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Degree to Which the Alachua County State Housing Initiatives Partnership Program Addresses Very Low-Income Homeownership

Permanent Link: http://ufdc.ufl.edu/UFE0022742/00001

Material Information

Title: Degree to Which the Alachua County State Housing Initiatives Partnership Program Addresses Very Low-Income Homeownership
Physical Description: 1 online resource (104 p.)
Language: english
Creator: Thomas, Toccarra
Publisher: University of Florida
Place of Publication: Gainesville, Fla.
Publication Date: 2008

Subjects

Subjects / Keywords: affordable, alachua, county, florida, homeownership, housing, income, initiatives, lower, partnership, ship, state
Urban and Regional Planning -- Dissertations, Academic -- UF
Genre: Urban and Regional Planning thesis, M.A.U.R.P.
bibliography   ( marcgt )
theses   ( marcgt )
government publication (state, provincial, terriorial, dependent)   ( marcgt )
born-digital   ( sobekcm )
Electronic Thesis or Dissertation

Notes

Abstract: The State Legislature, various reports, and research documents, have documented Florida's lack of affordable housing since 1988. In response to this documented need the State Legislature stated that every Floridian should have access to safe and affordable housing by 2010. In direct response to this goal, the State Housing Initiatives Partnership program (SHIP) was designed to produce partnerships that will preserve and/or produce affordable housing in localities around the state. The SHIP program is funded by documentary stamp taxes which are collected on each real estate transaction that occurs in Florida. The SHIP program was specifically designed to assist very low-, low-, and to some extent moderate-income households obtain homeownership in Florida. This study examines if very low-income households in Alachua County, Florida, can sustain affordable homeownership with down payment assistance. An exploratory case study was chosen to explore if very low-income households could sustain homeownership with SHIP down payment assistance in the fiscal years 2003-2004 and 2005-2006 in Alachua County, Fl. In 2003 the Alachua County Affordable Housing Study briefly examined Alachua County's SHIP program, yet it did not examine very low-income households. The lessons learned informed recommendations that can be used to strengthen affordable housing policy in Alachua County. Alachua County has peculiar characteristics that prevent the generalization of lessons learned from Alachua County?s SHIP program to other SHIP programs across the state. These characteristics are examined in detail in chapter 5 Alachua County SHIP program. Although other jurisdictions might have some similar characteristics, they do not exhibit all of the characteristics of Alachua County; this prevents comparisons. Alachua County differs from other programs because it has designed its SHIP program differently from other SHIP programs. This is permitted under Florida State Statutes and it is another characteristic that prevented a comparison between Alachua County's SHIP program and SHIP programs of other jurisdictions. It was concluded, from the examination of the data, that very low-income households in Alachua County that applied for SHIP Downpayment Assistance (DPA) in fiscal years 2003-2004, and 2005-2006 could not afford homeownership even with the down payment assistance program, while low-income households could afford homeownership. As a result of these findings, two recommendations were delivered: the income guidelines for Alachua County should be changed, and Alachua County should focus on using SHIP funds to provide multi-family rental housing for very low-income households while focusing on providing affordable homeownership for low-, and moderate-income households. Future research opportunities include: affordability analyses should be performed for other jurisdictions and the results should be compared to the affordability analysis for Alachua County, back end ratios and household debt for very low-income households in Alachua County needs to be procured and reviewed, and close out-reports that detail how much recaptured funds Alachua County receives needs to be procured and reviewed.
General Note: In the series University of Florida Digital Collections.
General Note: Includes vita.
Bibliography: Includes bibliographical references.
Source of Description: Description based on online resource; title from PDF title page.
Source of Description: This bibliographic record is available under the Creative Commons CC0 public domain dedication. The University of Florida Libraries, as creator of this bibliographic record, has waived all rights to it worldwide under copyright law, including all related and neighboring rights, to the extent allowed by law.
Statement of Responsibility: by Toccarra Thomas.
Thesis: Thesis (M.A.U.R.P.)--University of Florida, 2008.
Local: Adviser: Macedo, Joseli.
Local: Co-adviser: Larsen, Kristin E.

Record Information

Source Institution: UFRGP
Rights Management: Applicable rights reserved.
Classification: lcc - LD1780 2008
System ID: UFE0022742:00001

Permanent Link: http://ufdc.ufl.edu/UFE0022742/00001

Material Information

Title: Degree to Which the Alachua County State Housing Initiatives Partnership Program Addresses Very Low-Income Homeownership
Physical Description: 1 online resource (104 p.)
Language: english
Creator: Thomas, Toccarra
Publisher: University of Florida
Place of Publication: Gainesville, Fla.
Publication Date: 2008

Subjects

Subjects / Keywords: affordable, alachua, county, florida, homeownership, housing, income, initiatives, lower, partnership, ship, state
Urban and Regional Planning -- Dissertations, Academic -- UF
Genre: Urban and Regional Planning thesis, M.A.U.R.P.
bibliography   ( marcgt )
theses   ( marcgt )
government publication (state, provincial, terriorial, dependent)   ( marcgt )
born-digital   ( sobekcm )
Electronic Thesis or Dissertation

Notes

Abstract: The State Legislature, various reports, and research documents, have documented Florida's lack of affordable housing since 1988. In response to this documented need the State Legislature stated that every Floridian should have access to safe and affordable housing by 2010. In direct response to this goal, the State Housing Initiatives Partnership program (SHIP) was designed to produce partnerships that will preserve and/or produce affordable housing in localities around the state. The SHIP program is funded by documentary stamp taxes which are collected on each real estate transaction that occurs in Florida. The SHIP program was specifically designed to assist very low-, low-, and to some extent moderate-income households obtain homeownership in Florida. This study examines if very low-income households in Alachua County, Florida, can sustain affordable homeownership with down payment assistance. An exploratory case study was chosen to explore if very low-income households could sustain homeownership with SHIP down payment assistance in the fiscal years 2003-2004 and 2005-2006 in Alachua County, Fl. In 2003 the Alachua County Affordable Housing Study briefly examined Alachua County's SHIP program, yet it did not examine very low-income households. The lessons learned informed recommendations that can be used to strengthen affordable housing policy in Alachua County. Alachua County has peculiar characteristics that prevent the generalization of lessons learned from Alachua County?s SHIP program to other SHIP programs across the state. These characteristics are examined in detail in chapter 5 Alachua County SHIP program. Although other jurisdictions might have some similar characteristics, they do not exhibit all of the characteristics of Alachua County; this prevents comparisons. Alachua County differs from other programs because it has designed its SHIP program differently from other SHIP programs. This is permitted under Florida State Statutes and it is another characteristic that prevented a comparison between Alachua County's SHIP program and SHIP programs of other jurisdictions. It was concluded, from the examination of the data, that very low-income households in Alachua County that applied for SHIP Downpayment Assistance (DPA) in fiscal years 2003-2004, and 2005-2006 could not afford homeownership even with the down payment assistance program, while low-income households could afford homeownership. As a result of these findings, two recommendations were delivered: the income guidelines for Alachua County should be changed, and Alachua County should focus on using SHIP funds to provide multi-family rental housing for very low-income households while focusing on providing affordable homeownership for low-, and moderate-income households. Future research opportunities include: affordability analyses should be performed for other jurisdictions and the results should be compared to the affordability analysis for Alachua County, back end ratios and household debt for very low-income households in Alachua County needs to be procured and reviewed, and close out-reports that detail how much recaptured funds Alachua County receives needs to be procured and reviewed.
General Note: In the series University of Florida Digital Collections.
General Note: Includes vita.
Bibliography: Includes bibliographical references.
Source of Description: Description based on online resource; title from PDF title page.
Source of Description: This bibliographic record is available under the Creative Commons CC0 public domain dedication. The University of Florida Libraries, as creator of this bibliographic record, has waived all rights to it worldwide under copyright law, including all related and neighboring rights, to the extent allowed by law.
Statement of Responsibility: by Toccarra Thomas.
Thesis: Thesis (M.A.U.R.P.)--University of Florida, 2008.
Local: Adviser: Macedo, Joseli.
Local: Co-adviser: Larsen, Kristin E.

Record Information

Source Institution: UFRGP
Rights Management: Applicable rights reserved.
Classification: lcc - LD1780 2008
System ID: UFE0022742:00001


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1 DEGREE TO WHICH THE ALACHUA COUNTY STATE HOUSING INITIATIVES PARTNERSHIP PROGRAM ADDRESSES VE RY LOW-INCOME HOMEOWNERSHIP By TOCCARRA NICOLE THOMAS A THESIS PRESENTED TO THE GRADUATE SCHOOL OF THE UNIVERSITY OF FLOR IDA IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ARTS IN URB AN AND REGIONAL PLANNING UNIVERSITY OF FLORIDA 2008

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2 2008 Toccarra Nicole Thomas

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3 To every person unable to afford one of lifes most basic necessities: Housing

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4 ACKNOWLEDGMENTS I would like to take the tim e right now to acknowledge a number of people who have helped me endure this arduous journey. I would like to thank God first. I would like to acknowledge my mother, Jacqueline Rose Thomas-Baker. Without this strong black woman, my life would be completely different. I love her w ith every fiber of my being, and I still want to be like her when I grow up. She was my first role model, and she inspires me to attempt to do great things in this world. I would like to acknowledge my ba by brother. He has grown a nd matured into such a great and admirable man. He has always been in my co rner, holding me down and believing in me. I would also like to acknowledge my favorite A unt, Tunecia Jackson. She constantly called to check up on her Carra Cat and w ould call sometimes to just say I love you. I also acknowledge the entire Thomas family. I would not be the pe rson that I am today without them, and I could not ask for a better family I would also like to acknowle dge all of my friends, especi ally my Urban and Regional Planning, and Black Graduate St udent Organization friends. Everyone accepted me for who I am and dealt with my various eccentricities, they ca n never know how much this means to me. They helped me hold onto my sanity when the times got rough. The past two years would have been extremely long if I would not have known th ese people, I cannot name everyone but you all know who you are. I would definitely like to acknowledge Ms. Akilah Brown. I had to learn the hard way that Akilah is always right. Finally, I would like acknowledge everyone that has helped me in any way during this process, I cannot name everyone but they all are in my heart.

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5 TABLE OF CONTENTS page ACKNOWLEDGMENTS...............................................................................................................4 LIST OF TABLES................................................................................................................. ..........7 LIST OF FIGURES.........................................................................................................................8 LIST OF ABBREVIATIONS.......................................................................................................... 9 ABSTRACT...................................................................................................................................10 CHAP TER 1 INTRODUCTION..................................................................................................................12 2 LITERATURE REVIEW.......................................................................................................18 Introduction................................................................................................................... ..........18 Affordable Housing Defined.................................................................................................. 19 Federal Housing Policy......................................................................................................... ..20 Affordable Homeownership................................................................................................... 21 Floridas Affordable Housing Needs......................................................................................27 Cost Burdened Households in Florida.............................................................................28 Renters......................................................................................................................28 Owners.....................................................................................................................30 Addressing Floridas Affordable Housing Needs........................................................... 31 3 METHODOLOGY................................................................................................................. 34 4 STATE HOUSING INITIATIVE S PARTNERSHIP PROGRAM ........................................ 43 Introduction................................................................................................................... ..........43 The William E. Sadowski Affordable Housing Act............................................................... 44 State Housing Initiatives Partnership Program Requirements and Administrative Procedures..................................................................................................................... ......46 General Program Guidelines........................................................................................... 47 Statutory Requirements...................................................................................................48 5 ALACHUA COUNTY CASE STUDY.................................................................................. 52 Introduction................................................................................................................... ..........52 Alachua County Demographics.............................................................................................. 53 Alachua Countys Affordable Housing Needs.......................................................................55 Alachua Countys SHIP Program........................................................................................... 59 Eligible Home Repairs.................................................................................................... 60

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6 Income Verification......................................................................................................... 61 Affordable Housing Strategies of the Alachua C ounty SHIP Program.................................. 62 Down Payment Assistance with Rehabilitation S trategy................................................62 Single-Family Housing Developm ent Strategy............................................................... 65 Multi-Family Housing Development Strategy................................................................ 66 Special Needs Housing Development Strategy............................................................... 67 Mortgage Foreclosure Intervention Strategy ................................................................... 67 6 DATA ANALYSIS................................................................................................................ 73 Introduction................................................................................................................... ..........73 Affordability Analyses............................................................................................................75 Hypothetical Client..........................................................................................................75 Average Client FY 2003-2004........................................................................................76 Average Client FY2005-2006.........................................................................................77 7 FINDINGS AND RECOMMENDATIONS.......................................................................... 81 Introduction................................................................................................................... ..........81 Findings..................................................................................................................................81 Recommendations for the Alachua C ounty SHIP Program................................................... 84 Change the Income-Guideline Targets for Alachua County........................................... 84 Focus on Providing More Affordable Re ntal Housing Options Throughout the County ..........................................................................................................................87 Discussion...............................................................................................................................89 8 CONCLUSION..................................................................................................................... ..93 Introduction................................................................................................................... ..........93 Future Research Opportunities...............................................................................................94 LIST OF REFERENCES...............................................................................................................98 BIOGRAPHICAL SKETCH.......................................................................................................104

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7 LIST OF TABLES Table page 2-1 Homeownership and rental developmen t program s designed and implemented by the state of Florida...................................................................................................................33 2-2 Rental development programs designed and im plemented by the state of Florida...........33 4-1 Funding history of the Sadowski Act................................................................................. 51 5-1 Comparison of the state of Fl orida to Alachua County, Florida ........................................69 5-2 Cost-burdened Households represente d by tenure in Alachua County during 2005 ......... 69 5-3 Housing needs assessment-population a nd household projection for Alachua County, 2005....................................................................................................................................69 5-4 Alachua County SHIP down paymen t assistance incom e guidelines................................ 72 5-5 Maximum assistance guidelines May 2006.......................................................................72 6-2 Affordability analysis fo r average applicant 2003-2004 ................................................... 79 7-1 Alachua County SHIP defaults from 1993-2005............................................................... 92

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8 LIST OF FIGURES Figure page 5-1 Alachua County down payment a ssistance strategy flowchart. ......................................... 705-2 SHIP Process from documentary tax stamp to funding allocation.................................... 71

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9 LIST OF ABBREVIATIONS AMI Area median income CDBG Community development block grant CWHIP Community workforce housing incentive program DPA Down payment assistance FHFC Florida housing finance corporation FMR Fair market rent FY Fiscal year HOPE VI Housing opportunitie s of people everywhere HUD United States Department of housing and urban development LHAP Local housing assistance plan SAIL State apartment lo an incentive program SHIP State housing initiati ves partnership program

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10 Abstract of Thesis Presen ted to the Graduate School of the University of Florida in Partial Fulfillment of the Requirements for the Master of Ar ts in Urban and Regional Planning DEGREE TO WHICH THE ALACHUA COUNTY STATE HOUSING INITIATIVES PARTNERSHIP PROGRAM ADDRESSES VE RY LOW-INCOME HOMEOWNERSHIP By Toccarra Nicole Thomas August 2008 Chair: Joseli Macedo Cochair: Kristin Larsen Major: Urban and Regional Planning The State Legislature, various reports, and re search documents, have documented Floridas lack of affordable housing since 1988. In response to this document ed need the State Legislature stated that every Floridian should have access to safe and affordable housing by 2010. In direct response to this goal, the State Housing Initiatives Partnership program (SHIP) was designed to produce partnerships that will pr eserve and/or produce affordable housing in localities around the state. The SHIP program is funded by documentary stamp taxes which are collected on each real estate transaction that occurs in Florida. The SHIP program was specifically designed to assist very low-, low-, and to some extent modera te-income households obtain homeownership in Florida. This study examines if very low-income households in Alachua County, Florida, can sustain affordable homeownership with down paym ent assistance. An exploratory case study was chosen to explore if very low-income households could sustain homeow nership with SHIP down payment assistance in the fi scal years 2003-2004 and 2005-2006 in Alachua County, Fl. In 2003 the Alachua County Affordable Housing Study briefly examined Alachua Countys SHIP

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11 program, yet it did not examine very low-inco me households. The lessons learned informed recommendations that can be used to strength en affordable housing policy in Alachua County. Alachua County has peculiar ch aracteristics that prevent th e generalization of lessons learned from Alachua Countys SHIP program to other SHIP programs across the state. These characteristics are examined in detail in chapter 5 Alachua County SHIP program. Although other jurisdictions might have some similar ch aracteristics, they do not exhibit all of the characteristics of Alachua County; this prevents comparisons. Al achua County differs from other programs because it has designed its SHIP program differently from other SHIP programs. This is permitted under Florida State Statutes and it is another characteristic that prevented a comparison between Alachua Countys SHIP progra m and SHIP programs of other jurisdictions. It was concluded, from the examination of th e data, that very low-income households in Alachua County that applied for SHIP Downpa yment Assistance (DPA) in fiscal years 20032004, and 2005-2006 could not afford homeownership even with the down payment assistance program, while low-income households could a fford homeownership. As a result of these findings, two recommendations were delivered : the income guidelines for Alachua County should be changed, and Alachua County should focus on using SHIP funds to provide multifamily rental housing for very low-income hous eholds while focusing on providing affordable homeownership for low-, and m oderate-income households. Future research opportunities include: affordab ility analyses should be performed for other jurisdictions and the results shou ld be compared to the affordab ility analysis for Alachua County, back end ratios and household debt for very lo w-income households in Alachua County needs to be procured and reviewed, and close out-reports that detail how much recaptured funds Alachua County receives needs to be procured and reviewed.

