Affordable Rental Housing Development Information Statement
Types of Projects
Funds can be used to assist projects involving:
- Acquisition of standard units.
- Acquisition and rehabilitation.
- New construction.
Forms of Assistance
Deferred payment or reduced interest (3%) loans may be used to assist with down payments, closing costs, construction, rehabilitation and soft costs associated with the development. Pinellas County generally limits the form of investment to these types. State and federal regulations may permit other types of investments.
The amount of funds contributed to the project is directly connected to the purpose of providing rental units that are affordable to low-income tenants and cannot be greater than the reasonable amount needed to accomplish that purpose.
Funds are committed to the project when a legally-binding agreement has been executed between the project owner and the participating jurisdiction. No commitment can be made until all financial and occupancy data have been assembled, and construction will commence (or loan closing will occur, if the project is acquisition only) within six months from the date of commitment.
Properties may be privately or publicly owned. There is a minimum of five units — with no maximum number of units — that may be included in an assisted project. Projects may include units in one or more buildings that are under common ownership, management and financing.
Funds may not be used to assist projects funded under Title VI of the National Affordable Housing Act – Prepayment of Mortgages Insured under the National Housing Act, Public Housing projects, or properties that have been assisted under the Rental Rehabilitation Program.
Funds are provided for a specific number of units. Not all units within a building, development or project need to be included in the assisted project. The Pinellas County Consortium will require reasonable standards for condition of property, equal housing opportunity, etc. for the entire development before committing funds to selected units within the development.
Only units receiving funds are considered “Assisted Units.” Strict occupancy and rental rate controls apply to assisted units. Requirements other than Lead-Based Paint and Relocation, Equal Opportunity and Fair Housing do not apply to units in a development that are not assisted units. Minimum and maximum expenditures are calculated on the basis of assisted units and not on the total number of units within a development (unless all units are to be assisted units).
In order to promote mixed-income development, Pinellas County will give priority to projects in which assisted units will constitute no more than 40% of units within a multifamily development.
NOTE: With respect to the above paragraph concerning mixed-income developments, the county will make an exception to its mixed-income policy only when one of the following conditions is present:
- The property contains less than 50 units total.
- The property is in need of major rehabilitation to the extent that the cost of the rehabilitation is expected to exceed 30% of the current value of the property.
Public Policy Criteria
Assuming an applicant satisfies the threshold criteria, the county will consider compliance with the following public policy criteria in the evaluation and ranking of an applicant:
- Developments located in an area of Pinellas County with a demonstrated shortage of affordable housing as evidenced by a county-approved market study.
- Developments that preserve the existing affordable housing stock through substantial rehabilitation.
- Developments with the lowest ratio of county contribution per unit financed.
- Developments marketed toward mixed-income renters. To this end, the county does not require, and in fact discourages, projects with set asides greater than the 20%-50% or 40%-60% set asides required by the IRS. Generally, the county requires applicants to reserve at least 20% of the set-aside units for households earning 35% of Area Median Income (AMI) or less. The applicant does not need to set rents at the 35% of AMI level if the applicant includes a plan to use alternate means, such as Housing Choice Vouchers, to fill these 35% of AMI slots.
- Developments that benefit families with children.
- Developments that include units with three or more bedrooms.
- Developments that do not discriminate against persons or families solely because they receive Federal rental assistance.
- Developments in which the owners demonstrate a real long-term economic interest in the project as evidenced by a developer’s significant equity investment or personal guaranties.
- Developments in which owners demonstrate a commitment to projects through a history of continual ownership and involvement with their developments.
- Mixed-income developments located in Redevelopment Districts in Pinellas County.
- Developments owned by locally-designated Community Housing Development Organizations.
The long-standing policy of the county is to evaluate each application on a case-by-case basis rather than use a point system. The county reserves the right to modify the public policy criteria of its multifamily housing bond program at any time.
