• 6. Changes in qualified basis of building (HC), for example:
  • a. Common area now commercial space
  • b. Fee charged for resident facilities, e.g. parking or swimming pool, formerly included in eligible basis
• 7. Rent restrictions not met:
  • a. Rent exceeds maximum allowable amount
  • b. Improper calculation of utility allowances
  • c. Inadequate/insufficient documentation of utility allowances
• 8. Other restrictions not met:
  • a. Transient use or units not available to general public
  • b. Minimum lease term not adhered to
  • c. Units unsuitable for occupancy

Note: units shall meet HUD Physical Condition Standards for housing that is decent, safe, sanitary, and in good repair (DSS/GR). [Reference: Title 24 Code of Federal Regulation (CFR) Subtitle A, Part 5.703; http://www.access.gpo.gov/nara/cfr/waisidx_01/24cfr5_01.html ]

• d. Violations of health, safety and local building codes
• 9. Household's aggregate income exceeds the maximum applicable income limit upon initial occupancy
  • a. Lower-income units occupied by nonqualified full-time students
  • b. Failure to respond to requests for monitoring reviews

2.3 Management Company/On-Site Personnel

The management company and all on-site personnel are responsible to the owner for implementing the applicable Regulatory Agreement and program requirements correctly. Anyone who is authorized to lease apartment units to residents shall be thoroughly familiar with each federal and state law, rule, or regulation governing certification and leasing procedures. It is also important that the management company provide information, as needed, to Florida Housing and submit all required reports and documentation in a timely manner.

It is recommended that a management company representative attend Management Reviews and Physical Inspections conducted by the monitoring agent.

2.4 Trustee (MMRB)

The trustee serves as the fiduciary for the bondholders and has the responsibility of protecting the bondholders' investment. This includes collecting the payment of principal and interest on the bonds and monitoring the status of the bonds for the term of the loan.

Along with Florida Housing and/or the monitoring agent, the trustee receives Program Reports. The trustee shall also be notified of any non-compliance.

2.5 Monitoring Agent

The monitoring agent is the Compliance Monitor whose duties include but are not limited to:

A. Conducting pre-occupancy conference/training with a representative of the owner prior to leasing any units. Management of the Development shall attend this conference. The purpose of the conference is to provide instruction on the following aspects of compliance:

• 1. Federal regulations determining eligibility for lower-income residents
• 2. State law and Florida Housing’s rules for determining eligibility of residents
• 3. Provisions of the applicable Regulatory Agreement(s) and any other program requirements
• 4. Public Purpose Requirements and/or qualified resident programs
• 5. Fair Housing Act as amended
• 6. Affirmative Fair Housing Marketing requirements, as may be amended (currently applicable for HOME and MMRB with HUD Risk-Sharing)
• 7. Applications and recertification questionnaire - specific information necessary for continued Program compliance
• 8. Income limits, rent limits, and utility allowances
• 9. Annual income and assets including asset income
• 10. Income verifications
• 11. Tenant Income Certifications
• 12. Leases
• 13. Program Reports
• 14. Management units

At the pre-occupancy conference, the monitoring agent shall review the rent schedule and utility allowance and shall obtain a distribution list that includes the addresses and phone numbers of all persons to be contacted regarding Development compliance and shall obtain the name(s) of personnel authorized to prepare and submit Program Reports and execute related documents.

B. Reviewing Compliance of Relocation Activities (HOME);

C. Reviewing Tenant Income Certification and Recap of Tenant Income Certification Information that are submitted with the Program Report for completeness, including proper execution and income eligibility;

D. Conducting Management Reviews and Physical Inspections consisting of a review of resident files, the administrative procedures of the management company, and a physical inspection of the development throughout the compliance period.

Applications - checked for completeness and inclusion of total income from all sources, including assets;

Verifications of income - examined for completeness and compared with the application and Tenant Income Certification (includes examination of total assets and asset income if development participates in HOME and/or HC Programs);

Tenant Income Certifications - checked for completeness and to confirm the amount of income documented in the resident file;

Leases - examined to ensure that all occupants of the unit are listed, the lease is current and fully executed, and the lease is in accordance with the

Regulatory Agreement;

Sequence of the certification procedure - examined to verify that no person or family occupies a unit prior to being properly certified;

Program Report - procedures reviewed.

Physical Inspection – The condition and general appearance of the development shall be taken into consideration. Each unit in the development is suitable for occupancy, taking into account local health, safety, and building codes or other habitability standards.

After the Management Review and Physical Inspection, a summary is prepared and sent to the owner representative, management company, the on-site manager, and to the trustee, when applicable.

E. Providing additional training as needed to instruct the owner and management company personnel on compliance requirements;

F. Participate in Florida Housing’s Regional Compliance Training Workshop.

3.1 MMRB Post-1986 (Developments Subject to Tax Reform Act of 1986)

A. Income Limits - Minimum Set-Aside Requirement

In order for interest on Florida Housing’s multifamily housing revenue bonds to qualify as tax-exempt, each development shall meet the requirements of United States Code Title 26, Subtitle A, Chapter 1, Subchapter B, Part IV, Subpart A, Section 142(d), during the Qualified Project Period. Refer to Appendix A for Income Limit schedules.

The owner shall choose either:

• 1. Twenty (20) percent or more of the units in the development shall be occupied by households whose income is 50 percent or less of Area Median Gross Income ("AMI"), the 20-50 test; or,
• 2. Forty (40) percent or more of the units in the development shall be occupied by households whose income is 60 percent or less of AMI, the 40-60 test.

B. Additional Commitments

• 1. Additional Income Limit Requirements

The Regulatory Agreement shall describe the requirements where the upper income cap (150 percent of whichever is greater, the state median, area median, or county median) is applicable to the development.

• 2. Public Purpose Criteria or Special Set Aside

The Regulatory Agreement shall describe the requirements when applicable to the development. Public Purpose Criteria can increase the actual number of set aside units for households at differing income levels. Other Public Purpose Criteria provide for resident programs, extend the Qualified Project Period or serve the community needs.

C. Certification of Household Eligibility

• 1. Initial Certification

The initial determination of household income shall be made as of the date the qualified household first occupies a unit in the development.

• 2. Recertification

For purposes of recertifying household eligibility, the determination of income shall be made on a continuing basis as of each anniversary of the date the household first occupied a residential unit in the development to meet the requirements of United States Code Title 26, Subtitle A, Chapter 1, Subchapter B, Part IV, Subpart A, Section 142(d)(3)(A). As a practical matter, the owner representative may elect to recertify as of the first day of the month of the initial certification anniversary date.

Example: Household moved into unit August 10, 2002. The Annual Recertification could be effective August 1st for each succeeding year.

• 3. Income Changes after Initial Certification
  • a. Increase in Income (Next Available Unit)
    • (1) Increases in income to a level which does not exceed 140 percent of the applicable AMI limit shall not result in disqualification.

Example: Multiply 1.4 times the current applicable income limit. If the household’s current aggregate income does not exceed this figure, the unit shall be counted as income eligible at recertification.

- (2) If, upon recertification, the aggregate household income exceeds 140 percent of the applicable income limit, such household shall no longer be counted towards satisfaction of the lower-income requirements. The fact that such household’s income exceeds 140 percent of the applicable income limit shall not place the development in noncompliance so long as the next unit of comparable or smaller size that becomes vacant in the development is rented to a lower-income household until the development again meets its lower-income requirement.

• b. Increase in Household Size (Next Available Unit)

If, after initial certification and move in, another person wishes to join the household, management shall determine, prior to move-in of the new person, whether the unit continues to meet the applicable eligibility requirements. Income limits in effect at the time the household member is to be added shall be used. Management shall not allow an additional person to move into a unit if it jeopardizes compliance with the requirements of the Regulatory Agreement.

- (1) If the newly-constituted household meets the applicable eligibility requirements, the minimum requirement is completion of a new Tenant Income Certification containing all information pertaining to the new household member combined with the most recently certified income of the existing household. All application and verification procedures shall be adhered to. The new household member shall sign the form, however, it is not necessary for the existing household members to sign the new Tenant Income Certification; management may instead reference the existing Tenant Income Certification on the signature line of the new Tenant Income Certification.
- (2) If, upon recertification, the aggregate household income exceeds 140 percent of the applicable income limit, such household shall no longer be counted towards satisfaction of the lower-income requirements. The fact that such household’s income exceeds 140 percent of the applicable income limit shall not place the development in noncompliance so long as the next unit of comparable or smaller size that becomes vacant in the development is rented to a lower-income household until the development again meets its lower-income requirement.

• c. Decrease in Income

The income category may be changed due to a decrease in household aggregate income.

• d. Decrease in Household Size (Next Available Unit)

If upon recertification a household’s size decreases so that the household’s aggregate income exceeds 140 percent of the applicable income limit, such household shall no longer be counted towards satisfaction of the lower-income requirements. The fact that such aggregate income exceeds 140 percent of the applicable income limit shall not place the development in non-compliance so long as the next unit of comparable or smaller size in the development that becomes vacant is rented to a qualified household until the development again meets its lower-income requirement.

D. Qualified Project Period

• 1. The lower-income requirement shall be met commencing with:
  • a. New construction – the first day on which at least 10 percent of the units in the development are first occupied, or
  • b. Rehabilitation – the earlier of the date of acquisition of the development or the date the bonds are issued.

Example of New Construction Rent-up Procedure:

If a development contains 200 units, the applicable lower-income restrictions shall be met by the time 20 units have been occupied. Therefore, when 20 units have been occupied, a development meeting the 40-60 Test shall have 8 of these units actually occupied by households whose income is 60 percent or less of AMI and the remaining 12 units may be rented as market units. It is not sufficient that 8 units are reserved for households at the applicable lowerincome limit, they shall be occupied.

• 2. And ending on the later of:
  • a. The date that is 15 years after the date on which 50 percent of the total units in the development are first occupied;
  • b. The first day on which no tax-exempt bond issued to finance the development is outstanding; or
  • c. The date on which any assistance provided to the Development under Section 8 of the United States Housing act of 1937, as amended, terminates.

The requirements apply for the entire Qualified Project Period which may survive the early redemption of the bonds.

E. Documentation Requirements

Under the terms of the Regulatory Agreement, the Owner representative is required to provide copies of certain documents:

• 1. Certificate Concerning Commencement and Termination of Qualified Project Period

The certificate in recordable form is submitted to Florida Housing after 50 percent of the units in the development are first occupied. The owner representative submits the certificate for purposes of the calculation of the commencement and termination of the Qualified Project Period, including extensions, if any. Refer to Appendix U for an example of the certificate.

• 2. The Certificate of Continuing Program Compliance ("CCPC") is a statement confirming the percentage and number of units occupied by income eligible households and is submitted in conjunction with the Program Report. This document shall be signed by the owner representative unless a change in signature authority has been requested by the owner representative and such change has been acknowledged by Florida Housing.

F. Procedures

• 1. Management Units
  • a. Developments having a set-aside requirement totaling less than 100 percent shall place the management units in the non-set aside portion of its units.
  • b. Developments having a set-aside requirement totaling 100 percent of the units in the development shall follow the process below:
    • (1) The owner representative may request units to be exempted from income certification for full-time employees who are required to live on-site.
    • (2) The owner representative shall make the initial request to Florida Housing, in writing, prior to occupancy by the employee. The request shall include the employee's job title and reason for the requirement for living on-site.
    • (3) Florida Housing shall accept or reject the initial request and respond in writing.
    • (4) The approved management unit(s) shall be listed on the Program Report.
    • (5) Once a management unit has been approved, changes only need to be reflected on the Program Report. It is not necessary to send a letter to Florida Housing when there are changes in the designated unit or the employee who occupies the management unit. A management unit no longer required shall be rented to an income-eligible household.
• 2. Unit Transfer

An existing household transferring to another unit shall be treated as a new move-in and follow all application, verification, and certification procedures. Income limits at the time of the move shall determine if the new unit shall be income eligible.

G. Record Retention

Retain all resident files and records of documentation for at least six years after an applicant is rejected or after a unit has been vacated.

3.2 HUD Risk Sharing

A. The HUD Risk Sharing Program provides credit enhancement for mortgages of multifamily housing developments whose loans are underwritten, processed, and serviced by housing finance agencies. The program provides full FHA mortgage insurance to enhance the bonds issued by the agency.

• 1. Affirmative Fair Housing Marketing

HUD regulations require developments insured and/or subsidized under programs administered by HUD to implement an Affirmative Fair Housing Marketing Plan ("AFHMP"), Form HUD-935.2, approved for the development.

• a. Key Requirements
  • (1) The marketing effort shall be designed to attract broad cross sections of the eligible population without regard to race, color, religion, sex, disability, familial status, or national origin.
  • (2) Whenever additional applicants are needed to fill available units, advertising shall be carried out in accordance with the Florida Housing approved AFHMP.
• b. Affirmative Fair Housing Marketing Plan

Owners shall comply with the requirements of their Florida Housing approved AFHMP, which is designed to promote equal housing choice for all prospective residents regardless of race, color, religion, sex, disability, familial status, or national origin.

- (1) The purpose of the plan is to ensure that eligible families of similar income levels shall have a similar range of housing opportunities.
- (2) The plan outlines marketing strategies the owner shall use, including special efforts to attract persons who are least likely to apply because of such factors as the racial and ethnic composition of the neighborhood in which the development is located. Marketing shall also seek to reach potential applicants outside the immediate neighborhood if marketing only within the neighborhood creates a disparate impact against certain classes (i.e., if the entire neighborhood includes no minorities).
- (3) Owners shall monitor the results of the marketing effort and adjust their marketing techniques as necessary.

• 2. Income Limits - Minimum Set-Aside Requirement

The owner shall choose either:

• a. Twenty (20) percent or more of the units in the development shall be both rent restricted, and occupied by households whose income is 50 percent or less of Area Median Gross Income ("AMI"), the 2050 test; or,
• b. Forty (40) percent or more of the units in the development shall be both rent restricted, and occupied by households whose income is 60 percent or less of AMI, the 40-60 test.

Refer to Appendix A for Income Limit schedules.

• 3. Rent Restrictions

HUD Risk Sharing units are rent restricted.

• a. Gross Rent

The gross rent includes an allowance for utilities when paid by the household. Refer to Appendix B1 for maximum allowable rent schedules.

• b. Utility Allowance

The utility allowance is an estimate of the cost of monthly utilities for that unit type. If the household pays utilities (other than telephone and cable), a utility allowance is deducted from the maximum gross rent allowed for the unit. The resulting figure is the maximum allowable household rent contribution.

Verification of utility allowances used to calculate rents shall be obtained by the owner representative at least annually. Documentation of utility allowances shall be readily available to any interested party.

• c. Household Rent Contribution

The household rent contribution plus the utility allowance cannot exceed the maximum gross rent allowed for the unit. The household rent contribution generally includes only amounts paid by the household. Not included in the household rent contribution are:

- (1) Rental assistance payments, under Section 8 of the United States Housing Act of 1937, or under comparable rental assistance programs,
- (2) Amounts paid for optional supportive services.

• d. Changes in Maximum Allowable Rent Due to Changes in Income Limit and/or Utility Allowance
  • (1) Rent Increases - Rents shall not be increased until the beginning of a new lease term, unless otherwise specified in the current lease.
  • (2) Rent Reduction - If it is necessary to reduce rent as a result of a reduced income limit or an increased utility allowance, the households' rents shall be reduced with the next rental payment.

3.3 MMRB 501(c)(3) – Developments Sponsored by Qualified Non-profit Organizations

A. Income Limits - Minimum Set-Aside Requirement

United States Code Title 26, Subtitle A, Chapter 1, Subchapter B, Part IV, Subpart A, Section 145 provides an exemption from federal income taxation of interest paid on bonds issued to finance multifamily residential rental housing developments owned by charitable organizations, which have received a determination letter under section 501(c)(3). The issuer of the bonds is Florida Housing Finance Corporation. Refer to Appendix A for Income Limits schedules.

The owner shall choose either:

• 1. The 20-50 Test
  • a. Twenty (20) percent or more of the units in the development shall be both rent restricted and occupied by households whose income is 50 percent or less of Area Median Gross Income ("AMI"), and,
  • b. Fifty-five (55) percent or more of the units in the development shall be both rent restricted and occupied by households whose income is 80 percent or less of AMI; or,
• 2. The 40-60 Test
  • a. Forty (40) percent or more of the units in the development shall be both rent restricted and occupied by households whose income is 60 percent or less of AMI, and,
  • b. Thirty-five (35) percent or more of the units in the development shall be both rent restricted and occupied by households whose income is 80 percent or less of AMI.

B. Additional Commitments

• 1. Public Purpose Criteria

The Regulatory Agreement shall describe the requirements when applicable to the development. Public Purpose Criteria can increase the actual number of set aside units for households at differing income levels. Other Public Purpose Criteria provide for resident programs, extend the Qualified Project Period or serve the community needs.

C. Rent Restrictions

A unit is affordable when rents are limited to a percentage of either the household income or the applicable income limit. Refer to Appendix B1 for maximum allowable rent schedules.

• 1. Household Rent Contribution

The household rent contribution cannot exceed the maximum gross rent allowed for the unit. The household rent contribution generally includes only amounts paid by the household. Not included in the household rent contribution are:

• a. Rental assistance payments, under Section 8 of the United States Housing Act of 1937, or under comparable rental assistance programs,
• b. Amounts paid for optional supportive services.
• 2. Utility Allowance

The Regulatory Agreement shall describe the requirements when applicable to the development.

• 3. Changes in Maximum Allowable Rent Due to Changes in Income Limits
  • a. Rent Increases - Rents shall not be increased until the beginning of a new lease term, unless otherwise specified in the current lease.
  • b. Rent Reduction - If it is necessary to reduce rents as a result of reduced income limits, the households' rent shall be reduced with the next rental payment.

D. Certification of Household Eligibility

• 1. Initial Certification

The initial determination of household income shall be made as of the date the qualified household first occupies a unit in the development.

• 2. Recertification

For purposes of recertifying household eligibility, the determination of income shall be made on a continuing basis as of each anniversary of the date the household first occupied a residential unit in the development to meet the requirements of United States Code Title 26, Subtitle A, Chapter 1, Subchapter B, Part IV, Subpart A, Section 142(d)(3)(A). As a practical matter, the owner representative may elect to recertify as of the first day of the month of the initial certification anniversary date.

Example: Household moved into unit August 10, 2002. The Annual Recertification could be effective August 1st for each succeeding year.

• 3. Income Changes after Initial Certification
  • a. Increase in Income (Next Available Unit)
    • (1) Increases in income to a level which does not exceed 140 percent of the applicable income limit shall not result in disqualification.

Example: Multiply 1.4 times the current applicable income limit. If the household’s current aggregate income does not exceed this figure, the unit shall be counted as income eligible at recertification.

- (2) If upon recertification, a household’s aggregate income exceeds 140 percent of the applicable income limit for a household of the same size, such household shall no longer be counted towards satisfaction of the lower-income requirements. The fact that such household’s aggregate income exceeds 140 percent of the applicable income limit shall not place the development in non-compliance so long as the next unit of comparable or smaller size that becomes vacant in the development is rented to a lower-income household until the development again meets its lower-income requirement.

• b. Increase in Household Size (Next Available Unit)

If, after initial certification and move in, another person wishes to join the household, management shall determine, prior to move-in of the new person, whether the unit continues to meet the applicable eligibility requirements. Income limits in effect at the time the household member is to be added shall be used. Management shall not allow an additional person to move into a unit if it jeopardizes compliance with the requirements of the Regulatory Agreement.

- (1) If the newly-constituted household meets the applicable eligibility requirements, the minimum requirement is completion of a new Tenant Income Certification containing all information pertaining to the new household member combined with the most recently certified income of the existing household. All application and verification procedures shall be adhered to. The new household member shall sign the form, however, it is not necessary for the existing household members to sign the new Tenant Income Certification; management may instead reference the existing Tenant Income Certification on the signature line of the new Tenant Income Certification.
- (2) If upon recertification, a household’s aggregate income exceeds 140 percent of the applicable income limit for a household of the same size, such household shall no longer be counted towards satisfaction of the lower-income requirements. The fact that such household’s aggregate income exceeds 140 percent of the applicable income limit shall not place the development in non-compliance so long as the next unit of comparable or smaller size that becomes vacant in the development is rented to a lower-income household until the development again meets its lower-income requirement.