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12 CHAPTER 1 INTRODUCTION Housing that is affordable is one of the m ost basic necessities of life, along with food and clean water. The lack of affordable housing has b een an issue in the United States for several decades now, and there are many programs that ex ist to address this issue, including programs funded by the Federal Government and pr ograms funded by state governments. Although housing options exist in many markets, most of the housing available is not affordable to lower income households. One example of this type of ma rket is Florida. Florida is one of the fastest growing states in the nation, w ith one of the lowest averag e wages (National Low Income Housing Coalition, 2001). This combination of low-wages and fast growth has created a situation where Florida has a shortage of affordable housing options for those who need it. One of the state-run programs is the State Housing Initia tives Partnership (SHIP) program. This program was designed by Florida, to specifically addre ss the needs of Floridas residents. The SHIP program has become a national model for providing affordable housing to lower income households. The purpose of this study is to investig ate the potential for the SHIP Downpayment Assistance (DPA) program to allow lower inco me households (specifically very low-income households) obtain and maintain a mortgage in Alachua County. In addition to investigating whether lower income households can maintain and sustain a mortgage with SHIP DPA, this study also explores and provides alternatives to using SHIP f unding for homeownership for very low-income households in Alachua County based on the affordable housing needs of the County and not the mandates of the State Legislature. Several sources were ut ilized to provide a framework to examine Alachua Countys afford able housing needs and the needs of very lowincome potential homebuyers in Alachua County. As a result of Florid as low-wage service-

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13 based economy many Floridians are cost-burdene d renters, and owners. The SHIP programs downpayment assistance to lower income households is intended to bridge the gap for these households and allow them to obtain homeownership. This study examines the emphasis that the SHIP Program places on homeownership activities for very low-income households. The SHIP program provides homeownership opportunities to very low-, low-, and to some extent, moderate-income households by creating partnerships between affordable housing provide rs and local government officials. The State Legislature intended for the SHIP program to pr ovide a dedicated fundi ng source that allows local officials the freedom to plan for and implem ent affordable housing strategies since they are assured of funding for these strategies. In a ddition to this stream of funding, the local governments also have the authority to deliver these funds to very low-, lowand moderateincome households for downpayment assistance. One of the main barriers preventing lo wer income households from obtaining and maintaining homeownership is the lack of e nough income for a downpayment (Herbert & Tsen, 2005; Listokin, Wyly, Schmitt, & Voicu, 2001). Although a potential homeowner can qualify for a mortgage, he or she needs to have enough wealth to keep housing payments less than 28% of the households gross income in order to prevent cost-burden (Herbert & Tsen, 2005). It is this lack of wealth (that would pr event cost-burden) that preven ts many potential homeowners from purchasing a home (Herbert & Tsen, 2005). The Sadowski Affordable Housing Act (Sadowski Act) established the SHIP housing trust fund; and mandates the targets of the SHIP progr am. According to the Sa dowski Act, SHIP is funded through a documentary stamp tax on all real es tate transfers in Florida, and the funding is

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14 supplied to 51 entitlement communities and all 67 counties throughout the state.1 The amount of funding that each community and county receives is based on a population formula, with the minimum allocation being $350,000 (for rural communities) and the maximum $9 million. Downpayment assistance is one facet of the SHIP program and is only provided to clients who prove their eligibility. Clients must demonstrate the ability to afford a primary mortgage, clients must demonstrate the ability to meet th e minimum income guidelines (that are adjusted for family size), and finally clients must be able to demonstrate that the amount of the primary mortgage does not exceed the maximum house sale s price (which is set by the Florida Housing Finance Corporation periodically). The combina tion of these factors (and others that are examined in greater detail in chap ters 4 and 5) determine if a client is eligible for SHIP DPA, and, if so, how much assistance th at client would receive. This study examines if the guidelines for determining if a client can actually afford a mortgage using SHIP downpayment assistance are adequate for very low-income households. In come verification was performed on each client file and for the income guidelines set forth by Stat e Statutes. The income ve rification process, as performed here, examined if the minimum a nd maximum income guidelines for very lowincome households were adequate for lower inco me households. This process entails examining the applicants gross income to determine if his/her income falls within the income guidelines that are adjusted for family size, and are adjusted each fiscal year. The clients gross income for the next year must fall within the income guide lines that are set, sin ce the SHIP program was designed to assist lower income households. The income verification process is actually a three-phase process that involves determining the income, program, and unit eligibility of a clie nt. SHIP jurisdictions have the option of using 1 Entitlement cities refers to cities that recei ve Community Development Block Grant Funds.

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15 the income verification process as set forth by HUD for the Section 8 Voucher Program or the process as set forth by the Florida Housing Fina nce Corporation. Phase one involves determining what income category the client should be pl aced in, phase two invol ves verification of the clients annual income, and phase three determ ines whether the unit is eligible for SHIP assistance. Phase one involves determining which categor y the clients annual gross income falls within (very low, low-, or moderate-income). Th is study examines if these income guidelines are appropriate for allowing very low-income households to actually obtain a nd sustain a mortgage). Once all of this information is gathered, the antic ipated annual income is calculated and analyzed to determine how much downpayment assistance the client will receive. Phase two determines if the use of the funds falls within the eligible activ ities as defined by State Statutes. The last phase is to determine if the unit that the client is attempting to purchase meets the guidelines as set forth by State Statutes, to some ex tent this study examines this pha se; this is done to determine if the client can actually afford the house that s/he is attempting to purchase. The income verification process is explained in great detail in Chapter 3 sinc e is an integral part of the methodology for the case study that is presented in Chapter 5. Several sources were used to document Flor idas need for affordable housing; these sources include: the National Low Income Hous ing Coalition (1999-2006), data from the 2000 Census, and Nissen & Borum (2005). In addition to examining the lack of affordable housing, these reports and others explain how this situation (the lack of affordable housing) has occurred in Florida. The affordable housing needs of Al achua County are examined, because the needs of the County eclipse those of the State. Ther e are several reasons for this phenomenon:

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16 When compared to Florida, Alachua County ha s a higher percentage of its residents that are in need of affordable housing (Alac hua County Affordable Housing Study Team, 2003). Alachua County has a higher poverty rate ( 22.8 percent) compared to the State (12.5 percent) (Census, 2000). Due to the University of Florida (which is lo cated in Gainesville, the county seat), a dual renter market exists, because of the large number of students who reside in Gainesville (Alachua County Affordable Housing Study Team, 2003). Most of the affordable housing options for th e County are located in Gainesville, and the students and residents compet e for the affordable housing resources (Alachua County Affordable Housing Study Team, 2003). All of these factors have comb ined to create an affordable housing climate in the County that eclipses the needs of the State (Censu s, 2000; Alachua County Affordable Housing Study Team, 2003). The structure of this study is as follows: Ch apter 2 Literature Review details the relevant literature on the topic of affordable homeowne rship for lower income households, Chapter 3 Methodology describes in detail how the data was gathered and why a case study was chosen, Chapter 4 State Housing Initiatives Partnership Program explains in great detail the SHIP program in order to give the reader a frame of reference to understand the data and the thesis, Chapter 5 Alachua County Case Study presen ts the case study and provides details about Alachua County that are needed to understand th e data, Chapter 6 Data Analysis is where the data is presented and analyzed, Chapter 7 Findings and Recommendations provides the findings from the data analysis and the recommendations suggested to improve the SHIP program in Alachua County, and Chapter 8 Conclusion is wher e the thesis is conc luded, and where ideas that could not be explored in the scope of this study are offered as recommendations for future research. This study provides recommendations that aim to improve Alachua Countys State Housing Initiatives Partnership (SHIP) Program. These recomme ndations are provided as an

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17 attempt to ultimately improve the state of affo rdable housing in the County. Additionally this study adds to the discussion on affordable housing in the County because the investigator takes the position that very low-income households in Alachua County should not be targeted for homeownership. This study examined this positi on in depth and attempted to determine whether it is valid or incorrect. The inve stigator arrived at this conclusion by reviewing data that shows that very low-income households need extremely large subsidies to obtain a mortgage in Alachua County, and sometimes these subsidies are still not enough, whereas lowand, moderate-income households can afford homeowners hip with lower subsidy amounts.

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18 CHAPTER 2 LITERATURE REVIEW Introduction Them es examined in Chapter 2 Literature Re view include: the defini tion of affordable housing, housing cost-burden, an examination of housing cost-burden for renters versus homeowners, a brief examination of the history of affordable hous ing in the U.S., an in depth examination of affordable homeownership, and an examination of Floridas affordable housing needs. This chapter lays the foundation for a nd informs the methodology, since it examines the literature explored on this topic by other scholars. Affordable housing programs have existed in the United States sin ce the early 1930s with the passage of the Industrial Recovery Act of 1933, yet the Federal Government maintained the official position that housing was the sole respon sibility of the individual. Several factors eventually prompted the Federal Government to ch ange its official positio n and intervene in the housing market using public policies and progr ams (Hays, 1995; Ega n, Mott, & Roos, 1981). Since then the Federal housi ng policy has alternated between providing housing assistance, building affordable housing, promoting afford able homeownership, and providing rental subsidies for lower income households. Although the Federal Government has always heavily promoted affordable homeownership, it has not alwa ys provided funding to State governments to achieve this goal. This literature review will br iefly examine the major policies and initiatives that laid the groundwork for todays affordable housing policies including: how the history of affordable housing policy has la id the groundwork for affordable housing as it operates today, the housing cost-burden standard, cost-burdened renters versus cost-burdened homeowners, and the difference between the two, what is affordable homeownership, Floridas affordable housing needs, and measures that address Floridas affordable housing needs.

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19 This chapter examines the aforementioned affo rdable housing standards in order to provide a framework and foundation for the thesis of this study. This understanding is necessary because it provides a review of how other scholars have addressed and examined the affordable homeownership issue for lower income households. This review prevents repetition of ideas that were already examined, while also acting as a facilitator for new ideas and methods of addressing affordable housing and homeownership for very low-income households with the intention of providing potentia l solutions to this issue. Affordable Housing Defined What is affordable housing? How is housing determined to be affordable? Who needs affordable housing? These questions are essentia l to understanding affordable housing. The U.S. Department of Housing and Urban Developmen t (HUD) approaches the idea of affordable housing by examining how much housing a person can or cannot afford; this is the definition of cost-burden. Cost-burden curren tly is the standard used to determine the most common housing need. A household is considered co st-burdened if it pays more that 30% of its pre-tax income on housing related costs (i.e. rent or mortgage related expenses) excluding utilities and food (HUD, 1998). All of the Federal housing programs and a majority of State affordable housing programs are based on this definition; all of HUD's af fordable housing programs are designed to assist households that are considered cost-burdene d. Although the standard for a cost-burdened household is currently 30 percent, it has ranged from as low as 25 to as high as 50% (Kutty, 2005). Since the 1980s, scholars have criticized this st andard as one that is wholly inadequate for determining the housing need of clients since it examines afford able housing by stating what is not affordable (Kutty, 2005; Stone, 2006). Additionally, affordable housing advocates have stated that this standard does not address all of the complex variables involved with housing

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20 affordability (Kutty, 2005; Stone, 2006). Rather than examining affordable housing in terms of the housing ratio, Stone (2006) stat es that housing affordability is an expression of the social and material experience of people, constituted as households in relation to their individual housing situations (p. 151). Chi & Laquartra (1998) also disputed the application of the housing cost-burden ratio to homeownership stating th at housing expenses consist of different components, including mortgage co sts, property taxes, energy and other utility expenses and the current standard just does not address these variables (p. 177). Lerman & Reeder (1987) note that the cost-burden ratio is incapable of discern[i ng] cases of high rent-t o-income resulting from low-income from those that are due to a high hou sing expense associated with a strong taste for housing (p. 390). Several affordable housing scholars proposed alternatives to replace the cost-burden standard including the Residual Income Approach. The Residual Income Approach works by providing a subsidy that covers the difference between the amount of housing the family could afford, and the amount that is left over, vers us providing a subsidy based on a One-Size-FitsAll formula (cost-burden standard) (Stone, 200 6). Lerman & Reeder (1987) and Kutty (2005) also suggested alternatives to the cost-burden ra tio definition of affordability. Lerman & Reeder (1987) presented a quality-based definition of affo rdability as an alternative to the cost-burden ratio (p. 390).While Kutty (2005) suggests that ho using needs of a client should be considered on an individual basis, Federal Housing Policy Affordable mortgages are one of the federally b acked initiatives to assist historically underserved lower-income households with housing opportunities (S chwartz, 2006). Although affordable mortgages are generally served on the private side of the market, the Federal Government is a staunch supporter of these ac tivities and provides s upport whenever possible

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21 through programs such as the American Dream Downpayment Initiativ e, regulation of the mortgage market, and so on. The national homeownership rate was 66.2% as of December 2000; homeownership is at a historical high yet many minority and lower-income households are not included in this statistic (Census, 2000). Of the national homeownership rate only 48.2% of African-Americans and only 60% of Asian, Native American, and Pacific Isla nders owned their own home (American Dream Downpayment Act, 2003). It is argued that this neglect of mi nority and lower-income households has led to this disparity in home ownership rates (Goetz, 1993; HUD, 2002). As a result of this disparity th e Federal Government is actively campaigning to increase homeownership among these historically underser ved lower-income and minority households in order to extend the benefits of homeownership, and to alleviate its re sponsibility for providing and maintaining affordable rental units. Affordable Homeownership The Federal Governm ent is actively campai gning to address the inequalities between minority, and lower-income households, and nonminority and higher-income households, and increase homeownership among lower-income househol ds because affordable rental market units are rapidly converting to market rate units. Some of the Federal initiatives that exist to promote affordable homeownership include the promotion of affordable homeownership options through affordable mortgages, down payment assistance initiatives, and the guaranteeing of afford able mortgages through corporations such as the Federal Home Loan Mortgage Corporat ion (Freddie Mac), and the Federal National Mortgage Association (Fannie Mae). These initiatives in combination with the rapid conversion of affordable rental units to market rate rental (FMR) units have created a situation where lowerincome households are enticed into homeownership. The national policy push to increase

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22 homeownership among traditionally underserved households include programs such as the Housing Opportunities of People Everywhere (HOPE VI) program that focuses on the: revitalization of severely distressed public housing and [ on] provid[ing] financial assistance under such programs for main street revitalization or redevelopment projects in smaller communities to support the development of affordable housing for low-income families is one factor that is contributing to the large amount of affordable rental units that are disappearing across the c ountry. (42 U.S.C. 12821, 2003) Another program included in the nationa l policy push is the American Dream Downpayment Act (2003). The Government ins tituted the American Dream Downpayment Act to address the inequality in homeownership rates between minority and non-minority households. The American Dream Downpayment Act provides downpayment assistance to eligible applicants, those enduri ng a cost-burden of 30% or more and who expressed the desire to own their own home from 2004-2007. Affordable homeownership is presented as a solution to the affordable housing situation because of the conversion of affordable rental un its to market rate units in many markets. In addition to the revitalization of public housing un its, many mom and pop smaller rental units that might be affordable are reaching the end of their contracts and are converting to fair market units (Larsen, 2004). This means that lower in come households have fewer options when it comes to obtaining affordable housing. This is gene rally not such a bad idea, however affordable homeownership is presented as the only option to provide affordable homeownership. The researcher arrived at this c onclusion since only two scholars Husock (1997) and Walker (2004) were the only two to actively refute and provi de alternatives to affordable homeownership. Although the negatives of affordable homeown ership are examined by several scholars McCarthy, Van Zandt, & Rohe (2001) and Stegma n, Quercia, Radclife, Ding, & Davis (2007)

PAGE 23

23 (to name a few) only examined the negative e ffects of homeownership on very low-income households in terms of how the household's finances are affected, withou t providing alternatives to affordable homeownership. The main goal of the Federal Government regarding affordable homeownership is to rectify decades of institutional ne glect that traditiona lly underserved households have endured since the beginning of the modern mort gage system. According to Listokin et al. (2001) these households are traditionally underserved because the nations housing finance system was designed to predominantly serve the needs of white middle-or upper-income, nuclear families, alienating scores of lower-income and minority households (p. 466). McCarthy et al. (2001) also stated that the United States has created a housin g finance system that makes the direct benefits of owning a home most favorable for [higher-income] families and least favorable for [lowerincome] families (p.42). Other scholars also noted that tra ditionally underserved households that attain homeownership may be challenged to meet their mortgage obligations in an economic downturn (HUD, 2003; Stegmam et al., 2007). Stegman et al. (2007) state that lenient mortgage terms pay a disservice to the lower-income household because the liberalized underwriting guidelines also increase the likelihood that t hose homeowners will default (p. 246). Lenient standards for homeownership could potentially m ean that a household is not completely ready for homeownership. Retsinas (1999) also states that lower-income households are not ready for homeownership since the biggest obstacle is obtaining owning a nd maintaining a home relative to their incomes (n.p.). McCarthy et al. (2001), Retsinas & Belsky (200 2), and HUD (2003) also concluded that affordable mortgages place lo w-income households in precarious financial situations due to the dangers of lending based on lenien t terms. Listokin et al. (2001) stressed that affordable mortgages are risky fo r lower income households since these:

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24 innovative mortgage productscar ry a greater risk because th ey allow an increasing share of income to be applied to housing, not leav ing much leeway to meet household medical and other unexpected expenses, a high housing debt ratio may also be imperiled by future changes, such as missing utility costs or a down turn in the economy that raises unemployment rates and creates other adverse effects. (p. 500) Listokin et al. (2001) examines why minority lower-i ncome households are traditionally underserved. His research states th at the lack of intergenerational wealth transfers and a lack of upward class mobility and economic barriers suppress the homeownership rate of blacks and Hispanics who also happen to constitute a la rge portion of the lower-income households in America (p. 466). Listokin et al .(2001) continues on to state that lowering housing expectations helps but a large gap still remainseven the mo st liberal mortgage productsleave the vast majority of renter families unserved at any level(p. 466). All of the aforementioned factors have combined to create a national climate that portrays homeownership as the solution to the affordable housing problem. Asher, Revels, Marcus, Black, Seibert & Kaplan (2001), and HUD (2002) arrived at the conclusion that homeownership is great for economic redevelopment since it creates a secondary economy related to homeownership (construction, realtors, lawyers, title insurance officers, cashiers at home improvement stores and so on). The cycle of building and selling afford able homes, stimulates economic development in communities since homeowners have to purchase furnishings, decorations, and appliances for their homes, and this translates to jobs that are associated with this spending activity (Hendrickson, 2007). Although homeownership does create a boost for the economy of a particular community, scholars have not addressed the idea that these actions are only benefici al for homeowners who are already at a stable economic place in th eir lives. The only true economic benefit from homeownership realized by lower-income households is the actual possession of the home; this possession gives the lower-income household an asset that many do not possess before

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25 homeownership (Listokin et al ., 2001). Although the power of th e secondary economy related to homeownership has been fully documented, no stud ies exist that examine just how much (or whether) lower-income households actually reap the benefits of the secondary economy as well. Although scholars tout homeownership as a gr eat economic revitalization tool for the community, very little academic research has been completed to actually demonstrate how lower-income households spend their money when they purchase their homes; all of this information is anecdotal. Do lower-income households completely furnish their homes with new items? Do lower-income households purchase majo r home decoration items on credit? Do lowerincome households utilize the services of archit ects, or real estate br okers? Do lower-income households purchase secondhand items, and/or rely on family members to help supply some of these necessities? Immergluck & Smith (2006) are some of the few researchers who have examined how the economic activities of lowe r-income households might potentially have a negative effect on an entire neighborhood. This res earcher did not come acr oss any studies that examined how lower-income households spend thei r money and/or directly influenced by the secondary economy. Affordable housing strategies n eed variety; policies simply cannot rely on one strategy. A mixture of homeownership and rental strategies will adequately serve the needs of all those in need of affordable housing. A heavier emphasis on rental housing strategies for lower-income households creates a better hous ing climate for lower-income co mmunities; since a mixture of options allows-lower income households more choices and opportunities to achieve homeownership (Husock, 1997; Walker, 2004). Huso ck (1997) as well as Walker (2004) speak in depth about a continuum of housing options and how different affordable rental options allow households the opportunity to adequately save for homeownership. For ex ample, Walker (2004)

