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Agenda 06/13/2017 Item #16D13 Proposed Agenda Changes Board of County Commissioners Meeting June 13,2017 Move Item 16D13 to Item 11G: Recommendation to reaffirm staff administration of the State Housing Initiatives Partnership (SHIP) Program as administrative and ministerial, accept minor changes to the administration of the program, direct staff to amend the Local Housing Assistance Plan (LHAP) accordingly, and reaffirm sufficiency of several existing administration elements. (Commissioner Taylor's request) 06/13/2017 EXECUTIVE SUMMARY Recommendation to reaffirm staff administration of the State Housing Initiatives Partnership (SHIP) Program as administrative and ministerial, accept minor changes to the administration of the program, direct staff to amend the Local Housing Assistance Plan (LHAP) accordingly, and reaffirm sufficiency of several existing administration elements. OBJECTIVE: To support housing affordability throughout Collier County. CONSIDERATIONS: On October 13, 2015, Item 16D13, the BCC declared the SHIP Purchase Assistance Program administrative and ministerial which was reaffirmed at the June 28, 2016, meeting, item 16D26. Consequently, staff applies the appropriate rules and regulations with no authority to deviate. These include state statutes, the published SHIP Manual, and the locally approved LHAP. Collier County has had no income qualification findings by SHIP monitors or single auditors. Recently, a qualification requirement for a SHIP purchase assistance loan was questioned by the Finance Director as part of the audit process, (Item 16J3, March 14, 2017, agenda). The specific issue was the amount of cash/liquid assets held by the applicant. County staff appropriately considered the assets of the client per the existing rules and regulations to determine income qualification. Collier County’s LHAP is silent on a maximum level of liquid assets allowed, which is perfectly compliant. However, the local jurisdiction may set a limit in its LHAP. While the March 14th agenda item passed and allowed the purchase assistance to move forward, under general communication, one or more members of the BCC asked that staff bring back an item at a future meeting to discuss the appropriate level of cash/liquid assets allowable under our SHIP program. In the 20 years, the program has been in operation, no limit on liquid assets has been adopted. However, it is appropriate from time to time to evaluate long-standing practices. Staff developed a survey to compare some of Collier County’s administration practices against other SHIP jurisdictions to make recommendations to the BCC on possible program modifications. The Finance Director was given the opportunity to review the planned survey questions and added some questions. Staff worked with the Florida Housing Coalition (the funder’s TA contract provider) to conduct the survey and to provide follow-up technical assistance. 91 offices, or 78% of the jurisdictions receiving SHIP funds, responded to the survey questions. Staff believes this is a substantive sample and can derive valid information from the results to apply to our program design. In this process, Collier asked the other jurisdictions about thirteen process elements and reaffirmed that all current methods are compliant. However, staff recommends the following minor changes: Limit cash assets to $30,000 remaining after designated cash is used toward closing, and continue to use the SHIP manual method for calculating income from non-liquid assets Conduct a pre-payment audit to match state published monitoring standards While the initial question related to the Purchase Assistance Program, these parameters will be used for all applicable strategies that consider income qualification. If the recommendations are accepted, staff will need to amend the appropriate LHAP’s and bring them back to the BCC for approval at a later date. A summary of all the survey questions and related staff recommendations is included below. 1) Cash assets an eligible SHIP applicant may have: 51% of those responding limit cash a ssets and 49% do not. Collier County does not limit cash assets, though it is allowed that a local jurisdiction may do 16.D.13 Packet Pg. 947 06/13/2017 so within its LHAP. For those limiting cash assets, below shows the percentage of respondents limiting to the dollars shown: Less than $10,000 35% $10,001 - $30,000 41% More than $30,000 24% For any that limited cash assets, 96% used the SHIP manual method to calculate asset income on other types of assets. Recommendation: Limit cash assets to $30,000 remaining after designated cash is used toward closing. Following the SHIP manual (and HUD Handbook) elements related to income calculation methods, continue to use the SHIP manual method for calculating income from all other assets, be they liquid or non-liquid. It is beneficial for new home owners to have cash assets for home maintenance. Continue with no limit on non-cash assets such as retirement account balances. 