67-39.004. Eligibility Criteria for Qualified Obligations

To be eligible for a Guarantee, each Qualified Obligation must evidence, unless otherwise approved by the Board:

(1) Security for the proposed Qualified Obligation, including a mortgage on the real property, guarantees required from Principals or other parties, and a level of contributed equity satisfying the requirements recommended by the Credit Underwriter or Financial Advisor or otherwise acceptable to the Board;

(2) That the Obligor and the Principals thereof:

(a) Are credit-worthy;

(b) Are not currently in financial arrears or default to the Corporation or the Corporation’s servicer under any program or otherwise in noncompliance beyond any cure period contained under existing documents relating to any Corporation program; and,

(c) With respect to closings of Qualified Obligations that occur in 2002 or after, have not within the past five years been in financial arrears or default to any Qualified Lending Institution or its Servicer, or otherwise in noncompliance beyond any cure period contained in any loan documents related to any Qualified Obligation for which a Guarantee has been issued. Notwithstanding the above, if in the case of subsection (b) or (c), the Board determines that any financial arrearage or default does not materially adversely affect the ability of the Obligor and the Principals thereof to perform their obligations with respect to the proposed Qualified Obligation or the likelihood of their performing such obligations, then the Qualified Obligation will remain eligible for a Guarantee. With respect to subsection (b) or (c), above, noncompliance shall prohibit the issuance of a Guarantee only to the extent that the Board determines that such noncompliance substantially increases the likelihood of the Obligor and the Principals thereof not performing their obligations with respect to the proposed Qualified Obligation.

(3) Terms and provisions with respect to property insurance, repairs, alterations, payment of taxes, reserves and assessments, delinquency charges, default remedies, and additional security as are consistent with other similar Qualified Obligations for which a Guarantee has been issued or are deemed necessary by the Guarantor to address new problems or market situations and which are satisfactory to the Guarantor;

(4) Furtherance of the purposes of the Act and the Guarantee Program;

(5) That in the case of multifamily Residential Property, such Qualified Obligation is not a refinancing of existing permanent financing, except:

(a) Existing permanent financing for which a Guarantee has already been issued, or

(b) Refinancings associated with rehabilitation of the existing property in which:

1. Rehabilitation expenditures in connection with such acquisition equal at least 25% of the cost of acquiring such Residential Property,

2. A physical needs study conducted by an independent third party shows an expected useful life after rehabilitation in excess of the proposed term of the Qualified Obligation,

3. An unconditional performance and payment bond meeting the requirements of subsection 67-39.006(3), F.A.C., is obtained to support the rehabilitation; and,

4. An appraisal based on a market value approach showing a loan-to-value ratio with respect to the Qualified Obligation not in excess of 90% supports the credit underwriting report.

(6) That the proposed Eligible Housing will not:

(a) Be marketed to, attract and thereby materially displace residents from other affordable housing developments financed by the Corporation or guaranteed by the Guarantor located in the same submarket, provided that for such purposes the provision of only 4% low income housing tax credits by the Corporation shall not be deemed financing by the Corporation;

(b) Result in such concentration of affordable housing developments financed by the Corporation or by local housing finance authorities or guaranteed by the Guarantor in the given geographic area that either the ability to repay the Qualified Obligation is compromised or the purposes of the Act in providing Guarantees on a state-wide basis is not satisfied, or

(c) Result in such concentration of pre-lease-up Guarantee risk to a single Obligor or Principal that the likelihood of default on guaranteed Qualified Obligations is increased.

(7) That in the case of multifamily Residential Property for Qualified Obligations that close in 2002, other than Qualified Obligations consisting of a loan of tax-exempt bond proceeds from the Corporation designated in 2001 by the Corporation for funding or a Qualified Obligation consisting of a loan of bond proceeds from a Qualified Lending Institution which has submitted a completed and executed pre-application to the Guarantor with respect to the proposed Qualified Obligation prior to September 30, 2001, a favorable Credit Underwriter report indicating a minimum of 1.15x debt service coverage of the Qualified Obligation subject to the Guarantee. Notwithstanding the above, the existence of a favorable report of the Credit Underwriter does not obligate the Guarantor to issue a Guarantee;

(8) That no deed restrictions are imposed upon multifamily Residential Property pledged as security for any Qualified Obligation which restrict the marketability of the property in the event of foreclosure, unless otherwise approved by the Board in writing;

(9) Income limitations that are not in excess of the limitations set forth in the definition of “Eligible Persons” and that no additional rental limitations are imposed by the Qualified Lending Institution which would adversely affect the ability to repay the Qualified Obligation;

(10) That a final maturity of the Qualified Obligation not in excess of forty-two years from the date of closing, unless further limited by HUD regulations in connection with a HUD risk-sharing transaction, or, in the case of a rehabilitation financing, a final maturity equal to the lesser of forty-two years from the date of closing or 75% of the remaining useful life of the property as evidenced by a physical needs study prepared by an independent third party;

(11) That with respect to any Qualified Obligation of an Obligor which is a non-profit corporation or a limited liability company owned or controlled by a non-profit corporation:

(a) Such entity must provide at closing equity from low income housing tax credits or its own resources equal to at least 15% of total development cost, with no more than one-half of such equity comprised of subordinate loans or grants; and,

(b) The proposed Qualified Obligation will be credit underwritten and evaluated as being exempt from ad valorem taxation only to the extent the Obligor has provided an agreement evidencing such from the local property appraiser, in form and substance satisfactory to the credit underwriter and the Guarantor; and,

(12) That the Residential Property shall contain a maximum of 400 residential units. Any two-bedroom units shall be required to also have two full bathrooms.

Rulemaking Authority 420.507(25), 420.5092(4) FS. Law Implemented 420.5092 FS. History–New 4-5-93, Amended 2-16-94, 12-26-95, 2-6-97, Formerly 9I-39.004, Amended 10-21-99, 1-8-02.