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26 found a direct correlation between a familys ability to save fo r homeownership, and residing in an affordable rental unit. Walker (2004) stated that residing in th e affordable rental unit, affords the household the opportunity to save for a downpayment since a larger portion of the households income is not tied up in paying for housing and can be saved. The cornerstone of the American Dream is homeownership, and many lower-income and minority households do not share in this dream du e to various barriers. These barriers include wealth constraints and finding an inexpensive ho me with payments that correlate with their income (Retsinas, 1999). Homeownership is highly valued because it is believed that [it leads] to increased wealth and better living conditions (Van Zandt, 2003). Ho meownership is also highly valued, by many, due to its perceived stabilizing effect, and because of this idea it is often [viewed as]a central strategy for succes sful economic development (McCarthy et al., 2001, n.p.). Yet, in spite of this widely held beli ef, there is evidence that the economic benefits of homeownership, simply do not extend to lower-income households. According to McCarthy et al. (2001), the main economic benefits that are associated with homeown ership are realized through itemized mortgage tax interest and lo cal property deductions. Mo rtgage tax interest deductions are viable options for higher inco me households because these households earn enough yearly income to warrant itemization of deductions, one of the main ways to accumulate wealth using the home (Listokin et al., 2001; Collins, 2002). Generally, lower-income households do not realize these benefits because they do not earn enough to itemize their deductions (McCarthy et al., 2001). Affordable homeownership initiatives such as down payment assistance and lenient mortgage terms only address the short-term affordability issues associated with homeownership for lower-income households. All of these factors are potentially problematic for a lower-income household. A ccording to Larsen (2004), the success of

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27 homeownership for lower-income households is tempered by the fact that many of these households are at a greater risk of default due to a significantly higher housing cost-burden (p. 526). Floridas Affordable Housing Needs Floridas affordable housing clim ate is and has been very dire. Florida has a documented need for affordable housing for its residents due to its heavy reliance on low-wage paying service and tourism jobs. As a result, the State Legi slature has examined affordable housing and attempted to design solutions to these issues for over two decades. Numerous studies were delivered over the last 20 years decrying the la ck of affordable, decent housing. These findings document a housing crisis due to various factors including a lack of resources, the historical lowwage paying service and tourism industries that fuel Floridas economy, an d the lack of federal funding to assist in the production of affordable housing (State Housing Strategy Act, 1992; Affordable Housing Study Commis sion, 1999; Nissen & Borum, 2005). Floridas significant tourism and service indu stries provide notoriously low-wage paying jobs; as a result, many Floridians are in need of housing that measure up to their lower wages (Affordable Housing Study Commission, 1998; Nissen & Borum, 2005). Additionally, other factors such as the Federal Assistance that would normally fund housing programs and the enormous population growth over the last ten ye ars have combined to create great needs for affordable housing in Florida (State Housing St rategy Act, 1992). The Affordable Housing Study Commission, which is commissioned by State Statutes to convene once a year to study affordable housing needs, have examined this issue in depth since 1988. As a result of the State Legislatures exam ination, several solutions were proposed; these include:

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28 [the articulation of a] state housing strategy that will carry the stat e towards the goal of assuring that by the year 2010 each Floridian sh all have decent and affordable housing and designing several programs that are specif ically created to produce and/or preserve affordable housing in Florida. (State Housing Strategy Act, 1992) Affordable Housing Study Commission (1998, 2006, 2007), Larsen (2004), and Neisen & Borum (2005) found that Florida ha s failed at achieving this goa l and all have documented how far away Florida is from achieving this goal. The following will document the affordable housing needs of Florida from the late 1990s to 2010 for two reasons: the 1990s were chosen sin ce that is when the State Housing Initiatives Partnership Program (SHIP) was signed into law and the year 2010 is Floridas self imposed deadline for supplying affordable housing to each of its residents. Examining these years provides the foundation for understanding why a program such as SHIP was designed and implemented as one of the major ways to addres s the lack of affordable housing in Florida. Cost Burdened Households in Florida Renters In 1998 the program funds that were allocated by Florida to address the lack of affordable housing only kept up with about two-thirds of the growth of cost-burdened households (Affordable Housing Study Commission, 1998). Th e National Low Income Housing Coalition annually produces the Out of Reach Reports; th ese reports examine the ability of low-wage earners to afford housing in every state of the na tion. The data for Florida are provided here from 1999-2006 to demonstrate how dire Floridas affordable housing situation is for low-wage earners. National Low Income Housing Coalition (1999) showed that 37% of renters [were] unable to afford a one-bedroom apartment and 43% [were] unable to afford a two-bedroom apartment(n.p). Minimum wage workers in 1999 would have to earn $12.08 an hour at 40 hours a week, 52 weeks a year in order to afford a twobedroom unit in Florida at the Fair Market Rent

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29 (FMR), without being cost-burdened; a dual-income lower-wage household would have issues affording a two-bedroom apartment at the FMR (Dolbeare., 1999).2 In Florida in 2001, 40% of low-income renters could not afford the averag e FMR (National Low Income Housing Coalition, 2001). In 2003, an extremely low-income household earning $15,217 a year (30% of the median income for Florida was $50,723) was only able to afford a rental unit at approximately $380 a month; the FMR for Florida was $515 for a studio and approximately $605 a month for a onebedroom unit (National Low In come Housing Coalition, 2003).3 Fast forward to 2006 and the situation has only worsened. The FMR for a two-bedroom unit was $850 in 2006; to afford this rent w ithout cost-burden, a lo w-wage earner household would have to earn $2,834 monthly or $34,007 annually (National Low Income Housing Coalition, 2006). This household w ould have to work a 40-hour wo rk week, 52 weeks a year at a wage of $16.35 an hour, when the average mini mum wage rate in Florida for 2006 was $6.40 an hour (National Low Income Housing Coalition, 2006). A worker earning the average Florida minimum wage rate ($6.40 an hour) would have to work 120 hours a week, 52 weeks a year, in order to afford the FMR for a one-bedroom unit, or the low-wage income household would have to include 2.6 minimum wage earners working 40 hours a week 52 weeks a year to afford the two-bedroom FMR without bei ng cost-burdened (National Lo w Income Housing Coalition, 2006). This information illustrates wages for lower-income workers in Florida have not kept pace with the housing market. Although the Out of Reach Reports are published by the National Low Income Housing Coalition for each state, this literature review only focuses on Florida. 2 [Fair Market Rents] are gross rent estimates. They includ e the shelter rent plus the cost of all tenant-paid utilities, except telephones, cable, or satellite television service, and internet service (HUD, 2007).

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30 As the data shows, the trend for housing affordability for lower-income renters has worsened over the years, even though the Stat e has acknowledged this issue, and actively attempted to rectify it. Renters are examined, since homeowners ge nerally rent for a period, save for a down payment, and then attempt to purchase a house. The data presented here suggest that a minimum wage worker would have issues with affording homeownership since s/he has issues affording a rental unit in Florid a. Hebert & Tsen (2005) reported that down payment assistance is the only impediment standing between a lowerincome household and homeownership, yet the data provided by the Out of Reach series directly refute that idea. Since the lower-income renter household can scarcely afford th e FMR without cost-burden sin ce they do not make a living wage, how can s/he be expected to afford homeownership (Affordable Housing Study Commission, 2007)? The National Low Income H ousing Coalition releases these reports annually and so far, scholars have not responded to these reports. This res earcher feels that the data provides great support fo r the theory that lower-income households simply cannot afford homeownership in Florida. Owners In 2001, 59% of all Florida households could not afford a m edian priced home, Out of Reach series (1999-2006). Nissen & Borum (2005) found that 50% of all low-income households could not afford adequate housing, and over 70% of very low-income households could not afford adequate housing (Niesen & Borum, 2005). The data provided here supports the theory that lower-income households cannot afford hom eownership in Florida. This is important because this data directly refu tes the theory examined earlier in the literature review, the only barriers standing between the lower-income hous ehold and homeownership is a downpayment, (Van Zandt, 2003). This data provided supports the theories of Rohe et al. (2001), Larsen (2004), and Stegman et al. (2007). All of these sc holars conclude that lowe r-income households should

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31 not be placed into homeownership because they cannot afford it, although the data focuses more on renters, it is still valid when discussing hom eownership since as Husock (1997) and Walker (2004) state affordable rental op tions are an integral part of homeownership. This data is mentioned because it illustrates that Florida lack s affordable rental housing, which means that the cycle is broken, which presents obstacle to prevent very low-income households from obtaining homeownership. Addressing Floridas Affordable Housing Needs Floridas affordable housing needs have been docum ented in the State Statutes since 1988. As a result, Florida has enacted many policies and strategies to address these needs. For example, the Sadowski Act funds several programs that sole ly exist to combat housing needs Florida. In addition to the Sadowski Act there are some federa l funds that are used to combat housing needs in Florida. Out of the state programs that receive funding fr om the Sadowski Act, the SHIP program is the only one that is fully funded each year. Tables2-1 and 2-2 display the various affordable housing programs utilized in Florida. In addition to funding affordable housing in itiatives, the State also mandates that affordable housing issues need to be addressed through planning initiatives. For example, Florida State Statutes mandate that Comprehensive Plan s explicitly address affordable housing needs. The ideas of the housing cost-burden standard, cost-burdened renters versus cost-burdened homeowners, the housing continuum (Walker, 2004), what is affordable homeownership, Floridas affordable housing needs, and measures that address Floridas affordable housing needs, have all informed the methodology. These are the most important concepts from the literature review because they directly informed the design of the methodology. Additionally, these concepts were mentioned because they give some credence to the investigator's belief that lowe r-income households simply cannot afford owning a home, if those

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32 same households cannot afford to rent. Examini ng Floridas affordable housing needs was very important to the literature review, because it illu strated the actual need for a statewide affordable housing need. As a result of this belief, the design of the methodology focused specifically on collecting information th at would deny or affirm whether th e very low-income households in Alachua County, FL could afford homeowners hip with Downpayment Assistance (DPA).

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33 Table 2-1. Homeownership and rental development programs designed and implemented by the state of Florida Homeownership Programs State housing initiatives part nership program State funded Florida homeownership assi stance program State funded Home investment partnershi p program Federally funded Florida affordable housing guarantee program State funded Neighborhood housing rehabilitation program State funded Neighborhood housing rehabilitation program State funded Community workforce housing innovation pilot program (CWHIP) State funded Low-income housing tax cred it programs State funded Source: State Housing Strategy Act, 1992 Table 2-2. Rental development programs designe d and implemented by the state of Florida Rental Development Programs Local bond issues State funded Multi-family revenue bond program State funded Low-income housing tax credit State funded State apartment incentive loan program (SAIL) State funded Elderly housing community lo an program State funded Florida affordable housing gua rantee program State funded Source: State Housing Strategy Act, 1992

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34 CHAPTER 3 METHODOLOGY The m ethodology is one of the most importa nt portions of a study of this type. The methodology is important because it allows the read er to systematically follow the process that the investigator used. The methodology performed for this study relied heavily upon the income verification process of Alachua County, which was slightly modi fied for the purposes of this study. It is also important to note, that Alachua Countys income ve rification process is a slightly modified version of the income verifica tion process as outlined by HUD. The income verification process was only one part of the Case Study performed for this study. The methodology will also explain why a case study wa s chosen, how it was performed, and why the income verification process was performed as well. Yin (2003) defines a case study as an empirical inquiry that investigates a contemporary phenomenon within its real-life context, especially when the boundaries between phenomenon and context are not clearly evidentrelies on multiple sources of evid ence, with the need to converge in a triangulating fashion, and as another result benefits from the prior development of theoretical propositions to guide da ta collection and analysis. (p.13-14) Every case study should contain the five components of a research design, which are listed here: A studys questions Its propositions Its unit of analysis The logic linking the data to the propositions The criteria for interpreting the findings. (Yin, 2003, p.21) The questions examined in study include: Can very low-income households afford homeownership in Alachua County with SHIP? Is homeownership an a ppropriate activity for very low-income households in Al achua County? What can be lear ned from this study in terms of providing affordable housing to very low-in come households? One exception to the definition

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35 of an exploratory case study is that an exploratory case study does not need any propositions since it is exploring an idea, yet it must have a topic that is the subject of the exploration (Yin, 2003, p. 22). The subject of exploration for this study is down payment assistance in Alachua County for very low-income households. The unit of analysis is the income verification process as defined by Alachua County. The criteria for in terpreting the findings were to determine if the amount of the needed subsidy for the mortgage to be affordable for very low-income households exceeded the maximum subsidy stated in the SHIP maximum subsidy guidelines. This case study examines the affordability of the SHIP program for very low-income households for fiscal years 2003-2004, and 2005-2006. Thus, the area median incomes (AMI), income guidelines, and maximum house pr ices will come from those years. Another reason why the investigator chose Al achua County is that it presents a unique case, which makes it hard to compare the lessons learned here to other jurisdictions. These reasons include: Alachua County has a large population, and appr oximately half of that population is located in Gainesville (the county seat) (Alachua County Affordable Housing Team, 2003). The University of Florida is lo cated in the county seat (the Un iversity is one of the largest Universities in the southeast). The large number of students who attend the University of Florida and who need affordable housing, create a dual renter market where the residents of the County compete with the students from the University of Florida for the affordable housing resources (Alachua County Affordable Housing Team, 2003). The majority of the affordable housing for the County is located in the county seat, Gainesville, Fl (Alachua County Affordable Housing Team, 2003). Alachua Countys SHIP program includes a purchas e clause that stipulat es that a resident cannot purchase a house within the boundaries of Gainesville if s/he receives SHIP Down Payment Assistance (DPA); a hi gher percentage of households in the lower income ranges reside in the County when compared to State.

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36 There were some difficulties involved with this methodology design. Th ese difficulties are: a small sample size, and the lack of information available. The small sample size of Alachua Countys SHIP program could be due to the de sign of the Countys SHIP program; part of Alachua Countys housing strategy includes runni ng mini-SHIP programs. This means that affordable housing programs and smaller jurisdic tions within the County can apply to Alachua Countys SHIP program and provide down payment assistance (DPA) to clie nts. This potentially led to the small sample size available for analysis. Since these clients might be hidden from the Countys count of clients who applied for DPA. Although there was a small pool of applicants each year examined (an average of 40), there was the same number of very low-income applicants who could not afford a mortgage each year, even with SHIP assistance (Alachua County Client Files, 2003-2004, & 2005-2006). There were ten very low-income households that applied for SHIP DPA each fiscal year; each very low-income household that applied was incapable of affording a mortgage with down pa yment assistance. Some difficulty also existed with the comparison since debt other than the mort gage loan was not included in the calculations. This debt is important since it is used to help calculate how much debt a client can afford overall. Not including a value in the calculation could sk ew the results, since the calculation will state that a client could afford more debt than possible. The first step of the methodology involved ga thering the information needed for the income verification as defined by Alachua County, since it is the unit of analysis for the case study. The income verification process is a three-pha se process that exists to determine if the income of the client falls within the ma ndated guidelines set fo rth by State Statutes. Two sets of income verifications were perf ormed for the income guidelines for very lowincome households. One set used hypothetical c lient profiles that were constructed using

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37 information from the minimum income guidelines that are adjusted annu ally, and the maximum house sales price that will be a ssisted in Alachua County. The hypot hetical client profiles were constructed in order to examine if the income guidelines that are deliv ered annually by HUD are feasible for assisting very low-income househol ds in Alachua County. In other words, was HUD realistic when setting these minimum income guidelines for Alachua County, or are these guidelines unattainable for resi dents of Alachua County? These guidelines repres ent how much a family can earn and still be eligible for SHIP a ssistance and still be able to afford a mortgage in this area. The other set of income verifi cations were performed using client profiles complied based on information gathered from Alachua County SHIP program client files. Information about the average income, average household size, and aver age mortgage amount for a fiscal year were complied to create the average client. Once this was completed, the clients information was subjected to the income verification process as described earlier, to determine if the average client could realize and sustain a mortga ge using SHIP downp ayment assistance. The income verification proce ss is really a multi-phase proc ess that involves determining the income, program, and unit eligibility of a clie nt. There are three income categories that are defined as a percentage of the Area Median In come (AMI), and the SHIP administrator must determine if the clients annual gr oss income falls within one of th e income categories (very lowlow-, and moderate-income) this study examines if these income guideli nes are appropriate for allowing very low-income households to actually obtain and sustain a mort gage. The client must be able to answer questio n about his/her financial s ituation and provide supporting documentation.