• c. Decrease in Income

The income category may be changed due to a decrease in household aggregate income.

• d. Decrease in Household Size (Next Available Unit)

If upon recertification a household’s size decreases so that the household’s aggregate income exceeds 140 percent of the applicable income limit, such household shall no longer be counted towards satisfaction of the lower-income requirements. The fact that such aggregate income exceeds 140 percent of the applicable income limit shall not place the development in non-compliance so long as the next unit of comparable or smaller size in the development that becomes vacant is rented to a qualified household until the development again meets its lower-income requirement.

E. Qualified Project Period

• 1. The lower-income requirement shall be met commencing with:
  • a. The date the bonds are issued
• 2. And ending on the later of:
  • a. The date that is 15 years after the date of issuance; or
  • b. The first day on which no tax-exempt bond issued to finance the development is outstanding; or
  • c. The date on which Section 8 Assistance terminates.

The requirements apply for the entire Qualified Project Period which may survive the early redemption of the bonds.

F. Documentation Requirements

Under the terms of the Regulatory Agreement, the Owner representative is required to provide copies of certain documents:

• 1. Certificate Concerning Commencement and Termination of Qualified Project Period

The certificate in recordable form is submitted to Florida Housing after 50 percent of the units in the development are first occupied. The owner representative submits the certificate for purposes of the calculation of the commencement and termination of the Qualified Project Period, including extensions, if any. Refer to Appendix U for an example of the certificate.

• 2. The Certificate of Continuing Program Compliance ("CCPC") is a statement confirming the percentage and number of units occupied by income eligible households and is submitted in conjunction with the Program Report. This document shall be signed by the owner representative unless a change in signature authority has been

requested by the owner representative and such change has been acknowledged by Florida Housing.

G. Procedures

• 1. Management Units
  • a. Developments having a set aside requirement totaling less than 100 percent shall place management units in the non-set aside portion of its units.
• 2. Unit Transfer

An existing household transferring to another unit shall be treated as a new move-in and follow all application, verification, and certification procedures. Income limits at the time of the move shall determine if the new unit shall be income eligible.

H. Record Retention

Retain all household files and records of documentation for at least six years after an applicant is rejected or after a unit has been vacated.

3.4 MMRB Interim (Developments financed between January 1, 1986, and August 15, 1986)

A. Income Limits - Minimum Set-Aside Requirement

In order for interest on Florida Housing’s multifamily housing revenue bonds to qualify as tax-exempt, each development shall meet the following requirement:

• 1. Twenty (20) percent or more of the units in the development shall be occupied by households whose income is 80 percent or less of the Area Median Gross Income ("AMI"), adjusted for household size.

Refer to Appendix A for Income Limit schedules.

B. Additional Commitments

• 1. Additional Income Limit Requirements

The Florida Legislature mandated that units other than low-income units be occupied by households whose total current and Anticipated Annual Household Income does not exceed 150 percent of whichever is greater, the state median, area median, or county median, with no adjustment for household size (the upper income cap). Refer to Appendix A for Income Limit schedules.

• 2. Public Purpose Criteria

The Regulatory Agreement shall describe the requirements when applicable to the development. Public Purpose Criteria can increase the actual number of set aside units for households at differing income levels. Other Public Purpose Criteria provide for resident programs, extend the qualified project period or serve the community needs.

C. Certification of Household Eligibility

• 1. For purposes of satisfying income eligibility requirements, the determination of income shall be made as of the date the certified household first occupies a residential unit in the development.
• 2. Income Changes after Initial Certification
  • a. Increase in Income

Increases in income for current residents are not reported. The unit shall remain in the category determined at commencement of occupancy. Recertification does not apply.

• b. Increase in Household Size

If, after initial certification and move in, another person wishes to join the household, management shall determine, prior to move-in of the new person, whether the unit continues to meet the applicable eligibility requirements. Income limits in effect at the time the household member is to be added shall be used. Management shall not allow an additional person to move into a unit if it jeopardizes compliance with the requirements of the Regulatory Agreement.

If the newly-constituted household meets the applicable eligibility requirements, the minimum requirement is completion of a new Tenant Income Certification containing all information pertaining to the new household member combined with the most recently certified income of the existing household. All application and verification procedures shall be adhered to. The new household member shall sign the form, however, it is not necessary for the existing household members to sign the new Tenant Income Certification; management may instead reference the existing Tenant Income Certification on the signature line of the new Tenant Income Certification.

• c. Decrease in Income

Decreases in income for current residents are not reported. The unit shall remain in the category determined at commencement of occupancy. Recertification does not apply.

• d. Decrease in Household Size

The income category shall not change due to a decrease in household size. The unit shall remain in the category determined at commencement of occupancy. Recertification does not apply.

D. Qualified Project Period

• 1. The lower-income requirement shall be met commencing with the later of:
  • a. The first day on which at least 10 percent of the units in the development are first occupied, or
  • b. The date the bonds are issued
• 2. And ending on the later of:
  • a. The date ten years after the date on which 50 percent of the units in the development are first occupied; or
  • b. The date that is a Qualified Number of Days after the date of initial occupancy of any unit in the Development; or
  • c. The date on which any assistance provided to the development under Section 8 of the United States Housing Act of 1937, as amended, terminates.

The requirements apply for the entire Qualified Project Period which may survive the early redemption of the bonds.

E. Documentation Requirements

Under the terms of the Regulatory Agreement, the Owner representative is required to provide copies of certain documents:

• 1. Certificate Concerning Commencement and Termination of Qualified Project Period

The certificate in recordable form is submitted to Florida Housing after 50 percent of the units in the development are first occupied. The owner representative submits the certificate for purposes of the calculation of the commencement and termination of the Qualified Project Period, including extensions, if any. Refer to Appendix V for an example of the certificate.

• 2. The Certificate of Continuing Program Compliance ("CCPC") is a statement confirming the percentage and number of units occupied by income eligible households and is submitted in conjunction with the Program Report. This document shall be signed by the owner representative unless a change in signature authority has been requested by the owner representative and such change has been acknowledged by Florida Housing.

F. Procedures

• 1. Management Units
  • a. Developments having a set-aside requirement totaling less than 100 percent shall place the management in the non-set aside portion of its units.
  • b. Developments having a set-aside requirement totaling 100 percent of the units in the development shall follow the process below:
    • (1) The owner representative may request units to be exempted from income certification for full-time employees who are required to live on-site.
    • (2) The owner representative shall make the initial request to Florida Housing, in writing, prior to occupancy by the employee. The request shall include the employee's job title and reason for the requirement for living on-site.
    • (3) Florida Housing shall accept or reject the initial request the request and respond in writing.
    • (4) The approved management unit(s) shall be listed on the Program Report.
    • (5) Once a management unit has been approved, changes only need to be reflected on the Program Report. It is not necessary to send a letter to Florida Housing when there are changes in the designated unit or the employee who occupies the management unit. A management unit no longer required shall be rented to an income-eligible household.
  • c. Developments having a set-aside requirement totaling less than 100 percent shall place the management unit(s) in the non-set aside portion of its units.
• 2. Unit Transfer

An existing household transferring to another unit shall be treated as a new move-in and follow all application, verification, and certification procedures. Income limits at the time of the move shall determine if the new unit shall be income eligible.

G. Record Retention

Retain all resident files and records of documentation for at least six years after an applicant is rejected or after a unit has been vacated.

3.5 MMRB Pre-1986 (Developments Not Subject to the Tax Reform Act of 1986)

A. Income Limits - Minimum Set-Aside Requirement

In order for interest on Florida Housing’s multifamily housing revenue bonds to qualify as tax-exempt, each development shall meet the following requirement:

• 1. Twenty (20) percent or more of the units in the development shall be occupied by households whose income is 80 percent or less of the Area Median Gross Income ("AMI"), with no adjustment for household size.

Refer to Appendix A for Income Limit schedules.

B. Additional Commitments

• 1. Additional Income Limit Requirements

The Florida Legislature mandated that units other than low-income units be occupied by households whose total current and Anticipated Annual Household Income does not exceed 150 percent of whichever is greater, the state median, area median, or county median, with no adjustment for household size (the upper income cap). Refer to Appendix A for Income Limit schedules.

• 2. Public Purpose Criteria

The Regulatory Agreement shall describe the requirements when applicable to the development. Public Purpose Criteria can increase the actual number of set aside units for households at differing income levels. Other Public Purpose Criteria provide for resident programs, extend the Qualified Project Period or serve the community needs.

C. Certification of Household Eligibility

• 1. For purposes of satisfying income eligibility requirements, the determination of income shall be made as of the date the certified household first occupies a residential unit in the development.
• 2. Income Changes after Initial Certification
  • a. Increase in Income

Increases in income for current residents are not reported. The unit shall remain in the category determined at commencement of occupancy. Recertification does not apply.

• b. Increase in Household Size

If, after initial certification and move in, another person wishes to join the household, management shall determine, prior to move-in of the new person, whether the unit continues to meet the applicable eligibility requirements. Income limits in effect at the time the household member is to be added shall be used. Management shall not allow an additional person to move into a unit if it jeopardizes compliance with the requirements of the Regulatory Agreement.

If the newly-constituted household meets the applicable eligibility requirements, the minimum requirement is completion of a new Tenant Income Certification containing all information pertaining to the new household member combined with the most recently certified income of the existing household. All application and verification procedures shall be adhered to. The new household member shall sign the form, however, it is not necessary for the existing household members to sign the new Tenant Income Certification; management may instead reference the existing Tenant Income Certification on the signature line of the new Tenant Income Certification.

• c. Decrease in Income

Decreases in income for current residents are not reported. The unit shall remain in the category determined at commencement of occupancy. Recertification does not apply.

• d. Decrease in Household Size

The income category shall not change due to a decrease in household size. The unit shall remain in the category determined at commencement of occupancy. Recertification does not apply.

D. Qualified Project Period

• 1. The lower-income requirement shall be met commencing with the later of:
  • a. The first day on which at least 10 percent of the units in the development are first occupied, or
  • b. The date the bonds are issued.
• 2. And ending on the later of:
  • a. The date ten years after the date on which 50 percent of the units in the development are first occupied; or
  • b. The date that is a Qualified Number Of Days after the date of initial occupancy of any unit in the development; or
  • c. The date on which any assistance provided to the development under Section 8 of the United States Housing Act of 1937, as amended, terminates.

The requirements apply for the entire Qualified Project Period which may survive the early redemption of the bonds.

E. Documentation Requirements

Under the terms of the Regulatory Agreement, the Owner representative is required to provide copies of certain documents:

• 1. Certificate Concerning Commencement and Termination of Qualified Project Period

The certificate in recordable form is submitted to Florida Housing after 50 percent of the units in the development are first occupied. The owner representative submits the certificate for purposes of the calculation of the commencement and termination of the Qualified Project Period, including extensions, if any. Refer to Appendix V for an example of the certificate.

• 2. The Certificate of Continuing Program Compliance ("CCPC") is a statement confirming the percentage and number of units occupied by income eligible households and is submitted in conjunction with the Program Report. This document shall be signed by the owner representative unless a change in signature authority has been requested by the owner representative and such change has been acknowledged by Florida Housing.

F. Procedures

• 1. Management Units
  • a. Developments having a set-aside requirement totaling less than 100 percent shall place the management and model units in the non-certified portion of its units.
  • b. Developments having a set-aside requirement totaling 100 percent of the units in the development shall follow the process below:
    • (1) The owner representative may request units to be exempted from income certification for full-time employees who are required to live on-site.
    • (2) The owner representative shall make the initial request to Florida Housing, in writing, prior to occupancy by the employee. The request shall include the employee's job title and reason for the requirement for living on-site.
    • (3) Florida Housing shall accept or reject the initial request and respond in writing.
    • (4) The approved management unit shall be listed on the Program Report.
    • (5) Once a management unit has been approved, changes only need to be reflected on the Program Report. It is not necessary to send a letter to Florida Housing when there are changes in the designated unit or the employee who occupies the management unit. A management unit no longer required shall be rented to an income-eligible household.
• 2. Unit Transfer

An existing household transferring to another unit shall be treated as a new move-in and follow all application, verification, and certification procedures. Income limits at the time of the move shall determine if the new unit shall be income eligible.

G. Record Retention

Retain all resident files and records of documentation for at least six years after an applicant is rejected or after a unit has been vacated.

4.1 Income Limits - Minimum Set-Aside Requirement

In order to comply with State law and rules governing the administration of the State Apartment Incentive Loan (SAIL) Program, the set aside requirements shall be met from the date that the first unit is occupied or, if already occupied, from the date of loan closing. Refer to Appendix A for Income Limit schedules.

The owner shall choose either:

A. Twenty (20) percent or more of the units in the development shall be occupied by households whose income does not exceed 50 percent of the Area Median Gross Income (“AMI”); or

B. Forty (40) percent or more of the units in the development shall be occupied by households whose income does not exceed 60 percent of AMI.

4.2 Additional Commitments:

A. Additional Income Limit Requirements

The owner may choose to set-aside up to 100 percent of the units for lower income households. The Regulatory Agreement shall describe the requirements when applicable to the development.

B. Categorical Restriction Requirement

The units that are set aside or held available for elderly households, farmworker or commercial fishing worker households, special needs households, or households that were previously homeless, in accordance with section 420.5087, Florida Statutes. The Regulatory Agreement shall describe the requirements when applicable to the Development.

4.3 Certification of Household Eligibility

A. Initial Certification

The initial determination of household income shall be made as of the date the qualified household first occupies a unit in the development.

B. Recertification

For purposes of recertifying household eligibility, the determination of income shall be made on a continuing basis as of each anniversary of the date the household first occupied a residential unit in the development. As a practical matter, the owner representative may elect to recertify as of the first day of the month of the initial certification anniversary date.

Example: Resident moved into unit August 10, 2002. The Annual Recertification could be effective August 1st for each succeeding year.

C. Income Changes after Initial Certification

• 1. Increase in Income (Next Available Unit)
  • a. Increases in income to a level which does not exceed 140 percent of the applicable income limit shall not result in disqualification.

Example: Multiply 1.4 times the current applicable income limit. If the household’s current aggregate income does not exceed this figure, the unit shall be counted as income eligible at recertification.

• b. If, upon recertification, a household’s aggregate income exceeds 140 percent of the applicable income limit for a household of the same size, such household shall no longer be counted towards satisfaction of the very-low income requirements. The fact that such household’s aggregate income exceeds 140 percent of the applicable income limit shall not place the development in noncompliance so long as the next unit of comparable or smaller size that becomes vacant in the development is rented to a very-low income household until the development again meets its very-low income requirement.

NOTE: If a development also participates in the Housing Credit program, the household shall meet the eligibility requirements of United States Code Title 26, Subtitle A, Chapter 1, Subchapter A, Part IV, Subpart D, Section 42, as amended. Refer to Chapter 5, Housing Credits, Certification of Household Eligibility.

• 2. Increase in Household Size (Next Available Unit)

If, after initial certification and move in, another person wishes to join the household, management shall determine, prior to move-in of the new person, whether the unit continues to meet the applicable eligibility requirements. Income limits in effect at the time the household member is to be added shall be used. Management shall not allow an additional person to move into a unit if it jeopardizes compliance with the requirements of the Regulatory Agreement.

• a. If the newly-constituted household meets the applicable eligibility requirements, the minimum requirement is completion of a new Tenant Income Certification containing all information pertaining to the new household member combined with the most recently certified income of the existing household. All application and verification procedures shall be adhered to. The new household member shall sign the form, however, it is not necessary for the existing household members to sign the new Tenant Income Certification; management may instead reference the existing Tenant Income Certification on the signature line of the new Tenant Income Certification.
• b. If, upon recertification, the aggregate household income exceeds 140 percent of the applicable income limit, such household shall no longer be counted towards satisfaction of the lower-income requirements. The fact that such household’s income exceeds 140 percent of the applicable income limit shall not place the development in non-compliance so long as the next unit of comparable or smaller size that becomes vacant in the development is rented to a lower-income household until the development again meets its lower-income requirement.

NOTE: If a development also participates in the Housing Credit program, the household shall meet the eligibility requirements of United States Code Title 26, Subtitle A, Chapter 1, Subchapter A, Part IV, Subpart D, Section 42, as amended. Refer to Chapter 5, Housing Credits, Certification of Household Eligibility.

• 3. Decrease in Income

The income category may be changed due to a decrease in household aggregate income.

• 4. Decrease in Household Size (Next Available Unit)

If upon recertification a household’s size decreases so that the household’s aggregate income exceeds 140 percent of the applicable income limit, such household shall no longer be counted towards satisfaction of the very-low income requirements. The fact that such aggregate income exceeds 140 percent of the applicable income limit shall not place the development in non-compliance so long as the next unit of comparable or smaller size in the development that becomes vacant is rented to a qualified household until the development again meets its very-low income requirement.

NOTE: If a development also participates in the Housing Credit program, the household shall meet the eligibility requirements of United States Code Title 26, Subtitle A, Chapter 1, Subchapter A, Part IV, Subpart D, Section 42, as amended. Refer to Chapter 5, Housing Credits, Certification of Household Eligibility.

4.4 Compliance Period

The Compliance Period begins on the date the first unit is occupied, or if already occupied, on the date of loan closing, and ends in accordance with the number of years described in the Regulatory Agreement.

4.5 Procedures

A. Management Units

• 1. Developments having a set-aside requirement of less than 100 percent shall place the management units in the non-set aside portion of its units.
• 2. Developments having a set-aside requirement totaling 100 percent of the units in the development shall follow the process below:
  • a. The owner representative may request units to be exempted from income certification for full-time employees who are required to live on-site.
  • b. The owner representative shall make the initial request to Florida Housing, in writing, prior to occupancy by the initial employee. The request shall include the employee's job title and reason for the requirement for living on-site.
  • c. Florida Housing shall accept or reject the initial request and respond in writing.
  • d. The approved management unit(s) shall be listed on the Program Report.
  • e. Once a management unit has been approved, changes only need to be reflected on the Program Report. It is not necessary to send a letter to Florida Housing when there are changes in the designated unit or the employee who occupies the management unit. A management unit no longer required shall be rented to an income-eligible household.

B. Unit Transfer

An existing household transferring to another unit shall be treated as a new move-in and follow all application, verification, and certification procedures. Income limits at the time of the move shall determine if the new unit shall be income eligible.

NOTE: If a development also participates in the Housing Credit Program, the household shall meet the eligibility requirements of United States Code Title 26, Subtitle A, Chapter 1, Subchapter A, Part IV, subpart D, Section 42, as amended. Refer to Chapter 5, Housing Credits, Next Available Unit Rule.

4.6 Record Retention

Retain all resident file records and documentation for at least six years after an applicant is rejected or after a unit has been vacated.

5.1 Housing Credits - Allocations 1990 and Later

A. Income Limits - Minimum Set-Aside Requirement

Each development that participates in the Housing Credit Program shall set aside a minimum portion of the development units for lower-income households in order to comply with requirements of Section 42 of the Internal Revenue Code, as amended.

The owner shall choose either:

• 1. Twenty (20) percent or more of the units in the development shall be both rent restricted and occupied by households whose income is 50 percent or less of the Area Median Gross Income ("AMI"), the 20-50 test; or,
• 2. Forty (40) percent or more of the units in the development shall be both rent restricted and occupied by households whose income is 60 percent or less of AMI, the 40-60 test.

Once made, the election is irrevocable and establishes the income limit (50 percent or 60 percent of AMI) applicable to lower-income units in the development. The owner cannot claim any tax credits until the development meets its minimum set-aside requirements. The Regulatory Agreement shall describe the requirements applicable to the development.

Refer to Appendix A for Income Limit schedules.

