Eligible Use & Proper Expenditure

Question:
Are relocation expenses eligible SHIP costs? Is there a limit on the amount of relocation costs per family we can spend, or are there any standards for what should be spent?
Answer:
Yes, relocation expenses are eligible costs under the SHIP program if expended in conjunction with a rehabilitation assistance program. What you spend for temporary relocation will depend upon your local policies. You should decide in advance what will be paid as reasonable and customary in terms of temporary shelter and moving expenses and incorporate it as policy so as to avoid potential abuses.

Question:
Can I help an applicant more than once with the SHIP program?
Answer:
There is nothing in the SHIP rule or statute that specifically addresses this issue. It is a local policy decision. Many local communities have added a provision to their LHAP noting that an applicant cannot be assisted more than once with the SHIP program. If only one-time assistance is available, however, it is important to consider if the SHIP assistance provided is thorough and fully addresses an applicant’s needs. If an applicant purchases an existing home, for example, are there resources available to make needed repairs, or might the applicant be back soon to apply for assistance from your rehabilitation strategy. Similarly, when providing rehabilitation services, you should review the initial home inspection and consider whether repair priorities—including health hazard concerns, code violations, upgrading of electrical systems, and even energy efficiency—can be addressed with one-time assistance. As you consider limiting applicants to one-time assistance, you may need to increase your per unit subsidy level and other policies in order to ensure that a one-time recipient of services has been comprehensively assisted. This issue and many other policy considerations are discussed in two of the Coalition’s workshops entitled “A Quantitative Analysis of the SHIP Program” and “Enhancing Your Housing Strategies”. Refer to the workshop section of the Coalition’s website, www.flhousing.org, to learn when these trainings will be offered next.

Question:
Can SHIP funds be used for demolition and site clearance?
Answer:
Yes, as long as an eligible unit which serves an eligible household is moved to or constructed on the site. At the end of every project, we must be able to document specific housing assistance offered to a specific household. Therefore, demolition may only be part of a larger project to then construct housing on the cleared land after demolition.

Question:
The local lender has notified one of our SHIP awardees that there is a shortage in his escrow account. The notice was given after closing and the lender now wants to increase the monthly payment to cover the shortage. Can SHIP funds be used to pay for a shortage in the escrow account for a homebuyer?
Answer:
SHIP funds can be used to pay for any and all costs associated with closing, unless otherwise specified in the local HAP. Since the closing has already occurred, it would be difficult to award these funds without another closing. Minimum escrow balances are mandated by Federal laws and/or the mortgage agreements. Since the lender made the error, you should encourage the homeowner to negotiate a more reasonable amount for escrow. Since the increased monthly mortgage payment may result in putting the homeowner in a potential default position on the first mortgage, the lender should be agreeable to alternative arrangements.

Question:
Is the installation of central air conditioning an eligible SHIP expense?
Answer:
Yes. In most parts of Florida air conditioning is a necessity for the health and safety of the occupants living in the units. Previous experience with housing programs that do not allow for the installation of air conditioning has shown that people will find a way to cool their home. This often means the purchase of very old, very inefficient window units. These window air conditioners can greatly increase a family's monthly utility bills, drastically reducing a family's ability to meet their other monthly bills.

Question:
Funds have been encumbered for housing rehabilitation, and some funds have been spent on a first draw from the contractor. The housing activity is not complete. Are the funds expended?
Answer:
No, funds are only encumbered until the rehabilitation activities are completed, the work is inspected, the contractor is paid, and the unit is occupied by an eligible person. Refer to the definition of “expenditure” in the SHIP Rule, 67-37.002 (8), which notes that funds are considered expended "when the project is completed as evidenced by documentation of final payment to the contractor and release of all lien waivers, issuance of the certificate of occupancy by the local building department, and occupancy by an eligible person or eligible household.”

Question:
Please explain: "First Dollar In, First Dollar Out?"
Answer:
The SHIP rule requires that all program funds from a SHIP distribution be spent within 3 years of their initial receipt. Exceptions to this expenditure deadline are very limited. Many communities have Housing Assistance Plans that continue paying for the same strategies from one distribution to another. In these instances, SHIP administrators should consider spending all of the money from a distribution before moving on to subsequent years' distributions.

Question:
There are leftover funds in an escrow account that were not used on a project. The funds were allocated from the 2008/2009 cycle. The bank wants to give the funds back to the SHIP program. Can we take the funds? What should we do with them?
Answer:
The bank should cut the County a check for the leftover funds and the funds need to be re-allocated to a SHIP recipient, to be spent on eligible activities within the expenditure deadline of three years from the date when your community first started receiving its allocation. In this case, for example, the 2008/2009 allocation was first received on July 1, 2008 and must be expended no later than June 30, 2011.

Question:
What are the time limits on expenditure of interest earned on our local trust fund account?
Answer:
Interest earned falls under the same time limits as all other SHIP funds. The interest earned must be spent within 24 months from the end of the applicable State fiscal year in which the interest was earned. The "applicable State fiscal year" is determined by when the interest was earned. For example, the bank interest collected in the local housing trust fund from July 1, 2010 to June 30, 2011 is associated with the 10/11 SHIP distribution. It must be spent by June 30, 2011 which is 24 months from the end of the 10/11 State fiscal year.