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38 Once all of this information is gathered, the anticipated annual income is calculated and analyzed to determine how much downpayment assistance the clie nt will receive. Once this phase is completed, the next phase is to determine if the use of the funds falls within the eligible activities as defined by State Statutes. The last phase is to determine if the unit that the client is attempting to purchase meets the guidelines as set forth by State Statutes. To some extent this study examines this phase; this is done to determine if the clie nt can actually afford the house that s/he is attempting to purchase. This is the part of the income veri fication process that was modified by Alachua County. Annual income is divided by twelve to determ ine the monthly income. Monthly income is then multiplied by 33 and 41 percent, to determine the maximum front end and back end ratios. This information in addition to th e amount of the clients monthly debt is used to determine the amount of the clients income that can be de dicated to pay for housing without being costburdened. After the income is verified the amount needed for a down payment is calculated based on the sales price and the amount of the mort gage the client has obta ined. This is done in order to determine the amount of subsidy the client needs in order to afford the mortgage based on his/her income, the amount of the mortgage, the annual interest taxes and insurance, and the monthly payment that the client would need to provide to the loan company. This study examines part of the income verifi cation phase, and unit eligibility phase. This is done by examining the minimum income guidelin e for the very low-income category for the fiscal years examined. For example, for March 2008 the minimum income guideline for Alachua County is $11,900-$19,800 for a one person household, and the maximum home sales price that will be assisted is $204,440. Annual Income is di vided by twelve to determine monthly income. Monthly income is then multiplied by 33 and 41 percent, to determine the maximum front end

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39 and back end ratios. This information, in addition to the amount of the clients monthly debt, is used to determine the amount of the clients in come that can be dedicated to pay for housing without being cost-burdened. The next step in the methodology was to comp ile the client profiles. Information about Alachua County SHIP clients was used to dete rmine the average mortgage loan for a SHIP client, the average household income, and the av erage home sales price. These averages were used to complete an affordability analysis for the average SHIP client. The average client from each fiscal year was then compared to a hypothetical client from each year as well. This hypothetical client profile meets the basic requirements for SHIP Down Payment Assistance for a very-low-income household. This means that the client earns the lowest income for the very low-income bracket, and is purchasing a hous e with the maximum sales price that Alachua County will assist. This was done to determine if a very low-income client could actually afford a house in Alachua County if s/he actually ex hibited these financial characteristics when applying for SHIP downpayment assistance. This hypot hetical client was also compared to actual clients to determine if clients who were assisted were truly able to afford a mortgage with Down Payment Assistance. The average SHIP client for the fiscal year 2003-2004, had an average income of $21,146.77, an average loan amount of $89,432.10, and an average front end ratio of 29.52% (the front end ratio for an affo rdable mortgage that consumes less than 33% of the households pre-tax in order to be considered affordable). These averages are important because they provide a snapshot of clients who apply for and receive SHIP assistance. The average client from several fiscal years will be compared to a hypothetical client from each fiscal year as well. This hypothetical client meets the minimum requireme nts for SHIP assistance. This hypothetical

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40 client is necessary for the data analysis because the hypothetical client profile was constructed to determine if the guidelines that are set forth by the Florida Housing Finance Corporation are feasible in Alachua County. Can a client appl y for SHIP Downpayment Assistance earning the minimum income that will be assisted and still be able to afford a mortgage? Some difficulty existed with the comparison since debt other than the mortgage loan was not included in the calculations. This could potentially skew the re sults since the back end ratio is a part of determining if a client can afford a mortgage. Before the logic of why the fiscal years that were chosen are explai ned, a brief explanation of the Local Housing Assistance Pl an (LHAP) must be provided. The LHAP is the document that details the strategies a local jurisdiction will a dopt in order to address the affordable housing needs of its jurisdiction. This document must be submitted at least twelve months before SHIP funding is given to the jurisd iction and it can be amended twice in a twelve-month period. Additionally, each LHAP must addr ess three fiscal years. Alachua County SHIP administrators decided to revise some of the guideli nes of the 2002-2003/2003-2004/2004-2005 LHAP. The changes from the 2002-2003/2003-2004/2004-2005 L HAP were also adopted in the 20052006/2006-2007/2007-2008 LHAP. The changes are detailed in the following list: SHIP staff were no longer allowed to move remaining funding from strategy to another strategy. The maximum subsidy amount was increased. A prohibition on predatory lending was enacted. Although these changes were enacted during the 2002-2003/2003-2004/2004-2005 LHAP they are applicable for both fiscal years examin ed. As a matter of fact these changes directly influenced the decision to examine the fiscal y ears that were examined. These factors and the fact that client data before 2003 were not available for review, influenced the decision to

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41 examine the fiscal years 2003-2004, and 2005-2006. As a result of these change s all of the fiscal years examined had the same maximum house sale s price (as mentioned earlier this figure is changed periodically by the Florida Housing Finan ce Corporation), and these changes potentially affected the amount of clients who applied fo r SHIP DPA, as well as how much funding was received by each client. Each affordability analysis contained a control (an analysis performed using the information from the guidelines, i.e. using the area median income table and the maximum house value for that year; this information will then be compared to the affordability analysis performed using information from the av erage Alachua County SHIP applicant). This methodology is especially important becau se it explains how the data was gathered and analyzed. The income verification proce ss is important, because Alachua County has modified the income verification process as outlined by HUD to fit the needs of its SHIP program that fulfils the part of the SHIP desi gn to provide flexibility of program design for jurisdictions. Again this is impor tant information to know, if anot her jurisdiction tries to adopt any part of Alachua Countys downpayment assi stance program, the administrators of that program need to understand that this program had modified the income verification to specifically address the needs of its jurisdiction. To sum up, this methodology consisted of an exploratory case study, with a single case design. A single case design was chosen because Alachua County is significantly different from other jurisdictions, and it woul d be difficult to perform a comparison between Alachua County and other jurisdictions. Part of the case study in volved gathering data from Alachua County's LHAPs and client files and then analyzing the da ta to confirm or deny the suspicions of the investigator.

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42 The case study applying the methodology to th e Alachua County Case Study is presented in Chapter 5. Before the Case Study is presen ted, Chapter 4 details the history of the SHIP program, its purpose, and it details the mandatory requirements that must be met when using the funding. Chapter 4 provides a lot of detail about th e SHIP program in general, because one must understand the general ideas of th e SHIP program before one can understand the specific details of Alachua Countys SHIP program.

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43 CHAPTER 4 STATE HOUSING INITIATIVES PARTNERSHIP PROGRAM Introduction Although these changes were enacted during the 2002-2003/2003-2004/2004-2005 LHAP they are app licable for both fiscal years examine d. In fact these changes directly influenced the decision to examine the fiscal years that were ex amined. These factors and the fact that client data before 2003 were not available for review, influenced the decision to examine the fiscal years 2003-2004, and 2005-2006. As a result of these ch anges all of the fiscal years examined had the same maximum house sales price (as mentioned earlier this figure is changed periodically by the Florida Housing Finance Cor poration), and these changes potentially affected the amount of clients who applied for SHIP DPA. As well as the amount of funding received by each client. Each affordability analysis contained a control (an analysis performed using the information from the guidelines, i.e. using the area median income table and the maximum house value for that year; this information will then be compared to the affordability analysis performed using information from the av erage Alachua County SHIP applicant). This methodology is especially important becau se it explains how the data was gathered and analyzed. The income verification proce ss is important, because Alachua County has modified the income verification process as outlined by HUD to fit the needs of its SHIP program that fulfils the part of the SHIP desi gn to provide flexibility of program design for jurisdictions. Again, this is important information to know, if another jurisdiction tries to adopt any part of Alachua Countys downpayment assi stance program, the administrators of that program need to understand that this program ha d modified the income verification to address the specific needs of its jurisdiction.

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44 The case study applying the methodology to th e Alachua County Case Study is presented in Chapter 5. Before the Case Study is presen ted, Chapter 4 details the history of the SHIP program, its purpose, and it details the mandatory requirements that must be met when using the funding. Chapter 4 provides a lot of detail about th e SHIP program in general, because one must understand the general ideas of th e SHIP program before one can understand the specific details of Alachua Countys SHIP program. The William E. Sadowski Affordable Housing Act Signed into law on July 7, 1992, the W illiam E. Sadowski Affordable Housing Act, (92317 Florida Public Laws) was developed based on recommendations from Governor Chiless Ad Hoc Work Group on Affordable Housing, a State Senate Bill, and Dade Countys documentary stamp tax that was used to address affordable housing issues (Florida Law 92-317; Ross, 1992). The documentary stamp tax had been in use by Dade County since 1988, and the Ad Hoc Work Group recommended that it be applied st atewide (Ross, 1992). Dade Countys model for funding affordable housing was the basis fo r the SHIP Program, as it exists today. Many members of the Florida legislature and lobbyists supported modifying Dade Countys initiative and a pplying it to the entire state so that other counties and local municipalities could enjoy the same degree of success as Dade County, and others wanted to expand this novel idea of using the documentary stamp tax (Ross, 1992). In 1991, Governor Chiles convened the Ad Hoc Work Group on Affordable Housing that chaired by Bill Sadowski. The purpose of the Work Group was to examine various housing issues including the housing fina nce programs and regulatory reform that were bitterly dividing many housing proponents (Ross, 1992). The Ad Hoc Work Group eventually submitted a report to the Governor that included a recommendation to raise funds for affordable housing and reduce regulatory costs; these recommendations were included in the Senate bill filed by Senator

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45 Kirkpatrick in September 1991 (Ross, 1992). The William E. Sadowski Affordable Housing Act was passed in 1992 and was a direct response to the Governors goal of affordable housing for every Floridian by 2010. The Sadow ski Act establish[ed]a dedica ted revenue source for these trust funds from a ten cent increase per one hundred dollars on the documentary stamp taxes generated by real estate sales (Ross, 1992). In 1995 an additiona l ten cents was allocated form the states general revenue to supplement the or iginal funding (Affordable Housing Study Team, 2003). All 67 counties and 51 Community Development Block Grant entitlement cities in Florida receive funds from the Affordable Housing Trus t Fund, on an entitlement basis (State Housing Strategy Act, 1992). The documentary tax stam p generates approximately $200 million dollars annually, the minimum allocation is $350,000, and the maximum cannot exceed $9 million (State Housing Strategy Act, 1992). A population based formula is utilized to determine the amount each jurisdiction will receive. SHIP focuses on creating homeownership oppor tunities by allowing local governments to tailor their funding in ways that address the uniq ue affordable housing issues of its jurisdiction. There are some basic guidelines that must be followed but for the most part localities have flexibility in deciding how to use the SHIP funding. Th ese basic guidelines are: Seventy-five percent of the funding provide d must serve new construction activities Sixty-five percent of th e funding must be used for homeownership activities Thirty percent of the funding mu st serve low-income households And another 30% must serve very low-income households. (State Housing Initiatives Partnership Act, 1992) Each community must develop and implemen t a Local Housing Assistance Plan (LHAP) that details how affordable housing dollars are to be spent on locally designed activitiesannual

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46 funding is based on population, and each jurisdicti on is required to develop its plan through a local partnership (State Hous ing Strategy Act, 1992). Once the minimum requirements are met, localities have the freedom to u tilize the SHIP funds as necessary to provide and/or preserve affordable housing. Additionally the providers of the SHIP program are allowed to decide (to a certain extent) if moderate-inc ome households will be assisted. State Housing Initiatives Partnership Pr ogram Requirements a nd Administrative Procedures The Sadowski Act is the fra mework that prov ides funding to address affordable housing issues. Seventy percent of th e funds garnered by the Sadowsk i Act goes towards funding the SHIP program, which is a dedicated funding source, to provide affordable housing in the state of Florida. 4-1 details the amount of funding generated by the Sadow ski Act each year starting in 1992, and ending with the projected funds for 2006-2009. Florida State St atutes mandate how municipalities can receive SHIP funding and how that funding shall be used. The amount of funding that is generated each year is provided to illustrate the amount of funding that is potentially used for affordable housing needs. The following is an in-dep th description of the program procedures and program guidelines th at are set forth by Florida State Statutes. The footnote in Table 4-1 refers to the legisla tive cap that was signed into law at the time this table was published (2006), but it was not sc heduled to take effect until July 1, 2007. The Sadwoski Workforce Coalition opposed the cap along with other affordable housing proponents. Asher, et al. (2007) sent an open letter to the State Legislator s informing them of the Coalitions opposition and urging the Legislators to repeal the cap. The letter stated that capping the SHIP funds was an irresponsible and ill thought out le gislative move, since the SHIP program is the only program that is fully funded under the Sadows ki Act, and even with the amount of revenue

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47 that was generated each year (see Table 4-1), there was still a gap between the amount of households served and those that went unserved (Asher et, al., 2007). General Program Guidelines Although the SHIP program was designed to provid e localities with grea ter flexibility than federal programs, there are some program guidelines and statutory requireme nts that must be met before the SHIP funding can be provided to the locality. Each local government must draft and approve a Local Housing Assistance Plan (LHAP ). The LHAP allows the Florida Housing Finance Corporation, the entity that regulates an d funds the SHIP program, the chance to ensure that the strategies proposed comply with the statutory requirements and purpose of the SHIP program. The following list from the State Hous ing Strategy Act (1992) outlines the process in more detail. The LHAP outlines the local affordable hous ing needs in the local ity, in addition to detailing how the locality will utilize SHIP funding to address these issues. The LHAP must include the maximum sales price and/or house value that will be assisted. The maximum sales price cannot exceed 90% of the area median house price, which is determined annually by Department of Housing and Urban Development (HUD). The LHAP must contain the maximum subsidy that will be provided to any recipient. The LHAP must detail the income limits for th e area that will be assisted for very-low, low-, and moderate-income levels. Household income levels are determined by HUD each fiscal year, are adjusted for household size, and are expressed as a ratio of area median income (AMI) for a specified region. A copy of the LHAP must be provided to th e Florida Housing Finance Corporation within 12 months of requesting SHIP assistance. A receiving municipality must establish a loca l housing assistance trust fund to receive the SHIP funding. The LHAP must be adopted by the local munici pality through a resolution that details the local housing partnerships and initiatives.

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48 The LHAP must be reviewed at least once ev ery three years, and the document can cover up to three fiscal years. The LHAP can also be reviewed and amended at any time as long as the revised version is file d with the Florida Housing Fina nce Corporation within three months of revision. An administrative team that implements the LHAP and its initiatives must be designated. A notice of funding availability of housing trust funds must be circulated in a newspaper of general circulation and in ethni c and/or minority neighborhoods. The county or eligible municipali ty must not discriminate in the distribution of funding to clients. Program participants are required to commit c ontractually to the affordable housing criteria provided by the LHAP. If the contractual obligat ions are not met, a request to return the funds can be submitted to the local program participants. The area median income is defined as % of the area income. Very low-income is defined as not more than 50% of median annual adjusted gross income. Low-income is defined as one or more natural person or a family, the total annual adjusted gross household income of that does not exceed 80% of the median annual adjusted gross income for households within the state or 80% of the median annual adjusted gross income for households with in the metropolitan stat istical area [MSA]. Moderate-income is defined as the total annu al adjusted gross household income that is less than 120% of the median annual adjusted gross income for househol ds within the state or MSA whatever is greater. (State Housi ng Initiatives Partners hip Program Act, 1992) Statutory Requirements These requirem ents must be met by the particip ating jurisdiction, or the SHIP funds must be returned. These requirements as determined by the State Housing Strategy Act (1992) include: At least 65% of funds mu st be reserved for homeownership activities. At least 75% of funds must be reserved for construction, reha bilitation or emergency repair activities. All units assisted with program funds must be occupi ed by persons not exceeding moderate-income. Income of the applicants must be verified using the HUD Section 8 income verification methods. At least 30% of units assi sted must be occupied by very-low-income persons. Another 30% of units assisted must be occupied by low-income households.

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49 The term of a loan may not exceed 30 years (u nless it is a deferred payment loan); the loan may exceed 30 years as long as it continues to provide housing for eligible persons. All eligible rental housing assisted with SHIP funds must remain affordable for at least 15 years. If the amount of assistance exceeds $3,000 all rental units assisted must be monitored for unit eligibility for 15 years. If the owner decides that he/she wants to sell the property during this period, a right of first refusal must be provided to not-for-profit organizations to purchase the property The assisted housing must remain occupied by the owner for a number of years determined by the participating jurisdiction. If the house is vacated for any reason the owner will have to repay the assistance to th e participating jurisdiction. A qualification system for appl icants must be designed a nd implemented by resolution. Each participating jurisdiction must submit an annual report to the Florida Housing Finance Corporation An Affordable Housing Advisory Committee mu st be convened at least once every 3 years to monitor the performance of the SHIP progr am. (Ross, 1992; State Housing Strategy Act, 1992) The SHIP funding can be used for emergency repairs, new construc tion, rehabilitation of structures, downpayment and closing cost assist ance, impact fee assistance, construction, gap financing, mortgage buy downs, acquisition of property for affordable housing, matching funding for Federal housing grants, and homeowner ship counseling (State Housing Initiatives Partnership Act, 1992). The funding can be used for other uses as long as they are deemed eligible by the Florida Housing Finance Corporation (FHFC) when the jurisdiction submits its LHAP to the FHFC. Although there is great latitude in how a SHIP program can be designed, this flexibility cannot cloud the fact that the pr ogram must serve the needs of th e community and there needs to be full disclosure surrounding the program. The desi gn of the program must be fully explained in the LHAP and the LHAP must be adopted by the lo cal jurisdiction before it will be reviewed by the FHFC. By mandating that the LHAP be adopte d by the local jurisdicti on, it is ensured that residents and the affordable housing administrato rs for that jurisdiction are in harmony when it

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50 comes to addressing its affordable housing need s. Additionally, a notice of available funding must be provided where lower income and minority residents will see it. The time was taken out to describe in gr eat detail the SHIP pr ogram because it is imperative that the program be understood in it s entirety in order to understand the Case Study. This is because the Case Study provides specific details of Alachua Countys SHIP program, and in order to understand that program one must understand the entire SHIP program. The affordable housing needs of Alachua County are exp licitly detailed in th e next chapter because the SHIP program is specifically designed to allow jurisdictions the flexibility to custom tailor their programs to the needs of that particular ju risdiction, in hopes that this custom tailoring will specifically address those needs. The designers of the SHIP pr ogram did not want to impose a cookie-cutter, one-size-fits-all type of progr am on the jurisdictions because what works in one jurisdiction might not necessarily work in another. Therefore the general program design was outlined in this chapter to provide the read er with an understanding of the basic framework of the program, and the Case Study provides th e specific details of Alachua Countys SHIP program.

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51 Table 4-1. Funding history of the Sadowski Act Dollar figures in millions Housing trust fund monies Fiscal year Doc Stamp tax distributions to housing trust funds Appropriated Diverted Unappropiated 1992-93 40.839.20.0 1.6 1993-94 53.2 51.6 0.0 1.6 1994-95 48.6 50.8 0.0 -2.2 1995-96 112.4 112.9 0.0 -0.5 1996-97 120.2 125.9 0.0 -5.7 1997-98 155.6 133.3 0.0 22.3 1998-99 175.9 143.5 0.0 32.4 1999-00 179.4 157.2 0.0 22.2 2000-01 194.0 220.6 0.0 -26.6 2001-02 232.0 196.8 0.0 35.2 2002-03 297.8 249.4 0.0 48.4 2003-04 392.0 193.0 126.3 72.7 2004-05 478.8 193.0 220.8 65.0 2005-06 594.7 442.9 2.9 148.9 Cum. Totals 3,075.42,310.1 350.0 415.3 2006-07 520.8 2007-08 243.0 2008-09 244.4 The dollar figures, in the column labeled Housi ng Trust Funds Monies: Appropriated includes the amounts specified in the General Appropria tions Act as well as any relevant budget amendments Effective July 1, 2007, the affordable housing tr ust funds will have their distributions capped Source: Florida Legislative Committee on In tergovernmental Relations March 9, 2006

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52 CHAPTER 5 ALACHUA COUNTY CASE STUDY Introduction The last cha pter detailed th e general program guidelines of the SHIP program, and this chapter will provide the specifics of Alachua Countys SHIP program. This chapter will also detail the affordable housing needs of Alac hua County, why Alachua County was chosen, and the housing strategies that Alac hua County has implemented to a ddress affordable housing issues for its jurisdiction. All 67 counties and 51 Community Development Block Grant entitlement cities in Florida receive funds from the SHIP program, on an entitlement basis (State Housing Strategy Act, 1992). Both Alachua County and the City of Gainesville receive SHIP funding. Alachua Countys Local Housing Assistance Plan (LHAP) cont ains a purchase clause that states that an applicant who receives SHIP Downpayment As sistance (DPA) can purchase a house anywhere within the County except for with in Gainesvilles city limits. Ga inesvilles SHIP program also has a purchase clause that mandates that a client can only purchase a home within the Gainesville city limits. These purchase clauses exist to thwa rt competition between the SHIP programs. This creates a situation where clients have to choos e which program they want to apply for funding. Normally this would not be a problem; however, a majority of the affordable housing options for the County is located in the county seat, Gaines ville (Alachua County Af fordable Housing Team, 2003). This potentially creates a problem for so me residents of the County who would like to purchase a house, but most of the affordable housing resources are located within the City's limits.