B. Additional Commitments

• 1. Additional Set-Aside Units

Owners may set aside up to 100 percent of the total units in the development. Housing credits are awarded on a building-by-building basis; therefore, each building shall be occupied by enough incomeeligible households to meet the building's allocated set-aside requirements. The total percentage of set-aside units agreed upon shall be met beginning with initial occupancy and continuing throughout the Compliance and Extended Use Periods.

• 2. Units Set Aside Below the Minimum Required AMI Percentage

The owner may choose to set aside units at an AMI percentage below the minimum AMI percentage. This deeper targeting is met on a development basis rather than on a building-by-building basis throughout the Compliance and Extended Use Periods.

• 3. Demographic Commitments and Special Set-Asides

Demographic Commitments and Special Set-Asides provide for resident programs and serve the needs of the elderly, farmworker, commercial fishing worker, homeless, and other communities. The Regulatory Agreement shall describe the requirements when applicable to the development.

C. Certification of Household Eligibility

• 1. Discrimination Against Housing Voucher Holders Prohibited

Housing Voucher Holders – in accordance with United States Code Title 26, Subtitle A, Chapter 1, Subchapter A, Part IV, Subpart D, Section 42(h)(6)(B)(iv), an owner shall not refuse to lease a unit in the development to an applicant because the applicant holds a voucher of eligibility under Section 8 of the U.S. Housing Act of 1937.

• 2. Initial Certification

The initial determination of household income shall be made as of the date the qualified household first occupies a unit in the development.

• 3. Rehabilitated Buildings

If a household was certified as income eligible when a building was acquired as part of an acquisition and rehabilitation development, it does not have to qualify anew upon the completion of rehabilitation. It is simply subject to annual income recertification on the same basis as any other lower-income household.

• 4. Recertification

For purposes of recertifying household eligibility, the determination of income shall be made on a continuing basis as of each anniversary of the date the household first occupied a residential unit in the development. As a practical matter, the owner representative may elect to recertify as of the first day of the month of the initial certification anniversary date. However, the effective dates for RD developments participating in the HC Program shall be determined in accordance with RD regulations.

Example: Household moved into unit August 10, 2002. The Annual Recertification could be effective August 1st for each succeeding year.

• 5. Income Changes After Initial Certification
  • a. Increase in Income (Next Available Unit)
    • (1) If the aggregate household income of the occupants of a unit increases above the applicable AMI limit, but not above 140 percent of that limit, the unit shall continue to qualify as a lower-income unit, as long as the unit continues to be rentrestricted.

Example: Multiply 1.4 times the current applicable AMI limit. If the household’s current aggregate income does not exceed this figure, the unit shall be counted as lower-income at recertification.

- (2) If, upon recertification, the aggregate household income exceeds 140 percent of the applicable AMI limit the unit shall continue to qualify as lower-income and be counted toward satisfaction of the lower-income requirement, as long as the unit continues to be rent restricted, and each unit in the building, of comparable or smaller size, that is available or subsequently becomes available is rented to a qualified lowerincome household.

• b. Increase in Household Size (Next Available Unit)

If, after initial certification and move in, another person wishes to join the household, the minimum requirement is completion of a new Tenant Income Certification containing all information pertaining to the new household member combined with the most recently certified income of the existing household. All application and verification procedures shall be adhered to. The new household member shall sign the form; however, it is not necessary for the existing household members to sign the new Tenant Income Certification; management may instead reference the existing Tenant Income Certification on the signature line of the new Tenant Income Certification.

- (1) Increases in a lower-income household's aggregate income to greater than 140 percent of the applicable limit (adjusted for household size) shall not result in disqualification as long as the unit continues to be rent restricted and each unit in the building, of comparable or smaller size, that is available or subsequently becomes available is rented to a qualified lowerincome household.
- (2) If, upon recertification, the aggregate household income exceeds 140 percent of the applicable AMI limit the unit shall continue to qualify as lower-income and be counted toward satisfaction of the lower-income requirement, as long as the unit continues to be rent restricted, and each unit in the building, of comparable or smaller size, that is available or subsequently becomes available is rented to a qualified lowerincome household.

• c. Decrease in Income

The income category may be changed due to a decrease in household aggregate income.

• d. Decrease in Household Size (Next Available Unit)

If, upon recertification, a household's size decreases so that the household's aggregate income exceeds 140 percent of the applicable limit, the unit shall continue to be counted toward satisfaction of the lower-income requirement, as long as the unit continues to be rent restricted, and each unit in the building, of comparable or smaller size, that is available or subsequently becomes available is rented to a qualified lower-income household.

• e. Next Available Unit Rule

A record of next available unit documentation shall be maintained on an ongoing basis for all move-ins and move-outs and for households exceeding 140 percent of the applicable AMI limit at recertification. Records of next available unit documentation shall be kept on a building-by-building basis and shall be made available for inspection at the Management Review and Physical Inspection. The key regulatory citation is Title 26 Code of Federal Regulations Section 1.42-15. Refer to Appendix W for an example form and Appendix X for instructions.

- (1) It is necessary to document that each unit in the building, of comparable or smaller size, that is available or subsequently becomes available is rented to a qualified lower-income household in the following situations:

(a) Recertification - In the event that a lower-income household's income increases to a level greater than 140 percent of the applicable AMI limit. The household shall continue to be counted towards satisfaction of the lowerincome requirements, as long as the unit continues to be rent restricted and each unit in the building, of comparable or smaller size, that is available or subsequently becomes available is rented to a qualified lower-income household.

(b) Unit Transfer - An existing household transferring to another unit:

(i) Within the same building – When a current household moves to a different unit within the same building, the newly occupied unit adopts the status of the vacated unit. The vacated unit assumes the status the newly occupied unit had immediately before it was occupied by the current household. The application, verification and certification process does not apply.

(ii) To another building in the development: The household shall be treated as a new move-in and follow all application, verification, and certification procedures. Income Limits at the time of the move shall determine if the new unit shall be income eligible.

- (2) The owner representative shall be able to document reasonable attempts to rent vacant units. It is necessary to document that while a lower-income unit is vacant, no available unit in the development, of comparable or smaller size, that is available or subsequently becomes available is rented to a household that is not income eligible or the vacant unit will cease to qualify as a lower-income unit. This rule can prevent non-certified (market rent) units in a mixed income development from being leased while lower-income units remain vacant since the vacant unit rule applies on a development-wide basis, compared to the next available unit rule for over-income households, which applies on a building basis. The key regulatory citation is Title 26 Code of Federal Regulations Section 1.42-5(c)(ix).

D. Compliance Period

• 1. Developments shall satisfy compliance eligibility requirements for an initial 15-year period.

The Compliance Period begins on the first day of the first taxable year of the credit period, which is either the year the building is placed in service or the following year, based upon the owner's election.

• 2. Extended Use Period

Developments are required to comply with lower-income use requirements for a minimum additional period of 15 years beyond the end of the Compliance Period, creating a total Extended Use Period of 30 years. Development owners may agree to a longer extended use period in order to qualify for preference in the award of credits. The Regulatory Agreement shall specify the length of the additional requirement applicable to a particular development. The extended use period may be terminated by foreclosure and under certain other circumstances as set forth in United States Code Title 26, Subtitle A, Chapter 1, Subchapter A, Part IV, Subpart D, Section 42(h)(6)(E). The Regulatory Agreement may limit the availability of these provisions.

The overall development, and each building within the development, shall meet both the minimum set-aside requirements and the additional set-aside requirements throughout the compliance and extended use periods.

E. Rent Restrictions

• 1. Gross Rent

The gross rent includes an allowance for utilities when paid by the household. For developments receiving an HC allocation in 1990 and later, maximum gross rents are imputed by the number of bedrooms in the unit. Refer to Appendix B1 for maximum allowable rent schedules.

• 2. Utility Allowance

The utility allowance is an estimate of the cost of monthly utilities for the unit type. If the household pays utilities (other than telephone and cable), a utility allowance is deducted from the maximum gross rent allowed for the unit. The resulting figure is the maximum allowable household rent contribution.

Verification of utility allowances used to calculate rents shall be obtained by the owner representative at least annually. Documentation of utility allowances shall be readily available to any interested party.

The appropriate utility allowance for a building is governed by United States Code Title 26 Chapter 1, Part 1, Section 1.42-10.

• a. RD-assisted buildings - Use the applicable utility allowance as determined by RD for all HC rent-restricted units in the building.
• b. Buildings with RD residents - If any household in a building receives RD rental assistance, the applicable RD utility allowance shall be used for all HC rent-restricted units in the building (including any units occupied by households receiving HUD rental assistance payments).
• c. HUD regulated buildings - If neither a building nor any household in the building receives RD rental assistance and the rents and utility allowances of the building are reviewed by HUD annually, the applicable HUD utility allowance shall be used for all HC rentrestricted units in the building.
• d. Other buildings - If a building is not RD assisted or HUD regulated and no households in the building receives RD resident assistance, the applicable utility allowance for rent-restricted units in the building shall be determined as follows:
  • (1) Households receiving HUD rental assistance - Use the applicable Public Housing Authority (PHA) utility allowance for the Section 8 Existing Housing Program for HC rent-restricted units occupied by households receiving HUD rental assistance.
  • (2) Other households - For units in which the household does not receive HUD rental assistance, the appropriate utility allowance is the applicable PHA utility allowance. However, if an interested party (including a low-income resident, a building owner or Florida Housing) obtains a local utility company estimate for any unit in the building, that estimate becomes the appropriate utility allowance for all rent restricted units of similar size and construction in the building. If the local utility company estimate is used, ensure amounts given include all taxes and surcharges the household will be required to pay. The owner shall make available copies of the utility company estimate to the residents in the building.
• 3. Household Rent Contribution

The household rent contribution, plus the utility allowance, shall not exceed the maximum gross rent allowed for the unit. The household rent contribution generally includes only amounts paid by the household. Not included in the household rent contribution are:

• a. Rental assistance payments under Section 8 of the United States Housing Act of 1937, or under comparable rental assistance programs,
• b. Amounts paid for optional supportive services.
• 4. Changes in Maximum Allowable Rent

Rents shall not be increased until the beginning of a new lease term, unless otherwise specified in the current lease.

• a. Changes in income limits - Upon the release of new income limits from HUD, owners have 45 days from the effective date to implement the new limits (IRS Revenue Ruling 94-57).
• b. Changes in applicable utility allowances - If the applicable utility allowance, or the local utility company estimate, changes, the new utility allowance shall be used to compute the maximum household rents allowed for rent-restricted units. The owner has 90 days from the effective date to implement the change (United States Code Title 26 Chapter 1, Part 1, Section 1.42-10(b)(4)(ii)(B)(c)). It is recommended that management reconfirm the utility allowance on a quarterly basis to ensure that a change in the utility allowance is not overlooked.
• 5. Gross Rent Floor

For developments receiving an initial allocation or determination letter issued after October 6, 1994, in accordance with Revenue Procedure 94-57, IRS established the gross rent floor as maximum rents allowed on the date of initial allocation (usually the carryover date) or determination letter (for a bond-financed building) unless the owner designates the placed in service date for this purpose. The designation of the placed in service date for determination of the gross rent floor is a one-time irrevocable election that the owner shall make no later than the date the building is placed in service. For buildings receiving an initial allocation or determination letter prior to October 6, 1994, IRS permits any reasonable method to be used to determine the gross rent when a building first became part of qualified low-income housing project. This would ordinarily be the gross rent limit in the first year of the credit period.

In general, a decrease in the AMI will require a reduction in the gross rent charged to low-income households unless rent would be reduced below the gross rent floor. Thus, the rent limitation for a unit does not have to be reduced below the initial permitted maximum rent which is charged to the low-income households.

• a. Decrease in income limits – Under United States Code Title 26, Subtitle A, Chapter 1, Subchapter A, Part IV, Subpart D, Section 42(g)(2)(A), the applicable income limits shall not be decreased below the limits for the first year of a development’s occupancy for purposes of the development’s applicable rents.
• b. Increase in income limits – If the applicable income limits increase, unit rents may be increased depending upon provisions of the lease.
• c. Changes in applicable utility allowance – Rental income may decrease due to an increase in the utility allowance.

F. Documentation

As required by the IRS, owners shall document a Development's continuing compliance with Housing Credit requirements by submitting an annual certification of program compliance (form AOC-1) to Florida Housing. Owners shall begin submitting certifications when a Development's Housing Credits are first claimed and annually thereafter until the end of the Compliance Period for the Development. This document shall be properly executed by the owner, or an agent with full authority to legally bind the owner.

Refer to Appendix Y for an example of the Annual Owner's Certificate of Continuing Program Compliance form AOC-1.

G. Procedures

• 1. Management Units
  • a. Developments having a set-aside requirement totaling less than 100 percent shall place the management units in the non-set aside portion of its units.
  • b. Developments having a set-aside requirement totaling 100 percent of the units in the development shall follow the process below:
    • (1) The owner representative may request units to be exempted from income certification for full-time employees who are required to live on-site.
    • (2) The owner representative shall make the initial request to Florida Housing, in writing, prior to occupancy by the initial employee. The request shall include the employee's job title and reason for the requirement for living on-site.
    • (3) Florida Housing shall accept or reject the initial request and respond in writing.
    • (4) The approved management unit(s) shall be listed on the Program Report.
    • (5) Once a management unit has been approved, changes only need to be reflected on the Program Report. It is not necessary to send a letter to Florida Housing when there are changes in the designated unit or the employee who occupies the management unit. A management unit no longer required shall be rented to an income-eligible household.
• 2. Security (Courtesy) Officer Units

An IRS Private Letter Ruling issued 6/16/95, allowed a unit to be occupied by a security officer (a/k/a courtesy officer) if it was reasonably required by the development. The security officer unit shall not be included in the numerator or denominator when calculating the building's percentage of lower-income units.

Note: Private letter rulings are not precedent setting and do not bind the IRS. Nonetheless, they are usually viewed as an indicator of IRS’s thinking on particular matters.

Items to be considered by an owner representative seeking to rely upon this letter ruling are:

The security officer may be a local law enforcement officer who lives on-site and performs safety and security services.

• a. Security officer responsibilities include:
  • (1) Performing safety and security services
  • (2) Being on-site during the evening and nighttime hours to respond to resident requests for assistance, including complaints, unauthorized visitors, improper parking, and unauthorized use of community facilities
  • (3) Organizing criminal background investigations, neighborhood watch programs, and educational activities for primary school age residents
  • (4) Providing a daily log of activities to the development manager
• b. General Instructions
  • (1) Developments having a set-aside requirement totaling less than 100 percent shall place the security officer unit in the non-set aside portion of its units.
  • (2) Developments having a set-aside requirement totaling 100 percent of the units in the development shall follow the process below:

(a) The owner representative may request units to be exempted from income certification for security officers who are required to live on-site.

(b) The owner representative shall make the initial request to Florida Housing, in writing, prior to occupancy by the officer.

(i) Documentation to justify the need for an officer to live on-site including a criminal activity report for the Development and/or the surrounding neighborhood

(ii) A list of duties to be performed by the officer

(c) Florida Housing shall accept or reject the initial request and respond in writing.

(d) The security officer unit(s) shall be listed on the Program Report.

(e) Once a security officer unit has been approved, changes only need to be reflected on the Program Report. It is not necessary to send a letter to Florida Housing when there are changes in the designated unit or the officer who occupies the unit. A security officer unit no longer required shall be rented to an income-eligible household.

H. Record Retention

• 1. Owners/Managers shall:
  • a. Report and keep records on a building-by-building basis.
  • b. Retain records of the entire first year's credit period for at least six years beyond the due date (with extensions) for filing the Federal Income Tax Return for the last year of the building's Compliance Period. Other years' records shall be kept for six years beyond the due date (with extensions) for filing that year's Federal Income Tax Return.

5.2 Housing Credits -1987, 1988 and 1989 Allocations

A. Income Limits - Minimum Set-Aside Requirement

Each development that participates in the Housing Credit Program shall set aside a minimum portion of the development units for lower-income households in order to comply with requirements of Section 42 of the Internal Revenue Code, as amended. Refer to Appendix A for Income Limit schedules.

The owner shall choose either:

• 1. Twenty (20) percent or more of the units of the development shall be both rent restricted and occupied by households whose income is 50 percent or less of the Area Median Gross Income ("AMI"), the 20-50 test; or,
• 2. Forty (40) percent or more of the units in the development shall be both rent restricted and occupied by households whose income is 60 percent or less of AMI, the 40-60 test.

Once made, the election is irrevocable and establishes the income limit (50 percent or 60 percent of AMI) applicable to lower-income units in the development. The owner cannot claim any tax credits until the development meets its minimum set-aside requirements.

B. Additional Set-Aside Units

Owners may set aside up to 100 percent of the total units in the development. Housing credits are awarded on a building-by-building basis; therefore, each building shall be occupied by enough income-eligible households to meet the building's allocated set-aside requirements. The total percentage of set-aside units agreed upon shall be met beginning with initial occupancy and continuing throughout the Compliance Period.

C. Certification of Household Eligibility

• 1. Initial Certification

The initial determination of household income shall be made as of the date the qualified household first occupies a unit in the development.

• 2. Rehabilitated Buildings

If a household was certified as income eligible when a building was acquired as part of an acquisition and rehabilitation development, it does not have to qualify anew upon the completion of rehabilitation. It is simply subject to annual income recertification on the same basis as any other lower-income household.

• 3. Recertification

For purposes of recertifying household eligibility, the determination of income shall be made on a continuing basis as of each anniversary of the date the household first occupied a residential unit in the development. As a practical matter, the owner representative may elect to recertify as of the first day of the month of the initial certification anniversary date. Effective dates for RD developments participating in the HC Program will be determined in accordance with RD regulations.

Example: Household moved into unit August 10, 2002. The Annual Recertification could be effective August 1st for each succeeding year.

• 4. Income Changes After Initial Certification
  • a. Increase in Income (Next Available Unit)
    • (1) If the aggregate household income of the occupants of a unit increases above the applicable AMI limit, but not above 140 percent of that limit, the unit shall continue to qualify as a lower-income unit, as long as the unit continues to be rentrestricted.

Example: Multiply 1.4 times the current applicable income limit adjusted for household size. If the household’s current aggregate income does not exceed this figure, the unit shall be counted as lower-income at recertification.

- (2) If, upon recertification, the aggregate household income exceeds 140 percent of the applicable income limit the unit shall continue to qualify as lower-income and be counted toward satisfaction of the lower-income requirement, as long as the unit continues to be rent restricted, and each unit in the building, of comparable or smaller size, that is available or subsequently becomes available is rented to a qualified lowerincome household.

• b. Increase in Household Size (Next Available Unit)

If, after initial certification and move in, another person wishes to join the household, the minimum requirement is completion of a new Tenant Income Certification containing all information pertaining to the new household member combined with the most recently certified income of the existing household. All application and verification procedures shall be adhered to. The new household member shall sign the form; however, it is not necessary for the existing household members to sign the new Tenant Income Certification; management may instead reference the existing Tenant Income Certification on the signature line of the new Tenant Income Certification.

- (1) Increases in a lower-income household's aggregate income to greater than 140 percent of the applicable limit (adjusted for household size) shall not result in disqualification as long as the unit continues to be rent restricted and each unit in the building, of comparable or smaller size, that is available or subsequently becomes available is rented to a qualified lowerincome household.
- (2) If, upon recertification, the aggregate household income exceeds 140 percent of the applicable income limit the unit shall continue to qualify as lower-income and be counted toward satisfaction of the lower-income requirement, as long as the unit continues to be rent restricted, and each unit in the building, of comparable or smaller size, that is available or subsequently becomes available is rented to a qualified lowerincome household.

• c. Decrease in Income

The income category may be changed due to a decrease in household aggregate income.

• d. Decrease in Household Size (Next Available Unit)

If, upon recertification, a household's size decreases so that the household's aggregate income exceeds 140 percent of the applicable limit, the unit shall continue to be counted toward satisfaction of the lower-income requirement, as long as the unit continues to be rent restricted and each unit in the building, of comparable or smaller size, that is available or subsequently becomes available is rented to a qualified lower-income household.