2) Multiple names for the same individual: Majority of respondents use the name on the most recent driver license or state-issued identification and/or request additional documentation (from the applicant and public records searches, where applicable) such as birth certificates, social security cards, marriage licenses, divorce papers, adoptions and legal name changes. Several also rely upon the legal name affidavit from the title company signed at closing. Some others rely solely on verification completed by the first mortgage lender and will use the name on the first mortgage. Collier staff reviews the current driver's license, social security card, and validates citizenship with documents as noted below. If there is a discrepancy, source documents (such as a legal name change) are obtained to make a determination as to whether there is legal sufficiency to award funds. Unless it is obviously in error, the SHIP loan documents will follow the names used by the first mortgage lender. Recommendation: Current process is sufficient. 3) Profit and Loss (P&L) statements for self-employed: 78% of respondents always request 3 months, 12% only get tax returns and Schedule C’s, 10% do something else. Collier requires most current 3 months P&L. Recommendation: Current process is sufficient. 4) Self-employment income support beyond the tax returns, schedule C, and the P&L: Of 62 responders, the majority will obtain additional documentation only when there is some sort of discrepancy between the income on the tax returns, the profit and loss statements, and deposits into the applicant’s bank accounts. Collier currently does not pursue additional information, including backup for the P&L, instead of using the most conservative (highest) income estimate calculated. 16.D.13 Packet Pg. 948 06/13/2017 Collier meets with all applicants to explain requirements and identify additional documentation that may be required. Whether self-employed or not, in the event there have been repetitive instances whereby the applicant(s) have failed to provide proper and complete documentation, in particular with respect to income, this shall be grounds for denial of assistance. Recommendation: the Current process is sufficient. Upon technical assistance guidance from Florida Housing Coalition it is noted that if there is a discrepancy that shows lower and higher income calculations, to use the lower calculation, you must obtain additional documentation to justify using it. If you are using the highest possible income calculation based on the information available, there is no reason to pursue additional documentation. If the applicant disputes the higher income, they must provide additional documentation to support the lower income calculation. Collier always calculates conservatively, using the justified higher income level. 5) Federal tax lien - what actions were taken: Of 91 survey respondents, 77 responded. Around 30 indicated they do not pull credit reports and rely on the first mortgage lender’s evaluation. Around another 30 indicated they would deny assistance unless they receive proof of satisfaction or payment plan. The remaining respondents indicated no experience with this issue. If Collier staff becomes aware of a tax lien from the credit report, the case is denied. Recommendation: Current process is sufficient. 6) Divorced applicant assets - the extent to which investigate divorced spouse’s assets: 99% of respondents do not investigate the assets of the former spouse. Collier staff does not investigate assets of the former spouse. Recommendation: Current process is sufficient. 7) Audit extent prior to cutting SHIP purchase assistance check: 81 respondents - 52% do no audit, 31% do a minimal audit, and 17% perform a full audit. Collier County Finance performs a full audit on 100% of the cases to include income qualification. Recommendation: County Manager staff has no authority to set the audit standard, but would recommend a pre-payment audit to match state standards (which would fall roughly into the minimal audit category). 8) Sensitive personal documentation retained in files: 68% - maintain driver’s license, 43% - social security card, 19% passport, 34% keep more than one type, and 30% keep citizenship verification. CHS keeps copies of all items reviewed to include a driver’s license or state-issued ID case, passport, citizenship or permanent residence documents, social security cards. Recommendation: Current process is sufficient, we will maintain records to meet local, state and federal requirements. 9) Maximum SHIP award: Majority of respondents reported assistance levels between $10,000 and $30,000, with increasing amounts of assistance from moderate- to very low-income households. The highest assistance levels are in southeastern Florida, with Miami Beach reporting the highest maximum assistance of $150,000. Collier offers tiered assistance between $20,000 and $50,000. Recommendation: Current process is sufficient. 