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53 In addition to this issue, th ere are some other factors whic h make Alachua County different from other jurisdictions and warra nt an in depth investigation of its SHIP program versus other jurisdictions. These factors include: The University of Florida, which is a major university of the southeast, is located in the county seat A dual renter market exists due to the large number of students that attend the University of Florida and need housing. The County has a higher poverty rate than the state, since a majority of the jobs available in the County are in the lower-wage paying industry, service, and government sector. Due to the large amount of lower wage paying jobs, the incomes of the lower income households have not kept pace with the cost of housing in the region. According to the Alachua County Affordable Housing Team (2003) the most affordable type of housing available to lower income households are mobile homes, yet clients are units are barred from purchasing mobile homes with SHIP DPA funds. Alachua County Demographics As of April 4, 2001 The Bureau of Business and Econom ic Research ranked Alachua County Floridas 20th most populated county with a population of 222,935; the projected population for 2010 is 254,200 (BEBR, 2001). In 2006, Alachua County had a population of 240,756 people spread across 9 jurisdictions, approximately 90,000 or so were located in the City of Gainesville (American Community Survey, 2006). Alachua County was ranked 42nd out of the 67 counties for affordability of housing in 2000 (BEBR, 2000). Information from the American Community Survey was utilized as supp lemental information, since information from the 2000 Census is eight years old. The information from the American Community Survey is utilized since it delivers timely estimates and projections between census years. Alachua County had 94,208 households as of 2005, and a homeownership rate of 54.9 percent, when compared to the statewide rate 70.1 percent, is significan tly lower (Census, 2000).

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54 Table 5-1 shows a comparison of Alachua County to Florida for 2000. The information from the table comes from 2000 since that was the last decennial census. The City of Gainesville currently possesses a du al renter market that skews the affordable housing results for the entire county. Approximately 90,000 of Alachua Countys residents currently live in the county seat, with the remai nder of the residents spre ad across the other eight cities and rural areas in Alachua County (Census, 2000). This is significant for several reasons: college students compete with lower-income households for affordable rental units in Gainesville, and most of the affordable housing units for the County are located in Gainesville (Alachua County Affordable Housing Study, 2003) Although the Census counts a significant amount of affordable renter housi ng as being available in Gainesvi lle, a majority of those units are targeted specifically for co llege students (Alachua County Affordable Housing Team, 2003). This has caused competition between the college students and residents of the County for the available affordable rental units. Information about rental units is included here because as stated earlier, a community needs a range of housing units (including affordable rental units) to have a healthy affordable housing climate, and the data here shows that Alachua County does not have a healthy, balanced, affordable housing climate (Walker, 2004). Studies such as those delivered by Alac hua County Affordable Housing Study, 2003; National Low Income Housing Coalition have docu mented Floridas need for affordable housing for those employed in government, retail, and service jobs, where wages do not increase as quickly as housing costs increase. Alachua County reported an estimated 124,300 jobs as of December 2002 with approximately 24,000 of these jobs located at the Univer sity of Florida and lower-wage paying jobs.

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55 Alachua Countys Affordable Housing Needs Alachua County is presented as a case st udy example of whe ther very low-income households can sustain homeownershi p with SHIP assistance. It is believed that these households simply cannot afford homeownership even with SHIP assistance, due to extremely low-income levels, and a lack of housing that correlates with income levels in the County. Alachua County is very invested in the quest to provide affordable housing for its residents. It has several programs and several policy initiatives that are aimed at specifically addr essing affordable housing needs. The Housing Element of the Comprehensive Plan 2001-2020 for Alachua County, revised May 2, 2005 is dedicated to [providing] for the de velopment of affordable hosing dispersed throughout the County, through policies that focus on the following areas: la nd use and facilities, methods to promote the dispersion of affordab le housing, and manufactured housing (p. 1). The Housing Element describes in great detail all of the initiatives that address affordable housing in Alachua County. These include but are not limited to: a study for affordable housing (includes a detailed countywide needs assessment), a hous ing production cost analysis, an economic feasibility analysis, an inventory of substanda rd housing, an assessment of existing affordable housing developments, and an identification of sp ecific areas in the county where the market and incentive programs are not responding to the ar eas needs. The County has also adopted an affordable housing ordinance that lays out ince ntives for following policies and options that increase affordable housing in the area. In a ddition to all of the af orementioned policies and programs, the County received a $750,000 Community Development Block Grant for 2007, SHIP funding that allowed the c ounty to assist over 80 very lowand low-income families in 2007. The County also provides an Impact Fee Assi stance Program that assists income-eligible homebuyers with the cost of impact fees in th e form of a zero percent interest, soft second mortgage for five years (Alachua County Gr owth Management, 2007). The County has also

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56 created partnerships with such entities as the Alachua County Housing Authority, the Department of Housing and Urban Development, the National Coalition for the Homeless, and the Neighborhood Housing Development Corporation to provide affordable housing for the very lowand lowincome households of Alachua Count y. In spite of all of this, there is still a gap between the amount of available affordable hous ing and the residents who are in need of affordable housing. The Affordable Housing Study of Alachua County of 2003 focuses specifically on the region, and was commissioned by the County to ex amine these needs in order to provide a vehicle that would allow County Commissioners to deliver effective strate gies that will attempt to rectify these affordable housing issues. Th e Housing Study was relied upon extensively to provide in depth information for this case st udy on the affordable housing needs of the County. Data from other sources such as the Shimberg Center for Affordable Housing (2004), Out of Reach Reports (1999-2006), Census (2000), and reports from the Florida Housing Finance Corporation were utilized as well as other sources. One caveat mu st be presented, reports from the Shimberg Center for Affordable Housing (Shimberg Center, 2004), and the Housing Study omitted data that included college students (who attend the University of Florida and Santa Fe Community College), since these subsets of the population are very specialized and are not considered in need of affordable housing the same way that year-round residents of Alachua County are. The rationale given is that college students are no toriously transient, and are temporarily in need of affordable housing due to their college needs (Alachua County Affordable Housing Team, 2003). According to the Housing Study there is a great need for affordable housing for those employed in governme nt, retail, and service jobs, where wages do not increase as quickly as housing costs increase.

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57 According to the Alachua County Affordab le Housing Study (Housing Study) that was prepared by the Alachua County Board of County Commissioners per the requirements of Alachua Countys Comprehensive Plan, the need fo r affordable renter-occupied units is greater than the need for affordable owner-occupied un its when measured in absolute numbers on a comparative percentage basis (Alachua County Affordable Housing Team, 2003, p.4). Key findings of the Alachua County Affo rdable Housing Study are as follows: Approximately one-fourth of all Alachua County households are cost-burdened About half of all renter households and about 20% of owner-occupied households are costburdened (Housing Study, 2003) Without deep subsidies very-low-income households cannot afford homeownership Moderate-income households have a great abil ity to afford homeownership with only a moderate amount of assistance Between 1990 and 2000 the number of households in Alachua County increased from 71,258 to 87,509 Alachua County has a higher percentage of households in the lower-income ranges compared to the rest of the State. The amount of incomes in the middle and upper ranges is below the state average and the Housing Study po stulates that the above average amount of lower-income households could potentially result from the large amount of college students in the region Approximately 36% of Alachua Countys housing is multi-family housing. (Alachua County Affordable Housing Study Team, 2003) According to the Shimberg Center for Affordable Housing (2004), 20,126 households in the County were cost-burdened and 10,624 households were severely cost-burdened. Table 5-2 illustrates the households that are cost-burdened by tenure, while Table 5-3 illustrates the number of households that are cost-burdened by income leve l. Out of the total households that were costburdened in 2005: 6,349 were owner-occupied households, while 4,275 were severely costburdened; and 7,593 households were renter occupied households and 12,533 renter households were severely burdened (Shimberg Center for Affordable Housing, 2004). The number of cost-

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58 burdened renters is interesting to note because th ese are the households that could potentially request SHIP DPA to purchase a home. This is important because if these households are costburdened renters it is important to wonder whether these households will become cost-burdened homeowners if assisted with SHIP DPA funds. Table 5-3 illustr ates by tenure the number of households that experience cost-, and severe cost-burden by income level in Alachua County. These figures are significant sin ce approximately one third of all of the residents in the County (excluding college students) are c onsidered cost-burdened. Hypotheti cally speaking if all of these households are attempting to obtai n homeownership, they are going most likely to become costand severely cost-burdened homeowners creatin g more problems. As Immergluck & Smith (2006) illustrated, foreclosures have negative economic impacts on neighborhoods; and if these cost-burdened households become homeowners, th ey will most likely become cost-burdened homeowners that would potentially face forecl osure, and potentially cause negative economic effects on neighborhoods within the County. One of the key findings of the Affordable H ousing Study (2003) that was repeated several times throughout the study is that the need for affordable renter -occupied units is greater than the need for affordable owner-occupied units (p .5). This is significant because a major portion of Alachua Countys affordable housing stra tegies and policies focus on providing and encouraging affordable homeownership opportunitie s for its cost-burdened residents instead of providing affordable rental housi ng to address this documented need. This could potentially stem from the mandates that have been passed down from the Federal and State governments to increase homeownership among lower-income hous eholds. Another extremely important finding of the Housing Study (2003) is th at without deep subsidies ve ry-low-income households cannot afford homeownership (p.5).

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59 In addition to examining the affordable housing needs of Alachua County, the Housing Study also provided recommendations intended to guide and inform affordable housing strategies. The recommendations for the SHIP progr am are included here, since they are the most applicable to this study. These recommendati ons provided by the Alachua County Housing Study Team, include: not allocating more f unding to moderate-income households and supporting more multi-family rental developmen ts. Although this report was published in 2003, it is the most comprehensive examination of the affordable housing needs of Alachua County. Additionally, this report provide s a good overview of the major issues of Alachua Countys SHIP program, and delivers recommendations on how to improve the program. Alachua Countys SHIP Program The purpose of Alachua Countys SHIP program is to m eet the housing needs of very low-, low-, and moderate-income households up to 100% of the area median income to expand production of and preserve affordable housi ng [in the County] (Alachua County LHAP). Alachua County receives SHIP funds automatically as stated in the Fl orida State Statutes. A client cannot apply for SHIP assistance to pur chase and/or renovate mobile homes; is an important point and it cannot be stressed enough since mobile homes can potentially be an extremely affordable source of affordable housing in Alachua County and clients are automatically prohibited from purchasing th em with SHIP downpayment assistance funds (Alachua County Affordable Housing Team, 2003). Approved housing strategies include but ar e not limited to: emergency repairs, new construction, rehabilitation, down payment and clos ing cost assistance, im pact fee assistance, construction, gap financing, mortgage buy downs, acquisition of property for affordable housing, matching funds for federal housing grants and programs, and homeownership counseling (as a rule of thumb if the use is in cluded in the LHAP and approved by the Corporation it becomes an

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60 eligible use). These eligible home repairs are detailed here and can be found directly in the LHAP for 2005-2006/2006-2007/2007-2008. Eligible Home Repairs Repairs that are needed to bring homes up to Florida Building Code S.S. 553.70-553.898 F. S. S. Roof repair or replacem ent HVAC repair or replacement Energy conservation techniques for lower-income households Handicap accessibility repairs And any other repairs that are recommended by a SHIP certified inspector. (LHAP 20062008) There are several eligibility cr iteria that households must meet before receiving SHIP assistance. The list details the cr iteria that must be met as determined by the Alachua County LHAP 2005-2006/2006-2007/2007-2008: The client must be a first time homebuyer.4 The applicant must meet the income guidelines adjusted for family size. There must be no foreclosures on the clients record. The client must have a primary mortgage from a mortgage broker or bank, the mortgage loan must not be from a predatory lender.5 The sales price of the home must not exceed the maximum set forth by the Florida Housing Finance Corporation. 4 Displaced homemakers are allo wed to purchase a home as an exception. A displaced homemaker is a person who previously owned a home with his/her spouse (LHAP 2006-2008). 5 Alachua County offers a lender guideline workshop that educates potential lenders about the affordability and other guidelines which SHIP r ecipients must complete before receiving SHIP assistance. This program is effective because it reduces the amount of time th at could potentially be lost due to lender misunderstanding about the SHIP program. This workshop also fulfils the partnership mandate of Florida State Statutes 420 (1992).

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61 The household income must not exceed the income limits adopted by the County (see Table 5-4) (Alachua County Local Housing Assistance Plan 2005-2006/2006-2007/20072008).6 Income Verification The incom e verification proce ss is really a multi-phase proc ess that involves determining the income, program, and unit eligibility of a clie nt. There are three income categories that are defined as a percentage of the Area Median In come (AMI), and the SHIP administrator must determine if the clients annual gr oss income falls within one of the income categories (very low, low-, and moderate-income). This study examines if these income guidelines are appropriate for allowing very lowincome households to actually obtain and sustain a mortgage). The client must be able to answer the following questions and provide supporting information. How many persons live in the household? What is the total amount of income that each household member earns annually? A list of all sources of annual income must be provided. Can you obtain a primary mortgage loan? Do es the mortgage loan fall within the maximum house prices for that fiscal year? (4350.3 REV-1) Once all of this information is gathered, the anticipated annual income is calculated and analyzed to determine how much downpayment assistance the client will receive. And then this information is used to determine if the unit that the client is attempting to purchase meets the guidelines as set forth by State Statutes. This is done by multiplying the monthly mortgage amount by 28% (if the cost of housing exceeds 28%then this household is considered to be costburdened). This study examines part of the income verification phase, and unit eligibility phase. This is done by taking the minimum income guideline for the very low-income category, for 6 Although the income limits are set by the Department of Housing and Urban Development; Alachua County has stated in its LHAP that it will use the income limits set forth by the Florida Housing Finance Corporation

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62 example, for March 2008 the minimum inco me guideline for Alachua County is $11,900$19,800 for a one-person household, and the maximum ho me sales price that will be assisted is $204,440. Annual income is divided by twelve to de termine monthly income. Monthly income is then multiplied by 33 and 41 percent, to determine the maximum front end and back end ratios. This information in addition to th e amount of the clients monthly debt is used to determine the amount of the clients income that can be de dicated to pay for housing without being costburdened. After the income is verified the amount needed for a down payment is calculated based on the sales price and the amount of the mort gage the client has obta ined. This is done in order to determine the amount of subsidy the client needs in order to afford the mortgage based on his/her income, the amount of the mortgage, the annual interest taxes and insurance, and the monthly payment that the client would need to provide to the loan company Affordable Housing Strategies of the Alachua County SHIP Program The Alachua County SHIP program has five affo rdable housing strategies that com prise its SHIP program. These strategies include: Down Payment Assistance with Rehabilitation, Mortgage Foreclosure Intervention, Single-Family Housing Development, Multi-Family Housing Production, and Special Needs Housing Pr oduction. All of these st rategies are outlined in great detail in Alachua County s LHAP. Each strategy is slightly different from the other but all are used to contribute to a ffordable housing in Alachua Count y in one way or another. The strategies will be explained in the following paragraphs. Down Payment Assistance with Rehabilitation Strategy The Down Paym ent Assistance with Rehabilita tion strategy (DPA) is administered by the Alachua County Growth Management Department. This is significant to mention since other local governments and not-for-profit housing prov iders leverage SHIP funds with other funds to provide affordable housing in the County (LHAP 2005-2006/2006-2007/2007-2008).

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63 Essentially these other governments and housi ng providers receive SHIP funding from the County to run their own mini-SHIP programs. This strategy is primarily used to address the homeownership statutory requirement. Alachua County has ad opted the statutory requirements and modified them to make them more appl icable to Alachua Countys affordable housing climate. The Down Payment Assistance with Re hab program addresses housing affordability by attempting to service the clients financial gap for affording a mortgage. The list details the requirements that are specific to Alachua Count ys SHIP program, that are specific to the Countys program and differs from the general SHIP program. Available to all first time homebuyers The household must be able to attain a firs t mortgage from an approved mortgage lender Homeowners who have obtained sub-prim e mortgages or mort gages from predatory lenders will not receive assistance The SHIP funding will be provided as a sec ond, deferred payment, no interest 30 year loan. The family must retain the home as the primary residence for 30 years. If the family does not retain the home as the primar y residence then the SHIP mort gage will have to be repaid in full If the primary mortgagee dies before the 30 ye ars has transpired the SHIP mortgage will be forgiven The purchaser must attend 2 homebuyers education courses, preferably prior to applying for a mortgage loan. The client cannot have any prior defaults on his/her record. This program is primarily available to very -low and low-income households, if there is additional funding left over it will be offered to moderate-income households A SHIP certified inspector must inspect the hous e in addition to an inspector hired by the client. The client must provide two percent of the mortgage loan amount for a down payment. The maximum assistance is $25,000 as of 2006

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64 There is no guarantee that a client will rece ive the entire maximum since the maximum amount allotted to each client depends on what income bracket the client falls in, whether the structure needs rehabilitation and the amount of closing costs and down payment assistance that a client need s (See Table 5-5).(Local Housi ng Assistance Plan 2006-2008) Alachua County prepared a flowchart to di splay how a client can obtain downpayment assistance from the County. This flowchart starts at the pre-approval stag e and details the SHIP process step by step. This flowchart is provi ded here as a way to illustrate the SHIP Downpayment Process from the notice of funding av ailability to the mortgage closing (Figure 5-1). In addition to this flowchart, another flow chart that displays how the County receives SHIP funding from the state and then al locates this funding into the various housing strategies that are outlined in the LHAP is provided as Figure 5-2. Table 5-4 is provided in order to illustrate the maximum subsidy that will be provided to any client. The maximum subsidy is mandated by St ate Statutes to be explicitly stated in the LHAP as determined annually by the Florid a Housing Finance Corporation. Although the maximum that could potentially be provided to any one client is $25,000 for 2006, there are certain conditions that must be met, and there is the chance that a client would not receive the maximum amount depending on that clients situation. The maximum Downpayment Assistance (DPA) am ount that will be given to any client depends on what income bracket th at client is in, if the struct ure needs rehabilitation work, and finally how much closing cost and down paymen t assistance the client needs. Although two fiscal years are examined (2003-2004, and 2005-2006) only one table is pr ovided. This one table is sufficient because the maximum subsidy assistance was raised from $20,000 to $25,000 and SHIP staff was no long permitted to switch remain ing funding from one strategy to another in 2003. And these measures were still applicable fo r the duration of the fiscal years examined.