• e. Next Available Unit Rule

A record of next available unit documentation shall be maintained on an ongoing basis for all move-ins and move-outs and for households exceeding 140 percent of the applicable AMI limit at recertification. Records of next available unit documentation shall be kept on a building-by-building basis and shall be made available for inspection at the Management Review and Physical Inspection. The key regulatory citation is Title 26 Code of Federal Regulations Section 1.42-15. Refer to Appendix W for an example form and Appendix X for instructions.

- (1) It is necessary to document that each unit in the building, of comparable or smaller size, that is available or subsequently becomes available is rented to a qualified lower-income household in the following situations:

(a) Recertification - In the event that a lower-income household's income increases to a level greater than 140 percent of the applicable AMI limit. The household shall continue to be counted towards satisfaction of the lowerincome requirements, as long as the unit continues to be rent restricted and each unit in the building, of comparable or smaller size, that is available or subsequently becomes available is rented to a qualified lower-income household.

(b) Unit Transfer - An existing household transferring to another unit:

(i) Within the same building – When a current household moves to a different unit within the same building, the newly occupied unit adopts the status of the vacated unit. The vacated unit assumes the status the newly occupied unit had immediately before it was occupied by the current household. The application, verification and certification process does not apply.

(ii) To another building in the development: The household shall be treated as a new move-in and follow all application, verification, and certification procedures. Income limits at the time of the move shall determine if the new unit shall be income eligible.

- (2) The owner representative shall be able to document reasonable attempts to rent vacant units. It is necessary to document that while a lower-income unit is vacant, no available unit in the development, of comparable or smaller size, that is available or subsequently becomes available is rented to a household that is not income eligible or the vacant unit will cease to qualify as a lower-income unit. This rule can

prevent non-certified (market rent) units in a mixed income development from being leased while lower-income units remain vacant since the vacant unit rule applies on a development-wide basis, compared to the next available unit rule for over-income households, which applies on a building basis. The key regulatory citation is Title 26 Code of Federal Regulations Section 1.42-5(c)(ix).

D. Compliance Period

• 1. Developments shall satisfy compliance eligibility requirements for a 15-year period.

The Compliance Period begins on the first day of the first taxable year of the credit period, which is either the year the building is placed in service or the following year, based upon the owner's election.

The overall development, and each building within the development, shall meet both the minimum set-aside requirements and the additional set-aside requirements throughout the Compliance Period.

E. Rent Restrictions

• 1. Gross Rent

The gross rent includes an allowance for utilities when paid by the household. For developments receiving an HC allocation in 1987, 1988, and 1989, maximum gross rents are determined by the actual number of persons occupying the unit. Refer to Appendix B1 for maximum allowable rent schedules.

• 2. Utility Allowance

The utility allowance is an estimate of the cost of monthly utilities for the unit type. If the household pays utilities (other than telephone and cable), a utility allowance is deducted from the maximum gross rent allowed for the unit. The resulting figure is the maximum allowable household rent contribution.

Verification of utility allowances used to calculate rents shall be obtained by the owner representative at least annually. Documentation of utility allowances shall be readily available to any interested party.

The appropriate utility allowance for a building is governed by United States Code Title 26 Chapter 1, Part 1, Section 1.42-10.

• a. RD-assisted buildings - Use the applicable utility allowance as determined by RD for all HC rent-restricted units in the building.
• b. Buildings with RD residents - If any household in a building receives RD rental assistance, the applicable RD utility allowance shall be used for all HC rent-restricted units in the building (including any units occupied by households receiving HUD rental assistance payments).
• c. HUD regulated buildings - If neither a building nor any household in the building receives RD rental assistance and the rents and utility allowances of the building are reviewed by HUD annually,

the applicable HUD utility allowance shall be used for all HC rentrestricted units in the building.

• d. Other buildings - If a building is not RD assisted or HUD regulated and no households in the building receives RD resident assistance, the applicable utility allowance for rent-restricted units in the building shall be determined as follows:
  • (1) Households receiving HUD rental assistance - Use the applicable Public Housing Authority (PHA) utility allowance for the Section 8 Existing Housing Program for HC rent-restricted units occupied by households receiving HUD rental assistance.
  • (2) Other households - For units in which the household does not receive HUD rental assistance, the appropriate utility allowance is the applicable PHA utility allowance. However, if an interested party (including a low-income resident, a building owner or Florida Housing) obtains a local utility company estimate for any unit in the building, that estimate becomes the appropriate utility allowance for all rent restricted units of similar size and construction in the building. If the local utility company estimate is used, ensure amounts given include all taxes and surcharges the household will be required to pay. The owner shall make available copies of the utility company estimate to the residents in the building.
• 3. Household Rent Contribution

The household rent contribution, plus the utility allowance, shall not exceed the maximum gross rent allowed for the unit. The household rent contribution generally includes only amounts paid by the household. Not included in the household rent contribution are:

• a. Rental assistance payments, under Section 8 of the United States Housing Act of 1937, or under comparable rental assistance programs,
• b. Amounts paid for optional supportive services.
• 4. Changes in Maximum Allowable Rent

Rents shall not be increased until the beginning of a new lease term, unless otherwise specified in the current lease.

• a. Changes in income limits - Upon the release of new income limits from HUD, owners have 45 days from the effective date to implement the new limits (IRS Revenue Ruling 94-57).
• b. Changes in applicable utility allowances - If the applicable utility allowance, or the local utility company estimate, changes, the new utility allowance shall be used to compute the maximum household rents allowed for rent-restricted units. The owner has 90 days from the effective date to implement the change (United States Code Title 26 Chapter 1, Part 1, Section 1.42-10(b)(4)(ii)(B)(c)). Due to this 90-window it is recommended that management reconfirm the utility allowance on a quarterly basis to ensure that a change in the utility allowance is not overlooked.
• 5. Gross Rent Floor

For developments receiving an initial allocation or determination letter issued prior to October 6, 1994, owners generally are not required to reduce rents below the maximum amount allowed at the time the building was placed in service. IRS permits any reasonable method to be used to determine the gross rent when a building first became part of qualified low-income housing project. This would ordinarily be the gross rent limit in the first year of the credit period.

In general, a decrease in the AMI will require a reduction in the gross rent charged to low-income households unless rent would be reduced below the gross rent floor. Thus, the rent limitation for a unit does not have to be reduced below the initial permitted maximum rent which is charged to the low-income households.

• a. Decrease in income limits – Under United States Code Title 26, Subtitle A, Chapter 1, Subchapter A, Part IV, Subpart D, Section 42(g)(2)(A), the applicable income limits shall not be decreased below the limits for the first year of a development’s occupancy for purposes of the development’s applicable rents.
• b. Increase in income limits – If the applicable income limits increases, unit rents may be increased depending upon provisions of the lease.
• c. Changes in applicable utility allowance – Rental income may decrease due to an increase in the utility allowance.

F. Documentation

As required by the IRS, owners shall document a Development's continuing compliance with Housing Credit requirements by submitting an annual certification of program compliance (form AOC-1) to Florida Housing. Owners shall begin submitting certifications when a Development's Housing Credits are first claimed and annually thereafter until the end of the Compliance Period for the Development. This document shall be properly executed by the owner, or an agent with full authority to legally bind the owner.

Refer to Appendix Y for an example of the Annual Owner's Certificate of Continuing Program Compliance form AOC-1.

G. Procedures

• 1. Management Units
  • a. Developments having a set-aside requirement totaling less than 100 percent shall place the management units in the non-set aside portion of its units.
  • b. Developments having a set-aside requirement totaling 100 percent of the units in the development shall follow the process below:
    • (1) The owner representative may request units to be exempted from income certification for full-time employees who are required to live on-site.
    • (2) The owner representative shall make the initial request to Florida Housing, in writing, prior to occupancy by the initial employee. The request shall include the employee's job title and reason for the requirement for living on-site.
    • (3) Florida Housing shall accept or reject the initial request and respond in writing.
    • (4) The approved management unit(s) shall be listed on the Program Report.
    • (5) Once a management unit has been approved, changes only need to be reflected on the Program Report. It is not necessary to send a letter to Florida Housing when there are changes in the designated unit or the employee who occupies the management unit. A management unit no longer required shall be rented to an income-eligible household.
• 2. Security (Courtesy) Officer Units

An IRS Private Letter Ruling issued 6/16/95, allowed a unit to be occupied by a security officer (a/k/a courtesy officer) if it was reasonably required by the development. The security officer unit shall not be included in the numerator or denominator when calculating the building's percentage of lower-income units.

Note: Private letter rulings are not precedent setting and do not bind the IRS. Nonetheless, they are usually viewed as an indicator of IRS’s thinking on particular matters.

Items to be considered by an owner representative seeking to rely upon this letter ruling are:

The security officer may be a local law enforcement officer who lives on-site and performs safety and security services.

• a. Security officer responsibilities include:
  • (1) Performing safety and security services
  • (2) Being on-site during the evening and nighttime hours to respond to resident requests for assistance, including complaints, unauthorized visitors, improper parking, and unauthorized use of community facilities
  • (3) Organizing criminal background investigations, neighborhood watch programs, and educational activities for primary school age residents
  • (4) Providing a daily log of activities to the development manager
• b. General Instructions
  • (1) Developments having a set-aside requirement totaling less than 100 percent shall place the security officer unit in the non-set aside portion of its units.
  • (2) Developments having a set-aside requirement totaling 100 percent of the units in the development shall follow the process below:

(a) The owner representative may request units to be exempted from income certification for security officers who are required to live on-site.

(b) The owner representative shall make the initial request to Florida Housing, in writing, prior to occupancy by the officer.

(i) Documentation to justify the need for an officer to live on-site including a criminal activity report for the Development and/or the surrounding neighborhood

(ii) A list of duties to be performed by the officer

(c) Florida Housing shall accept or reject the initial request and respond in writing.

(d) The security officer unit(s) shall be listed on the Program Report.

(e) Once a security officer unit has been approved, changes only need to be reflected on the Program Report. It is not necessary to send a letter to Florida Housing when there are changes in the designated unit or the officer who occupies the unit. A security officer unit no longer required shall be rented to an income-eligible household.

H. Record Retention

• 1. Owners/Managers shall:
  • a. Report and keep records on a building-by-building basis.
  • b. Retain records of the entire first year's credit period for at least six years beyond the due date (with extensions) for filing the Federal Income Tax Return for the last year of the building's Compliance Period. Other years' records shall be kept for six years beyond the due date (with extensions) for filing that year's Federal Income Tax Return.

6.1 Income Limit Set-Aside Requirements

To comply with state law and rules governing the administration of the HOME Program, the set aside requirements shall be met from the date that the first unit is occupied or, if already occupied, from the date of loan closing. Refer to Appendix A for Income Limit schedules.

A. Twenty percent of the HOME-assisted units shall be occupied by households with incomes at or below 50 percent of the Area Median Gross Income (“AMI”); and

B. Eighty percent of the HOME-assisted units shall be occupied by households with incomes at or below 60 percent of AMI; or

If the development is a Disaster Relief development, 100 percent of the HOME-assisted units shall be occupied by households whose annual incomes do not exceed 80 percent of AMI.

The Regulatory Agreement shall describe the specific requirements applicable to the development.

6.2 Additional Commitments

A. Deeper Skewing

The owner shall choose to set aside a greater percentage of the units at or below 50 percent of AMI.

B. Demographic Commitments and Special Set Asides

Demographic commitments and special set asides provide for resident programs and serve the needs of the elderly, farmworker, homeless, and other communities. The Regulatory Agreement describes the specific requirements applicable to the development.

6.3 Certification of Household Eligibility

A. Discrimination Against Rental Assistance Subsidy Holders Prohibited

The owner shall not refuse to lease HOME-assisted units to a Section 8 voucher holder or to the holder of a comparable document evidencing participation in a HOME tenant-based rental assistance program because of the status of the prospective resident as a holder of such voucher. Refer to Title24 Code of Federal Regulations, Chapter I, Part 92.252 (d).

B. Initial Certification

The initial determination of household income shall be made as of the date the qualified household first occupies a HOME-assisted unit in the development.

C. Recertification

For purposes of recertifying household eligibility, the determination of income shall be made on a continuing basis as of each anniversary of the date the household first occupied a HOME-assisted unit in the development. As a practical matter, the owner representative may elect to recertify as of the first day of the month of the initial certification anniversary date.

Example: Household moved into unit August 10, 2002. The Annual Recertification could be effective August 1st for each succeeding year.

D. Income Changes after Initial Certification

• 1. Increase in Income
  • a. Developments funded with both HOME and Housing Credits

Housing Credit rules apply. Under the Housing Credit program, the household’s rent is not adjusted, and the unit is not replaced by another comparable unit until household income rises above 140 percent of the Housing Credit program eligibility threshold.

• b. HOME-Assisted Developments without Housing Credits

When increases in household income occur during the compliance/affordability period, the owner shall maintain compliance with HOME rent and occupancy requirements. The development shall maintain the correct number of Low HOME and High HOME rent units; and rents shall be adjusted for households whose incomes increase above 80 percent of the AMI. Refer to 6.3.D.5 for guidance in determining this adjustment of gross income and HOME rent.

- (1) If, upon recertification, the income of a household occupying a Low HOME rent unit increases, but does not exceed 80 percent of AMI, the rent of the household whose income has increased may, subject to the terms of the lease, be raised to the applicable High HOME rent and that unit may become a High HOME rent unit.

To replace the Low HOME unit, (a) Floating HOME-assisted units

The owner shall rent the next available unit in the development that is comparable in terms of size, features and number of bedrooms to a household that satisfies the development’s Low HOME unit requirement.

(b) Fixed HOME-assisted units

The owner shall rent the next available HOME-assisted unit in the development that is comparable in terms of size, features and number of bedrooms to a household that satisfies the development’s Low HOME unit requirement.

This process shall not increase the required number of HOMEassisted units.

- (2) If, upon recertification, a household’s income exceeds 80 percent of AMI, the unit the household occupies remains a HOME-assisted unit, however, the household’s rent shall be

calculated using the Section 8 guidelines as shown in the example provided in 6.3.D.6.

To replace the HOME-assisted unit, (a) Floating HOME-assisted units

The owner shall rent the next available unit in the development that is comparable in terms of size, features and number of bedrooms to a household that satisfies the development’s HOME-assisted unit requirement. The unit occupied by the over-income household is then not a HOME-assisted unit, and the rent of that unit shall be adjusted as appropriate.

(b) Fixed HOME-assisted units

The owner shall rent the next available HOME-assisted unit in the development that is comparable in terms of size, features and number of bedrooms to a household that satisfies the development’s Low HOME unit requirement.

This process shall not increase the required number of HOMEassisted units.

• 2. Increase in Household Size

If, after initial certification and move in, another person wishes to join the household, management shall determine, prior to move-in of the new person, whether the unit continues to meet the applicable eligibility requirements. Income limits in effect at the time the household member is to be added shall be used. Management shall not allow an additional person to move into a unit if it jeopardizes compliance with the requirements of the Regulatory Agreement.

If the newly-constituted household meets the applicable eligibility requirements, the minimum requirement is completion of a new Tenant Income Certification containing all information pertaining to the new household member combined with the most recently certified income of the remaining members of the existing household. All application and verification procedures shall be adhered to. The new household member shall sign the form; however, it is not necessary for the existing household members to sign the new Tenant Income Certification; management shall instead reference the existing Tenant Income Certification on the signature line of the new Tenant Income Certification.

• 3. Decrease in Income

The income category may be changed due to a decrease in household aggregate income.

• 4. Decrease in Household Size
  • a. Developments funded with both HOME and Housing Credits

Housing Credit rules apply. Under the Housing Credit program, the household’s rent is not adjusted, and the unit is not replaced by another comparable unit until household income rises above 140 percent of the Housing Credit program eligibility threshold.

• b. HOME-Assisted Developments without Housing Credits

When, during the compliance/affordability period, a decrease in household size causes household income to increase to a level greater than the applicable income limit, the owner shall maintain compliance with HOME rent and occupancy requirements. The development shall maintain the correct number of Low HOME and High HOME rent units; and rents shall be adjusted for households whose incomes increase above 80 percent of AMI. Procedures for determining this adjustment of gross income and HOME rent appear at section end.

- (1) If, upon recertification, the income of a household occupying a Low HOME rent unit increases due to a decrease in household size, but does not exceed 80 percent of AMI, the rent of the household whose income has increased shall, subject to the terms of the lease, be raised to the applicable High HOME rent and that unit shall become a High HOME rent unit.

To replace the Low HOME unit, (a) Floating HOME-assisted units

The owner shall rent the next available unit in the development that is comparable in terms of size, features and number of bedrooms to a household that satisfies the development’s Low HOME unit requirement.

(b) Fixed HOME-assisted units

The owner shall rent the next available HOME-assisted unit in the development that is comparable in terms of size, features and number of bedrooms to a household that satisfies the development’s Low HOME unit requirement.

This process shall not increase the required number of HOMEassisted units.

- (2) If, upon recertification, a household’s income exceeds 80 percent of AMI, the unit the household occupies remains a HOME-assisted unit; however, the household’s rent shall be calculated using the Section 8 regulations as shown in the table at section end.

To replace the HOME-assisted unit, (a) Floating HOME-assisted units

The owner shall rent the next available unit in the development that is comparable in terms of size, features and number of bedrooms to a household that satisfies the development’s HOME-assisted unit requirement. The unit occupied by the over-income household is then not a HOME-assisted unit, and the rent of that unit shall be adjusted as appropriate.

(b) Fixed HOME-assisted units

The owner shall rent the next available HOME-assisted unit in the development that is comparable in terms of size, features and number of bedrooms to a household that satisfies the development’s Low HOME unit requirement.

This process shall not increase the required number of HOMEassisted units.

• 5. Adjusting Income of Over-Income Households

HUD regulations provide for allowances to be deducted from a household's annual income to achieve adjusted income. Adjusted income is derived by subtracting any of the following deductions (also called allowances) that apply to the household from a household’s annual gross income:

• a. $480 for each dependent (includes any of the following family members who are not the head of household or spouse: persons under 18, handicapped/disabled family members, or full-time students)
• b. Reasonable child care expenses (for children 13 and under) during the period for which annual income is computed that enable a family member to work or go to school, if no adult is available in the household to provide child care
• c. For elderly households only, medical expenses, including medical insurance premiums, in excess of three percent of annual income that are anticipated during the period for which annual income is computed and that are not covered by insurance
• d. Reasonable expenses in excess of three percent of annual income for the apparatus and care of a handicapped or disabled family member that enable that person or another person to work that are anticipated during the period for which annual income is computed
• e. $400 for any elderly family (head of household or spouse is 62 or older or handicapped or disabled)

Over-income households in HOME-assisted units shall pay 30 percent of their adjusted income for rent and utilities. If 30 percent of an over-income household’s adjusted income exceeds market rents, the development owner shall charge the market rent.

For a detailed discussion of calculating annual and adjusted income under Section 8 rules, see the HOME Model Series “Technical Guide for Determining Income and Allowances for the HOME Program.” For upto-date rules and requirements, consult the regulations at United States Code Title 24, Chapter I, Part 5.611.

• 6. Example for Determining Adjusted Gross Income and HOME Rent Household Income Increased to Greater Than 80% AMI

Income limit for four (4) person household at 80 percent AMI $ 27,900

Grandmother – head of household - Age 68 Father - Age 40 Mother - Age 35 Son - Age 15

Actual verified annual income at recertification $ 30,000

$ 30,000 Annual household gross income - 400 Less head of household elderly allowance - 480 Less dependent allowance, Equals $ 29,120 Adjusted Gross Income x 30 % Percent of income household shall pay for rent, Equals $ 8,736 30 percent of annual Adjusted Gross Income ÷ 12 Divided by 12 months, Equals $ 728 Adjusted monthly income (minimum rent) - 75 Less HUD utility allowance, Equals $ 653 Monthly household rent for HOME Assisted unit

6.4 Rent Restrictions

Rents are restricted for the length of the compliance/affordability period. Rents are determined on an annual basis by the U.S. Department of Housing and Urban Development (HUD) and distributed by Florida Housing to owners and management company personnel. Refer to Appendix C for maximum allowable HOME rent schedules.

