67-21.031. Qualified Contracts

(1) An owner’s written request to the Corporation for a qualified contract (a “qualified contract request”) shall be governed by 26 CFR 1.42-18 (the “qualified contract regulations”), Section 42 of the IRC, as applicable, Section 420.503(4), F.S., and Section 420.503(36), F.S., and this rule section in effect at the time of the qualified contract request. As used in this rule section:

“Bona fide contract” has the same meaning as in Section 420.503(4), F.S.

“Qualified contract” has the same meaning as in Section 420.503(36), F.S.

(2) For purposes of this rule and processing a qualified contract request, the Corporation shall be deemed to have fulfilled its responsibility to present the owner with a qualified contract by presenting the owner with a contract deemed by the Corporation to be a qualified contract pursuant to Section 420.503(36), F.S., within the one-year period described in Section 42(h)(6)(I) of the IRC. The initial deposit required by Section 420.503(36), F.S., to be deposited in escrow in order for the bona fide contract to be deemed a qualified contract must be deposited in escrow with a nationally recognized title insurance company which offers escrow services (“escrow agent”) designated by the owner at the time of submission of the qualified contract request, or if no such escrow agent is designated by the owner, with an escrow agent selected by the purchaser, contemporaneously with the submission of the contract to the owner. The contract shall be accompanied by written notice from the Corporation to the owner that the contract has been deemed by the Corporation to be a qualified contract pursuant to Section 420.503(36), F.S. It shall be the owner’s responsibility to negotiate with the purchaser the specific terms of the contract, and the owner’s rejection of the contract or failure to act on the contract shall in no way affect the status of the contract as a qualified contract. The Corporation shall have no duty and is not responsible to either the owner or the purchaser for negotiating the details of the qualified contract following its presentation to the owner.

(3) After the 14th year of the Compliance Period, unless otherwise obligated under the Extended Use Agreement, or a Land Use Restriction Agreement under another Corporation program, and provided the right to request a qualified contract for the Development was not waived in exchange for or in connection with the award of Housing Credits, the owner of a Development may submit a qualified contract request to the Corporation. When submitting a qualified contract request, the owner shall utilize the Qualified Contract Package in effect at the time of the request and shall remit payment of the required Qualified Contract Package fee as provided therein. The Qualified Contract Package consists of the forms and instructions, obtained from the Corporation at 227 North Bronough Street, Suite 5000, Tallahassee, Florida 32301-1329, or on the Corporation’s website under the Multifamily Programs link labeled Non-Competitive Funding Programs or from http://www.flrules.org/Gateway/reference.asp?No=Ref-12012, which shall be completed and submitted to the Corporation in order to request a qualified contract. The Qualified Contract Package, (Rev. 03-2020), is adopted and incorporated herein by reference.

(4) All information contained in a Qualified Contract Package is subject to independent review, analysis and verification by the Corporation or its agents. The Corporation may request additional information to document the qualified contract amount calculated by the owner. The Corporation may also engage the services of its own certified public accountant (CPA) and real estate appraiser to assist in the review of a Qualified Contract Package. Real estate appraisers involved in the qualified contract process must be licensed by the state of Florida, be an MAI-designated general appraiser, and be otherwise acceptable to the Corporation.

(5) The qualified contract regulations provide that the fair market value of the non-low-income portion of the building includes the fair market value of the underlying land and that the valuation of the underlying land must take into account the existing and continuing requirements contained in the Extended Use Agreement. Pursuant to Section 193.017, F.S., and the statutes cited therein, the Extended Use Agreement recorded in connection with a Housing Credit property is a land-use regulation and a limitation on the highest and best use of the property during the term of the agreement that must be considered by the county property appraiser in assessing the value of the property. Unless the owner elects otherwise as provided below, for purposes of a qualified contract request, the fair market value of the underlying land shall be the value attributed to the underlying land by the county property appraiser in the most recent year’s assessed value of the Development provided that the county property appraiser’s valuation of the land takes into account the existing and continuing requirements contained in the Extended Use Agreement. The county property appraiser’s valuation methodology shall be verified upon submission of a qualified contract request in order to determine if the valuation of the land has taken into account the existing and continuing requirements contained in the Extended Use Agreement. If the owner is of the opinion that the county property appraiser’s valuation does not represent the fair market value of the underlying land within the contemplation of the qualified contract regulations at the time of the qualified contract request, the owner may elect to submit with its qualified contract request a value (the “owner’s appraised value”) for the underlying land at the fair market value determined by a real estate appraiser (the “owner’s appraiser”) engaged by the owner for that purpose in lieu of the county property appraiser’s valuation. A copy of the real estate appraisal (the “owner’s appraisal report”) upon which the owner’s appraised value is based shall be included with the owner’s qualified contract request. If the owner elects to rely on the county property appraiser’s valuation of the land and the Corporation determines that the county property appraiser’s valuation did not take into account the existing and continuing requirements contained in the Extended Use Agreement, the county property appraiser’s valuation shall be disregarded, and instead, the owner must obtain and submit to the Corporation an owner’s appraisal report together with the owner’s appraised value as provided above. The owner’s appraiser must certify in the appraisal report that the valuation represents the fair market value of the underlying land taking into account the existing and continuing requirements contained in the Extended Use Agreement for the property. The owner’s appraisal report must also include a narrative describing the methodology or manner in which the requirements contained in the Extended Use Agreement were considered by the owner’s appraiser in arriving at the owner’s appraised value of the underlying land, and, for comparison and evaluation purposes, the opinion of the owner’s appraiser as to what the fair market value of the underlying land would be if unencumbered by the requirements of the Extended Use Agreement. The lower of the restricted and unrestricted appraised values should be included in the qualified contract price if the owner’s appraised value is submitted. The owner’s appraised value of the underlying land and the owner’s appraisal report shall be subject to review and approval by the Corporation. The Corporation may engage the services of one or more real estate appraisers, or other professionals, to assist in the review and evaluation of the owner’s appraised value and the owner’s appraisal report.