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65 Single-Family Housing Development Strategy This single-f amily housing development strategy (SFHD) is available to not-for-profit housing providers, for profit housing providers, sma ller localities, and other entities that have expressed an interest in providing affordable housing to lower income households in Alachua County. The SFHD strategy falls directly under the State Statute Requirement that commands local governments to establish partnerships wi th other affordable housing providers in the community. Essentially the SFHD strategy allows housing providers to run their own miniSHIP program if the funding will be used in accordance with the eligible uses set forth by State Statutes. In order to receive the funding, potential sponsors must submit an application that includes a narrative detailing how they plan on us ing the funding once Alachua County submits a notice of funding availability. This strategy addresses the 75%new construction activity requirement as well. The SHFHD strategy serves the county by actually providing affordable housing for very low-, low-, and moderate-income households. This strategy has two major ta rgets: new construction and home repairs that are detailed below. New Construction target guidelines: Assist in new construction and development of single family housing for very lowand low-income households. Since SHIP funding is used to construct new housing, the affordability and eligibility guidelines still appl y to the houses (that must remain available to very lowand low-income households fo r 30 years). This means that SHIP sponsors must keep detailed records and submit to monitoring for the 30 year period Funding can be used for the acquisition of land for new construction, acquisition of land for infrastructure, and new ho me construction. For example, Alachua Habitat for Humanity is a SHIP sponsor under the single family housing developmen t strategy and uses the funds to acquire land that drastically helps defray the costs of housing for very low-income households. (Alachua County L HAP 2005-2006/2006-2007/2007-2008, p. 8-23) Home Repair target guidelines: Emergency repair

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66 Rehabilitation of substandard housing Demolition and reconstruction of substandard homes The homeowner assisted must have incomes th at fall in the very lowor low-income brackets. The funding can be used as matching funds by the County and other municipalities for funding from state/federal grant or loan pr ograms. For example, the City of Alachua receives SHIP funding through the single family housing development strategy and leverages the funding with Community Develo pment Block Grant funds to demolish and rebuild substandard structures for very lo w-and low-income households (Alachua County LHAP Alachua County LHAP 2005-2006/2006-2007/2007-2008, p.8-23). Multi-Family Housing Development Strategy The m ulti-family housing development strate gy (MFHD) provides funding to for-profit and not-for-profit affordable housing developers for the construction, or rehabilitation of affordable rental units (Alachua County LHAP 2005-2006/2006-2007/2007-2008). The applicants can also leverage the SHIP funding with Low Income Housing Tax Credits, and the State Apartment Incentive Loan Program. The rental units must be affordable to very lowand low-income renters. If the loan provided to the developer exceeds $3,000, annual monitoring of the rental units must be performed to ensure the a ffordability of the units over the life of the loan (15 years) (Alachua Count y LHAP 2005-2006/2006-2007/2007-2008). This can quickly become cumbersome as the number of tenants increases. Additionally, if the owner wants to sell the rental property before the expirati on of the loan, the owner needs to give a first right of refusal to any eligible non-profit organization to purchase the property at curr ent market values, to ensure that the rental units will remain occupi ed by eligible renters (LHAP 2005-2006/2006-2007/20072008). As a result of these requirements, this st rategy is rarely utilized by developers. Although the State Apartment Incentive Loan is available for multi-family rental production, the developer has to secure a minimum loan amount that excludes smaller mom and pop developers.

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67 Special Needs Housing Development Strategy The special needs housing developm ent (S NHD) strategy is served by both Alachua County and the City of Gainesville through an interlocal agreement. It provides funding to notfor-profit agencies for the construction or rehabi litation of temporary tr ansitional or long term rental housing (Alachua County LHAP 2005-2006/2006-2007/2007-2008). This funding is only for very low-income families. Mortgage Foreclosure Intervention Strategy The m ortgage foreclosure intervention strategy is primarily used to address the requirement that 30% of all SHIP funding must address very lowincome households, and another 30% of SHIP funding must address lo w-income households. The mortgage foreclosure intervention strategy provides funding to SHIP clients who are facing fo reclosure circumstances beyond their control. The list prov ided here provides more information about the mortgage foreclosure intervention program as de tailed in the Alachua County LHAP. The client must have purchased a home using SHIP funds The client must have defaulted on the mortgage loan for 2 months and has no other way of bringing the account current The client must be able to resume full mortgage payments to the primary lender after receiving the assistance Each household must be certified to meet the income guidelines for Alachua County for any year in order to receive SHIP funding. A mortgage is co nsidered affordable if the mortgage payments do not exceed 30% of that amount that represents the percentage of the median annual gross income for house holds[but if] housing for that a household devotes more than 30% of its income shall be deemed affordable if the first institutional mortgage lender is satisfied [that] the hous ehold can afford the mortgage payment. (Alachua County LHAP 20052006/2006-2007/2007-2008, p. 8-23) Table 5-5 illustrates the income levels that will receive assistance from Alachua County for the 2006-2008 LHAP. Part of the in come verification process is de termining the income level of the client.

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68 This study might be useful to other SHIP administrators because it might potentially provide an outline for several things. Namely, how to perform an economic feasibility study, how to setup a SHIP program (for jurisdictions that are new to receiving SHIP funding), and lastly it could also serve as a warning for what to avoid when setting up a SHIP program. Or this study could eventually provide en couragement to Florida to change the State Statutes that mandate the SHIP program.

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69 Table 5-1. Comparison of the state of Florida to Alachua County, Florida Florida Alachua County Population 15,982,378 217,955 Total housing units 8,533,419 106,752 Homeownership rate 70.1% 54.9% Owner occupied households 4,441,799 48,085 Renter occupied households 1,896,130 39,424 Amount of vacant units 965,018 7,604 Total mobile homes 495,146 3,368 Median value of owner occupied Housing $105,500 $97,300 Median household income $45,625 $31,426 Poverty rate 12.5% 22.8% Source: Census 2000 Table 5-2. Cost-burdened Households repres ented by tenure in Alachua County during 2005 Renter Owner-occupied Total Cost-burdened households 7,593 6,349 13,942 Severely cost-burdened households 12,533 4,275 16,808 20,126 10,624 30,750 Source: Shimberg Center for Affordable Housing, 2004 Table 5-3. Housing needs assessment-population and household projection for Alachua County, 2005 Amount of Income Paid for Housing Household income as percentage of area median income Little to no costburden% Cost-burden% Severely costburdened Extremely low-income 4,548 1,639 11,553 Very low-income 3,307 4,493 3,772 Low-income 10,415 4,439 1,063 Moderate-income 1,063 3,371 420 Total 63,458 13,942 16,808 Shimberg Center for Housing Affordability, 2004

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70 Figure 5-1. Alachua County down payment assist ance strategy flowchart. Source: Alachua County Growth Management Department, 2006

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71 Figure 5-2. SHIP Process from documentary ta x stamp to funding allocation. Source: Ross, 1992, Alachua County LHAP 2005-2006/2006-2007/2007-2008

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72 Table 5-4. Alachua County SHIP down payment assistance income guidelines Household Size Very Low-income (30 to 50% of AMI) Low-income (51 to 80% of AMI) Moderate-income (81 to 100% AMI) 1 *$11,450-$19,100$19,100-$30,500$30,501-$38,125 2 *$13,100-$21,800$21,801-$34,900$34,901-$43,625 3 *14,700-$24,550$24,551-$39,250$39,251-$49,601 4 *$16,350-$27,750$27,751-$43,6500$43,601-$54,500 5 *$16,650-$29,450$29,451-$47,100$47,101-$58,875 6 $18,950-$31,600$31,601-$50,600$50,601-$63,250 7 $20,250-$33,800$33,801-$54,050$54,051-$67,563 8 or more $21,600-$35,950$35,591-$57,550$57,551-$71,875 As a guideline, the minimum income set forth by Alachua Habitat for Humanity is used as the minimum income threshold for the SHIP Down Payment Assistance program Source New Alachua County SHIP Down Payment Assistance Program Guidelines (May 2006) Table 5-5. Maximum assistance guidelines May 2006 Very low-income Low-income Moderate-income Existing homes needing rehabilitation $25,000 (combination of down payment, closing costs and rehabilitation) $20,000 (combination of down payment, closing costs and rehabilitation) $5,000 (combination of down payment, closing costs and rehabilitation) Existing homes needing no rehabilitation $15,000 (down payment and closing costs) $10,000 (down payment and closing costs) $5,000 (down payment and closing costs) New homes (less than 1 year old) $20,000 (down payment and closing costs) $15,000 (down payment and closing costs) $5,000 (down payment and closing costs) Source: New Alachua County SHIP Down Paymen t Assistance Program Guidelines (May 2006)

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73 CHAPTER 6 DATA ANALYSIS Introduction The data that was analyzed for this study wa s collected from Alachua County SHIP files from fiscal years (FY) 2003-2004, and 2005-2006. A hypothetical client profile was compiled for the fiscal year 2003-2004; only one hypothetical client profile was completed because the maximum house sales price did not change during the fiscal years examined. This hypothetical profile was used as a control/base line to judge the average client profiles that were compiled for both FY 2003-2004 and 2005-2006. The information that was examined to construct the average client was: the annual income of the house hold, the purchase price of the house, and the household size for each client. While the informa tion used to construct the hypothetical client was the maximum house sales price for the fisc al year 2003-2004 and th e minimum household income for each fiscal year. The fiscal years 2003-2004, and 2005-2006, were examined because both occurred after a major revision to the LHAP occurred. As of 2003 SHIP staff members were no long allowed to transfer funding from one strategy to another, and the maximum subsidy was changed. The LHAP addresses three fiscal years, and can be revised twice within any twelve month period. Alachua County revised the 2002-2003/2003-2004/20042005 LHAP, and kept these changes for the 2005-2006/2006-2007/2007-2008 LHAP. These changes meant that a client had a chance of receiving a higher subsidy and was part of the reason why these fi scal years were chosen. These fiscal years had the most in common out of all of the fiscal years that Alachua County operated a SHIP program. Having the same maximum subs idy guideline, $25,000, made the data analysis easier to perform since the investigator did not have to compare clients with different subsidy amounts.

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74 The Alachua County Growth Management Hous ing Division has determined that if a household has a mortgage front end ratio of less than 33 % of its gross annual income, and a back end ratio of less than 41 percent, the mortgage loan is affordable. The front end ratio refers to the amount of gross annual income that pays fo r the mortgage, while the back end ratio refers to the amount of gross annual income that pays for recurring monthly debt The SHIP staff uses an Excel worksheet, with formulas that are us ed by the mortgage industry to calculate the mortgage affordability for the client.7 For example, the provided monthly calculator shows the mortgage loan that a very low-income, low-in come and moderate-income one person household could afford for 2005-2006 without any SHIP assistance. To obtain the front end ratio, monthly income is multiplied by 33 percent; this is the maximum front end ratio that Alachua County w ill accept, since a mortgagee with a front end ratio of less than 33 % means that the househol d is not cost-burdened. The same formula is applied to the back end ratio, and if the back end ratio is less than 41 % the mortgage is considered affordable. Alachua County SHIP staff will allow a client to have a back end ratio that is slightly higher than 41%, however a front end ratio that exceeds 33 % is unacceptable. The sales price of the home is multiplied by .02 (m ortgage lenders require that a household must pay at least 2 % of the down pa yment without any assistance). The following list provides more information about the affordability analysis process that is used by Alachua County. The sales price is subtracted from the down payment to determine the mortgage amount The monthly interest is added to the te rm in months and the mortgage amount The total amount is multiplied by negativ e 1 to obtain the monthly payment The total monthly mortgage is added to the taxes and insurance to determine the total monthly payment. All of this is explained since the formulas ar e not displayed in the a ffordability calculator. 7 Although if the mortgage lenders affordability analysis overrides Alachua Countys; meaning that if a mortgage lender determines that a mortgage is affordable Alachua County has to accept that mortgage

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75 Affordability Analyses Hypothetical Client According to the affordability analys is, a ve ry low-income one-person household earning $19,100 annually, without any outside debt (car pa yment, cell phone, car insurance etc) could only afford a mortgage for $38,539.36. The maximu m house sales price for 2003-2006 was used to determine if a client came in with the bare minimum income and tried to obtain an average mortgage could afford it. The maximu m home sales price for 2003-2006 was $172,732.00, and this amount far outstrips this persons ability to afford a home in Alachua County (Census, 2000). This is a completely hypothe tical version of what an app licant would look like. There are very few people who have no recurring monthly debt In this case, the maximum front end ratio that this applicant can afford without being cost-burdened is $525.25 per month, for a mortgage of $38,539.36. The maximum house sales price was $172,632 for this fiscal year, and the client would need a subsidy of $130,738 to afford the home on his/her yearly salary. This would not happen. This affordability analysis was performed to illustrate that a very low-income household could not afford the average house sales price in Alachua County. Th e affordability analysis of a hypothetical client was also performed to examine if the guidelines set forth by the Florida Housing Finance Corporation are feasible in Alachua County. And for the very low-income household, this affordability analysis suggest s that these guidelines are not feasible Alachua County SHIP staff perform an affordability analysis for every client who applies for the Down Payment Assistance with Rehabilitation (DPA with Rehab) strategy as part of the income verification process. The affordability an alysis allows the SHIP staff to determine how much assistance a client might need. For example, in the fiscal year of October 2003-September 2004, ten of the 41 households that applied for the DPA with Rehab strategy were very low-

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76 income households. Of those households, all te n were cost-burdened when household income was analyzed. All of these cost-burdened households had front end ratios over that exceeded 33 % and some had front end ratios as high as 50 pe rcent. This meant that these households would need substantial subsidies that could potenti ally exceed the amount that Alachua County was allowed to provide. And as a resu lt these households were not able to receive SHIP assistance. See Table 6-1 for more information about this client. Average Client FY 2003-2004 This af fordability analysis examines information from the average client that applied for assistance in the Fiscal Year (FY) 2003-2004. This was used to compare the hypothetical affordability analyses and the affordability analysis for the average client. For this fiscal year each household had an average of three pers ons living within the household, the average household income was $28,140. The household income was adjusted for household size (see Table 5-4). The average home sales price for ap plicants applying to th e SHIP program in FY 2003-2004 was $89,432.10. Table 6-2 provides more information about this client. According to the affordability analysis the average applicant for Alachua County was not cost-burdened. Yet there were 41 applicants to the SHIP Downpayment Assistance (DPA) for FY 2003-2004; and out of the 41applicants, there we re ten very low-income applicants; all ten very low-income applicants were cost-burde ned. The average front end ratio for the costburdened very low-income applicant was 41.63 percen t, while the average front end ratio for all applicants for this fiscal year was 33 percent. This front end ra tio for the cost-burdened very lowincome households is unacceptable by Alachua C ounty's standards to receive DPA. Actually by Alachua Countys standards the very low-income households are severely cost-burdened. The affordability analysis also assumes no debt, potentially skewing the results. For some reason the majority of applicants to th e program, especially for this fiscal year, were low-income

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77 households. This could be due to how Alachua County operates its SHIP program. The singlefamily housing development strategy allows not-for-profit and for-profit organizations to run mini-SHIP programs. There is th e potential that a majority of the very low-income households in Alachua County are applying to these miniSHIP programs. There is a very active Habitat for Humanity chapter that operates in Alachua County and very low-income households might be applying to the Habitat for Humanity for assist ance, since this program is very conducive to assisting very low-income households obtain home ownership. The average SHIP client for this fiscal year was not cost-burdene d because the average SHIP clie nt was a low-income household. While the households that are very low-in come are cost-burdened by Alachua Countys standards for this fiscal year. Average Client FY2005-2006 The average applicant for FY 2005-2006 had an average household incom e of $27,142.47, for a household of three people, and the average house sales price was $78,165.70. This affordability analysis is very similar to the first affordability analysis. This affordability analysis is stating that a household of three people w ith no outside debt, and purchasing a house for $78,165.70 would be able to afford the mortgage. The assumption of no debt could be skewing the results, since the affordability analysis is not able to properly account for the maximum back end ratio. There were ten applicants who were co st-burdened when the affordability analysis was performed, and again these same ten applicants we re the very low-income households. Out of the total applicants, only ten were very low-income households, but all of those very low-income households were cost-burdened and could not afford homeownership by Alachua Countys standards. Table 6-3 provides more information about from when the information from all 41 applicants were averaged together.

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78 Some caveats must be presented in order to a ccept this data: monthly debt information was not available for the income verifications of th e clients, the income verification process was adapted by Alachua County from HUD and used here, and mortgage in terest rate was the average interest rate for that fi scal year. All of this informati on might have potentially skewed the results, but everything in th e researchers power was done to ensure the validity of the data. Additionally the recommendations provided here are mainly applicable to Alachua Countys SHIP program, and that is due to the flexibility of the SHIP program to begin with. Nonetheless, another jurisdiction could potential ly read this study and gain so me idea about what problems to watch out for in their jurisdicti ons. Some of the information here could prove useful to other jurisdictions when they are trying to set up a SH IP program. That type of information would be how to modify the income verification process to address the needs of a particular jurisdiction, keep meticulous records on information such as mont hly debt if this is necessary to perform an income verification, and so on. In conclusion, the affordable analyses were performed using Alachua County's modified version of the Department of Housing and Ur ban Developments (HUD). This is permissible under the State Housing Initiatives Partnership Program Act (1992). The affordability analysis is important because it illustrates how very lo w-income households in Alachua County cannot afford homeownership, while simultaneously providing support for Alachua Countys Affordable Housing Study that stated that low-income households could not afford homeownership in Alachua County (Alachua County Affordable Housing Team, 2003). These findings directly informed the recommendations that are delivered and discussion in Chapter 7 Findings and Recommendations.