A. Low HOME Rents

A minimum of 20 percent of the HOME-assisted units shall have rents that are the lesser of (1) Fair Market Rents (FMR) or (2) 30 percent of 50 percent of AMI less the applicable utility allowance for the unit.

B. High HOME Rents

The remaining HOME-assisted units in the development shall have rents that are the lesser of (1) FMR or (2) 30 percent of 65 percent of AMI less the applicable utility allowance for the unit.

EXCEPTION NOTE: The High HOME Rents and Low HOME Rents are the MAXIMUM rents, which can be charged with the following exception: If a development has a federal or state project-based rental subsidy and the household pays no more than 30 percent of its adjusted income toward rent, the maximum rent shall be the rent allowable under the projectbased rental subsidy program (United States Code Title 24, Subpart F, Subsection 92.252(b)(2)). This does not apply to units with occupants participating in the Section 8 Voucher Program.

C. Disaster Relief Rents

If the development is a Disaster Relief development, rents for HOMEassisted units shall not exceed the HUD Section 8 Fair Market Rent (FMR) less the applicable utility allowance for the unit.

D. Floating Units

For developments with both assisted and non-assisted units, the program administrator or owner shall select fixed or floating units at the time of development commitment.

When HOME-assisted units are “floating”, the units that are designated as HOME-assisted may change over time as long as the total number of HOME-assisted units in the development remains constant.

E. Utility Allowance

The utility allowance is an estimate of the cost of monthly utilities for the unit type. If the household pays utilities (other than telephone), a utility allowance is deducted from the maximum Gross Rent allowed for the unit. The resulting figure is the maximum allowable household rent contribution.

Verification of utility allowances used to calculate maximum household rent contributions shall be obtained by the owner representative at least annually. Documentation of utility allowances shall be readily available to any interested party.

F. Household Rent Contribution

The household rent contribution plus the utility allowance cannot exceed the maximum gross rent allowed for the unit. The household rent contribution generally included only amounts paid by the household. Not included in the household rent contribution are:

• 1. Rental assistance payments, under Section 8 of the United States Housing Act of 1037, or under comparable rental assistance programs,
• 2. Amounts paid for optional supportive services.

G. Changes in Utility Allowance

If the applicable PHA utility allowance changes, the new utility allowance shall be used to compute gross rent of HOME-assisted units.

• 1. Rent Increases - Rents shall not be increased until the beginning of a new lease term, unless otherwise specified in the current lease.
• 2. Rent Reduction – If it is necessary to reduce rent as a result of a reduced income limit or an increased utility allowance, the households’ rents shall be reduced with the next rental payment.

H. Changes in Maximum Allowable Rent

• 1. Any increase in rents for HOME-assisted units is subject to the provisions of outstanding leases, and in any event, the owner must provide tenants of those units not less than 30 days prior written notice before implementing any increase in rents.
• 2. Regardless of changes in fair market rents and in median income over time, the HOME rents for a Development are not required to be lower than the HOME rent limits for the Development in effect at the time of Development Commitment.

Refer to Title 24 Code of Federal Regulations, part 92.252(f)(1).

6.5 Procedures

A. Management Units and Model Units

Management and model units are not allowed in HOME developments if the development is 100 percent HOME-assisted.

Developments having a HOME set-aside requirement totaling less than 100 percent shall place the management and model units in the non-set aside portion of its units.

B. Unoccupied Units

• 1. Floating HOME-assisted units
  • a. The vacated unit shall be reoccupied by an eligible household in the appropriate income category to satisfy the development’s HOME occupancy requirements; or
  • b. Another comparable unit (comparable in terms of size, features, and number of bedrooms to the originally designated HOMEassisted unit) in the development shall be occupied by an eligible household of appropriate income category (United States Code Title 24, Subpart K, subsection 92.252(j)).
• 2. Fixed HOME-assisted units
  • a. Fixed units remain the same throughout the Period Of Affordability.

Vacant units shall be filled in the same manner as required by HOME regulations; i.e., (i) 20 percent of the HOME-assisted units shall be occupied by households with incomes at or below 50 percent of AMI and (ii) 80 percent of the HOME-assisted units shall be occupied by households with incomes at or below 60 percent of AMI.

Vacant units are not counted in the HOME-assisted set-aside percentage.

C. Unit Transfers

An existing household transferring to another unit shall be treated as a new move-in and follow all application, verification, and certification procedures. Income limits at the time of the move shall determine if the new unit shall be income eligible.

6.6 Compliance/Affordability Period

HOME-assisted rental units carry rent and occupancy restrictions for varying lengths of time, depending upon the average amount of HOME funds invested per unit:

A. The minimum Period Of Affordability for rehabilitation developments is 15 years.

B. The minimum Period Of Affordability for newly constructed rental housing is 20 years.

C. The Period Of Affordability shall be extended until the loan is repaid as enumerated in Rule 67-48.020 (1), F.A.C.

The Regulatory Agreement shall describe the required compliance/affordability period for the development.

6.7 Relocation Requirements

A. Uniform Relocation Act – Relocation

Residential households in place prior to the submission of an application for HOME funding shall be provided with the opportunity to lease and occupy a suitable, decent, safe, sanitary and affordable dwelling unit in the building or development upon completion of the development. If the rehabilitation is such that it shall require the household to be temporarily relocated, the associated costs are an eligible cost of the development.

All HOME developments are subject to the Uniform Relocation Act (URA). When a development owner applies for HOME funding, the present residents shall be provided certain protections. These include:

• 1. Written notices of the right to remain or the need to relocate
• 2. Payment of costs associated with temporary relocation
• 3. Payments for those residents, which are required to move permanently

B. Minimizing Displacement

Consistent with other goals and objectives of the HOME Program, the grantee (participating jurisdiction/State recipient/CHDO/Native American tribe) shall assure that it has taken all reasonable steps to minimize displacement (direct or indirect) that occurs as a result of a development assisted with HOME funds. To the extent feasible, residential residents of dwellings to be rehabilitated shall be provided a reasonable opportunity to lease and occupy a suitable, decent, safe, sanitary, and affordable dwelling in the building/complex upon completion of the development.

C. Current Residents - Over Income

No HOME funds can be used to assist a unit in which the occupant's income is above the 80 percent AMI limit at the time HOME funds are committed to the development. These residents shall be eligible for HOME Relocation Assistance. Refer to U.S. Department of Housing and Urban Development Handbook 1378, Resident Assistance, Relocation and Real Property Acquisition, September 1990, for relocation procedures.

6.8 Affirmative Fair Housing Marketing

HUD regulations require developments insured and/or subsidized under programs administered by HUD to implement an Affirmative Fair Housing Marketing Plan ("AFHMP"), Form HUD-935.2, approved for the development.

A. Key Requirements

• 1. The marketing effort shall attract broad cross section of the eligible population without regard to race, color, religion, sex, disability, familial status, or national origin.
• 2. Whenever additional applicants are needed to fill available units, advertising shall be carried out in accordance with the Florida Housingapproved AFHMP.

B. Affirmative Fair Housing Marketing Plan

Owners shall comply with the requirements of their Florida Housingapproved AFHMP, which is designed to promote equal housing choice for all prospective residents regardless of race, color, religion, sex, disability, familial status, or national origin.

• 1. The purpose of the plan is to ensure that eligible families of similar income levels shall have a similar range of housing opportunities.
• 2. The plan outlines marketing strategies the owner shall use, including special efforts to attract persons who are least likely to apply because of such factors as the racial and ethnic composition of the neighborhood in which the development is located. Marketing shall also seek to reach potential applicants outside the immediate neighborhood if marketing only within the neighborhood shall create a disparate impact against certain classes (i.e., if the entire neighborhood includes no minorities).
• 3. Owners shall monitor the results of the marketing effort and adjust their marketing techniques as necessary.

6.9 Record Retention

The key regulatory citation pertaining to record retention is Title 24 Code of Federal Regulations, Subpart K, Section 92.508.

A. Owners/managers shall, at a minimum, retain and provide access to records as follows:

• 1. Period of Record Retention
  • a. Except as provided in paragraphs (2), (3), or (4) of this section, records shall be retained for five years after closeout of the funds.
  • b. If any litigation, claim, negotiation, audit, or other action has been started before the expiration of the required period (3 years), the records shall be retained until completion of the action and resolution of all issues which arise from it, or until the end of the regular period, whichever is later.
  • c. Records regarding affordable housing, income targeting, equal opportunity, affirmative marketing, flood insurance, written agreements, resident files and records, and inspection and monitoring reports shall be retained for five years after the required period of affordability.
  • d. Records covering displacements and acquisitions shall be retained for at least five years after the date by which all persons displaced from the development and all persons whose property is acquired for the development have received the final payment to which they are entitled.
• 2. Access to Records
  • a. The participating jurisdiction shall provide citizens, public agencies, and other interested parties with reasonable access to records while adhering to applicable state and local laws regarding privacy and obligations of confidentiality.
  • b. HUD and the Comptroller General of the United States, or any of their representatives, have the right of access to any pertinent books, documents, papers or other records of the participating jurisdiction, state recipients, and subrecipients, in order to make audits, examinations, excerpts, and transcripts.

NOTE: HOME Developments utilizing Housing Credits shall also keep records in accordance with Housing Credit program requirements. Refer to Chapter 5, Housing Credit.

7.1 General

Prospective applicants shall be advised that maximum income limits apply, that the amount of household income shall be verified, and household members shall be required to execute a Tenant Income Certification. If, after initial certification and move in, another person wishes to join the household, management shall determine, prior to move-in of the new person, whether the unit continues to meet the applicable eligibility requirements. Income limits in effect at the time the household member is to be added shall be used. Management shall not allow an additional person to move into a unit if it jeopardizes compliance with the requirements of the Regulatory Agreement. When applicable, prospective applicants shall be advised of recertification requirements.

7.2 Income Eligibility

A. MMRB Post 1986, MMRB 501(c)(3), SAIL, HC, HOME

For developments which are required to certify only lower-income households, applicants shall be considered qualified if the combined income for the household at move-in does not exceed the income limits applicable to the development.

For purposes of satisfying income eligibility requirements, the determination of income shall be made on the date the certified household first occupies a residential unit in the development and on an ongoing basis. Owners shall conduct a recertification of household income and composition at least annually.

B. MMRB Pre – 1986 and MMRB Interim

For those developments with both lower-income and eligible middleincome requirements, applicants shall be considered qualified if the combined income for the household at move-in does not exceed the income limits applicable to the development. For purposes of satisfying income eligibility requirements, the determination of income shall be made on the date the certified household first occupies a residential unit in the development.

7.3 Additional Considerations

A. Student Household Eligibility

A student is a person carrying a subject load considered full-time by the educational institution being attended, or who shall be a full-time student at an educational institution during five (5) months of the calendar year.

Regulations provide that a household shall not qualify if all occupants are full-time students unless the household meets one of the exceptions identified below.

If, upon recertification, all of the occupants are determined to be full-time students, the unit shall no longer qualify unless the household meets one of the exceptions identified below.

NOTE: Developments participating in multiple programs shall apply the most restrictive requirements.

• 1. Program Exceptions
  • a. MMRB – Pre 1986 and Interim

The students are married and are entitled to file a joint tax return

• b. MMRB – Post 1986, SAIL, and HC (alone or combined with other programs)
  • (1) Student households that receive Temporary Assistance for Needy Families (TANF) or its equivalent
  • (2) The students are enrolled in a job training program receiving assistance under the Job Training Partnership Act (JTPA) or under other similar Federal, State, or local laws
  • (3) The students are single parents and their children and such parents are not dependents (as defined by Internal Revenue Code Section 152) of another individual and such children are not dependents (as so defined) of another individual other than a parent of such children.
  • (4) The students are married and file a joint tax return
  • (5) The student is a former foster child in transition to independence
• c. HOME

HUD places no restriction on occupancy by students

7.4 Application

A fully completed application is necessary for an accurate determination of eligibility. The information furnished on the application shall be used as a tool to determine all sources of income including total assets and asset income. If the development's application for residency does not request information regarding total assets and asset income, an asset addendum to the application shall be used. Refer to Appendix N for an example of the asset affidavit.

It is management's responsibility to obtain sufficient information on all applicants to completely process the application. Florida Housing recommends that roommates complete separate applications.

Florida Housing does not prescribe an application format; however, the application shall include:

A. The name, age, occupation, and student status of all persons expected to occupy the unit (legal name shall be given just as it shall appear on the Lease and Income Certification);

B. All sources and amounts of current and anticipated annual income including but not limited to employment, child support, retirement, etc. (including total assets and asset income) expected to be derived during the twelve-month certification period; and,

(including total assets and asset income) expected to be derived during the twelve-month certification period; and, C. The signature of the applicant and the date the application was completed.

It shall be necessary to explain to the applicant that all information provided is considered sensitive and shall be handled accordingly.

7.5 Verification

A. Regular sources of income must be verified.

B. Verification shall be received by management prior to execution of the Tenant Income Certification and move in.

C. When written verification is not possible prior to move in, direct contact with the source will be acceptable only as a last resort. The conversation shall be documented in the household's file and shall include all the information that a written verification would include. The name and title of the contact, the name and title of the owner representative accepting the information, and the date of the direct contact shall be included. Continued follow up with the third party to obtain written verification is recommended.

Refer to Chapter 10, Verification Requirements, for guidance.

7.6 Leases

Lease forms shall include provisions as addressed in the Florida Residential Landlord and Tenant Act (Chapter 83, Part II of the Florida Statutes).

A. The lease shall include:

• 1. The legal name of all occupants
• 2. A description of the unit to be rented
• 3. The move-in date
• 4. The term of the lease, including the beginning and ending dates
• 5. The rent charged
• 6. Relevant provisions of the Regulatory Agreement

B. The initial lease term shall meet the requirement of the program in which the development participates.

C. Only occupants of the unit shall be included on or sign the lease.

D. Assignment or subletting of leases is not permissible.

E. Lease Guarantor

Lease guarantors are permitted. The guarantor does not appear on the lease as a lessee, or occupy the unit.

If the guarantor makes recurring financial contribution to the household, the contribution is considered annual income.

7.7 Tenant Income Certification

A. General Information

The Tenant Income Certification form is used to certify a household’s eligibility to meet the qualification requirements according to the programs applicable to the development.

A UNIT SHALL NOT BE COUNTED AS A SET-ASIDE UNIT UNLESS THE HOUSEHOLD RESIDING IN THE UNIT IS PROPERLY CERTIFIED.

• 1. Initial Certification

The initial determination of household income shall be made on the date the qualified household initially occupies a unit.

• a. Steps for Initial Certification
  • (1) Interview household members to obtain current information on anticipated income, assets, and household composition for the ensuing certification year, and have household members sign the verification form giving permission for release of the information requested.
  • (2) Verify the household’s income (refer to Chapter 10 Verification Requirements).
  • (3) Utilize the Florida Housing Tenant Income Certification form, or other acceptable form, for qualified households. Refer to Appendix Q for an example of the Florida Housing Tenant Income Certification form.

Acceptable forms for certification are:

(a) Florida Housing Tenant Income Certification Form

(b) HUD Form 50059 or equivalent; refer to Chapter 10, Section 10.4, part A.2.

(c) HUD Form 50058 or equivalent with PHA Applicant/Tenant Certification

(d) RD Tenant Certification Form 1944-8

• 2. Recertification

The income of a household occupying a set-aside unit in the development shall be recertified at least annually on the basis of the current anticipated Annual Household Income. This requirement does not apply to MMRB Pre-1986 or MMRB Interim Developments.

The effective date of Annual Recertification shall be determined by the month the household initially occupied the unit. However, the effective dates for RD developments participating in the HC Program shall be determined in accordance with RD regulations.

Example: Household moved into unit August 10, 2002. The Annual Recertification could be effective August 1st for each succeeding year.

• a. Steps for Recertification

It is recommended that all steps shall be completed at least 35 days before the effective date. Early completion shall enable the owner to give the household 30 days advance notice of any increase in rent.

- (1) Maintain a tracking system to facilitate timely completion of recertification.
- (2) Provide written notice to household regarding upcoming recertification approximately ninety (90) days in advance.
- (3) Schedule an appointment for an interview.
- (4) Interview household members to obtain current information on anticipated income, assets, and household composition for the ensuing certification year, and have household members sign the verification form giving permission for release of the information requested. To facilitate the interview it is recommended that a recertification questionnaire be used.
- (5) Verify the household’s income (refer to Chapter 10 Verification Requirements).
- (6) Utilize the Florida Housing Tenant Income Certification form, or other acceptable form, for qualified households. Refer to Appendix Q for an example of the Florida Housing Tenant Income Certification form.

Acceptable forms for recertification are:

(a) Florida Housing Tenant Income Certification Form

(b) HUD Form 50059 or equivalent; refer to Chapter 10, Section 10.4, part A.2.

(c) HUD Form 50058 or equivalent with PHA Applicant/Tenant Certification

(d) RD Tenant Certification Form 1944-8

- (7) Notify household of any rent change resulting from the recertification.

8.1 Introduction

Determining Annual Income discusses the requirements regarding annual income and the procedure for calculating Annual Household Income when determining eligibility. Refer to Appendix E for a list of income types that are included in anticipated Annual Household Income and to Appendix F for a list of those that are not.

A. Owners shall determine the amount of a household’s income before the household is allowed to move into a unit and at least annually thereafter. HUD regulations specify the types and amounts of income to be included in the calculation of annual income.

B. Although the definitions of annual income used for the programs covered in this guidebook have some similarities with rules used by the U.S. Internal Revenue Service (IRS), the tax rules are different from HUD program rules.

8.2 Regulations

The key regulatory citation pertaining to this chapter is Title 24 Code of Federal Regulation Part 5.609, Annual Income.

8.3 Requirements

A. Annual income is the amount of income that is used to determine a household’s eligibility.

B. Annual income is the amount anticipated to be received by a household during the 12-month period following move-in or recertification effective date.

C. Annual income includes all amounts that are not specifically excluded by regulation.

D. Annual income includes amounts derived (during the 12-month certification period) from Assets to which any member of the household has access. (Refer to Chapter 9 for guidance on determining income from Assets).

8.4 Methods for Projecting and Calculating Annual Income

A. The requirements for determining whether a household is eligible for occupancy require the owner to project or estimate the annual income that the household expects to receive. There are several ways to make this projection. The following are two acceptable methods for calculating the annual income anticipated for the coming year:

• 1. Generally the owner shall use current circumstances to anticipate income. The owner calculates projected annual income by annualizing current income. Income that may not last for a full 12 months (e.g., unemployment compensation) shall be calculated assuming current circumstances will last a full 12 months.
• 2. If information on changes expected to occur during the year is available, use that information to determine the total anticipated

income from all known sources during the year. For example, if a verification source reports that a union contract calls for a 2% pay increase midway through the year, the owner shall add together the total income for the months before, and the total income for the months after the increase.

Example - Calculating Anticipated Annual Income

A teacher’s assistant works nine months annually and receives $1,300 per month. During the summer recess, the teacher’s assistant works for the Parks and Recreation Department for $600 per month.

Calculate annual income based on anticipated changes through the year: $ 11,700 ($ 1,300 x 9 months) + 1,800 ($ 600 x 3 months) $ 13,500

B. Once all sources of income are known and verified, owners shall convert reported income to an annual figure. Convert periodic wages to annual income by multiplying:

• 1. Hourly wages by the number of hours worked per year (2080 hours for full-time employment with a 40-hour week and no overtime).
• 2. Weekly wages by 52.
• 3. Bi-weekly wages (paid every other week) by 26.
• 4. Semi-monthly wages (paid twice each month) by 24.
• 5. Monthly wages by 12.

To annualize other than full-time income, multiply the wages by the actual number of hours or weeks the person is expected to work.