10) Applicant personal contribution: 69% responded yes, 31% responded no. Those reporting yes 16.D.13 Packet Pg. 949 06/13/2017 report contribution ranges from $500 to $2500. Collier follows lender guidelines, USDA does not require any personal contribution, Habitat requires $1,000 personal contribution. Other lenders have various requirements. Recommendation: Current process is sufficient. 11) Residence in the County prior to SHIP assistance purchase: 21% require it, 79% do not. Collier does not require this, though the vast majority are Collier residents at the time of application. Recommendation: Current process is sufficient. 12) Allow purchase with Code violations or unpermitted structures: 24% said yes, 76% said no. Collier recently improved its process so that if the appraisal report or home inspection indicates an issue, Collier staff engages with a third-party inspector to evaluate the issue and if needed, confirm it has been resolved. If unresolved, or where there is an unresolved health, safety, welfare concern or issue, Collier will not approve a loan Recommendation: Current process is sufficient. 13) Clients purchase from nonprofits like Habitat where nonprofit is seller and lender: 62% said yes, 38% said no. Note, it was not asked whether there is such an organization in their jurisdictions. Collier does allow clients to purchase from nonprofits such as Habitat, and since they are the only lower income housing developer presently in the County, the county could not meet program set asides without this developer. Recommendation: Current process is sufficient. FISCAL IMPACT: There is no fiscal impact. Funds are located in Fund 791, currently projects 33429 and 33467. LEGAL CONSIDERATIONS: This item is approved for form and legality, and requires majority vote for Board approval - JAB GROWTH MANAGEMENT IMPACT: The SHIP Program facilitates the goals, objectives, and policies set forth in the Housing Element of the Growth Management Plan. RECOMMENDATION: To reaffirm staff administration of the SHIP Program as administrative and ministerial, accept minor changes to the administration of the program, direct staff to amend the LHAP accordingly, and reaffirm sufficiency of several existing administration elements. Prepared By: Kristi Sonntag, Manager/Federal and State Grants, Community and Human Services ATTACHMENT(S) 1. FHC Summary of Survey on SHIP Purchase Assistance (DOCX) 16.D.13 Packet Pg. 950 06/13/2017 COLLIER COUNTY Board of County Commissioners Item Number: 16.D.13 Doc ID: 3239 Item Summary: Recommendation to reaffirm staff administration of the State Housing Initiatives Partnership (SHIP) Program as administrative and ministerial, accept minor changes to the administration of the program, direct staff to amend the Local Housing Assistance Plan (LHAP) accordingly, and reaffirm sufficiency of several existing administration elements. Meeting Date: 06/13/2017 Prepared by: Title: Operations Analyst – Public Services Department Name: Hailey Margarita Alonso 05/19/2017 3:50 PM Submitted by: Title: Division Director - Cmnty & Human Svc – Public Services Department Name: Kimberley Grant 05/19/2017 3:50 PM Approved By: Review: Public Services Department Kimberley Grant Additional Reviewer Completed 05/19/2017 5:17 PM Public Services Department Joshua Hammond Additional Reviewer Completed 05/22/2017 1:06 PM Community & Human Services Kristi Sonntag Additional Reviewer Completed 05/22/2017 1:27 PM Public Services Department Sean Callahan Additional Reviewer Completed 05/22/2017 1:31 PM Public Services Department Hailey Margarita Alonso Level 1 Division Reviewer Completed 05/24/2017 11:14 AM County Attorney's Office Jennifer Belpedio Level 2 Attorney of Record Review Completed 05/24/2017 3:53 PM Public Services Department Steve Carnell Level 2 Division Administrator Review Completed 05/24/2017 4:43 PM Grants Erica Robinson Level 2 Grants Review Completed 05/25/2017 12:34 PM Office of Management and Budget Valerie Fleming Level 3 OMB Gatekeeper Review Completed 05/25/2017 1:35 PM County Attorney's Office Jeffrey A. Klatzkow Level 3 County Attorney's Office Review Completed 05/25/2017 1:52 PM Budget and Management Office Ed Finn Additional Reviewer Completed 05/30/2017 11:20 AM Grants Therese Stanley Additional Reviewer Completed 06/02/2017 10:04 AM County Manager's Office Nick Casalanguida Level 4 County Manager Review Completed 06/04/2017 11:31 AM Board of County Commissioners MaryJo Brock Meeting Pending 06/13/2017 9:00 AM 16.D.13 Packet Pg. 951 SUMMARY of Responses Survey on SHIP Purchase Assistance The Florida Housing Coalition surveyed SHIP offices statewide. There was a 78% response rate. This is a summary of the survey results. Question 1 – Which City or County SHIP Program are you with? This question simply asks