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79 Table 6-1. Affordability analysis for hypothetical client 2003-2004 Applicant Information: Annual income $19,100.00 Monthly Debt Monthly income 1,591.67 Front ratio 33% Total 0.00 Back ratio 41% Max front end ratio $525.25 Max mortgage amount 38,539.36 Max back ratio less debt $652.58 Deferred loan needed 130,738.00 Max monthly PITI $525.25 Sales price Down payment Mortgage amount Annual interest $172,732.00 $3,454.64 $169,277.36 6.60% Monthly interest Term (Months) Monthly payment T&I 0.55000% 360 $1,081.10 $279.12 Monthly payment without subsidy $1,081.10 Source: Alachua County Growth Manage ment Department Housing Division, 2005 Table 6-2. Affordability analysis for average applicant 2003-2004 Applicant Information: Annual income $28,140.00 Monthly Debt Monthly income 2,345.00 Front ratio 33% Total 0.00 Back ratio 41% Max front ratio $773.85 Max Mortgage amount 101,844.15 Max back ratio less debt $961.45 Deferred Loan Needed N/A Max monthly PITI $773.85 Sales price Down payment Mortgage amount Annual interest $89,432.10 $1,788.64 $87,643.46 6.60% Monthly interest Term (Months) Monthly payment T&I Monthly payment without subsidy 0.55000% 360 $559.74 $123.41 $559.74 Source: Alachua County SHIP Client Files, 2004

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80 Table 6-3. Affordability analysis for average applicant 2005-2006 Applicant Information: Annual income $27,142.47 Monthly debt Monthly income 2,261.87 Front ratio 33% Total 0.00 Back ratio 41% Max front ratio $746.42 Max mortgage amount 100,846.51 Max back ratio less debt $927.37 Deferred loan needed N/A Max monthly PITI $746.42 Sales price Down payment Mortgage amount Annual interest $78,165.70 $1,563.31 $76,602.39 6.60% Monthly interest Term (Months) Monthly payment T&I Monthly payment without subsidy 0.55000% 360 $489.23 $102.35 $489.23 Source: Alachua County SHIP Client Files, 2006

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81 CHAPTER 7 FINDINGS AND RECOMMENDATIONS Introduction A m ajor finding was revealed from the analysis of the data. It was found that very lowincome households that applied for Down Payment Assistance (DPA) in Alachua County during the fiscal years FY2003-2004, and 2005-2006 could not afford homeownership even with SHIP DPA. While low-income households that applie d for DPA in Alachua C ounty during the fiscal years FY2003-2004, and 2005-2006 could. This finding is ex amined in detail in this chapter, as well as the recommendations that are derived from this data analysis. Findings National Low Incom e Housing Coaliti on(1999, 2001, 2003, & 2006) stated over and over that minimum wage workers in Florida would have to either earn twice the minimum wage rate, or work about 100 hours a week (depending on the year) to afford a fair market rent (FMR) rental unit. The data paints a picture that it is nearly impossi ble for lower-income households to afford saving for a down payment while attempting to afford their current rental unit and pay for utilities. The SHIP program also does not take in to account the fact that these households have to afford utilities and other household necessiti es (although Alachua Countys SHIP program does through its back end ratio). The literature and th e program guidelines that examine the feasibility of lower income households ability to affo rd homeownership does not address how lower income households would be able to afford ot her household expenses (S tate Housing Strategy Act, 1992; Herbert & Tsen, 2005; Collins, 2006). The Alachua County SHIP program provides ga p assistance to applicants of its Down Payment Assistance with Rehabili tation (DPA with Rehab) strategy. An affordability analysis, as part of the income verification process, is performed to determine how much mortgage the

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82 clients annual income can support without being cost-burdened. This affordability analysis is then compared to the actual sa les price of a home and the mort gage that the applicant is attempting to obtain. This affordability analysis allows the Alachua County SHIP staff to determine what the gap is between an affordable mortgage and the actu al mortgage that the applicant can support with his/her income and then attempts to fill that gap. The data was examined to test the thesis statement: whether very low-income households could sustain a mortgage in Alachua County wi th down payment assistance. According to the data, a very low-income household could not, wh ile a low-income applicant could sustain a mortgage with assistance. Low-income househol ds are only mentioned because they comprised the majority of applicants to the Alachua County SHIP program for each fiscal year examined. Alachua County determined a mortgage as affordable if the front end ratio is less than 33 percent. Front end ratio refers to 33 % of household pre-tax income that is spent on mortgage costs. Only low-income applicants had front e nd ratios less than 33 % when the affordability analyses were performed (30 in all), and all of the very low-income applicants had front end ratios that exceeded 33 % (in some cases it r eached 49 percent). Although there was a small pool of applicants each year examined (average of 40), there was roughly the same amount of very low-income applicants who could not afford a mo rtgage each year, even with SHIP assistance. There were roughly ten very low-income households a year that applied to the SHIP program and each very low-income household was incapable of affording a mortgage with down payment assistance. This finding sugge sts a trend and not a fluke. There are potentially several reasons why very low-income applicants did not apply to Alachua Countys SHIP program, in spite of the fact that the SHIP program was designed to specifically assist very low-income households. One reason could be that the very low-income

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83 household in Alachua County is applying elsewhere for assistance. The Habitat for Humanity is very active in Alachua County and is designed expressly to assist th e very lowincome household. Another reason could be the way that Alachua County actually runs its SHIP program. Not-for-profit and for-profit housing prov iders can apply to the Single-Family Housing Development Strategy for funding for the purpose of providing and/or preserving affordable housing in Alachua County. These or ganizations essentially run m ini-SHIP programs. Most of the very low-income households could effectiv ely be removing these households from the pool of applicants that apply to the Down Paym ent Assistance with Rehabilitation Strategy. Other evidence includes the fact that Alachua County has used its mortgage foreclosure intervention strategy to primarily assist very low-income SHIP recipients. This allows the Alachua County SHIP program to fulfill the requ irement that 30 % of all funding must assist very low-income households, and additionally fulf ill part of the requirement that 65 % of all funding must assist homeownership activities. A red flag should be raised from this information, if the 30 % very low-income guide line is being served by the mo rtgage foreclosure strategy, is homeownership really th e right strategy for this income gr oup? Table 7-1 is provided as a snapshot of Alachua Countys SHIP program defaults, unfortunately it is hard to compare Alachua Countys foreclosure data to that of the foreclosure date of othe r localities in Florida since this data is not accurately report ed on a consistent basis (Fitterman, email communication, December 5, 2007). What is known is that the foreclosure rate among SHIP programs is roughly three percent, which echoes that of the FHA mortgage foreclosures, while Alachua County has a cumulative foreclosure ra te of 8.15 % for very low-income households, and 9.70 % for low-income households (Fitterman, email communication, December 5, 2007).

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84 Recommendations for the Alachua County SHIP Program This study provides two recomm endations for the Alachua County State Housing Initiatives Partnership (SHIP) Program. Change the income-guideline targets for Alachua County. Instead of placing a heavy emphasis on homeownership for very low-inco me households, focus on assisting low-, and moderate-income households obtain homeownership o Use other strategies that focus on assis ting very low-income households obtain affordable housing. One such strategy is the multi-family rental housing strategy that is already in pl ace in Alachua County, but it is not utilized to its full extent. Focus on providing more affordable rental housing across the County, especially rental housing that targets very low-income households o This recommendation could be fulfilled by providing more multi-family rental housing that only available to very lo w-income households, this would fulfill mandatory statutory requirement that 30 % of all funding must assist very lowincome households. Change the Income-Guideline Targets for Alachua County As stated num erous times throughout this document, the SHIP program was designed to have a minimum of guidelines, in order to allow jurisdictions maximum flexibility in designing a program that specifically addressed the needs of that jurisdiction. It is repeated again here for the benefit of the reader, becaus e although the program affords the jurisdiction a minimum of guidelines, there are three major guidelines that must be addressed in order to receive SHIP funding. These guidelines are: 30 % of all fundi ng must assist very low-income households, another 30 % must assist low-income househol ds, 65 % of all funding received must assist homeownership activities, and 75 % of all funding received must serve new construction activities. This recommendation suggests that these income guidelines should be relaxed for Alachua County in light of the data examined here. In Alachua County 52 % of all households that received SHIP assistance were very lowincome households earning $18,150 or less for a family of four (Alachua County Growth

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85 Management, 2007). Alachua Countys SHIP program exceeds the very low-income income target by 22 percent. This investigator believes that the SHIP program places too much emphasis on very low-income households, without examining the potential for residents of a jurisdiction to sustain these guidelines. As th e data illustrated, very low-in come households cannot afford homeownership in Alachua County, but 30 % of all funding received by the jurisdiction must assist very low-income households, and 65 % of all funding must a ssist homeownership activities. This recommendation is based on Walk ers 2004 study which stated that a wide range of affordable housing options are needed in order for a jurisdiction to have a healthy affordable housing climate. This recommendation is not suggesting that very low-income households should be ignored by Alachua Countys SHIP program Rather it is attempting to suggest that homeownership for very low-income households in Alachua County might not be the best option since the data shows that very low-income hous eholds could not afford homeownership. This recommendation is suggests util izing SHIP funding in other ways to assist very low-income households instead of focusing on obtaining hom eownership for very low-income households. Additionally, if a very low-income client alrea dy owns a home and would like to apply for SHIP funding for renovation activitie s, then that very low-income client could be assisted. However, SHIP funding should not be used to assist very low-income households in purchasing a house. This emphasis on homeownership for very lo w-income households could work in other jurisdictions that do not rely as heavily on low-wage paying jobs. As such the program should continue focusing on utilizing the Down Paymen t Assistance with Reha bilitation (DPA with Rehab) strategy to fulfill the 65 % homeowne rship requirement and the 30 % low-income homeownership requirement in those jurisdictions if it has been found that very low-income households in that jurisdiction co uld indeed afford homeownership.

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86 This focus on moderateand low-income households will allow Alachua County to utilize any remaining funding in innovative and unique ways to address other affordable housing needs of the County. These remaining funds are recapture d funds and they are not subject to the same scrutiny of the State Statutes as the original funding. Recaptured funds are funds that are repaid at the end of the mortgage term, repaid when the house is no longer utilized as the primary residence, or if the affordability period is met (State Housing Initiatives Partnership Strategy Act, 1992). All of this means that the recaptured funds could theoretically be used to start another strategy, with more lenient terms than the original strategies. R ecaptured funds will be essential in carrying out this recommendation since the St ate Statutes place a clear emphasis on assisting very lowand low-income households in obtaini ng affordable homeownership. But as stated before, recaptured funds are not subject to these requirements. The data overwhelmingly showed that low-income households can support homeownership, especially with Down Payment Assistance in Alachua County. But the SHIP program (through the State Statutes ) places just as much emphases on homeownership for very low-income households, as it does for low-inco me households. As a result the SHIP program should reexamine this focus on very low-inco me households and homeownership, while adding an economic feasibility study requirement to th e State Statutes. If this recommendation is adopted very low-income households could alwa ys apply to Habitat for Humanity if that household truly wanted to purchase a house. Habita t for Humanity might be a better program for very low-income households in Alachua County sin ce the client has to vo lunteer to build houses, allowing the client to earn sweat equity and e ssentially pay for his/her house in sweat equity.

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87 Alternatively, the SHIP funding that would normally be used to assist very low-income households obtain homeownership could be channeled into other strategies th at could assist very low-income households in other ways. The SHIP program focuses a majority of its attention on very low-income and low-income households. The percent of funding that shoul d assist low-income households should be increased, and moderate-income households shou ld be assisted. The State Statutes only accommodates moderate-income households if ther e is unexpended funding and if the minimum requirements of the program have been met. At the very least, economic studies should be performed in each locality and county to determin e if very low-income households can actually sustain homeownership within those jurisdictions If the data shows that very low-income households cannot obtain and sustai n homeownership, then those m unicipalities should receive permission to channel the funding which would nor mally be used to assist very low-income households obtain homeownership into other stra tegies that might provi de other affordable housing options. Focus on Providing More Affordable Rental Housing Options Throug hout the County Both the Alachua County Affordable Housi ng Study (Housing Study) and the Affordable Housing Study Commissions 2007 Final Report provided recommendations for the SHIP program. The Housing Study examined the issue of providing assistance to moderate-income households, but ultimately decided that this was not in the best interest of Alachua Countys SHIP program (2006). The data examined disagree with this finding, as st ated before the data show that very low-income households in Alach ua County cannot sustain homeownership and as a matter of fact only ten households or so appl ied for down payment assistance each year. This data suggests that Alachua County should recons ider this recommendati on since its been found that very low-income househol ds cannot afford homeownership.

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88 Although the Housing Study also explicitly stat ed that there was a greater need for affordable rental housing, it never suggested that Alachua County extend its multi-family rental housing strategy. Rental housing can be provided in various ways : provide a loan to housing providers who are interested in providing mixed-in come rental units, utilize the various programs (Low Income Housing Tax Credit, State Ap artment Incentive Loan Program, Community Development Block Grant Program etc.) that can be used in co mbination with SHIP funding to reduce the costs associated with providing re ntal housing, and any recaptured funds can be channeled into the multi-family rental strategy to fund the affordable re ntal strategy. This idea could be an excellent vehicle for producing mo re multi-family affordable rental housing in Alachua County. Especially since this was a need that was repeated several times throughout the literature (Alachua County Housing Study, 2003; National Low Income Housing Coalition, 1999, 2001, 2003, & 2006; Nissen and Borum, 2005).The SHIP program in general has obstacles that prevent the SHIP program from fully utilizing the multi-fa mily strategy. These obstacles include: The affordability clause that states that each unit must remain affordable to residents for a minimum of 15 years and annual income verifi cation monitoring needs to be performed to ascertain that the units remain affordable. The owner must file a right of first refusal if s/he wants to sell the property before the affordability period has expired (generally 15 years) These barriers combine to form an extremely cumbersome, complicated, and time consuming task that prevents develope rs from seeking out this strategy. These rules are counterproductive since this strategy is supposed to attract smaller developers who might be incapable of fully leveraging the funds needed for the State Apartment Incentive Loan (SAIL) Program. Although the Hous ing Study (2003) has stated in very clear terms that there is a dire need for affordable multi-family rental units in Alachua County, this

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89 strategy is not being utilized to address this nee d. This could be rectified by slightly modifying the SHIP rules to ease the process for the sma ller developer. The modi fied regulations could include relaxing the income verifi cation process, or al lowing rental developers to outsource the income verification process. Or it could be suggested th at the rental devel opers roll the income verification process into the contract with the property manager. For example, the property manager could have to verify the income of each resident at the beginning of each lease and at each renewal, removing some of the responsibility from the developer. Another use for the recaptured SHIP funds is to focus on establishing a program that allows not-for-profit and for-pro fit organizations to assist structures versus assisting recipients. This strategy woul d entail providing funding to these organizations to purchase and rehabilitate structures; these or ganizations would also have to remain the landlords of these structures for the life of the SH IP loan. This program already ex ists to some extent with the single-family housing development strategy (new c onstruction) but it needs to be expanded. This could be done by funneling more funding into this strategy; the extra funding could potentially be recaptured funds. Additionally, there would be a need to find organizations that would be willing to remain the landlords of these structur es and to ensure that the structure remains affordable throughout the life of the loan. Again, this would entail making the income verification process easier and/or finding organizations th at are willing to ta ke on this process. Discussion One of the m ajor recommendations delivered in this study was to ut ilize SHIP funds to provide more multi-family affordable housing units within the County. Although this study is about homeownership, affordable rental housing must be discussed as well, since a wide range of housing options is necessary in the provision of affordable housing (Walker, 2004). This range of housing options is necessary because it affords lowe r income households the ability to save for a

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90 down payment if they want to purchase a home while residing in an affordable rental. Walker (2004) discusses affordable housing in terms of a continuum; rental housing is on one end of the continuum, while homeownership is on the other. Not everyone wants and/or needs to own a home, and housing markets need to offer enough opti ons to appease the rent ers, households with special needs, homeowners, potential homeowners, the homeless and so on. Potential homeowners need special attention since one does cannot automati cally purchase a home, s/he needs to rent in a unit that allows him/her to save enough money for a downpayment, in order to properly prepare for homeownership. As a result of this study, this researcher strongly feels that Alachua County needs to include the production of multi-family rental housing, in its affordable housing strategy in order to provide enough affordab le rental options that would house those who do not want to rent, and those w ho want to own but need to rent in order to save enough money for a downpayment. Alachua County has unique issues that prevent the a pplications of its lessons learned to other jurisdictions, except the recommendation that economic feasibility studies for providing affordable homeownership to very low-inco me households should be performed by each jurisdiction before assisting very low-income homeowners. This presents a future research opportunity. The scope of this study did not allo w for a comparison of Alachua Countys SHIP program with that of a comparable jurisdiction. National Low Income Housing Coaliti on (1999, 2001, 2003, & 2006) provide information about how minimum wage workers in Florida w ould have to either earn twice the minimum wage rate, or work about 100 hours a week (dependi ng on the year) to afford a fair market rate (FMR) rental unit. The data paint a picture th at it is nearly impossible for lower income households to afford saving for a down payment wh ile attempting to afford their current rental,

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91 and pay for utilities, and so on. The SHIP program also does not take into account the fact that these households have to afford utilities a nd other household necessities (although Alachua County does through its back end ratio) ; in spite of the fact that the literature clearly states that these necessities are definitely a part of housing affordability and need to be included when attempting to determine affordability (Chi & Laquartra, 1998). All of the above recommendations were deliv ered to enhance Alachua Countys SHIP program. These recommendations mainly focu s on Alachua Countys SHIP program since Alachua County has unique characteristics that need to be addressed by the recommendations, and these recommendations might not necessarily appl y to other municipalities. The scope of this study did not allow for the comparison of Alachua County to other municipalities and the economic feasibility studies presents opportunities for future research. These recommendations and future research opportunities will potentially improve the program, and create a stronger program that can reach more households in th e long run. This study stat es that other housing options should be explored when it comes to very low-income households in Alachua County, since the data shows that they cannot afford homeownership even with DPA.