Example - Anticipated Increase in Hourly Rate

February 1 Certification effective date $7.50/hour Current hourly rate $8.00/hour New rate to be effective March 15

(40 hours per week x 52 weeks = 2,080 hours per year)

February 1 through March 15 = 6 weeks 6 weeks x 40 hours = 240 hours 2,080 hours minus 240 hours = 1,840 hours (check: 240 hours + 1,840 hours = 2,080 hours)

Annual Income is calculated as follows: 240 hours x $7.50 = $ 1,800 1,840 hours x $8.00 = $ 14,720 Anticipated Annual Income $ 16,520

C. Some circumstances present more than the usual challenges to estimating anticipated income. Examples of challenging situations include a

household that has sporadic work or seasonal income or a resident who is self-employed. In all instances, owners are expected to make a reasonable judgment as to the most reliable approach to estimating what the household will receive during the year.

8.5 Whose Income is Counted

A. Income of Household Members

• 1. Adults. Count the annual income of the head, spouse or co-head, and other adult members of the household. In addition, persons under the age of 18 who have entered into a lease under State law are treated as adults and their annual income shall also be counted. These persons will be either the head, spouse, or co-head and are sometimes referred to as emancipated minors.

NOTE: If an emancipated minor is residing with a household as a member other than the head, spouse, or co-head, the individual would be considered a dependent and his or her income handled in accordance with the following section.

• 2. Other household members. Some income received by or on behalf of other household members is counted and some is not.
  • a. Earned income of minors (household members under 18) is not counted.
  • b. Benefits or other unearned income of minors is counted and is reflected on the Tenant Income Certification as income of the payee.
  • c. A small amount of the earned income of full-time students who are 18 years of age or older will be counted. If the income is less than $480 annually, count all the income. If the annual income exceeds $480, count $480 and exclude the amount that exceeds $480.
  • d. All income of a full-time student, 18 years of age or older, is counted if that person is the head of the household, spouse, or cohead.
  • e. Payments received by the household for the care of foster children or foster adults are not counted, nor are adoption assistance payments in excess of $480. This rule applies only to payments made through the official foster care relationships with local welfare agencies.

Whose Income is Counted? Other Income (including Employment income from Members Income assets)

Head Yes Yes Spouse Yes Yes Co-head Yes Yes Other adult Yes Yes

Child under 18 No Yes Full-time student over 18 See Note Yes

Other Income (including Employment income from Nonmembers Income assets)

Foster child No No Foster adult No No Live-in aide No No

NOTE: The earned income of a full-time student 18 years old or older who is not the head, co-head, or spouse is excluded to the extent that it exceeds $480.

B. Income of Temporarily Absent Household Members

• 1. Owners shall count all income of household members approved to reside in the unit, even if some members are temporarily absent.
• 2. If the owner determines that an absent person is no longer a household member, the individual shall be removed from the lease and the Tenant Income Certification.
• 3. A temporarily absent individual on active military duty shall be removed from the household and his or her income shall not be counted unless that person is the head of the household, spouse, or co-head.
  • a. However, if the spouse or dependents of the person on active military duty reside in the unit, income of the persons residing in the unit shall be counted in full, even if the military member is not the head, or spouse of the head, of the household.
  • b. The income of the head, spouse, or co-head will be counted even if that person is temporarily absent for active military duty.

8.6 Calculating Income – Elements of Annual Income

A. Educational Scholarships or Grants

All forms of student financial assistance (grants, scholarships, educational entitlements, work study programs, and financial aid packages) are excluded from annual income. This is true whether the assistance is paid to the student or directly to the educational institution.

B. Alimony or Child Support

Count the amount specified in a divorce settlement or separation agreement unless the applicant:

• 1. Certifies the income is not being provided, and
• 2. Has made reasonable effort to collect the amounts due, including filing with courts or agencies responsible for enforcing payments.

When child support or alimony are received but are not court ordered the annual amount is included as income.

Alimony or child support paid by a member of the household is counted as income, even if it is garnished from wages.

C. Contributions and Gifts

• 1. Owners shall count as income any regular contributions and gifts from persons outside the household. These sources may include rent and utility payments paid on behalf of the household and other cash or noncash contributions provided on a regular basis.

Examples - Regular Cash Contributions

A resident’s father pays her monthly utility bills. On average he provides $100 each month. The $100 per month shall be included in the household’s annual income.

The daughter of an elderly tenant pays her mother’s $175 share of rent each month. The $175 value shall be included in the household’s annual income.

• 2. Among the items that are excluded from annual income are the values of:
  • a. The Meals on Wheels program or other programs that provide food for the needy;
  • b. Groceries provided by persons not living in the household; and
  • c. Amounts received under the Food Stamp Act of 1977, the School Lunch Act and the Child Nutrition Act of 1966, including reduced lunches and food under the Special Supplemental Food Program for Women, Infants and Children (WIC).
  • d. Contributions paid directly to the childcare provider by persons not living in the unit.
  • e. Temporary, nonrecurring, or sporadic income (including gifts).

D. Income from a Business or Profession

When calculating annual income, owners shall include the net income from operation of a business or profession including self-employment income and rental of real estate. Net income is gross income less business expenses, interest on loans, and depreciation computed on a straight-line basis, as provided in Internal Revenue Services (IRS) Regulations.

• 1. In addition to net income, owners shall count any salaries or other amounts distributed to household members from the business, and cash or assets withdrawn by household members, except when the withdrawal is a reimbursement of cash or assets invested in the business.
• 2. When calculating net income, owners shall not deduct principal payments on loans, interest on loans for business expansion or capital

improvements, other expenses for business expansion, or outlays for capital improvements.

• 3. If the net income from a business is negative, it shall be counted as zero income. A negative amount shall not be used to offset other household income.

E. Adjustments for Prior Overpayments of Benefits

If an agency is reducing a household’s benefits to adjust for a prior overpayment (e.g., social security, SSI, TANF, or unemployment benefits), count the amount that is actually provided after the adjustment.

Example - Adjustment for Prior Overpayment of Benefits

Mr. Green's social security payment of $250 per month is being reduced by $25 per month for a period of six months to make up for a prior overpayment. Count his Social Security income as $225 per month for the next six months and as $250 per month for the remaining six months.

F. Periodic Payments from Long-Term Care Insurance, Pensions, Annuities, and Disability or Death Benefits

The full amount of periodic payments from annuities, insurance policies, retirement funds, pensions, and disability or death benefits are included in annual income. Payments such as Black Lung Sick Benefits, Veterans Disability, Dependent Indemnity Compensation for the Widow of a Killed in Action Serviceman are examples of such periodic payments.

G. Income from Training Programs

• 1. Amounts received under HUD-funded training programs are excluded from annual income.
• 2. Earnings and benefits received by any household member due to participation in qualifying State or local employment training programs are excluded.

H. Resident Services Stipend

A resident services stipend is a modest amount of money received by a resident for performing a service for the owner on a part-time basis. Such services may include, but are not limited to fire patrol, hall monitoring, lawn maintenance, and resident initiatives coordination. Refer to Title 24 Code of Federal Regulations, Part 5.609(c)(8)(iv).

• 1. If the resident stipend exceeds $200 per month, owners shall include the entire amount in annual income.
• 2. If the resident stipend is $200 or less per month, owners shall exclude the resident services stipend from annual income.
• 3. No resident may receive more than one such stipend during the same period of time.

I. Lump Sum Payments Counted as Income

• 1. Generally, lump sum amounts received by a household, such as inheritances, insurance settlements, or proceeds from sale of property are considered assets, not income.
• 2. When social security or SSI benefit income is paid in a lump sum as a result of deferred periodic payments, that amount is excluded from annual income.
• 3. Lottery winnings paid in one payment are treated as assets. Lottery winnings paid in periodic payments shall be counted as income.

8.7 Exclusions from Income

Many of the items listed as exclusions from annual income under HUD requirements are items that the IRS includes as taxable income. Therefore, it is important for owners to focus specifically on the HUD requirements regarding annual income. Refer to Appendix F for a list of income exclusions.

9.1 What is Considered an Asset?

A. Assets are items of value that may be turned into cash. A savings account is a cash Asset. The bank pays interest on the Asset. The interest is the income from that Asset.

B. Some individuals have Assets that are not earning interest. A quantity of money is an Asset: it is a thing of value that could be used to the benefit of its owner, even though it is not producing income.

C. Some belongings of value are not considered Assets. Necessary personal property is not counted as an Asset. Refer to Appendix G for a list of items that are considered Assets and to Appendix H for a list of items that are not considered Assets.

9.2 Determining the Total Cash Value of Family Assets

It is necessary to first determine whether the total cash value of family Assets exceeds $5,000.

A. The cash value of an Asset is the market value less reasonable expenses that would be incurred in selling or converting the Asset to cash, such as the following:

• 1. Penalties for premature withdrawal;
• 2. Broker and legal fees;
• 3. Settlement costs for real estate transactions.

The cash value is the amount the household could actually receive in cash, if the household converted an Asset to cash.

Example - Calculating the Cash Value of an Asset

A family has a certificate of deposit (CD) in the amount of $5,000 paying interest at 4%. The penalty for early withdrawal is three months of interest.

$5,000 x 0.04 is $200 in annual income $200/12 months = $16.67 interest per month $16.67 x 3 months = $50.01 $5,000 - $50 = $4,950 cash value of CD.

B. It is essential to note that a household is not required to convert an Asset to cash. Determining the cash value of the Asset is done simply as a calculation by the owner because it is a required step when determining income from Assets under program requirements.

Example - Determining the Cash Value of an Asset

The cash value is the market value or the amount another person would pay to acquire the Asset less the cost to turn the Asset into cash.

If a household owns real estate, it may be necessary to consider the household’s equity in the property as well as the expense to sell the property.

To determine the household’s equity, subtract amounts owed on the property from its market value:

Market value - Mortgage amount owed = Equity in the property

Calculate the cash value by subtracting the expense of selling the property:

Equity - Expense of selling = Cash Value

Applicant/Resident owns a rental house. The market value is $100,000. They owe $60,000. The cost to dispose of this house would be $8,000. The owner would determine the cash value as follows:

Market Value $100,000 Mortgage Amount - $60,000 40,000

Cost of disposing of the Asset (real estate commission, and other costs of sale) - $8,000 Cash Value $32,000

9.3 Assets Owned Jointly

A. If Assets are owned by more than one person, prorate the Assets according to the percentage of ownership. If no percentage is specified or provided by a State or local law, prorate the Assets evenly among all owners.

B. If an Asset is not effectively owned by an individual, do not count it as an Asset. An Asset is not effectively owned when the Asset is held in an individual’s name, but (a) the Asset and any income it earns accrue to the benefit of someone else who is not a member of the family and (b) that other person is responsible for income taxes incurred on income generated by the Assets.

C. Determining which individuals have ownership of an Asset requires collecting as much information as is available and making the best judgment possible based on that information.

• 1. In some instances, but not all, knowing whose social security number is connected with the Asset may help in identifying ownership. Owners shall be aware that there are many situations in which a social security number

connected with an Asset does not indicate ownership and other situations where there is ownership without connection to a social security number.

• 2. Determining who has contributed to an Asset or who is paying taxes on the Asset may assist in identifying ownership.

9.4 Determining Income from Assets

Annual income includes amounts derived from Assets to which household members have access.

A. The calculation to determine the amount of income from Assets to include in annual income considers both of the following:

• 1. The total cash value of the household Assets; and
• 2. The amount of income those Assets are earning or could earn.

B. The rule for calculating income from Assets differs depending on whether the total cash value of family Assets is $5,000 or less or is more than $5,000.

9.5 Calculating Income from Assets When Assets Total $5,000 or Less

If the total cash value of all household Assets is $5,000 or less, the actual income the household receives from Assets is the amount that is included in annual income as income from Assets.

Example - Use Actual Income from Assets When Total Net Family Assets are $5,000 or Less

Type of Asset Cash Value Actual Yearly Income

Certificate of Deposit $950 $40 $1,000 withdrawal fee $50 interest @ 4%

Savings Account $500 $12.50 $500 interest @ 2.5%

Stock $300 $0 $300 Not paying dividends

Total $1,750 $52.50

The total cash value of the household Assets is $1,750. Therefore, the amount that is added to annual income as income from Assets is the actual income earned or $52.50.

9.6 Calculating or Imputing Income from Assets When Assets Exceed $5,000

When net household Assets total more than $5,000, annual income includes the greater of the following:

A. Actual Income

The actual income the household receives from Assets. Total the actual income from net household Assets; or

B. Imputed Income

Imputed means “attributed” or “assigned”. Imputing income from Assets is “assigning” an amount of income (based upon the current passbook savings rate as established by HUD) solely for the sake of the annual income calculation. The Imputed income from such an Asset is the interest the money would earn if it were put in a savings account; imputed income is not real income. The passbook rate is currently set at 2.0%

To begin this calculation, first total the cash value of all Assets, then multiply the total cash value of all Assets by 2.0%. The product is the “imputed income” from Assets. Then, total the actual income from all Assets. The greater of the imputed income from Assets or the actual income from Assets is included in the calculation of annual income.

Example - Use Actual Income from Assets When Total Net Family Assets Exceed $5,000

Type of Asset Cash Value Actual Yearly Income

Checking Account $455 $0 (nonInterest bearing)

Savings Account $6000 $150 (interest at 2.5%

Stocks (not paying $3000 $0 Dividends this year)

Total $9,455 $150

Total cash value of Assets is greater than $5000. Therefore, it is necessary to compare the actual income from Assets to the imputed income from Assets

The total cash value of Assets ($9,455) is multiplied by 2.0% to determine the imputed income from Assets

.02 x $9,455 = $189

$189 is greater than the actual income from Assets ($150).

In this case, therefore, the owner will add $189 to the annual income calculation as income from Assets.

9.7 Calculating Income from Assets - Specific Types of Assets

A. Trusts

• 1. Explanation of trusts
  • a. A trust is a legal arrangement generally regulated by State law in which one party (the creator or grantor) transfers property to a second party (the trustee) who holds the property for the benefit of one or more third parties (the beneficiaries). A trust can contain cash or other liquid Assets or real or personal property that could be turned into cash. Generally, the Assets are invested for the benefit of the beneficiaries.
  • b. Trusts may be revocable or non-revocable. A revocable trust is a trust that the creator of the trust may amend or end (revoke). When there is a revocable trust, the creator has access to the funds in the trust account. When the creator sets up a non-revocable trust, the creator has no access to the funds in the account.
  • c. The beneficiary frequently will be unable to touch any of the trust funds until a specified date or event (e.g., the beneficiary’s 21st birthday or the grantor’s death). In some instances, the beneficiary may receive the regular investment income from the trust but not be able to withdraw any of the principal.
  • d. The beneficiary and the grantor may be members of the same household. A parent or grandparent may have placed funds in trust to a child. If the trust is revocable, the funds may be accessible to the parent or grandparent but not to the child.
• 2. How to treat trusts
  • a. The basis for determining how to treat trusts relies on information about who has access to either the principal in the account or the income from the account.
  • b. Revocable trusts - If any member of the household has the right to withdraw the principal in the account, the trust is considered to be an Asset and is treated as any other bank account. The cash value of the trust (the amount the household member would receive if he or she withdrew all that could be withdrawn) is added to total net Assets. The actual income received is added to actual income from Assets.
  • c. Non-revocable trusts - If no household member has access to either the principal or income of the trust at the current time, the trust is not included in the calculation of income from Assets or in annual income.

If only the income (and none of the principal) from the trust is currently available to a household member, the income is counted in annual income, but the trust is not included in the calculation of income from Assets.

• d. Non-revocable trust as an Asset disposed of for less than fair market value - If a resident sets up a non-revocable trust for the benefit of another person while residing in the development, the trust is considered an Asset disposed of for less than fair market value

If the trust has been set up so income from the trust is regularly reinvested in the trust and is not paid back to the creator, the trust is calculated as any other Asset disposed of for less than fair market value for two years and not taken into consideration thereafter.

• e. Non-revocable trust distributing income - When a resident places an Asset in a non-revocable trust but continues to receive income from the trust, the income is added to annual income and the trust is counted as an Asset disposed of for less than market value for two years. Following the two-year period, the owner will count only the actual income distributed from the trust to the resident.
• f. Payment of principal from a trust - The beneficiary of a trust may receive funds from the trust in different ways. A beneficiary may receive the full value of a trust at one time. In that instance the funds would be considered a lump sum receipt and would be treated as an Asset. A trust set up to provide support for a person with disabilities may pay only income from the trust on a periodic basis. Occasionally, however, a beneficiary may be given a portion of the trust principal on a periodic basis. When the principal is paid out on a periodic basis, those payments are considered regular income or gifts and are counted in annual income.
• 3. Special needs trust

A special needs trust is a trust that may be created under some State laws, often by household members for disabled persons who are not able to make financial decisions for themselves. Generally, the Assets within the trust are not accessible to the beneficiary.

• a. If the beneficiary does not have access to income from the trust, then it is not counted as part of income.
• b. If income from the trust is paid to the beneficiary regularly, those payments are counted as income.

B. Annuities

• 1. Annuity facts and terms
  • a. An annuity is a contract sold by an insurance company designed to provide payments, usually to a retired person, at specified intervals. Fixed annuities guarantee a certain payment amount, while variable annuities do not, but have the potential for greater returns.
    • (1) A hybrid annuity (also called a combination annuity) combines the features of a fixed annuity and a variable annuity.
    • (2) A deferred annuity is an annuity that delays income payments until the holder chooses to receive them. An immediate annuity is one that begins payments immediately upon purchase.
    • (3) A life annuity continues to pay out as long as the owner is alive. A single-life annuity provides income benefits for only one person. A joint life annuity is issued on two individuals and payments continue in whole or in part as long as either individual is alive.
  • b. Generally, a person who holds an annuity from which he or she is not yet receiving payments will also be earning income. In most instances, a fixed annuity will be earning interest at a specified fixed rate similar to interest earned by a CD. A variable annuity will earn (or lose) based on market fluctuations, as in a mutual fund.
  • c. Most annuities charge surrender or withdrawal fees. In addition, early withdrawal usually results in tax penalties.
  • d. Depending on the type of annuity and the current status of the annuity, the owner will need to ask different questions of the verification source, which will normally be the applicant or resident’s insurance broker.
• 2. Income after the holder begins receiving payments.
  • a. When verifying an annuity, owners shall ask the verification source whether the holder of the annuity has the right to withdraw the balance of the annuity. For annuities without this right, the annuity is not treated as an Asset.
  • b. Generally, when the holder has begun receiving annuity payments, the holder can no longer convert it to a lump sum of cash.
    • (1) In this situation, the holder will receive regular payments from the annuity that will be treated as regular income and no calculations of income from Assets will be made.
    • (2) However, payments received from the annuity shall not be counted as income until the full amount that the holder invested in the annuity has been exceeded.
• 3. Calculations when an annuity is considered an Asset
  • a. When an applicant or resident has the option of withdrawing the balance in an annuity, the annuity will be treated like any other Asset. If total net Assets exceed $5,000, it will be necessary to determine the cash value of the annuity in addition to determining the actual income earned.
  • b. In most instances, an annuity from which payments have not yet been made is earning income on the balance in the annuity. A fixed annuity will earn income at a fixed rate in the same manner that a CD earns income. A variable annuity will earn (or lose) based on current market conditions, as with a mutual fund.
  • c. The owner will need to verify with the insurance agent or other appropriate source:
    • (1) That the holder has the right to withdraw the balance (even if penalties are involved).
    • (2) The basis on which the annuity may be expected to grow during the coming year.
    • (3) The surrender or early withdrawal penalty fee.
    • (4) The tax rate and the tax penalty that would apply if the household withdrew the annuity.
  • d. The cash value will be the full value of the annuity, less the surrender (or withdrawal) penalty, and less any taxes and tax penalties that would be due.
  • e. The actual income is the balance in the annuity times the percentage (either fixed or variable) at which the annuity is expected to grow over the coming year. (This money will be reinvested into the annuity, but it is still considered actual income.)
  • f. The imputed income from the Asset is calculated only after the cash value of all family Assets have been determined. Imputed income from Assets is calculated on the total cash value of all household Assets.