respondents to identify the City or County SHIP office they represent. The survey overall received responses from 91 offices. Of the 91 respondents, 74 requested to receive results of the survey. Question 2 – Does your city or county offer SHIP purchase assistance? The responses to this question are summarized in the table below: QUESTION 2 Yes No Total Respondents 85 6 Percentage 93% 7% Question 3 – Do you limit the amount of CASH assets that an eligible SHIP applicant may have? The responses to this question are summarized in the table below: QUESTION 3 Yes No Total Respondents 46 45 Percentage 51% 49% Question 4 – If Yes, what is the maximum amount of cash assets an applicant may have? Of those that answered YES to the previous question, each set their maximum cash assets as follows: QUESTION 4 Less than $10,000 $10,001 to $30,000 More than $30,000 Total Respondents 16 19 11 Percentage 35% 41% 24% Question 5 – If you limit cash assets, how do you calculate asset income? The responses to this question are summarized in the table below: QUESTION 5 Method from SHIP Manual Own Method Total Respondents 49 2 Percentage 96% 4% 16.D.13.a Packet Pg. 952 Attachment: FHC Summary of Survey on SHIP Purchase Assistance (3239 : FHC Summary of Survey on SHIP Purchase Assistance) *Please note that there were 5 participants that responded to this question that answered NO to Question 3. All 5 indicated they use the method in the SHIP manual to derive asset income. Question 6 – If you use a modified method, please provide details about it. The two offices that use their own method for asset income calculation describe them below: QUESTION 6 St. Lucie County Volusia County Method Gap in bank loan The amount of liquid assets that the applicant may have in accounts after the loan closing cannot exceed the equivalent of twelve months of PITI or $15,000, whichever is higher. Retirement assets including IRAs, 403(b), 457 or 401K accounts, or other similar accounts restricted for retirement usage, and funds established in an account for college education are not treated as liquid assets for this purpose. Question 7 – What actions do you take if it appears there are multiple names for the same person? The majority of respondents use the name on the most-recent driver license or state-issued identification and/or request additional documentation (from the applicant and publics records searches, where applicable) such as birth certificates, social security cards, marriage licenses, divorce papers, adoptions and legal name changes (a few will disqualify applicants automatically until this documentation is provided). Several also rely upon the legal name affidavit from the title company signed at closing. Some others rely solely on verification completed by the first mortgage lender and will use the name on the first mortgage. Interestingly, a few respondents indicated they never experienced this and are uncertain what to do in such cases. Question 8 – For self-employment income, are Profit & Loss statements (for at least 3 months) always requested, or only in some circumstances? The responses to this question are summarized in the table below: QUESTION 8 Always Requested Only in absence of 2 years returns and Other 16.D.13.a Packet Pg. 953 Attachment: FHC Summary of Survey on SHIP Purchase Assistance (3239 : FHC Summary of Survey on SHIP Purchase Assistance) Schedule Cs Total Respondents 70 11 9 Percentage 78% 12% 10% *Please note that 1 office did not respond to this question that responded to other survey questions. Question 9 – If you answered "Other" for the previous question, please provide details about it. In most cases, those answering “Other” still request and/or require profit and loss statements. Most request 2 years of tax returns in addition to the profit and loss statements. A couple will accept a notarized income statement or 2 years tax returns in lieu of the profit and loss statements. One indicated they rely solely on the primary mortgage lender’s verification of self-employment. Question 10 – Under what circumstances do you obtain additional proof and documentation of self-employment income beyond details on the tax return plus the profit and loss statement? Of the 91 respondents to the survey, 62 responded to this question. The majority will obtain additional documentation only when there is some sort of discrepancy between the income on the tax returns, the profit and loss statements and deposits into the applicant’s bank accounts. Around 12 respondents indicated they do not request any additional documentation. Additionally, a few indicated (reiterated) reliance on the first mortgage lender for this verification. One indicates almost always asking for additional documentation, no specific circumstances described. Question 11 – What actions do you take if there is a Federal Tax Lien identified on the credit report? Of the 91 survey respondents, 77 responded to this question. Around 