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Besides its downpayment /closing cost loan assistance program, the Local Housing Assistance Program provides SHIP funds as loans for rehabilitation of housing units. Households who occupy these rehabilitation units must be either very low or low income. While implementing the county's local housing assistance plan, the county must ensure that all state requirements and local requirements are met. One state requirement is that all funds must be encumbered within 12 months after the end of the fiscal year in which the funds are received and must be expended within 24 months after the end of the fiscal year. Other state requirements relate to the percentage of the SHIP funds that must be used by various income groups, as well as a minimum percentage of funds that must be used for home ownership and construction. Habitat For Humanity constructs new housing units for very low and low income households. Consequently funds provided to Habitat For Humanity meet all of the above criteria. Since there are many county residents needing housing assistance, the Board must decide how much, if any, SHIP funds should be set aside for specific programs, and how much to have available for applicants not associated with set aside programs. Following is a summary of the proposed FY 2002/03 SHIP budget, with the HFH request included. PROPOSED 7- "— .+a.aa y VYVLl Estimated Revenues Proposed Expenditures • FY 2001-02 State Allocation 970,110 • Administrative Fees 97,011 • CDBG Set Aside 175,000 • Homeless Set Aside* 100,000 • HFH Requested Set Aside 398,380 • Remaining Funds for General SHIP Applicants 199,719 • TOTAL 970,110 970,110 sed if transitional housing clients do not qualify for SHIP funding. For SHIP set aside funds, the requirements are the same as those applicable to non -set aside SHIP funds Consequently, SHIP set aside funds must be used by the end of the assigned Fiscal Year, or those funds will be returned to the SHIP trust fund to be used by general SHIP applicants. As with non -set aside SHIP funds, all set aside funds must be processed according to SHIP program rules. For each SHIP loan associated with set aside funds, an application must be filed the Loan Review Committee must approve the loan, a promissory note and mortgage document must be prepared, and a closing must be held. Setting aside SHIP funds for clients of non-profit organizations provides certain advantages, but has some drawbacks. While set aside funds may leverage money from other programs, the result is that there is less funding available for general SHIP applicants. Since there is significant demand for SHIP assistance and since every year there are many applicants who cannot be assisted due to the lack of funding, setting aside SHIP funds for various groups adversely affects those county residents who do not have any advocacy group. In FY 2001-2002 for example, there are approximately 60 SHIP applications that will not even be reviewed. Of these 60 applicants 25 chose to be transferred to FY 2002-2003. Despite the fact that set asides reduce the funds available for general applicants, there are advantages to reserving funds for Habitat For Humanity. One advantage is that HFH has participated in the SHIP program for a number of years and performed well. Other advantages are that HFH assists many very low income households, requires that applicants invest sweat equity, provides homeownership counseling to applicants, and meets all program requirements. For those reasons, staff supports HFH's request for a $398,380 SHIP set aside for FY 2002/2003. June 4, 2002 47 Pl! 4 n r•-• t•-• D