C. Lump sum receipts counted as Assets

• 1. Commonly, when a household receives a large amount of money, a lump sum payment, the family will put the money in a checking or savings account, or will purchase stocks or bonds or a CD. Owners shall count lump sum payments received by a tenant as Assets. Examples of lump sum payments include the following:
  • a. Inheritances;
  • b. Capital gains;
  • c. Lottery winnings paid in one payment;
  • d. Cash from the sale of Assets;
  • e. Insurance settlements (including health and accident insurance, workers compensation, and personal and property losses); and
  • f. Any other amounts that are received in one-time lump sum payments.
• 2. A lump sum payment is counted as an Asset only as long as the household continues to possess it. If the household uses the money for something that is not an Asset (a car, a vacation, education, etc.) the lump sum shall not be counted.
• 3. It is possible that a lump sum or an Asset purchased with a lump sum payment may result in enough income to require the household to report the increased income at the next regularly scheduled annual recertification.

D. Balances held in retirement accounts

• 1. Balances held in retirement accounts are counted as Assets if the money is accessible to the household member. For individuals still employed, accessible amounts are counted even if withdrawal would result in a penalty. However, amounts that would be accessible only if the person retired are not counted.
• 2. IRA, Keogh, and similar retirement savings accounts are counted as Assets, even though withdrawal would result in a penalty.
• 3. Include contributions to company retirement/pension funds:
  • a. While an individual is employed, count only amounts the household can withdraw without retiring or terminating employment.
  • b. After retiring or terminating employment, count as an Asset any amount the employee elects to receive as a lump sum.
• 4. Include in annual income any retirement benefits received through periodic payments.

E. Mortgage or deed of trust

Occasionally, when an individual sells a piece of real estate, the seller may loan money to the purchaser through a mortgage or deed of trust. This may be referred to as a “contract sale”.

A mortgage or deed of trust held by a household member is included as an Asset. Payments on this type of Asset are often received as one combined payment which includes interest and principal. The value of the Asset is determined by calculating the unpaid principal at the end of the 12 month period following certification. Each year this balance will decline as more principal is paid off. The interest portion of the payment is counted as actual income from an Asset.

F. Assets disposed of for less than fair market value

Applicants and residents shall declare whether an Asset has been disposed of for less than fair market value at each certification and recertification. Owners shall count Assets disposed of for less than fair market value during the two years preceding move in certification and annual recertification. The amount counted as an Asset is the difference between the cash value and the amount actually received.

• 1. Any Asset that is disposed of for less than its full value is counted, including cash gifts as well as property. To determine the amount that has been given away, owners shall compare the cash value of the Asset to any amount received in compensation.
• 2. However, the rule applies only when the fair market value of all Assets given away during the past two years exceeds the gross amount received by more than $1,000.
• 3. When the two-year period expires, the income assigned to the disposed Asset also expires. If the two-year period ends in the middle of a recertification year, then the resident may request an interim recertification to remove the disposed Asset(s).
• 4. Assets disposed of for less than fair market value as a result of foreclosure, bankruptcy, divorce, or separation are not counted.
• 5. Assets placed in non-revocable trusts are considered as Assets disposed of for less than fair market value except when the Assets placed in trust were received through settlements or judgments.
• 6. Applicants and residents shall sign a self-verification form at their initial certification and each annual recertification identifying all Assets that have

been disposed of for less than fair market value or certifying that no Assets have been disposed of for less than fair market value.

• 7. Owners need verify only those certifications that do not appear to agree with reported information.

Examples - Asset Disposed of for Less than Market Value

• a. An applicant sold her home to her daughter for $10,000. The home was valued at $89,000 and had no loans secured against it. Broker fees and settlement costs are estimated at $1,800.

$89,000 Market value - 1,800 Fees $87,200 Cash value

• 10,000 Sales price to daughter $77,200 Asset disposed of for less than fair market value

In this example the Asset disposed of for less than fair market value is $77,200. That amount is counted as the resident’s Asset for two years from the date the sale took place.

(The $10,000 received from the daughter may currently be in a savings account or other Asset or may have been spent. The $10,000 will be counted as an Asset if the applicant has not spent the money.)

• b. A resident purchased a used car at a price of $10,000 for her grandson and contributed $8,000 to the college tuition of her granddaughter.

$10,000 Automobile purchased as a gift 8,000 College tuition gift $18,000 Asset disposed of for less than fair market value. The $18,000 disposed of for less than fair market value is counted as the resident’s Asset for two years from the date each Asset was given away.

Chapter 10: Verification Requirements

10.1 General Requirements

A. Owners shall verify income, assets, household characteristics, and circumstances that affect household eligibility according to the table below:

Verification Method Based Upon Total Net Household Asset Value

Program	Asset (≤ $5,000)	Asset Income (≤ $5,000)	Impute Income (≤ $5,000)	Asset (> $5,000)	Asset Income (> $5,000)	Impute Income (> $5,000)
MMRB Lower	Self	Self	No	Self	Self	Yes
MMRB Other Eligible (Middle)	Self	Self	No	Self	Self	No
SAIL	Self	Self	No	Self	Self	Yes
HC	Self	Self	No	3rd	3rd	Yes
HOME	3rd	3rd	No	3rd	3rd	Yes

Key:

Code	Meaning
Self	Self-Declaration Affidavit is acceptable
3rd	Third-Party Verification is required

B. Applicants and adult household members shall sign consent forms to authorize the owner to collect information to verify eligibility and income.

10.2 Timeframe for Obtaining Verifications

Owners obtain verifications at the following times:

A. Owners shall verify income and all eligibility requirements prior to initial move-in.

B. Owners shall verify each household’s income as part of the annual recertification process. Refer to Chapter 7 for information on annual recertification.

10.3 Required Verification and Consent

Adult household members shall authorize owners to request independent verification of data required to confirm program eligibility. To provide owners with this authorization, adult household members shall sign two copies of the consent portion of the owner’s verification forms. Owners may create their own verification forms to request information from employers, child care providers, medical professionals, and others. Adult household members sign these forms at the time of certification and each recertification.

A. Owner-Created Verification Forms

• 1. Written third-party verifications are always preferred. Owners may create verification forms for specific verification needs.
• 2. It is important that the applicant or resident know from whom owners will request information and to whom the completed form will be returned.
  • a. Verification forms shall clearly state in a prominent location that the applicant or resident may not sign the consent if the form does not clearly indicate who will provide the requested information and who will receive the information.
  • b. Owners send the verification form with the applicant’s or resident’s original signature to the third-party source.
  • c. Owners retain a copy of the verification form.
  • d. Provide a copy to the applicant or resident upon request.
  • e. Upon return, all verifications shall be date-stamped.

Explain to the applicant/resident that all information provided is considered sensitive and will be handled accordingly.

B. Reasonable Accommodation

If an applicant or resident cannot read or sign a consent form due to a disability, the owner shall provide a reasonable accommodation.

Examples:

• 1. Provide forms in large print.
• 2. Provide readers for persons with visual disabilities.
• 3. Allow the use of a designated signatory.
• 4. Visit the person’s home if the applicant or resident cannot travel to the office to complete the forms.

10.4 Verification Methods

Florida Housing programs require owners to use verification methods that are acceptable to HUD. HUD accepts three methods of verification. These are, in order of acceptability, third-party verification, review of documents, and applicant’s/resident’s affidavit. If third-party verification is not available, owners shall document the resident file to explain why third-party verification was not available. Refer to Appendix I for a detailed list of acceptable forms of verification according to factor to be verified.

A. Tenant Income Certification Forms

Tenant Income Certification forms from other federal programs may be accepted as verification of income.

• 1. HUD Form 50058, or equivalent, for households possessing a Section 8 Voucher issued by a public housing agency
• 2. HUD Form 50059, or equivalent, for Developments with project based Section 8 assistance contracts (all supporting verification documentation shall be retained in the household's file)
• 3. A letter from the housing authority that they have verified the household income is an acceptable form of verification in lieu of HUD Form 50058. The statement shall contain the amount of income for each household member and shall be signed and dated by the housing authority representative.
• 4. USDA Rural Development Tenant Certification Form 1944-8

B. Third-Party Verification

The following describes ways in which third-party verification may be obtained.

• 1. Written - Written documentation sent directly by a third-party source is the preferred method of verification. It is suggested that a selfaddressed, stamped envelope be included with the request for verification.

The applicant or resident shall not hand-carry the verification to or from the third-party source.

• 2. Electronic - The owner may obtain accurate third-party written verification by facsimile, email, or Internet, if adequate effort is made to ensure that the sender is a valid third-party source.
  • a. Facsimile - Information sent by fax is most reliable if the owner and the verification source agree to use this method in advance during a telephone conversation. The fax shall include the company name and fax number of the verification source.
  • b. Email - Similar to faxed information, information verified by email is more reliable when preceded by a telephone conversation and/or when the mail address includes the name of an appropriate individual and firm.
  • c. Internet - Information verified on the Internet is considered thirdparty verification if the owner is able to view web-based information from a reputable source on the computer screen. The owner may accept a printout of the most recent statement if it includes (1) the relevant information required for a third-party verification, and (2) an Internet address and header or footer that identifies the company issuing the statement. If the owner has reason to question the authenticity of a document, the owner may require the resident to access the electronic file via the Internet in the owner’s office, without providing the owner with username or password information.
  • d. Verbal - When written verification is not possible prior to move in, direct contact with the source will be acceptable only as a last resort. The conversation shall be documented in the household's file and shall include all the information that a written verification

would include. The name and title of the contact, the name and title of the owner representative accepting the information, and the date of the direct contact shall be included. Continued follow up with the third party to obtain written verification is recommended.

C. Documents Provided by Applicant

• 1. An owner may review documents submitted by the applicant or resident in one of the following situations:
  • a. Third-party verification is not possible or is not required - For example, verifying that a household member is over 62 years old is more appropriately accomplished by examining a birth certificate than through third-party verification.
  • b. Third-party verification is delayed - If information from a third party is not received in a timely manner, owners may consider original documents submitted by the applicant or resident. The owner may resort to a review of documents if the owner determines and documents that third-party verification cannot or will not be obtained.

For example, the owner sends a verification request to an applicant’s or resident’s bank, but does not receive a response from the bank. The owner calls the bank and learns that the bank's policy prohibits the verification required. The owner may accept original copies of the applicant’s/resident’s bank statements to verify saving and checking account information.

• 2. Copies of the reviewed documents shall be placed in the household's file. If copies cannot be made, the person reviewing the original documents shall list by name the documents reviewed and the information provided on the documents. The name and title of the owner representative accepting the information and the date shall be included.
• 3. Obtaining accurate verification through a review of documents requires the owner to consider the following:
  • a. Is the document current? Documentation may be inaccurate if it is not recent.
  • b. Is the documentation complete? Owners shall not accept pay stubs to document employment income unless the applicant or resident provides the most recent four to six consecutive pay stubs. Actual paychecks or copies of paychecks shall never be used to document income because deductions are not shown on the paycheck.
  • c. Is the document an unaltered original? Documents with original signatures are the most reliable. Photocopied documents generally cannot be assumed to be reliable.

D. Self Declaration

An owner may accept an applicant’s/resident’s self declaration regarding the trueness of information submitted if the information cannot be verified by another acceptable verification method. The file shall contain written documentation of the attempts to obtain written verification. Continued follow up with the third party to obtain written verification is recommended.

10.5 Documenting Verifications

Owners shall include verification documentation in the resident file.

A. Third-Party Verification

Third-party verification received through the mail or by electronic transmission shall be retained in the resident file.

B. Telephone Verification

When verifying information by phone, the owner shall record and include in the resident’s file the following information:

• 1. Third-party’s name, position or title, and contact information;
• 2. Information reported by the third party;
• 3. Name and position or title of the person who conducted the telephone interview; and
• 4. Date and time of the telephone call.

C. Original Documents

When original documents are presented, for example a birth certificate, photocopy the original document(s) and place in the resident file with a notation that the document viewed and copied was an original. The notation shall include the name of the person who inspected the original document. If the document inspected was not an original, the notation shall also indicate evidence that the document was accurate and had not been subjected to tampering.

D. Documenting Why Third-Party Verification is Not Available

When third-party verification is not available, owners shall document in the file efforts made to obtain the required verification and the reason the verification was not obtained. The owner shall include the following documents in the applicant’s or resident’s file:

• 1. A written note to the file explaining why third-party verification is not possible; or
• 2. A copy of the date-stamped original request that was sent to the third party; and
• 3. Written notes or documentation indicating follow-up efforts to reach the third party to obtain verification.

10.6 Effective Term of Verifications

Signed verification consent forms shall be used within a reasonable time after the applicant or resident has signed if the signature is to represent a valid and current authorization by the household. Verified information shall be used in a timely manner since household circumstances are subject to change.

A. Effective Term of Verifications

• 1. Verifications are valid for 120 days from the date of verification by the owner.
• 2. If verifications are more than 120 days old, the owner shall obtain new verifications.

10.7 Inconsistent Information Obtained Through Verifications

The applicant shall explain any significant differences between the amounts listed on the application and amounts reported on third-party verifications. The file shall be documented to explain the difference.

The owner representative shall complete Program Reports which provide a unit-by-unit listing of all units in the development and give detailed information regarding the occupants’ eligibility and the development’s compliance with set-aside requirements.

The Program Report is submitted to the Compliance Monitor (Monitoring Agent), the Florida Housing Compliance Department, and if the development is MMRB to the Trustee. Please note that Florida Housing is the Compliance Monitor for Housing Credit developments that receive credits from the allocation for Rural Development (RD) 515 participants which do not participate in any other Florida Housing programs.

Florida Housing requests developments to submit the Excel file containing the Program Report to Florida Housing and the Compliance Monitor as an email attachment. Each development has a unique identifying key number; this key number must begin the Excel file name. The key number list has been posted on the Forms page of Florida Housing's Property Owners & Managers webpage. If you are unable to locate the Key Number for your development, please email ComplianceMail@floridahousing.org . Within the text of the email, please provide the name and address of the development.

The following email addresses have been designated for Program Reporting:

Florida Housing Finance compliance.reporting@floridahousing.org Corporation (Tallahassee) Amerinational Community compliance@amerinational.net Services First Housing compliancereporting@firsthousingfl.com (Tampa) Seltzer Management Group compliance.reporting@seltzermanagement.com

A Program Report submission via email to an individual employee address alone shall not fulfill the reporting requirement. However, an individual employee may be included as an additional addressee.

To facilitate recording and processing, the Program Report file for each development should be transmitted by a separate email. The subject line of the transmittal email should begin with the key number referenced above.

11.1 Program Report Submission

A. Initial Program Report

1 Occupied Units at the Time of Bond/Loan Closing: The initial Program Report shall be prepared as of the last day of the calendar month during which the closing occurred and shall be submitted to Florida Housing and the Compliance Monitor no later than the 15th of the following month. The Compliance Monitor’s copy of the Program Report shall be accompanied by executed Tenant Income Certification copies for ten percent (10%) of the certified units. If the initial Management Review and Physical Inspection is conducted prior to closing, the initial Program Report shall be submitted to Florida Housing and the Compliance Monitor prior to the initial review and the Compliance Monitor’s copy shall be accompanied by executed Tenant Income Certification copies for ten percent (10%) of the certified units.

2 No Occupied Units at the Time of Loan Closing: The initial Program Report shall be prepared as of the last day of the month during which the first unit is occupied and shall be due no later than the 15th of the following month.

3 Occupied Units at Execution of Carryover Allocation Agreement (Competitive HC): The initial Program Report shall be prepared as of the last day of the month during which the Carryover Allocation Agreement is executed and shall be due no later than the 15th of the following month.

4 No Occupied Units at Execution of Carryover Agreement (Competitive HC): The initial Program Report shall be prepared as of the last day of the month during which the first unit is occupied and shall be due no later than the 15th of the following month.

5 Non-competitive HC Without any Corporation-issued Bonds/Loans: The initial Program Report shall be prepared as of the last day of the calendar month during which final Housing Credit allocation occurred and shall be submitted no later than the 15th of the following month. The Servicer’s copy of the Program Report shall be accompanied by executed Tenant Income Certification copies for ten percent (10%) of the certified units.

B. Subsequent Program Reports shall be prepared as of the last day of each calendar month and are due no later than the 15th of each following month, according to the following example schedule.

Florida Housing or the Compliance Monitor may request Program Reports and/or resident information at any time during the monitoring year.

MONTHLY PROGRAM REPORTING SCHEDULE Report Month Period Covered Due Dates

January January 1 - January 31 February 15

February February 1 - February 28 (29) March 15

March March 1 - March 31 April 15

C. Monthly Program Report (Form PR-1) summary worksheets and the recap of tenant income certification worksheet shall be accompanied by:

• Tenant Income Certification (TIC) copies for ten percent (10%) of the executed TICs that were effective during the current reporting period (submitted only to Compliance Monitor and, if MMRB, the Trustee); and
• MMRB Certificate of Continuing Program Compliance (CCPC). The CCPC is a statement confirming the percentage and number of units occupied by income eligible households, the form of which is exhibited in the MMRB loan documents. This document shall be properly executed by the owner, or an agent with full authority to legally bind the owner, unless a change in signature authority has been requested by the owner representative and such change has been acknowledged in writing by Florida Housing.

PROGRAM REPORT FORMS SUBMISSION Monitoring Florida Trustee Form Agent Housing (MMRB Only) Summaries and Recap X X X CCPC (if MMRB) X X TICs (10%) X X

11.2 Annual Report

Annual Owners Certificate (AOC) of Housing Credit Program Compliance, form AOC-1. This document shall be properly executed by the owner, or an agent with full authority to legally bind the owner. Owners shall submit certifications beginning with the carryover allocation (or final allocation if credits are issued in conjunction with tax exempt bond financing) and on an annual basis throughout the Compliance Period for the development. The annual certification is due (to Florida Housing only) by April 30 each year.

11.3 Financial Monitoring An audited financial statement and a fully completed and executed Form SR-1 shall be submitted annually for each development. The audited financial statements are to be prepared in accordance with accounting principles generally accepted in the United States of America and audited in accordance with auditing standards generally accepted in the United States of America. The submission documents shall include the Form SR-1 in its electronic form as a Microsoft Excel spreadsheet.

A. The initial submission of the audited financial statement and a fully completed and executed Form SR-1 will be due for all developments following the end of the fiscal year during which the first unit is occupied.

B. Developments funded by SAIL, RRLP, or supplemental loan (“Group 1”), shall provide the Corporation and its Servicer with an audited financial statement and a fully completed (Parts 1-5) and executed Financial Reporting Form (SR-1), Rev. 02/09, annually by May 31st of each year. A late fee of $500 will be charged to any Group 1 participant for failure to submit these documents by the submission deadline.

C. Developments funded by HOME, MMRB, HC or EHCL (“Group 2”), shall provide the Corporation (only) with an audited financial statement and a completed (Parts 1, 2, and-5 only) and executed Financial Reporting Form (SR-1), Rev. 02/09, annually by 120 days following their fiscal-year end and shall be submitted tofinancial.reporting@floridahousing.org . A late fee of $250 will be charged to any Group 2 participant for failure to submit these documents by the submission deadline.

D. The audited financial statements for the twelve (12) months period ended December 31st (Group 1) or the fiscal-year ending date (Group 2) and shall include:

• Comparative Balance Sheet with prior year and current year balances;
• Statement of revenue and expenses;
• Statement of changes in fund balances or equity;
• Statement of cash flows; and
• Notes.

E. The development owner shall furnish to the Corporation or its servicer, unaudited statements, certified by the owner’s principal financial or accounting officer, covering such financial matters as the Corporation or its servicer may reasonably request, including monthly statements with respect to the development.

Adjusted Gross Income Derived by subtracting from Annual Household Income (HOME Program) the deductions (also called allowances) that apply to the household. According to United States Department of Housing and Urban Development (HUD) Section 8 regulations (24 CFR 5.611).

AFHMP Affirmative Fair Housing Marketing Plan. A plan designed to promote equal housing choice for all prospective tenants regardless of race, color, religion, sex, disability, familial status, or national origin. Form HUD-935.2.

Agriculture The science and art of production of plants and animals useful to humans, including to a variable extent the preparation of these products for human use and their disposal by marketing or otherwise, and includes aquaculture, horticulture, floriculture, viticulture, forestry, dairy, livestock, poultry, bees, and any and all forms of farm products and farm production.