Amount of Investment
The minimum investment is $1,000 per assisted unit. The maximum per unit investment of funds is based upon the amount realistically needed to make the assisted unit affordable to low-income tenants but cannot exceed the maximum limits per unit as established by HUD annually.
Term of Restrictions
For the period of time established by the program, the amount of rent that can be charged and the tenants who can be served in assisted units are subject to strict controls. In addition, assisted units must be maintained in good condition (meeting Housing Quality Standards as defined by HUD).
For HOME assisted units, the number of years these restrictions are in effect is linked to the type of project, whether FHA financing is used, and the average amount of funds invested per unit as shown below:
|TYPE OF PROJECT (OR FINANCING)||AMOUNT OF FUNDS PER UNIT||NUMBER OF YEARS|
|Rehabilitation or Acquisition of Existing Units||Up to $15,000||5 years|
|"||$15,000 to $40,000||10 years|
|"||Over $40,000||15 years|
|Refinancing Rehabilitation Project||Any Dollar Amount||15 years|
|New Construction or Acquisition of New Units||Any Dollar Amount||20 years|
For projects using State Housing Initiatives Partnership (SHIP) funds, the restrictions are in effect for 15 years or the term of financing, whichever is longer.
Each year during the term of the program restrictions, project owners or managers must provide income and occupancy data for tenants in assisted units. The county is responsible for the accuracy of the data and therefore has the right to verify information provided by the owner or manager. In addition, the county must physically inspect assisted units each year during the restriction period.
NOTE: If the HOME project contains fewer than five units, the inspections may be conducted at intervals longer than one year, but not less frequently than every three years. If the HOME Project contains five to 25 units, the inspections may be conducted at intervals longer than one year, but not less frequently than every two years.
At least 20% of the assisted units in a project of five or more assisted units must have rents that equal 30% of annual income for households with annual incomes at 50% of median income. This rental rate is calculated by HUD based upon the number of bedrooms in the unit and includes utilities. The actual contract rent will vary depending upon which utilities are paid by the tenant. The utility allowances established by the local Housing Authority are used to calculate contract rents.
The remaining 80% of the assisted units may have higher rents that are the lesser of the Fair Market Rent or an amount based upon 30% of gross income for households with incomes at 65% of median.
The rent that can be charged for assisted units is determined by HUD annually. Owners may adjust their rates accordingly but must give tenants at least 30 days’ written notice before increases are implemented. Any increases are subject to other general provisions of the lease agreements (which usually preclude increases until the lease is renewed). Although the calculations used to determine rents have historically resulted in increases, a decrease in median income could result in a decrease in allowable rents for assisted units. Should this occur and threaten the financial viability of projects, HUD may make adjustments to the rent structure.
For projects funded under the HOME Investment Partnership Program (HOME), at least 20% of the assisted units in projects of five or more assisted units must be occupied by households with annual incomes that are 50% or less of median income as adjusted for family size. These very low-income tenants must occupy the units with the lower rents. The balance of the assisted units must be occupied by households with annual incomes that are 60% or less of median income as adjusted for family size.
NOTE: The HOME Program rules permit 10% of all HOME funds used for rental housing to assist households with incomes between 60% and 80% of median income. The Pinellas County Consortium will reserve this amount to avoid displacing low-income tenants in occupied units that will be assisted with HOME funds.
Because tenants occupying assisted units will generally have annual incomes equal to or less than 60% of median income, and the higher rents allowed are based upon affordable rates for households at 65% of median income, tenants will pay more than the generally accepted standard for “affordable” units if the maximum allowable rents are used.
Before basing development calculations on the highest rents allowed, owners should carefully consider whether low-income tenants will be attracted to their projects. While well-designed, well-managed mixed-income projects should be viable when there is a limited choice of rental housing for low-income tenants, it could spell financial disaster for a project if there are many other more affordable units available.
Project owners or managers must determine a tenant’s eligibility based upon annual income as calculated for the Housing Voucher Program and defined in 24 CFR Part 813 of the Code of Federal Regulations. The procedure used for verifying income at initial occupancy and for verifying income annually is subject to approval by the Pinellas County Consortium.