(6) In addition to the Qualified Contract Package fee, the owner shall be responsible for all third party fees in connection with the owner’s qualified contract request. Third party fees include, but are not limited to, the costs of the services provided by CPAs and real estate appraisers or other real estate professionals engaged by the Corporation to assist it in the review of a qualified contract request, and the fees and commissions of any real estate broker in connection with the marketing and sale of the development to a buyer under a qualified contract.

(7) When offering a development for sale to the general public pursuant to a qualified contract request, the Corporation may, but shall not be required to, utilize the services of a real estate broker under contract with or designated by the Corporation to market and sell the development. The owner of the development shall be responsible for the fees and commissions due any such real estate broker in connection with the marketing and sale of the development, and, upon request of the Corporation or the real estate broker, the owner shall enter into a written agreement with the real estate broker pursuant to which the owner agrees to pay to the real estate broker such fees and commissions in connection with the marketing and sale of the development.

(8) The running of the one-year period described in Section 42(h)(6)(I) of the IRC shall be suspended by the Corporation at any time upon written notice to the owner if:

(a) The Corporation concludes that the owner’s request lacks information required in the Qualified Contract Package or other essential information;

(b) The owner fails to pay the Qualified Contract Package fee or, thereafter, fails to timely pay any other fees or costs for which the owner is responsible hereunder;

(c) The owner and the Corporation are unable to reach mutual agreement on the qualified contract amount;

(d) The Development that is the subject of the qualified contract request is not in compliance with the applicable program requirements or if any fees related to the Development are delinquent;

(e) The owner fails to allow the Corporation, its agents or prospective buyers access to the Development for purposes of verification, inspection or due diligence;

(f) The Applicant or Developer, or Principal, Affiliate or Financial Beneficiary of an Applicant or a Developer is in arrears to the Corporation or any agent or assignee of the Corporation;

(g) Following request, the owner fails to enter into the written agreement with the real estate broker designated by the Corporation to market and sell the development, or

(h) Administrative or civil proceedings are commenced at any time during the one-year period contesting a determination or decision made by the Corporation regarding a qualified contract request or a qualified contract; or

(i) The owner otherwise fails to comply with the requirements of this rule section or the qualified contract regulations.

The term of any such suspension shall begin on the date of the written notice provided by the Corporation to the owner, and shall continue unabated until such date as the deficiency, non-payment, litigation or disagreement giving rise to the suspension is cured or otherwise resolved. The Corporation shall acknowledge the cure or resolution by written notice to the owner within 10 days thereafter. The owner’s election to value the underlying land based on the owner’s appraised value as provided in subsection (6), above, shall automatically prevent the owner’s purported qualified contract request from beginning the one-year period described in Section 42(h)(6)(I) of the IRC until such time as the Corporation and the owner shall mutually agree on the value of the underlying land for purposes of the owner’s qualified contract request.

References in this rule to the one-year period shall mean the running of the one-year period as same may be affected as a result of being suspended pursuant to this subsection (8).

(9) Upon mutual agreement of the owner and the Corporation, the qualified contract amount shall be documented in writing signed by the Corporation and the owner.

(10) The owner shall cooperate with the Corporation and its agents, real estate brokers and prospective buyers in connection with the processing of the owner’s qualified contract request and the marketing of the Development to prospective buyers. If the Corporation presents a qualified contract within the one-year period regardless of whether the owner accepts, rejects or fails to act upon the contract, the Development shall remain subject to the Extended Use Agreement, and the owner shall be deemed to have waived any right or option to submit another qualified contract request for the Development. If the Corporation is unable to present during such one-year period a qualified contract, the Extended Use Agreement shall terminate, subject, however, to Section 42(h)(6)(E)(ii) of the IRC which provides that the termination of an extended low-income housing commitment under Section 42(h)(6)(E)(i) will not be construed to permit before the close of the 3-year period following the termination (a) the eviction or termination of tenancy (other than for good cause) of an existing tenant of any Low-Income unit, or (b) any increase in the gross rent with respect to a Low-Income unit not otherwise permitted under Section 42 of the IRC.

(11) An owner shall be allowed only one qualified contract request per Development.

(12) This rule shall apply to qualified contract requests first submitted to the Corporation on or after the effective date of the rule.

Rulemaking Authority 420.507, 420.508 FS. Law Implemented 420.5099 FS. History–New 7-16-13, Amended 2-2-15, 9-15-16, 5-24-17, 7-8-18, 7-11-19, 6-23-20, Repromulgated 5-18-21, 7-6-22, Amended 6-28-23.