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92 Table 7-1. Alachua County SHIP defaults from 1993-2005 Very low-income Low-income Close out fiscal year number of applicants Defaults number of applicants Defaults 1993 1994 1995 43 5 111 4 1996 8 0 52 5 1997 10 4 29 6 1998 12 0 37 3 1999 21 2 96 9 2000 27 75 1 2001 41 4 110 16 2002 55 5 61 14 2003 36 5 81 1 2004 41 1 44 9 2005 25 0 15 1 Total defaults 319 26 711 69 Default rate 8.15% 9.70% Source: Alachua County SHIP Client Files, 2005

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93 CHAPTER 8 CONCLUSION Introduction Two recomm endations for the Alachua Count y SHIP program were delivered by this study, these recommendations were discussed in de pth in Chapter 7 and will be repeated here. These recommendations are: Change the income-guideline targets for Alachua County. Instead of placing a heavy emphasis on homeownership for very low-inco me households, focus on assisting low-, and moderate-income households obtain homeownership o Use other strategies that focus on assis ting very low-income households obtain affordable housing. One such strategy is the multi-family rental housing strategy that is already in pl ace in Alachua County, but it is not utilized to its full extent. Focus on providing more affordable rental housing across the County, especially rental housing that targets very low-income households o This recommendation could be fulfilled by providing more multi-family rental housing that only available to very lo w-income households, this would fulfill mandatory statutory requirement that 30 % of all funding must assist very lowincome households. These recommendations were delivered af ter examining Alachua Countys unique affordable housing and economic situation, which a llowed the researcher to determine that very low-income households cannot afford homeow nership in Alachua County, even with the assistance of the SHIP Down Payment Assistan ce Program. The very low-income households that applied directly to Al achua Countys SHIP program between 2003 and 2006 had front end ratios that exceeded the 33 % benchmark establ ished by the mortgage industry as affordable. Each fiscal year, an average of ten very low-income households applied for down payment assistance, and none of those appl icants were able to afford a mortgage using the affordability requirements. These recommendations were provided to potentially strengthen the SHIP

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94 program. Since very low-income households in Alachua County cannot afford homeownership even with the SHIP subsidy, the SHIP program should be modified to focus on other income levels. Future Research Opportunities Som e future research opportunities are pr ovided here and include: performing economic feasibility analyses for other jurisdictions and co mparing the results to the affordability analysis performed in this study for Alachua County, exam ine back end ratios and household debt for very low-income households in the participating jurisdictions and examine how this debt affects the households ability to afford homeownership, and examine if supplying recaptured funds to the multi-family rental strategy for Alachua C ounty would allow developers to provide more affordable housing in Alachua County. The Affordable Housing Study Commission is convened yearly to examine various affordable housing issues in Florida; the fina l reports deliver recommendations to improve affordable housing in Florida. The 2007 Final Report examined the SHIP program, and two major recommendations that were delivered are income targeting guidelines should remain in place, and guidelines for rental subsidies should be relaxed. This study disagrees with the Affordable Housing Study Commissions recommendation that the income targeting guidelines should rema in in place. The income targeting guidelines refer to the requirements that 30 % of all f unding expended should assi st very low-income households, and that 30 % of funding should assist low-income households. This study recommends that very low-income households should not be targeted unless the participating jurisdiction has pe rformed an economic feasibility study to determine if the very low-income households within that jurisdicti on can actually sustain homeownership with down payment assistance. The targeti ng guidelines for low-income households should be increased,

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95 and an income targeting guideline for moderate-income households should be instituted. This recommendation stems from the examination of th e data from Alachua Countys SHIP program. Although, as stated numerous times throughout this study, the majority of the lessons learned from Alachua County cannot be applied to other jurisdictions, but this one can. This recommendation can be applied to other juri sdictions since it sugge sts that the housing affordability issues within a jurisdiction should be examined before a program of such magnitude is carried out, especially si nce this program targets very lowand low-income households. This study agrees with the Affordab le Housing Study Co mmissions (AHSC) recommendation that the guidelines for assistance provided to developers of rental communities should be relaxed. The final report continued on to state that it believed that this recommendation would not be instituted since the Community Workforce Housing Innovation Pilot Program (CWHIP) was specifically designed to provide loans to developers of rental units (AHSC, 2007). This researcher believes that recaptured funds can be provided to smaller developers of rental units. According to the Alachua County Afford able Housing Study (2003) the CWHIP program is unattainable by smaller developers since the amount of funding needed to leverage the CWHIP funds is hard to secure, in addition to the in ordinate amount of work involved in developing a rental complex. Although CWHIP is not the only program that is av ailable, it was developed as a means to allow smaller developers obtain funds and leverage these funds with other programs. But somehow (according to the Affordable Housing Study Commission) CWHIP has become unobtainable for smaller developers and is prim arily used by larger developers (Affordable Housing Study Commission, 2003). Another future research opportuni ty would be to obtain closing reports for the fiscal years examined and determine how much funding Alac hua County received and how the funding was

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96 divided between the housing strategies and each client. These closing reports must contain information about the strategies utilized to a ddress the housing needs of that jurisdiction, how many households were assisted, and how much funding each client received. Additionally the closing report must contain how much funding that jurisdiction received originally. This is a research opportunity because the Florida Housing Finance Corporation (the entity that regulates the SHIP program) only has closing reports on f ile until FY2000. The fiscal years examined were FY2003-2004, 2004-2005, and 2005-2006. Reviewing the cl osing reports once they are filed with the Florida Housing Finance Corporation could enhance the quality of this study and serves as a future research opportunity. Close out reports are mandated by State Statut e to be filed with the Florida Housing Finance Corporation at the end of each fiscal year. The penalty for not filing these reports is the suspension of SHIP funding. However, the fact th at the closing reports we re not available from the Florida Housing Finance Corporation does not m ean that the closing reports do not exist. The closing reports could be missing because the juri sdiction did not file them with the Florida Housing Finance Corporation because a particular fiscal year has not closed out yet. Sometimes a fiscal year will extend past a regular calendar year, and the jurisdiction will need to apply for an extension (State Housing Strategy Act, 1992) Thus, retrieving and reviewing the close out reports once they are filed with the Florida Hous ing Finance Corporation will serve as a future research opportunity. In addition to the information stated above, it would be helpful to determine how much funds are recaptured each fiscal year. This in formation is key to the recommendation that recaptured funds could be used to assist modera te-income households, and to provide affordable multi-family rental housing, because the feasibil ity of this recommendation depends on how

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97 much funds are actually recap tured annually. This amount could determine whether one or several households could receive SHIP funding under this recommendation. This information should be included in the closing reports that are filed annually w ith the Florida Housing Finance Corporation, but as just stated, the close out reports for the fiscal years examined are not on file with the Florida Housing Finance Corporation. Housing that is affordable really is one of the most important basi c necessities of life, along with food and clean water. There are many pr ograms currently in exis tence that serve to address this need, and the SHIP program is one of these programs. Although this study, has scrutinized the program extensivel y, and pointed out several of its faults, this researcher still feels that the program has its merits and can be salvaged. Additionally, the fact that this program exists to provide affordable housing to lower income households is very admirable. And the recommendations delivered here could improve the program and take it to a new level.

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98 LIST OF REFERENCES 1000 Friends of Florida. (1997). Fu nding for affordable housing: of ships and sails: Affordable housing financing program s in Florida. Foresight, Retrieved September 20, 2007, from http://www.1000friendsofflorida.org/housing/Afford_Housing_Funding.asp Affordable Housing Study Comm ission. (1998). A comprehensive afford able housing policy for Florida. Final Report. 1-50. Retrieved August 30, 2007, from http://www.floridahousing.org/webdocs/ah sc/AnnualReports/1998R eport/98_ahsc_rep.pd f Affordable Housing Study Comm ission. (2006). A preservation strategy for Floridas affordable multi-family housing. Final Report. 1-40. Retrieved August 30, 2007, from http://www.floridahousing.org/NR/rdonlyres/63332252-F3EA-486A-9F59B95E7F6CDE56/0/AHSCFinalReport2006.pdf Affordable Housing Study Comm ission. Final report (2007). 1-36. Retrieved August 20, 2007, from http://www.floridahousing.org/NR/rdonlyres/8790658B-6CB0-4F46-B5A21136E8C1C227/0/AHSCFinalReport2007.pdf Alachua County Affordable Housing Study Team. (2003). Alachua County affordable housing study. 1-177. Retrieved October 8, 2007, from http://growthm anagement.alachua.fl.us/housing/hous ing_docs/Alachua%20County%20Affordable%2 0Housing%20Study.pdf Alachua County Growth Management Department. (2005) Alachua County comprehensive plan 2001-2020. Retrieved September 30, 2007, from http://growthm anagement.alachua.fl.us/compplanning/amendments.php Alachua County State Housing Initiatives Partners hip (SHIP) Program Local Housing Assistance Plan State Fiscal Years 2005-2006/20 06-2007/2007-2008 1 (2006). 1-63. Retrieved January 1, 2008, from http://growthm anagement.alachua.fl.us /formsdocs/H_SHIP_LHAP.pdf American Dream Downpayment Ac t Subtitle E of Title II of the Cranston-Gonzalez National Affordable Housing Ac t, 42 USC 12821 (2003). Asher, D., Revels, B., Marcus, K., Black, S., Seib ert, S., Kaplan, M.(2003). Letter to Florida legislator from the Sadowski Act coalition Housing News Network (19)1. 1-28. Retrieved September 13, 2007 from http://www.flhousing.org/pdf/Journal03Winter.pdf Baker, D. (2005). Who's dreaming? Homeownership among low income families 1-12. Center for Econom ic and Policy Research: 2 005-02. Retrieved January 9, 2008 from http://www.cepr.net/documents/publications/housing_2005_01.pdf Chi, P., & Laquartra, J. (1998). Profiles of Housing Cost-burden in the United States. Journal of Family and Economic Issue ( 19)2. 175-93. Retrieved January 9, 2008 from http://www.springerlink.com.lp.hscl.ufl. edu/content/j6m 63660r8371r1t/fulltext.pdf

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99 Collins, M. (2002). Pursuing the American dream: homeowne rship and the role of the federal housing policy. 1-61. Retrieved October 10, 2007, from http://www.nw.org/Network/pubs/studies/ docu ments/pursuingAmDreamCollins2002.pdf Dolbeare, N. (1999). Out of reach report: The gap between housing costs and income of poor people in the United States National Low Income Hous ing Coalition. Retrieved November, 11 2008 from http://www.nlihc.org/cgi-bin/data.pl?state=FL Degroove, J. (1997). Decent, safe, and a ffordable housing for all Floridians. Foresight, 10 (3) 113. Retrieved Septem ber 1, 2007, from http://www.1000friendsofflorida.org/ housing/Afford_Housing_Program .asp Egan, J., Carr, J., Mott, A., & Roos, J. (1981). Housing and public policy. Cambridge, Massachusetts: Bullinger. Fitterman, S. (2004). Serving the ex tremely low income with SHIP. Florida Housing Coalition Housing News Network, 20(2) 13-14. Fitterman, S., & Greger, W. (2003). Purchase assi stance programs: the role of housing costs and area incomes in determining subsidy. Florida Housing Coalition Housing News Network, 19(1) 1-28. Florida Housing Finance Co rporation. (2006). 1-64. Living in Florida: 2006 annual report. Retrieved January 27, 2008 from http://www.floridahousing.org/NR/r donlyres/54429FE5-6F33-439A-AF3088BD890D6FA9/0/2006AR_SpreadsPDFweb.pdf Florida Housing Finance Corpor ation. (2005) 1-317. State Hous ing Initiatives Partnership Program SHIP Program Manual Florida Housing Finance Corporation We make housing affordable: annual rep ort. (2003). 1-29. Retrieved January 27, 2008 from http://www.floridahousing.org/NR/r donlyres/10E2F17C-532F-459A-BB723B73302806DF/0/2003AR_layout.pdf Florida Housing Finan ce Corporation. (n.d.). William E. Sadowski afford able housing Act, online press kit Retrieved from http://www.floridahousing.org/NR/rdonlyres/B7481E75-8A7749B7-9DAB-B9D9FBCD458B/0/ WilliamESadowskiAct.pdf Goetz, E. G. (1993). Housing policy innovation in U.S. cities and states. in Shelter Burden Philadelphia: Temple University Press, 1993. Hays, R. A.,(1995), 1-360. The federal government and urban housing. New York: New York State University of New York Press. Hendrickson, M. (2007). 1-10. Economic impact of Sadowski Act state and local housing trust fund monies (State Funding). Sadwoski/Workforce Housing Coalition.

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100 Hendrickson, M., (2006).Funding history of the Sadowski act. Florida Legislative Committee on Intergovernmental Relations. Documentary st amp tax revenues estimating conference. Herbert, C. E. & Tsen, W., (2007). The poten tial of downpayment assistance for increasing homeownership among minority and low-income households. Cityscape (9)2, 1-32. Retrieved March, 9, 2008 from http://www.huduser.org/periodical s/cityscpe/vol9num 2/ch5.html Husock, H. (1997). Public housing as a 'poor house'. Public Interest, (129), 73-85. Immergluck, D., & Smith, G. (2006). The external costs of single family mortgage foreclosures: the impact of single family mortgage foreclosures on property values. Housing Policy Debate, 17(1), 57-79. Kutty, N., K. (2005). A new measure of housing a ffordability: estimates and analytical results. Housing Policy Debate, 16 (1), 113-142. Larsen, K. (2004). Florida's housing trust fund-a ddressing the state's affordable housing needs. Journal of Land Use, 19 (2), 525-535. Lerman, D. L., & Reeder, W. J. (1987) The affordability of adequate housing. AREUEA Journal, 15(4), 389-404. Listokin, D., Wyly, E., K., Schmitt, B., & Voicu, I. (2001). The Potential and Limitations of Mortgage Innovation in Fostering Home ownership in the United States. Housing Policy Debate, 12(3), 465-513. McCarthy, G., Van Zandt, S., & Rohe, W. ( 2006). The economic benefits and costs of homeownership: a critical assessment of the research working paper NO. 01-02. Nissen, B., & Borum, J. W. (2005). 1-28. Worki ng poverty: low wage workers in Florida a research report. Research Institute on Social and Economic Policy. Retrieved October 10, 2007 from http://www.risepfiu.org/reports/W orkingPovertyL owWageWorkersInFlorida.pdf Pelletiere, D., Wardrip, K., & Crowley, S. (2006). Out of reach report. National Low Income Housing Coalition. Retrieved November 11, 2008 from http://www.nlihc.org/oor/oor2006/data.cfm ?getstate=on&state=FL Pitcoff W., Pelletiere, D., Crowley, S., Schaffer, K., Trekson, M., Vance, C., & Dolbeare, C., (2003). Out of reach report: Americas housing wage climbs National Low Income Housing Coalition. Retrieved November 11, 2008 from http://www.nlihc.org/oor/oor2003/ Retsinas, N.P. (1999) Lower-incom e homeowners: Struggling to keep the dream alive. Housing Facts and Findings, 1(3). Retrieved from http://www.knowledgeplex.org/kp/text_documen t_summ ary/article/relfiles/hff_0103_rets inas.html

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101 Retsinas, N. P., & Belsky, E. S. (2002). Examining the unexamined goal. low income homeownership: Examining the unexamined goal (2002). Washington D.C.: Brookings Institution Press. Rohe, W. M., & Stewart, L. S. (1996) Homeownership and neighborhood stability. Housing Policy Debate, 7 (1), 37-81. Rohe, W. M., & Watson, H. L. (2007). Chasing the American dream: new perspectives on affordable homeownership Ithaca: Cornell University Press. Rosen, D. (1986). Housing trust funds. American Planning Association Planning Advisory Service Report 406 1-89. Ross, J. (1992). The William E. Sadowski Affordable Housing act. Environmental and Urban Issues, XX(1), 13-17. Ross, J. (1995). Full funding for Sa dowski act: a magnificent achievement. Florida Housing Coalition Housing News Network, 10 (2), 1-5. Schwartz, A. F. (2006). Housing policy in the United States: An introduction New York: Routledge. State Housing Initiatives Partnership Program Act. (1992) Retrieved December 12, 2007, from http://www.leg.state.fl.us/STATUTES/index.cfm? App_mode=Display_Statute&URL=C h0420/part07.htm&StatuteYear=2007& Title=-%3E2007-%3EChapter%20420%3EPart%20VII State Housing Strategy Act. (1992) Retrieved December 12, 2007, from http://www.leg.state.fl.us/s tatutes/index.cfm ?mode=View%20Statutes&SubMenu=1&Ap p_mode=Display_Statute&Search_String= state+housing+strategy+act&URL=CH0420/S ec0001.HTM Stegman, M. A., Querica, R., G., Radclife, J., Ding, L., & Davis, W. R. (2007). Preventative servicing is good for business and affordable homeownership policy. Housing Policy Debate, 18(2), 243-278. Stone, M. E. (2006). What is housing affordability? The case for the residual income approach. Housing Policy Debate, 17(1), 151-184. Twombly, J., Crowley, S, Ferris, N., & Dolbeare, C. (2001). Out of reach report: Americas growing wage rent disparity. National Low Income Hous ing Coalition. Retrieved November 11, 2008 from http://www.nlihc.org/cgi-bin/oor2001.pl?state=FL U.S. Census Bureau. (2000). Profile of selected housing char acteristics: Alachua County, FL. Retrieved January 25, 2007, from http://factfinder.census.gov/servle t/QTTable? _bm=y&-geo_id=05000US12001&qr_name=DEC_2000_SF1_U_QTH3&-ds_na me=DEC_2000_SF1_U&-redoLog=false

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102 U. S. Census Bureau. (2000). American FactFinder fact sheet: Alachua County, FL. Retrieved January 17, 2007, from http://factfinder.census.gov/servlet/STTable?_bm=y&geo_id=05000US12001&-qr_nam e=ACS_2006_EST_G00_S2501&ds_name=ACS_2006_EST_G00_&-redoLog=false United States Department of Housing and Ur ban Development Office of Policy Development and Research. (2002). 1-11. Economic Benefits of Increasing Minority Homeownership. Retrieved October 10, 2007, from http://www.glensold.com/blueprint.pdf United States Departm ent of Housing and Ur ban Development Office of Policy Development and Research. (2006). Evaluation of the United States housing finance system: A historical survey and lessons fo r emerging mortgage markets. United States Department of Housing and Ur ban Development Office of Policy Development and Research. (2007). Fair market rents for the sect ion 8 housing assistance payments program United States Department of Housing and Urban Development. (2007). HUD historical background. Retrieved April 10, 2008, from http://www.hud.gov/offices/adm/about/admguide/history.cfm United States Departm ent of Housing and Urba n Development Office of Policy Development and Research. (2003). HUD Handbook 4350.3: Occupancy requi rements of subsidized multifamily housing programs United States. Congress. House. Committee on Financial Services. Subcommittee on Housing and Community Opportunity. (2003). Promoti ng the American dream of homeownership through downpayment assistance: Hearing before the subcommittee on housing and community opportunity of the co mmittee on financial services, House of Representatives, one hundred eighth congress, first session, April 8, 2003. United States Department of Housing and Ur ban Development Office of Policy Development and Research. (1998). Rental housing assessmen t-the crisis continues, the 1997 report to congress on worst case housing needs. Retrieved April, 10, 2008 from http://www.huduser.org/publicati ons/affhsg/worstcase/toc.htm l Van Zandt, S. (2003). Racial/Ethni c differences in housing outcomes for first time, low-income homebuyers: findings from a national homeownership education program. Housing Policy Debate, 18(2), 431-474. Walker, D. (2004). Why homeownership depends on affordable rental housing. Housing News Network, 20(2) 1-32. White, D., Smith, M. T., Gatzlaff, D., White, M. L., Martinez, J., Nguyen, D., et al. (2004). The state of Floridas housing 2004. Florida Housing Data Clear inghouse, Shimberg Center for Affordable Housing.

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103 Yin, R. K. (2003). Case study research: design and methods, third edition, a pplied social research methods (3rd ed.). Thousand Oaks, California: Sage Publications

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104 BIOGRAPHICAL SKETCH Toccarra Nicole Thom as was born on August 27, 2008 to Jacqueline Rose Thomas-Baker and Michael White in Huntsville, Alabama. Tocc arras family moved to Rivera Beach, Florida (her mothers hometown) when she was three ye ars of age. Rivera Beach had a great impact upon Toccarras life, and is part of the reason sh e eventually decided to pursue studying Urban and Regional Planning. Toccarra received the Bachelor of Arts in Engl ish Literature from the University of Florida in 2006. While studying for the Masters of Arts in Urban and Regional Planning Toccarra was very active with extracurricular activities. She was very active in the Black Graduate Student Organization serving as the social chair for her first year of in volvement and then as the Vice President during the second year She simultaneously held the same positions in the Student Planning Association. While activel y serving her community, Toccarra also worked as an intern for the United States Department of Housing and Urban Development Community Development Work Study Program.