Tenants whose annual incomes increase over time may stay in assisted units. However, if their annual income rises above the allowable level, they must pay no less than 30% of their adjusted income for rent and utilities. Adjusted income is calculated according to the rules for the Housing Voucher Program, which generally allows certain deductions from annual gross income. The Pinellas County Consortium will provide these rules or assistance in calculating adjusted income to owners. (If Low Income Housing Tax Credits are used in conjunction with this program, the Tax Credit rent provisions override this provision for over-income tenants.)
In general, all assisted units must be in good condition. If the project involves the acquisition of rental units that will not be rehabilitated, the units must meet Housing Quality Standards (HQS). If rehabilitation is involved, the units must meet the Pinellas County Consortium’s Rehabilitation Standards. New construction must comply with all local codes including the Model Energy Code.
During the period when restrictions are in effect, all assisted units must be maintained in good condition and must meet HQS. If it’s determined that units do not meet HQS during the annual inspection, property owners or managers will be notified and given a reasonable amount of time (consistent with applicable Housing Code requirements) to make the necessary corrections. Failure to correct deficiencies constitutes default under the mortgage agreement.
Projects may be subject to relocation requirements under the Uniform Relocation Act (URA), which has its own set of comprehensive regulations. In general, any person or family that permanently moves from the assisted property as a direct result of acquisition or rehabilitation is considered a displaced person and is entitled to relocation benefits. This includes tenants who move in the belief that they will be displaced, tenants forced to move by the owner before the owner applies for funds, and tenants whose rental rates exceed certain affordable levels after the assistance has been provided.
Relocation expenses are a part of the project cost and are included in the loan. However, adding relocation expenses to a proposed project may make it financially infeasible. For these reasons, it is vitally important that owners of occupied properties, or those who wish to use funds to acquire properties that have existing tenants, coordinate closely with the Pinellas County Consortium before taking any action that may result in displacement.
In general, notices must be provided to all tenants as soon as possible. If tenants are not to be displaced, they must be told so. If displacement is expected or possible, specific information must be included with the notice that generally describes the benefits to which tenants may be entitled. Tenants must be cautioned not to move prematurely.
Problems related to relocation requirements are most likely to occur in projects where there is considerable turnover and where it takes a fairly long period of time to complete the work necessary for loan commitment. Assistance may be denied if it is impossible to determine which tenants were affected by the application for assistance under the RHDP.
The most important thing to remember is that tenants must be fully informed. If fully-informed tenants elect to move voluntarily, or if fully-informed tenants move into the project after the application has been submitted and they have been advised that they will not be eligible for relocation expenses, the tenants are not considered displaced.
Other Federal Requirements
A number of State and Federal rules apply to this program as well as to other housing programs. Pinellas County is responsible for ensuring that all projects meet all applicable requirements. Applicants should be particularly aware of the following:
- Occupancy is subject to all Equal Opportunity and Fair Housing legislation and rules.
- To the maximum extent possible, opportunities for employment and contracting must be provided to minority- and women-owned businesses and to business concerns which are located in the program service area.
- Projects containing five or more units are subject to affirmative marketing requirements intended principally to reach those unlikely to apply for housing without special outreach.
- All units in a project, including the assisted units, must comply with regulations implementing the Lead-Based Paint Poisoning Prevention Act.
- Davis-Bacon wage compliance and other Federal laws and regulations pertaining to labor standards apply to all construction contracts for 12 or more units.
- Flood insurance is required for any project located in a flood zone.
Free Listing Resource for Property Owners
If your unit is sitting unoccupied, you can advertise your rental property for free at FloridaHousingSearch.org. List your property’s amenities and special features to land the right tenants to keep your rental income coming.
Affordable Housing Development Funding
Affordable Housing Application
For additional information, contact:
Pinellas County Community Development Division
440 Court Street, 2nd Floor
Clearwater, Florida 33756