Nassau County, Fla., Pushes For Higher Subsidies, Affordable Housing Reform

The Fernandina Beach, Fla., News-Leader reports that a local housing assistance program is facing a half-million-dollar shortfall, doesn’t comply with Florida state regulations and simply not working, according to officials.

Fernandina Beach is located in Nassau County (in red, pictured) in Northeast Florida, just beneath the Georgia line. There, a State Housing Initiatives Partnership (SHIP) program is supposed to foster affordable housing by providing subsidies to moderate- and low-income home buyers.

Its effectiveness is another story. At a March 1 workshop, county and state officials offered a poor assessment of how the program is administered and appealed to the county commission for drastic changes. At present, the program allows pre-qualified buyers in Nassau County to receive a $15,000 subsidy when they buy houses costing $185,000 or less. The subsidy is set up through a second mortgage, paid back to the county at a 4 percent APR (coming out to monthly payments of about $70).

But on Wednesday, officials said Nassau is the only Florida county that requires the subsidies to be repaid. Worse yet, many of the program’s 155 recipients can’t — or simply refuse — to pay back the county. The result is nearly $500,000 in uncollected funds, according to county manager Eron Thompson.

“Obviously, with half a million dollars in debt service, something’s not working,” Thompson said.

There’s little the county can do to collect on the second mortgages besides send letters or make phone calls requesting payment. Steven Cumbo of the Florida Housing Coalition said Nassau’s current system forces the county to act like a landlord and doesn’t comply with regulations.

“If you continue this method and go after that debt, you’ll be in the newspaper trying to evict families. You know you don’t want that. It’s not a question of ‘if’ or ‘maybe.’ [There must be] changes because the current program is not working,” he said.

County Administrator Mike Mahaney agreed, saying that part of the problem is the county demands immediate repayment.

“We shouldn’t do that, and there should be safeguards in place to prevent the houses from being flipped,” Mahaney said.

The administrator said Nassau should model its program on other Florida counties, which allow payments to be nixed if the borrower stays in the home for several years or meets other conditions. The current system does not track flipping and foreclosures, and requires many man-hours to wade through endless paperwork.

Debbie Balevre of the Northeast Florida Regional Council, who administers the SHIP programs for Nassau County and neighboring Putnam County, said almost every other Florida county uses a deferred payment system. That is simpler than a a second mortgage because if the borrower stays in the home for 10 years or more, the loans are usually forgiven.

“But you’re asking people to immediately pay back a second loan, and sometimes the money’s just not there,” Balevre said.

There is also the matter of the subsidy’s relatively low cap. A $15,000 package is paltry compared the $50,000-plus offerings of many counties in Florida. The maximum home price of $185,000 under the current program is also set far too low. In Florida as a whole, median prices have increased 80 percent in three years and are now more than $250,000.

The commission took no votes last week, but directed Thompson and Mahaney to return with a revised plan Monday. The county needs to have a new plan approved by the state by May 2, or its anticipated SHIP funding for the next fiscal year — $600,000 — will be in jeopardy.

The rise of Florida home loan rates will only quell demand (and keep prices down) so much. Our state will always be in high demand for both retirees and real estate investors. Florida faces an affordable housing crisis, and not just in the Southern portion of the state. Without serious reform, it will only become more difficult for lower- and middle-income Floridians to achieve the American dream of homeownership in the coming decades.