AMI Area Median Income. HUD Median Family Income according to the Metropolitan Statistical Area (MSA) or county or state where the Development is located. Also see Income Limit.

Annual Certificate A certificate furnished to Florida Housing by the owner Of Continuing Program specifying compliance with the requirements of 26CFR Compliance (AOC) Section 42. (HC Program)

Annual Household Income The gross income of all persons who intend to reside in a unit.

- 1. Amounts anticipated to be received by, or on behalf of or to any household member (even if temporarily absent) during the 12-month period following initial occupancy or annual recertification effective date; and
- 2. Amounts derived (either actual or imputed), during the 12-month period, from assets to which any household member has access (24 CFR 5.609); and
- 3. Which are not specifically excluded by regulation (24 CFR 5.609(c)).

Annual Owner Certification Refer to Annual Certificate Of Continuing Program (AOC) Compliance. Refer to Appendix Y for an example.

Annual Recertification The compilation of the gross income of all persons in a previously-qualified household to enable the household to continue to meet program requirements.

Anticipated Annual Refer to Annual Household Income. Household Income

Applicant A person or a family that has applied for housing.

Application Form, completed by a person or household seeking rental of a unit in a Development, which includes the information required to determine eligibility for residency. The application shall be signed and dated by the applicant(s).

Aquaculture Section 597.0015, Florida Statutes provides:

- 1. "Aquaculture" means the cultivation of aquatic organisms.
- 2. "Aquacultural producers" means those persons engaging in the production of aquacultural products and certified under s.597.004.
- 3. "Aquaculture products" means the aquatic organisms and any product derived from aquatic organisms that are owned and propagated, grown, or produced under controlled conditions. Such products do not include organisms harvested from the wild for depuration, wet storage, or relay for purification.

§597.004, Florida Statutes, requires that any person engaging in aquaculture shall be certified by the Florida Department of Agriculture and Consumer Services.

Asset Cash or non-cash items that can be converted to cash. Income from an asset, either actual or imputed, is included in Annual Household Income.

Asset Income The amount of money received by a household from items of value. Also refer to Asset.

Award or Benefit Letter Notification form supplied by an agency or company providing benefits to residents. For example, Social Security, Supplementary Security Income (SSI), pension, etc.

Bond Any bond, debenture, note or other evidence of financial indebtedness issued by Florida Housing under and pursuant to Chapter 420 Florida Statutes. Refer also to Multifamily Mortgage Revenue Bond (MMRB) Program.

Carryover The provision under United States Code Title 26 Section or Carryover Allocation 42 that allows a Development to receive a Housing (HC Program) Credit allocation in a given calendar year and be placed in service within a period of two calendar years from the date the applicant qualifies for Carryover.

Categorical Requirements Refer to Demographic Requirement.

Certificate Of A certificate furnished by the Owner representative to Commencement And Florida Housing, the Compliance Monitor, and the Termination Of Qualified Trustee, specifying the period during which time the Project Period (QPP) Development is subject to MMRB Program (MMRB Program) requirements. Refer to Appendix U (Post-1986) or Appendix V (Pre-1986) for an example.

Certificate Of Continuing A certificate furnished by the owner to Florida Housing, Program Compliance (CCPC) the Compliance Monitor and the Trustee, specifying (MMRB Program) compliance with program eligibility requirements. Accompanies the Program Report when specified by the Regulatory Agreement.

Certification Year The twelve (12) month time period following initial occupancy or the annual recertification effective date.

Certified Vacant A vacated unit most recently occupied by a qualified household for at least 31 days. If a qualified household moves out of a unit after at least thirty-one (31) days of occupancy, the unit is counted as a certified vacant unit in the qualified category of the former household until such time as the unit is reoccupied. Upon rental of the unit, the certified category of the unit shall be redetermined according to the categories for which the new household qualifies. Units cannot be left permanently vacant and still satisfy the set-aside requirements. Owner representatives shall be able to document attempts to rent the vacant units to eligible households. Code Refer to Internal Revenue Code.

Commercial Fishing Worker A laborer who is employed on a seasonal, temporary, or permanent basis in fishing in saltwater or freshwater and who derived at least 50% of their income in the immediately preceding 12 calendar months from such employment.

The term includes a person who has retired as a laborer due to age, disability, or illness.

- 1. In order to be considered retired due to age, a person shall be 50 years of age or older and shall have been employed for a minimum of 5 years as a commercial fishing worker.
- 2. In order to be considered retired due to disability or illness, a person shall:

(a) Establish medically that the person is unable to be employed as a commercial fishing worker due to such disability or illness; and

(b) Establish that he or she was previously employed as a commercial fishing worker.

Commercial Fishing Worker A household of one or more persons wherein at least Household one member of the household is a Commercial Fishing Worker at time of initial occupancy.

Compliance The act of meeting the requirements and conditions specified in regulations, statutes, program requirements, the Regulatory Agreement, bond documents, and loan documents.

Compliance Monitor Florida Housing or its designee responsible for monitoring the owner's compliance with the terms and conditions specified in regulations, statutes, program requirements, the Regulatory Agreement, bond documents, and loan documents.

Compliance Period The period of time required for program compliance as described in the Regulatory Agreement.

Correction Period The period during which an owner shall correct any violations which have resulted in non-compliance with program requirements or the Regulatory Agreement. Cure Period Refer to Correction Period.

Demographic Requirement The occupancy requirements or restrictions to serve the elderly, farmworker, commercial fishing worker, homeless, and other communities. The Regulatory Agreement shall describe the requirements when applicable to the Development.

Development Any real property designed and intended for the purpose of providing residential housing, whether new construction, acquisition or rehabilitation and intended for use as rental housing as a participant in programs administered by Florida Housing.

Effective Term of Verified information shall be used in a timely manner Verification since household circumstances are subject to change. A verification is valid for 90 days and may be updated verbally for an additional 30 days. A verification shall be within its effective term at inception date of household’s Tenant Income Certification.

Elderly Refer to the Regulatory Agreement applicable to the Development.

Elderly Household Head of household or spouse is age 62 or older or qualified persons pursuant to the Federal Fair Housing Act and Section 760.29(4), F. S. Refer to the Regulatory Agreement applicable to the Development.

Eligible Household Individual, family or group of individuals living together determined to meet eligibility requirements for Florida Housing programs and with aggregate household income not in excess of 150 percent AMI.

Employment Income Wages, salaries, tips, bonuses, overtime pay, or other compensation for personal services from a job.

EUA The Regulatory Agreement between Florida Housing (HC Program) and the Development owner setting forth the incomeeligibility set aside requirements and other program requirements restricting the use of the Development and extending the term of the Compliance Period. Also known as the Extended Low-Income Housing Agreement.

Event Of Default Occurs when the Development fails in the performance of compliance obligations.

Exempt Unit A unit in a Development granted exemption from income certification requirements by Florida Housing for occupancy by a full-time employee of the Development who is required to live on-site or for occupancy by a security (courtesy) officer.

Extended Use Period The extension of compliance requirements for an (HC Program) additional period of not less than 15 years. The Regulatory Agreement specifies the length of the additional requirement when applicable to the Development.

Fair Housing Act Title VIII of the Civil Rights Act, 42 USC 3601. The Fair Housing Act is a broad statute that prohibits discrimination based upon race, color, religion, sex, national origin, disability, or familial status in housing and housing-related programs.

Fair Market Value An amount that represents the true value at which property would be sold on the open market.

Family or A household composed of one or more persons. Family Household

Farmworker Any laborer who is employed on a seasonal, temporary or permanent basis in the planting, cultivating harvesting or processing of agricultural or aquacultural products and who has derived at least 50% of their income in the immediately preceding 12 calendar months from such employment.

The term includes a person who has retired as a laborer due to age, disability, or illness.

- 1. In order to be considered retired from farm work due to age, a person shall be 50 years of age or older and shall have been employed for a minimum of five (5) years as a farmworker immediately preceding retirement.
- 2. In order to be considered retired from farm work due to disability or illness, a person shall be:

(a) Medically established that the person is unable to be employed as a Farmworker due to such disability or illness; and

(b) Established that her or she had previously met the definition of Farmworker.

Farmworker Household A household of one or more persons wherein at least one member of the household is a Farmworker at time of initial occupancy.

Final Allocation The issuance of Housing Credits to an Applicant upon (HC Program) completion of construction or rehabilitation of a Development. Fixed Units Units that are originally designated as HOME-assisted (HOME Program) shall continue as HOME-assisted units throughout the Period of Affordability.

Floating Units Units that are designated as HOME-assisted may (HOME Program) change over time as long as the total number of HOMEassisted units in the Development remains constant.

Florida Housing Florida Housing Finance Corporation.

FmHA USDA Farmers Home Administration; now known as USDA Rural Development (RD).

Foster Adult Adult with a disability who is unrelated to the tenant household and who is unable to live alone.

Foster Children Children that are in legal guardianship or custody of a State, county or private adoption or foster care agency, yet are cared for by foster parents in their homes, under some kind of foster care arrangement with the custodial agency.

Gross Income Refer to Annual Household Income.

Gross Rent Floor The initial maximum rent limitation for a unit below which subsequent gross rent does not have to be reduced. An increase in the Utility Allowance may cause the rental income for a unit to decrease below the initial rental income amount.

HC Program Housing Credit Program. The Federal Low Income Housing Tax Credit program administered by Florida Housing.

HOME or The HOME Investment Partnerships Program pursuant HOME Program to HUD Regulations 24 CFR Part 92, or similar successor regulations issued under the authority of Title II of the National Affordable Housing Act of 1990 (Public Law 101-625, November 28, 1990).

HOME-Assisted Unit A unit to which the HOME Program maximum rent limitations apply.

Homeless An individual or family who lacks a fixed, regular, and adequate nighttime residence or an individual or family who has a primary nighttime residence that is:

(a) A supervised publicly or privately operated shelter designed to provide temporary living accommodations, including welfare hotels, congregate shelters, and transitional housing; or

(b) An institution that provides a temporary residence for individuals intended to be institutionalized; or

(c) A public or private place not designed for, or ordinarily used as, a regular sleeping accommodation for human beings.

The term does not refer to any individuals imprisoned or otherwise detained pursuant to state or Federal law.

Household One or more persons occupying a housing unit. Does not include foster children or live-in aides.

HUD The United States Department of Housing and Urban Development.

HUD Risk Sharing Program The program authorized by section 542(c) of the Housing and Community Development Act of 1992.

Imputed Asset Income Imputed means attributed or assigned. Imputing income from assets is “assigning” an amount of income (based upon the current passbook savings rate as established by HUD, currently 2.0%) solely for the sake of the annual income calculation. The imputed income from such an asset is the interest the money would earn if it were put in a savings account; imputed income is not real income. When required, calculate Imputed Asset Income for comparison to actual Asset Income; whichever is the greater of these two figures must be included in Annual Household Income.

Income Certification Refer to Tenant Income Certification.

Income Limit The maximum household income limitation per unit for Developments participating in Florida Housing programs. These limits will be revised periodically by Florida Housing based upon figures provided by HUD.

The household Income Limit shall be adjusted for household size with two exceptions:

MMRB Pre-1986 Program –adjustment for household size does not apply; and

MMRB Interim Program – adjustment for household size shall not apply to eligible households other than lower-income households.

Ineligible Household A household whose combined income exceeds the applicable income limitation at initial occupancy, a resident who has not been certified living in a set-aside unit, a resident who is not shown on the Lease, etc.

Initial Review The initial Management Review and Physical Inspection of a Development by Florida Housing or the Compliance Monitor after the Development’s initial occupancy. The review includes examination of resident files, a review of administrative procedures and an inspection of units for compliance with Physical Condition Standards.

Internal Revenue Code The Internal Revenue Code together with corresponding and applicable final, temporary or proposed regulations and revenue rulings issued or amended with respect thereto by the Treasury Department or Internal Revenue Service of the United States.

Lease The legal agreement between the household and the owner which delineates the terms and conditions of occupancy in the rental of a unit.

Live-In Aide A person who resides with one or more elderly persons, near-elderly persons, or persons with disabilities and who:

- 1. Is determined to be essential to the care and well-being of the persons;
- 2. Is not obligated for the support of the persons; and
- 3. Would not be living in the unit except to provide the necessary supportive services (24 CFR 5.403).

While a relative may be considered to be a live-in aide, they shall meet the above requirements, especially the last. The live-in aide qualifies for occupancy only as long as the individual needing supportive services qualifies and shall not qualify for continued occupancy as a remaining family member.

Lower-Income Limit Household income limitation between 50 percent and 80 percent of AMI, according to program specifications.

LURA The Regulatory Agreement between Florida Housing and the Development owner setting forth the incomeeligibility set aside requirements and other program requirements restricting the use of the Development. Also known as Land Use Restriction Agreement.

Management Company A firm selected by the owner to oversee the operation and management of the Development and who accepts compliance responsibility.

Management Review And A periodic review of a Development by the Compliance Physical Inspection Monitor which includes examination of resident files, a review of administrative procedures and an inspection of units for compliance with Physical Condition Standards.

Management Unit A unit exempted from income certification and occupied by a full-time employee of the Development who is required by the owner representative to live on site and is reasonably required for operation of the Development.

MMRB Program The Multifamily Mortgage Revenue Bond Program was created to help meet Florida’s growing housing needs by providing lower interest rate loans to non-profit and for profit developers. These loans are generated from both taxable and tax-exempt bonds, which are sold through either a competitive or negotiated method of sale or private placement.

Model Units Developments having a certification requirement totaling less than 100 percent shall place Model Units in the non-certified portion of its units.

Treatment of Model Units by Developments having a certification requirement totaling 100 percent varies by program:

MMRB Model Units are allowed, however, they shall not be occupied and shall be available at all times for viewing by prospective residents.

SAIL Model Units are allowed, however, they shall not be occupied and shall be available at all times for viewing by prospective residents.

HC Model Units are not permitted in Developments having a certification requirement totaling 100% of the units in the Development.

HOME Model Units are not allowed in HOME Developments if the Development is 100 percent HOME-assisted.

Never Rented A unit which has never been occupied; the unit is not included in the numerator nor the denominator when determining compliance with set-aside requirements.

Non-Compliance Occurs when the Development fails in the performance of compliance obligations.

Other Vacant A vacated unit in which the most recent household:

  - (1) Was properly certified but did not occupy the unit for at least 31 days, or
  - (2) Was not properly certified

Owner Any individual, association, corporation, joint venture or partnership which is a sponsor of a Development.

Period of Affordability Refer to Compliance Period.

Personal Property Property held as an investment (gems, jewelry, coin Considered as Asset collections, antique cars). Necessary items (such as clothing, furniture, cars, etc.) are not considered as assets.

Physical Condition Standards for housing that is decent, safe, sanitary, Standards and in good repair (Title 24 Code of Federal Regulations Section 5.703).

Plan To Attain Self PASS allows a person with disabilities who is receiving Sufficiency (Pass) Supplemental Security Income (SSI), and who is also receiving other income, to set-aside a portion of the other income in order to achieve a work-related goal.

Pre-Occupancy A meeting conducted, prior to the leasing of any units Conference/Training in a Development, by Florida Housing and/or the monitoring agent with the owner and/or management agent to review the terms and conditions specified in regulations, statutes, program requirements, the Regulatory Agreement, bond documents, loan documents, and Florida Housing policies and procedures.

Program Report Provides a unit-by-unit listing of all units in the Development and gives detailed information regarding the occupants’ eligibility and the Development’s compliance with set-aside requirements.

Public Purpose Criteria Additional requirements that may increase the actual number of set aside units for households at differing income levels, provide for resident programs, extend the qualified project period or otherwise serve the community needs.

Qualified Number of Days Fifty (50) percent of the total number of days from the date of issuance of the original bonds until the maturity date of the bonds with the longest maturity, including refunding obligations (MMRB Pre 1986 and MMRB Interim).

Qualified Project Period The period of time required for compliance with the (QPP) MMRB lower-income set-aside requirements. The QPP shall be described in the Regulatory Agreement.

Qualified Resident Program Refer to Public Purpose Criteria.

RD USDA Rural Development (formerly FmHA).

Real Property Considered as Ownership in buildings or land. Asset

Regulatory Agreement The agreement between Florida Housing and the Development owner that sets forth the program requirements. Also refer to EUA and LURA.

Reserved Unit A unit set aside to fulfill Public Purpose Criteria. (MMRB Program)

Resident Occupant of a unit to whom the unit is leased.

Resident Files Complete and accurate records pertaining to each dwelling unit, containing the application for each tenant, verification of income of each tenant, asset information, an Income Certification, and lease. Any authorized representative of Florida Housing, the Trustee, the Compliance Monitor, and the Department of Treasury or the Internal Revenue Service shall be permitted access to these files.

SAIL Program State Apartment Incentive Loan program. Governed by Florida Statutes (420.5087).

Section 504 Section 504 of the Rehabilitation Act of 1973, as amended, 29 U.S.C. 794, as it applies to programs or activities receiving Federal financial assistance (24 CFR 8.3).

Section 8 Regulations used in defining and determining income according to Section 8 of the United States Housing Act of 1937 (42 USC 1437f).

Set Aside The occupancy requirements or restrictions for Developments financed by Florida Housing. The Regulatory Agreement describes the requirements applicable to the Development.

Single Room Occupancy Housing consisting of single room dwelling units that is (SRO) the primary residence of its occupant(s).

Special Set Asides The occupancy requirements or restrictions that provide for resident programs or serve the needs of the elderly, farmworker, commercial fishing worker, homeless and other communities. The Regulatory Agreement shall describe the requirements when applicable to the Development.

Student An individual who is a fulltime student at an educational organization which normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on, for at least five calendar months during a calendar year.

Substandard Housing Housing is substandard if it:

(a) is dilapidated. A housing unit is dilapidated if it:

- 1. does not provide safe and adequate shelter and meets the criteria in either paragraph (2), (3), or (4)
- 2. endangers the health, safety or well-being of the household in its present condition,
- 3. has one or more critical defects, or
- 4. has a combination of intermediate defects in sufficient number or extent as to require considerable repair or rebuilding. (The defects may involve original construction, or may result from continued neglect, lack of repair, or serious damage to the structure);

(b) does not have operable indoor plumbing;

(c) does not have a usable flush toilet, bathtub, or shower inside the unit for the exclusive use of the household;

(d) does not have electricity or has inadequate or unsafe electrical service;

(e) does not have safe or adequate source of heat;

(f) should, but does not, have a kitchen; or

(g) has been declared unfit for habitation by an agency or unit of government.

Substandard housing also applies to a Homeless family.

Single Room Occupancy housing is not substandard solely because it does not contain sanitary or food preparation facilities (or both).

Ten Percent Occupancy The occupancy level at which a Development shall (MMRB Program) begin maintaining its required percentage of occupied units for lower-income tenants.

Tenant Income Certification Document by which the household certifies its income, for the purpose of determining whether the household will be eligible under the applicable program requirements. Refer to Appendix Q for an example.

Trustee The financial institution which controls bond proceeds, (MMRB Program) collects principal and interest on the mortgage loan, administers payments of principal and interest on the bonds, and is responsible for their proper use.

USDA United States Department of Agriculture.

Utility A service (as light, power, or water) provided by a public utility for heating, cooking, air conditioning, water heating, sewer service, and trash collection. Does not include telephone service, nor cable television or satellite television.

Utility Allowance An estimate of the monthly cost of a reasonable consumption of utilities for a unit by an energyconservative household of modest circumstances consistent with the requirements of a safe, sanitary, and healthful living environment.

Verification Information from a third party which is collected in order to corroborate the accuracy of information concerning income provided by applicants to a Development.

Verification Request Form The form used by management to request verifications of income from the source of the income. The form shall state the purpose of the request, include a release statement by the applicant, and request the frequency and amount of pay.

Very-Low Income Household income limitation between 20 percent and 60 percent of AMI, according to program specifications.

Waiting List A formal record of applicants for housing that identifies the applicant’s name, date and time of application, selection preferences claimed, unit size desired, and income qualification category.