30 indicated they do not pull credit reports and rely on the first mortgage lender’s evaluation. Around another 30 indicated they will deny assistance unless they receive proof of satisfaction or payment plan. The remaining respondents indicated no experience with this issue. Question 12 – For a divorced applicant, do you investigate the assets of the former spouse? The responses to this question are summarized in the table below: QUESTION 12 Yes No Total Respondents 1 88 Percentage 1% 99% *Please note that two participants did not respond to this question that responded to other survey questions. Question 13 – Which of the following best describes the depth of audit performed by the Clerk of Courts or Finance Division before writing a SHIP-related purchase assistance check? 16.D.13.a Packet Pg. 954 Attachment: FHC Summary of Survey on SHIP Purchase Assistance (3239 : FHC Summary of Survey on SHIP Purchase Assistance) The responses to this question are summarized in the table below: QUESTION 13 No audit Minimal Audit Full Audit Total Respondents 42 25 14 Percentage 52% 31% 17% Pasco County emailed to share feedback on this question: “There needs to be a middle ground. Internal audit will check payments, check the ship report for accuracy, but I never heard of one redoing income or talking to clients. It is more of a fiscal review.” *Please note that only 81 participants responded to this questions. Question 14 – Check each of the following you retain in the SHIP File after initial review and validation: The responses to this question are summarized in the table below. Respondents were allowed to choose more than one answer. QUESTION 14 Driver License Social Security Card Passport One or more identifying documents Verification of citizenship Total Respondents 62 39 17 31 27 Of those that responded, the most likely combinations were Driver License and Social Security Card, or Driver License and one or more identifying documents. Question 15 – What is the maximum amount of the purchase assistance SHIP award? If the award differs by income category, please write Very Low: $__, Low $__, Moderate $__. The majority of respondents reported assistance levels between $10,000 and $30,000, with increasing amounts of assistance from moderate- to very low-income households. The highest assistance levels are in southeastern Florida, with Miami Beach reporting the highest maximum assistance of $150,000. One office reported decreasing levels of assistance from moderate- to very low-income households. Question 16 – Do you require purchase assistance applicants to contribute a certain amount of their own money in order to receive SHIP assistance? The responses to this question are summarized in the table below: QUESTION 16 Yes No Total Respondents 60 27 Percentage 69% 31% *Please note there were only 87 respondents to this question. 16.D.13.a Packet Pg. 955 Attachment: FHC Summary of Survey on SHIP Purchase Assistance (3239 : FHC Summary of Survey on SHIP Purchase Assistance) Question 17 – If you answered "Yes" on the last question, how much is the required contribution? Respondents either required a specific amount or a percentage of the purchase price. Of those requiring a specific amount, none required more than $2,500 or less than $500. Of those requiring a percentage, the range was between 1% and 3%. Some had graduating levels required as income levels increased. Question 18 – Does your purchase assistance program require your applicants to reside in your city of county prior to receiving SHIP assistance? The responses to this question are summarized in the table below: QUESTION 18 Yes No Total Respondents 18 69 Percentage 21% 79% *Please note that only 87 participants responded to this question. Question 19 – Do you allow purchase of properties that have code violations or unpermitted improvements or structures? The responses to this question are summarized in the table below: QUESTION 19 Yes No Total Respondents 20 65 Percentage 24% 76% *Please note that only 85 participants responded to this question. Question 20 – If you answered "Yes" to the last question, explain how you determine that there is a code violation or unpermitted improvement. There were 26 responses to this question, and some responded to this question even though answering “No” on the previous question. However, the majority rely on the home inspection and/or appraisal to determine the existence of code inspections. The remaining will check records from their Codes Department. Question 21 – Do any of your clients purchase properties from nonprofits like Habitat for Humanity where the nonprofit is the seller of the property and the lender? The responses to this question are summarized in the table below: QUESTION 21 Yes No Total Respondents 55 33 Percentage 62% 38% 16.D.13.a Packet Pg. 956 Attachment: FHC Summary of Survey on SHIP Purchase Assistance (3239 : FHC Summary of Survey on SHIP Purchase Assistance)